The effect of information announcements on bid/ask spreads in the call options market*

Abstract. This study investigates changes in the call option market microstructure, as reflected in bid/ask spread changes, surrounding information release dates. The size of bid/ask spreads is not significantly changed by accounting earnings releases. The results indicate a significant increase in the bid/ask spread on the date of large price changes and a significantly increased number of insignificant changes in both actual and proportional bid/ask spreads surrounding earnings announcements and dates of large price changes. Significant increases in trading volume precede both types of information releases. Résumé. Cette étude examine les changements dans la microstructure du marché des options d'achat, tels que reflétés par les changements dans l'écart des cours acheteur et vendeur, autour des dates de publication d'information. La taille des écarts des cours acheteur et vendeur n'est pas sensiblement modifiée par la publication des bénéfices comptables. Les résultats montrent un accroissement significatif de l'écart entre le cours acheteur et vendeur à la date de changements majeurs des prix, et un accroissement significatif du nombre de changements négligeables à la fois des écarts de cours acheteur et vendeur absolus et relatifs, autour des dates de publication de résultats et de fluctuations de prix importantes. Des accroissements significatifs du niveau d'activité précèdent les deux types d'informations divulguées.     

What Determines Corporate Transparency?

We investigate corporate transparency, defined as the availability of firm‐specific information to those outside publicly traded firms. We conceptualize corporate transparency within a country as output from a multifaceted system whose components collectively produce, gather, validate, and disseminate information. We factor analyze a range of measures capturing countries' firm‐specific information environments, isolating two distinct factors. The first factor, interpreted as financial transparency, captures the intensity and timeliness of financial disclosures, and their interpretation and dissemination by analysts and the media. The second factor, interpreted as governance transparency, captures the intensity of governance disclosures used by outside investors to hold officers and directors accountable. We investigate whether these factors vary with countries' legal/judicial regimes and political economies. Our main multivariate result is that the governance transparency factor is primarily related to a country's legal/judicial regime, whereas the financial transparency factor is primarily related to political economy.     

New Measures of Union Organizing Effectiveness

This study compares union organizing activity and success in the United States and Canada. Based largely on certification data for the period 1976–1985, he results indicate there was a substantial decline in union organizing effectiveness in the United States and the Canadian unions were more active and successful in recruiting new members than their American counterparts. The evidence suggests that labor policy in Canada is more supportive of union organizing and the achievement of first collective agreements.     

THE EFFECTIVENESS OF MINIMUM-WAGE INCREASES IN REDUCING POVERTY: PAST, PRESENT, AND FUTURE

Extending the work of Card and Krueger, we find minimum-wage increases (1988–2003) did not affect poverty rates overall, or among the working poor or among single mothers. Despite employment growth among single mothers, most gainers lived in nonpoor families and most working poor already had wages above the proposed minimums. Simulating a new federal minimum wage of $7.25 per hour, we find 87% of workers who benefit live in nonpoor families. Poor single mothers receive 3.8% of all benefits. Expanding the Earned Income Tax Credit would far more effectively reduce poverty, especially for single mothers. ( JEL J21, J31, J38)     

An Exploratory Behavioral and Socio-Economic Profile of Consumer Action About Dissatisfaction with Selected Household Appliances

Dissatisfactions of consumers with household appliances and consumers' attempts to get action to overcome their dissatisfaction are frequently discussed and reported. However, only limited empirical research that permits generalization is available. This study provides additional insight into characteristics of consumers experiencing dissatisfaction with some household appliances as well as a profile of those consumers who express their dissatisfactions and those who don't and the places turned to by those consumers who do complain.     

Consumer Education and the Preschool Child

Children are consumers and subject to a number of factors which socialize them into this role. Consumer education is often cited as an important tool in directing this socialization process toward the desired result of developing efficient and knowledgeable consumers. But how early can consumer education begin in the school setting? Can the preschool child be taught basic marketplace concepts and sequences or is this consumer simply too young? What are the early building blocks of consumer education? Do some approaches to teaching the very young consumer work better than others? This study presents a conceptual framework and the results of an exploratory laboratory study which begin to answer these important questions.     

Household Use of Open-End Credit to Finance Risk

The use of open-end consumer credit to finance risk is becoming increasingly popular, but has long been overlooked in the literature on household risk management. This paper derives explicit conditions under which credit financing is superior to insurance policies, product service plans, and self-insurance as a means of financing risk. Implications for consumers, manufacturers, insurers, creditors, and public policymakers are discussed.     

Identifying Minimum Wage Effects: New Evidence from Monthly CPS Data

The appropriateness of including year effects in employment models has been a contentious issue in the minimum wage literature. Using monthly data from the 1979–2004 Current Population Surveys, I find consistent evidence of adverse labor demand effects for teenagers across specifications preferred by those on each side of this debate. Estimated employment elasticities range from –0.2 to –0.3 and unconditional hours elasticities from –0.4 to –0.5.