Disciplining the ‘black sheep of the Balkans’: financial supervision and sovereignty in Bulgaria, 1902–38

Using the example of Bulgaria, we argue that familiar models of international political economy fail to capture the tension between national sovereignty and access to capital markets experienced by peripheral debtors in the late nineteenth and early twentieth centuries. Existing accounts exaggerate the significance of the gold standard as a good housekeeping seal of approval and underestimate the role of direct financial controls. Furthermore, they underestimate the linkage in zones of inter‐imperial rivalry, such as the Balkans, between foreign borrowing and strategic alignment. We show how Bulgaria found its politics destabilized prior to 1914 by the demands of its creditors. After defeat in the First World War, Bulgaria was forced to submit to an even tighter system of creditor control. Though it obtained substantial debt relief during the 1930s, these concessions were gained not through an assertion of national sovereignty and default, but at the price of even closer supervision. This in turn casts new light on the conventional view of Bulgaria as a victim of Nazi ‘informal imperialism’. In light of Bulgaria's previous experience, the more striking feature of its trade relations with Hitler's Germany is that they were conducted on a basis of sovereign equality.     

Why Is Long‐Horizon Equity Less Risky? A Duration‐Based Explanation of the Value Premium

We propose a dynamic risk‐based model that captures the value premium. Firms are modeled as long‐lived assets distinguished by the timing of cash flows. The stochastic discount factor is specified so that shocks to aggregate dividends are priced, but shocks to the discount rate are not. The model implies that growth firms covary more with the discount rate than do value firms, which covary more with cash flows. When calibrated to explain aggregate stock market behavior, the model accounts for the observed value premium, the high Sharpe ratios on value firms, and the poor performance of the CAPM.     

Canadian academic accountants' productivity: A survey of 10 refereed publications, 1976–1989*

Abstract. In this paper we examine the productivity of Canadian academic accountants through analyses of articles published in 10 refereed journals between 1976 and 1989, inclusive. We report the numbers of articles by Canadian institutional affiliation cross-tabulated by subject area, whether theoretical or empirical, and by the journal in which articles appeared. Summary statistics are computed to identify the gross and per capita productivity of the institutions represented and to identify the 10 most productive researchers in this period as well as in the subperiods 1976–82 and 1983–89.     

Should Derivatives Be Privileged in Bankruptcy?

Derivatives enjoy special status in bankruptcy: they are exempt from the automatic stay and effectively senior to virtually all other claims. We propose a corporate finance model to assess the effect of these exemptions on a firm's cost of borrowing and incentives to engage in derivative transactions. While derivatives are value‐enhancing risk management tools, seniority for derivatives can lead to inefficiencies: it transfers credit risk to debtholders, even though this risk is borne more efficiently in the derivative market. Seniority for derivatives is efficient only if it provides sufficient cross‐netting benefits to derivative counterparties that provide hedging services.