Local measured service and the attributes of a sound rate structure

Most U.S. jurisdictions use flat rates (FR) for local telephone service pricing. This paper explores why a majority of those exposed to usage-sensitive pricing or local measured service (LMS) generally prefer it to FR. One reason may be LMS promotes value-maximizing behavior for both the provider and the customer. Some customers may prefer FR, even if LMS is value maximizing, out of concern that gainers either cannot or will not compensate losers. Another possibility is LMS is not a value-maximizing option. This paper systematically compares LMS with FR, using the attributes of a sound rate structure.     

Consumer Trends and Attitudes to Functional Foods

Abstract

Consumers' needs have grown to such an extent that they are sought out of nutritious and pleasant organoleptic foods, as well as functional foods. This study explores consumer attitudes towards health nutrition products and particularly functional foods, using data from a survey to 325 consumers. The results designate that consumers recognize different kinds of functional foods, willing to pay a premium for their purchase. They perceive that functional foods may contribute to easily follow a healthy and balanced diet and reduce the risk of health problems but appeared anxious about the health benefits these foods communicate in their labelling.     

Analysis of divisional profitability using the residual income profile: a note on cash flows and rates of growth

The present note expands on the (Frigo and Ciecka (1995)) residual income profile in order to analyze the relationship between residual income (RI), return on investment (ROI) and cash flows. The results indicate that in addition to the question of whether RI and ROI are useful in divisional performance evaluation, both measures also have an important role to play as a means of approximating actual cash flow. © 1998 John Wiley & Sons, Ltd.     

Market failure and the existence of the state: a restatement and critique

In this article the ‘market failure’ approach to the existence of the state in market economies is restated and generalized in terms of transaction costs economizing. This approach is then criticized in that it asserts the pre-existence of societal consensus regarding efficiency versus distribution. In the presence of ex-ante distributional inequalities I suggest that distribution is a more plausible determinant of the existence and functions of the capitalist state, both theoretically and empirically. The possibility has implications on the notion of state neutrality, and on viewing the market as the ‘natural’ means of allocating resources. It also questions the very need for the existence of the market.     

Policy Uncertainty and the Dual Role of Corporate Political Strategies

Firms use active political strategies not only to mitigate uncertainty emanating from legislative activity, but also to enhance their growth opportunities. We find that a firm's systematic risk (beta) can be hedged away by employing various political strategies involving the presence of former politicians on corporate boards of directors, contributions to political campaigns, and corporate lobbying activities. The hedging effect is greater when firms operate in more uncertain industries. In addition, active political strategies are associated with greater firm heterogeneity and make real options more value relevant as potential drivers of competitive advantages in uncertain environments.     

Competition and Concentration in the New European Banking Landscape

This paper measures the degree of concentration and competition in the enlarged European Union (EU) banking environment over the period 1998–2002. In the empirical part we opt for a methodology as proposed by Panzar and Rosse based on a non‐structural estimation of market competition. Our results suggest that European banks were operating under conditions of monopolistic competition and that bank interest revenues in the 10 new EU member states was earned under conditions of higher competition than those that existed in the old EU banking countries. The opposite result was observed for total operating revenues. Smaller banks earn interest income in a less competitive environment than larger banks, while the opposite is observed for total revenues.     

Dynamic volatility and external security related shocks: The case of the Athens Stock Exchange

This paper analyses the impact of exogenous national security related shocks on the time-varying volatility structure of the Greek stock market. Alternative autoregressive conditional heteroscedastic models are estimated, in order to identify the best fit that adequately describes return volatility behavior, testing symmetric as well as asymmetric innovation responses. An external national security related shock factor is included as well as a military crisis dummy, in order to depict possible implications for the conditional variance. The empirical findings appear to support a statistically significant impact of both national security related factors on the Athens stock market returns.     

The Two Faces of Analyst Coverage

We find that positive excess (strong) analyst coverage is associated with overvaluation and low future returns. This finding is consistent with the view that excessive analyst coverage, driven by investment banking incentives and analyst self-interests, raises investor optimism causing share prices to trade above fundamental value. However, weak analyst coverage causes stocks to trade below fundamental values. This finding indicates that investors tend to believe that these firms are more likely to be plagued by information asymmetries and agency problems. The results remain robust after controlling for the possible endogenous nature of analyst coverage and analysts' self-selection bias.     

Habit Formation in an Overlapping Generations Model with Borrowing Constraints

We introduce habit‐formation in the three‐period OLG borrowing‐constrained framework of Constantinides et al. (2002) by allowing the utility of the middle‐aged (old) to depend on consumption when young (middle‐aged). This specification enables us to separate the effect of the two habit parameters (middle‐aged and old) since each representative age‐group can face different levels of habit persistence. The two‐habit setup underlines some important issues with regards to savings and security returns which do not always conform to the standard findings in the literature. In addition, the model produces equity premium consistent with US data for relatively small levels of risk aversion.