Dividends and the Resolution of Uncertainty

Investors' alleged preference for current rather than future dividends cannot, it is argued, be explained by the hypothesis of a progressively higher discount rate for more distant dividends to reflect increasing riskiness. It is more likely to be caused by inadequate standards of disclosure by companies concerning their intended uses of the funds retained by them, as compared with the standards required for external sources of finance, and by the market's consequent lack of confidence in the productivity of the former.     

Employee Ownership and Company Performance

This paper investigates how Britain's largest employee-owned firm, the John Lewis Partnership, performs relative to its major competitors. In the context of John Lewis's unique constitutional structure, employee ownership appears to offer significant advantages in the market place. It is difficult to assess the relative importance of particular policies; as a group, employee ownership, open information flows, high wages, and profit share are clearly associated with high productivity.     

对中国当前城市社会稳定性的实证研究

本文旨在通过个人对其生活各个方面满意度的自我评定来测定中国城市社会的稳定性及其决定因素。本文使用的数据具有中国城市社会的代表性。本研究所得的主要结论为,经济的持续稳定增长以及就业机会的增加会降低人们的不满情绪,从而减轻了社会政治的不稳定性;在收入可持续增长时,仅收入分配不均一项指标并不一定导致不稳定;给予人们一定的政治空间,鼓励人们提高社会与社区的参与意识亦会提高人们的满足感;良好的家庭生活与社会关系网络会化解人们的不满情绪;在控制诸种可观察到的变量后,共产党员依然具有较高的满足感。     

Real Estate Prices and Corporate Investment: Theory and Evidence of Heterogeneous Effects across Firms

In this paper, we investigate the effect of real estate prices on productive investment. We build a theoretical framework of firms' investment with credit rationing and real estate collateral. We show that real estate prices affect firms' borrowing capacities through two channels. An increase in real estate prices raises the value of the firms' pledgeable assets and mitigates the agency problem characterizing the creditor–entrepreneur relationship. It simultaneously cuts the expected profit due to the increase in the cost of inputs. We test our theoretical predictions using a large French database. We do find heterogeneous effects of real estate prices on productive investment depending on the position of the firms in the sectoral distributions of real estate holdings.     

THE BEHAVIOUR OF CERTIFICATE OF DEPOSIT RATES IN THE UK

Using a number of maturities of up to one year and weekly highquality data on UK, CD rates, 1975–92, we provide a varietyof tests of the expectations hypothesis (EH) of the term structure.Our results appear to give more support to the EH than do earlierstudies, which often use longer maturities and data of a lowerfrequency on coupon paying bonds and yield data on ‘bundlesof bonds’. If one is willing to assume that noise traderspredominate in the bond market at very short horizons, we canprovide some insights into empirical results, found in the literature.     

International Investment Restrictions and Closed-End Country Fund Prices

Some closed-end country funds trade at large premiums relative to their net asset values. This paper examines whether international investment restrictions raise country fund price-net asset value ratios by segmenting international capital markets. We test whether a relation exists between announcements of changes in investment restrictions and changes in these ratios using weekly data from May 1981 to January 1989. The results provide evidence that some foreign markets are at least partially segmented from the U.S. capital market.     

Financial Contracting and the Choice between Private Placement and Publicly Offered Bonds

The financial contracting in private placement bonds and publicly offered bonds are different. Our data show that private placement bonds are more likely to have restrictive covenants than public bonds. Private placement bonds are also more likely to be issued by smaller and riskier firms. For investment‐grade firms that issue bonds in both markets, our analysis shows that firms select the bond type to minimize financing costs. We find significant differences in the pricing of private placement and publicly offered bonds, and some of these differences appear to be related to the different institutional features between the two markets.     

Work Ethic, Employment Contracts, and Firm Value

We analyze how the work ethic of managers impacts a firm's employment contracts, riskiness, growth potential, and organizational structure. Flat contracts are optimal for diligent managers because they reduce risk-sharing costs, but they attract egoistic agents who shirk and unskilled agents who add no value. Stable, bureaucratic firms with low growth potential are more likely to gain value from managerial diligence. Firms that hire from a virtuous pool of agents are more conservative in their investments and have a horizontal corporate structure. Our theory also yields several testable implications that distinguish it from standard agency models.     

The Impact of the Federal Reserve's Large‐Scale Asset Purchase Programs on Corporate Credit Risk

Estimating the effect of Federal Reserve's announcements of Large‐Scale Asset Purchase (LSAP) programs on corporate credit risk is complicated by the simultaneity of policy decisions and movements in prices of risky financial assets, as well as by the fact that both interest rates of assets targeted by the programs and indicators of credit risk reacted to other common shocks during the recent financial crisis. This paper employs a heteroskedasticity‐based approach to estimate the structural coefficient measuring the sensitivity of market‐based indicators of corporate credit risk to declines in the benchmark market interest rates prompted by the LSAP announcements. The results indicate that the LSAP announcements led to a significant reduction in the cost of insuring against default risk—as measured by the CDX indexes—for both investment‐ and speculative‐grade corporate credits. While the unconventional policy measures employed by the Federal Reserve to stimulate the economy have substantially lowered the overall level of credit risk in the economy, the LSAP announcements appear to have had no measurable effect on credit risk in the financial intermediary sector.