Law commentary: Unjust dismissal laws in other countries: some cautionary notes*

In this article the author provides a view from the USA on the workings of unfair dismissal legislation in a number of countries.     

Race and prosecution expenditures

There has been a steady accumulation of literature on racial differentials in crime and the response of the criminal justice system. A neglected component of societal response to crime has been the volume of prosecution expenditures. This article seeks to repair this neglect by examining state level difference inper capita prosecution expenditures in 1980 using a multiple regression equation. The results show that, holding other factors constant, lower prosecution expenditures are associated with higher percentages of blacks in a state’s population. The relationship of this to discrimination is discussed in terms of England.     

FORECASTING STOCK INDEX VOLATILITY: COMPARING IMPLIED VOLATILITY AND THE INTRADAY HIGH–LOW PRICE RANGE

The intraday high–low price range offers volatility forecasts similarly efficient to high‐quality implied volatility indexes published by the Chicago Board Options Exchange (CBOE) for four stock market indexes: S&P 500, S&P 100, NASDAQ 100, and Dow Jones Industrials. Examination of in‐sample and out‐of‐sample volatility forecasts reveals that neither implied volatility nor intraday high–low range volatility consistently outperforms the other.     

Mergers and synergism—some chance-constraint perspectives

This paper presents a single-period model in which profit-maximizing firms, subjected to externally imposed risk-constraints, can generate synergistic benefits through merger. It is shown that those effects depend upon several conditions and assumptions, whose reflection of the real world can vary from one case to another. The model provides some important theoretical insights to understanding the conflicting empirical results of several recent studies concerning synergistic benefits.     

Value at risk and conditional extreme value theory via markov regime switching models

This study develops a new conditional extreme value theory‐based (EVT) model that incorporates the Markov regime switching process to forecast extreme risks in the stock markets. The study combines the Markov switching ARCH (SWARCH) model (which uses different sets of parameters for various states to cope with the structural changes for measuring the time‐varying volatility of the return distribution) with the EVT to model the tail distribution of the SWARCH processed residuals. The model is compared with unconditional EVT and conditional EVT‐GARCH models to estimate the extreme losses in three leading stock indices: S&P 500 Index, Hang Seng Index and Hang Seng China Enterprise Index. The study found that the EVT‐SWARCH model outperformed both the GARCH and SWARCH models in capturing the non‐normality and in providing accurate value‐at‐risk forecasts in the in‐sample and out‐sample tests. The EVTSWARCH model, which exhibits the features of measuring the volatility of a heteroscedastic financial return series and coping with the non‐normality owing to structural changes, can be an alternative measure of the tail risk. © 2008 Wiley Periodicals, Inc. Jrl Fut Mark 28:155–181, 2008     

The Intersection of Law and Ethics – at 600 Grant Street, Pittsburgh, PA: Is it Ethical to Assert a Legal Technicality to Avoid Liability for a Debt Created by Fraud?

A considerable literature exists regard-ing the moral obligation to keep one's promises. Several authors have focused on the exceptional circumstances which may or should excuse this moral duty. Less frequently discussed is the question of how this general moral obligation and its possible exceptions play out in the context of negotiable written promises to pay money, i.e., so-called "commercial paper."This paper focuses on the application of the legal rules governing commercial paper, and on the ethical implications involved in the application of those rules. More specifically, it asks whether the assertion of the technical doctrine known as "holder in due course," and the denial of that status in some cases, promotes ethical behavior in the marketplace. By examining the circumstances of one case, involving a substantial investment and a large bank, I hope to shed some light on how the legal and ethical rules do in fact "intersect."     

The influence of consumer socialisation in the home on gender differences in financial literacy

The lower level of financial literacy amongst females relative to males has been well documented in the literature. There has however been a less than compelling argument constructed as to why this discrepancy occurs. This article introduces findings showing the influence the home, particularly financial discussions in the home, has on the financial literacy levels of children and young adults. A key finding is that males have their first financial discussion in the home at a younger age than females on average, with this differential statistically significant across students of differing socioeconomic status. For males, the age of the child when they have their first financial discussion in the home influences their financial literacy levels some years later at university, even accounting for other variables such as socioeconomic status. The findings of this article suggest that financial socialisation in the home may be subject to a gender bias, which over time contributes to differential financial literacy knowledge levels between the genders.     

Women on the Board and Managers’ Pay: Evidence from Spain

The current literature shows great interest in the issue of gender diversity on boards of directors. Some studies have hypothesized a direct relationship between diversity and the value of the firm, but not many examine the intermediate mechanisms that may exert an influence on such relationships. We employ two stages of GMM estimation methodology to exhibit evidences of the relationship between gender diversity and compensation of top managers in the Spanish context. Results show that gender diversity positively affects the effectiveness of boards—in terms of composition, structure, size and functioning—influencing a proper design of top managers compensation linked to company performance. Evidences suggest that legislative actions aimed at increasing the presence of women on boards of directors are justified not only for ethical reasons, but also for reasons of economic efficiency.