SEASONED EQUITY OFFERINGS FOR NEW INVESTMENT AND THE INFORMATION CONTENT OF INSIDER TRADES

Significant negative valuation effects are widely acknowledged for firms announcing seasoned equity offerings. This result is consistent with theoretical models linking new equity issues to increased adverse-selection costs, lower management ownership in the firm, misuse of free cash flow, or expectations for earnings declines. Also increasingly evident, insiders trade around corporate announcements. We test the hypothesis that insider trading and announcements of new equity issues serve as joint signals in the market's evaluation of prospective capital investment projects. Our findings are consistent with the hypothesis that insider trading is related to market reaction to announcements of new equity issues.     

Is the hotel classification system a good indicator of hotel quality?: An application in Spain

This paper analyses whether the hotel classification system is a good indicator of hotel quality, where quality is defined to be satisfying the expectations and needs of the client. We conducted our research in Spain, where a five-category system using stars is employed. To be exact, the hotel sector of one autonomous community (Cantabria, located in northern Spain) was studied, given that it is these autonomous regions that have exclusive authority to regulate and promote tourism. The results of the study confirm that even though significant quality differences are seen between the different categories, the ranking by quality does not correspond to that by categories. This supports the idea that quality is associated with the delivery of a service according to client expectations, more than it is with establishment category.     

Risk compensation in wages – a replication

We use data from Germany, The Netherlands, Portugal and Spain to test for the effect of earnings variation on individual earnings. We replicate estimates for the USA and find that the variance of earnings in an occupation affects individual wages positively while the skewness of earnings has a negative effect. Both results are in conformity with wage compensation for risk averse workers. First version received: March 2001/Final version received: July 2002 We are grateful to two anonymous referees for valuable comments.     

Using matrices of specifications,factors and concepts to assist design-engineering students

In this work a matrix-type tool is used to assist design-engineering students to develop product design projects. The ‘specifications-factors-concepts matrix’ or SFCM is proposed as a specific tool to organize and relate product requirements, design factors and projected solutions. Taking into account the early stages of the design process, two types of projects that are denominated, respectively, with imposed specifications and with derived specifications, are differentiated. In each case, SFCM conveniently integrates the main contents of the project in order to carry out a comprehensive study of the design problem. SFCM was implemented in higher education, particularly in Degree of Engineering of Industrial Design and Product Development. The design of a hydraulic front brake handle for motorcycles (imposed specifications approach) and a waking up enabler for children (derived specifications approach), were proposed. The process of creation as well as the resulting matrix is shown in each case. In addition, the development and results of the experience are exposed. Students assessed by means of a survey how it helped them to develop the main tasks involved in the design projects giving, globally, a positive opinion about its usefulness.     

Dissecting interbank risk using basis swap spreads

This paper analyses interbank risk using the information content of basis swap (BS) spreads, floating-to-floating interest rate swaps whose payments are associated with euro deposit rates for alternative tenors. To identify the impact of shocks affecting interbank risk, we propose an empirical model that decomposes BS quotes into their expected and unexpected components. These unobservable constituents of BS spreads are estimated by solving a signal extraction problem using a particle filter. We find that expected components covariate with aggregate liquidity and risk aversion while systemic risk arises as the main driver behind unexpected fluctuations. Our empirical findings suggest that macroprudential analysis emerges as a key device to ease asset pricing in a new multi-curve scenario.     

Which projects are selected for an innovation subsidy? The Portuguese case

Portuguese Economic Journal - Several empirical studies have analyzed which firm characteristics influence government evaluators in the decision to select specific firms to participate in Research...     

Feasible implementation of taxation methods

This paper studies implementation of taxation methods in one-commodity environments in which the incomes of the agents are unknown to the planner. Feasibility out of equilibrium imposes that the mechanism depend on the environment. We present two mechanisms. The first one, which requires complete information, implements every taxation method in Nash, strong and coalition-proof equilibrium. The second, where informational requirements are relaxed, implements a large class of consistent and monotone methods in subgame perfect equilibrium. Neither mechanism employs the off-equilibrium devices used by the general theory. Under fully private information no method is implementable. Received: 12 March 1997 / Accepted: 21 July 1998     

The effects of macroeconomic stability on foreign trade. An analysis for Spain, 1986–2000

Two main factors underlie the rebirth of interest in the study of the influence of the real exchange rate on trade, the reduction of its volatility and the current trend towards price stability. The objective of this study is to analyse the effects of the process of nominal convergence, required of the European member states for the fulfilment of monetary integration, on foreign trade flows. The case of Spain, which is especially interesting in this context, is studied for the period 1986 to 2000. The results of estimating the aggregate functions of the export and import of goods shows how macroeconomic stability has altered the behaviour of trade with respect to the two basic determinants – income and prices – how it has caused a significant structural change in the real exchange rate and, finally, how it has laid the explanatory bases for transactions in the twenty-first century with the single currency – the euro.     

Causes of world trade growth in agricultural and food products, 1951–2000: a demand function approach

The objective of the present study is to analyse the causes of the growth of international agricultural and food trade in volume terms from 1951 to 2000. The results suggest that income growth has been the principal reason for this expansion, while exchange rate stability and the real price of agricultural products played only a minor role. Multilateral trade liberalization and trade costs, given their long-term stability, are not elements that could have stimulated their growth. Finally, the intensive liberalization of trade which took place in various economic regions, especially in Europe, became a key factor in promoting agricultural trade among the countries participating in regional trade agreements. The study results also indicate that the determinants of trade growth for these goods were different to those for other goods and other periods.     

Decentralized trade, random utility and the evolution of social welfare

We study decentralized trade processes in general exchange economies and house allocation problems with and without money. The processes are affected by persistent random shocks stemming from agents’ maximization of random utility. By imposing structure on the utility noise term—logit distribution—one is able to calculate exactly the stationary distribution of the perturbed Markov process for any level of noise. We show that the stationary distribution places the largest probability on the maximizers of weighted sums of the agents’ (intrinsic) utilities, and this probability tends to 1 as noise vanishes.