An Empirical Analysis of the Effects of Online Trading on Stock Price and Trading Volume Reactions to Earnings Announcements*

This study provides evidence regarding the effects of online trading on stock price and trading volume reactions to quarterly earnings announcements. We test for differences in stock price and volume reactions to quarterly earnings announcements between a period with a significant amount of online trading (1996‐99) and a period without online trading (1992‐95). We conjecture that online trading has increased the proportion of naive investors in the market. We predict that this will result in (1) a decrease in the average precision of investor information prior to earnings announcements leading to higher earnings response coefficients (ERCs), (2) an increase in differential interpretation of earnings leading to higher trading volume reactions that are unrelated to price change, and (3) a decrease in differential prior precision leading to a decrease in the association between trading volume and absolute price change. We find evidence consistent with all three predictions. Our findings are relevant for assessing the validity of concerns about online trading expressed by regulators and the validity of theoretical models of trade with asymmetrically informed investors.     

NEW MICROFOUNDATIONS FOR THE AGGREGATE MATCHING FUNCTION*

Empirical studies of the aggregate labor market matching function have favored a Cobb–Douglas functional form, for which there are no microfoundations in the existing literature. I present a new model for the matching process, based on a “telephone‐line” Poisson queuing process, which, unlike other microeconomic approaches, can be integrated directly into standard theoretical search models. This implies a CES matching function, approximately Cobb–Douglas when search costs are approximately linear. The model allows empirical estimates of matching function parameters to be interpreted in terms of the costs and benefits of search.     

London creditors and the fifteenth‐century depression

Evidence of debts owed to Londoners, and contested before the royal Court of Common Pleas, allows an examination of the role of London creditors in the English depression of the fifteenth century and a reassessment of its causes. In this article, four main issues are examined. What is the nature of the Court of Common Pleas evidence (section I)? What were the three main forms of credit offered by Londoners—unsecured cash loans, sales of goods on credit, and written instruments called bonds (section II)? What is yielded by decadal analysis of Londoners’ extension of credit in the fifteenth century—making direct comparisons with Nightingale's published Statute Merchant and Staple data (section III)? What defines, in modern economic terms, the claim of so‐called ‘monetarist’ historians that credit was actively withdrawn during the depression, and how is this verified by the actions of London creditors (section IV)? It is concluded that the records of the Court of Common Pleas provide the detailed evidence monetarist historians have previously lacked both to prove that Londoners actively withdrew credit during the fifteenth century and to demonstrate that they employed pure equilibrium credit rationing in order to do so.     

The benefits of storage and non‐renewable resource price dynamics

Abstract Both the Theory of Storage and the Hotelling model play a prominent role in the study of non‐renewable resource prices. This paper combines these approaches by modifying the Hotelling model to allow firms to hold inventory in addition to in‐ground reserves, contributing three new results. First, inventory is more likely to be held if future demand and/or the marginal cost of extraction are uncertain. Second, the market price of the commodity is based on the Theory of Storage when inventory is held. Third, the optimal extraction of the resource is based on the Hotelling model.     

How Culture and Economy Meet in South Korea: The Politics of Cultural Economy in Culture‐led Urban Regeneration

This article investigates the ways in which cultural economy is formed through negotiation and interaction between local actors in the case of culture‐led regeneration in Gwangju, South Korea. It looks at the dynamics between the bureaucrats' pursuit of economic growth in the city and the efforts of civil society to maintain a strong political spirit throughout the regeneration process. Through in‐depth interviews with various participants and archival analysis, the politics of cultural economy are examined in relation to the Gwangju Biennale and the City of Culture project. The findings show that in these two cases bureaucrats were the dominant force, a tendency that instrumentalized culture. They also illustrate that this dominance brought about resistance from civil society. However, in the process of both engaging in conflict and working with each other, the different discourses of economic growth and cultural meaning were integrated, and in the process mutual learning and adaptation took place among members of the two groups. Civil society also faced cleavages resulting from different approaches to how to collaborate with the bureaucrats and its ensuing self‐reflection on communicative value enhanced its rehabilitation. The article argues that the politics of cultural economy is dynamic, involving processes of renegotiation, adaptation and self‐realization. It also offers the possibility of a new arena for the public sphere. Civil society plays a critical role in the integration of culture and economy.     

ENGAGING THE PRIVATE SECTOR TO IMPROVE HEALTH IN AFRICA

In much of sub‐Saharan Africa, governments have demonstrably failed to deliver health services to the poor. In some places, governments and donor agencies have contracted with private companies and non‐profits to deliver health services, with considerable success. Ideologically driven Western NGOs oppose further moves towards private provision – seemingly preferring the poor to suffer substandard and erratic government provision than to obtain their healthcare through non‐state means.