A change of focus: Stock market reclassification in the UK

Abstract

This paper examines the impact of a change of focus by a firm, as signified by a firm's stock market reclassification. It distinguishes between a firm's sector reclassification motivated by information specific to that firm and one that results from the redefinition and reorganisation of a sector. The direction of the price effects following reclassification depends significantly upon this distinction. Furthermore, a stock's return comovement with the FTSE All-Share Index is affected by its reclassification into a new sector, consistent with the allocation of stocks into categories by investors. Reclassification can induce common factors in the returns to stocks in an index without there being any change in these stocks’ fundamental cash flows.     

Measurement of risk perceptions in social research: a comparative analysis of ordinary least squares,ordinal and multinomial logistic regression models

Drawing on data gathered in the 2006 Monitoring the Future study of American youth (n = 2489), this investigation offers a comparative analysis of ordinary least squares (OLS), ordinal and multinomial logistic regression models in examining the effects of multiple factors on perceptions of alcohol risk. The article addresses limitations of OLS models in risk analyses and demonstrates how scholars can avoid making statistical errors when positioning vague quantifiers as ordinal dependent measures. Substantively, the article finds differential effects for (1) sex, (2) perceived attitudes of peers toward alcohol consumption, (3) frequency of intoxication, (4) teacher efforts toward alcohol education, (5) frequency of communicating with friends, and (6) newspaper exposure, as determinants of alcohol risk perceptions. Through statistical results and visual displays, the article reveals how inferences made about these effects stand to vary depending on the regression method chosen.     

Optimal versus suboptimal choices of accounting expertise on audit committees and earnings quality

By employing a Heckman two-stage selection model, we identify whether employing a financial expert with or without accounting expertise on the audit committee is optimal and how earnings quality varies across these optimal and suboptimal choices. Using four earnings quality measures (informativeness, timely loss recognition, earnings persistence, and accruals quality), we find no differences in earnings quality between firms optimally choosing an expert with or without accounting expertise, consistent with Demsetz and Lehn (J Polit Econ 93:1155–1177, 1985) and others who argue that when firms optimize their choice (i.e., accounting expertise), there should be no difference across the characteristic (i.e., earnings quality) being examined. We do find, however, earnings quality is significantly higher for firms that optimally choose an accounting expert relative to firms that choose (with/without accounting expertise) suboptimally. Finally, firms suboptimally choosing an accounting expert exhibit no improvement, or even lower earnings quality, than firms that optimally choose no accounting expert. Our results provide important evidence of the impact accounting expertise has on earnings quality when considering the firm’s choice.     

Multi‐unit pricing

A price takes the form of a cost for either one unit (single‐unit pricing) or multiple units (multi‐unit pricing). I consider a monopolist selling units of a good to a population of homogeneous consumers to explain why one is preferred to the other. A mental cost arises if the division problem a multi‐unit price causes is done. If marginal utility remains high multiple units are desired. Multi‐unit pricing is preferred since it creates a cost if fewer units are purchased. If utility exhibits strong diminishing returns single‐unit pricing is used to avoid the calculation. Copyright © 2008 John Wiley & Sons, Ltd.     

Addressing gender in agricultural research for development in the face of a changing climate: where are we and where should we be going?

Agricultural development efforts that do not address persistent gender gaps miss opportunities for greater impact. This synthesis reflects on key findings from integrated quantitative and qualitative analyses at the nexus of gender, agricultural development, and climate change. Linked farm household-, intrahousehold-, community-, and institutional-level data highlight significant and nuanced gender differences in adaptive capacity of individuals and communities to respond to climate change. The gender gap is also substantial in exposure to climate change and its impacts, and uptake of new practices that lower vulnerability. Women in agriculture will remain largely neglected by information and service providers unless their differing needs, access to, and control over resources are considered at policy and project design stage. Yet clear guidelines for addressing the needs of both men and women in different environments and agricultural systems are still lacking. Participatory ‘action research’ approaches with a focus on co-learning, and using innovative cell phone or social media-based approaches offer exciting new opportunities. Agricultural development decision-makers and project designers need to ‘design with gender in mind’. Equipping them with tools and knowledge of innovative gender-transformative practices and intervention options and creating accountability for serving women and men will be key.     

SAC 4: A Source Of Accounting Change

Despite its long gestation, the latest release in the Australian Accounting Research Foundation's conceptual framework, Statement of Accounting Concepts 4 Definition and Recognition of the Elements of Financial Statements (SAC 4), is poorly understood by many accountants. The statement specifies definitions for the elements which form the basis of the information in financial reports and sets out the criteria to be used in deciding when these elements should be recognised (reported) in the reports. Statements of accounting concepts do not attract the same direct legal force as AASB accounting standards. Nevertheless, this statement promises significant reforms to financial reporting. Because of its potential to create far-reaching changes, it is essential that accounting professionals are familiar with its contents and application. This paper describes the structure of SAC 4, comments upon some of its important components and illustrates its operation and key features in the context of one element, “assets”.     

The Short-Term Inflation-Hedging Characteristics of U.K. Real Estate

This study investigates the short-term inflation-hedging characteristics of U.K. real estate compared to other U.K. investments. It considers not only total returns but also changes in income and changes in capital values. The analyses are undertaken using annual and quarterly data. Stocks, bonds, appraisal-based real estate (including the three property types, separately), and real estate stocks are considered. Real estate series, constructed from the original appraisal series to take account of autocorrelation, also are used. The methodology is based on that devised by Fama and Schwert (1977) and tests are undertaken for stationarity and structural breaks. Hypotheses are established about the coefficients on expected and unexpected inflation in the model, and these are tested. It is concluded that real estate has poorer short-term hedging characteristics for total return, change in capital value, and change in income than stocks but better characteristics than bonds. However, there is evidence to suggest that the relationships change under different economic environments.     

INTERNATIONAL COMPARISONS OF AUSTRALIAN GDP IN THE 19TH CENTURY

This paper summarises the results of a new comparison of the level of Australian and U.K. real product in the 1890s, obtained by the direct deflation of money values of GDP by relative prices. The object of the study was to provide a check on the existing comparisons, obtained by extrapolation of time series of real GDP, as shown, for example, in Maddison (1982). Existing estimates imply that in the 1890s Australian GDP per capita was about 50 percent higher in the U.K. and U.S.A. and more than twice that for the average of 12 other western countries. The present study suggests these results probably overstate Australia's real GDP, and that Australian real GDP per capita was 36 percent higher than the U.K. in 1891 and 3 percent higher in 1900. Personal consumption per capita was 15 percent higher in Australia than in the U.K. in 1891, but about the same level in 1900.
Although this study compares prices and GDP in the colony of New South Wales with those in the U.K., the colony may be taken as representative of Australia as a whole.¹     

Reliability and the design of ethical organizations: A rational systems approach

This paper argues that the concept of reliability provides a useful framework for analyzing defects in organizational design and for prescribing changes that will facilitate ethical decision making. Reliability becomes an ethical concern when the individual or organizational interest diverges from the collective interest. Redundancy and requisite variety provide two design tools which can enable organizations to act reliably in the collective interest. The paper then discusses potential disadvantages to the use of a reliability framework as well as possible problems of implementation. It concludes by examining avenues for future research.Bryan W. Husted is an assistant professor in the Management Department of the Instituto Tecnologico y de Estudios Superiores de Monterrey in Mexico.