Lexical interference in semantic processing of simple words: Implications for brand names

This study provides evidence for a Stroop‐like interference effect in word recognition. Based on phonologic and semantic properties of simple words, participants who performed a same/different wordrecognition task exhibited a significant response latency increase when word pairs (e.g., poll–rod) featured a comparison word (poll) that was a homonym of a synonym (pole) of the target word (rod). These results support a parallel‐processing framework of lexical decision making, in which activation of the pathways to word recognition may occur at different levels automatically and in parallel. A subset of simple words that are also brand names was examined and exhibited this same interference. Implications for word‐recognition theory and practical implications for strategic marketing are discussed. © 2005 Wiley Periodicals, Inc.     

Beyond 'employability'

Concentrating on British welfare-to-work policy, the paper presentsa critique of 'employability-based' approaches to supply-sideintervention in the labour market. It is argued that the likelymacroeconomic impacts of the Blair Government's 'New Deal' programmeare being exaggerated, and that a more realistic appreciationof the limits and possibilities of such supply-side interventionsis required. Some suggestions for a reformed approach to welfare-to-workpolicy - based on a client-centred and developmental ethos,an enlarged concept of 'employment' (embracing the social economy)and active social redistribution - are proposed.     

Inter-temporal variation in the illiquidity premium

We find evidence of a systematic link between monetary conditions and inter-temporal variation in the price of liquidity. Specifically, following an expansive monetary policy shift, funding conditions improve and market-wide liquidity increases, which is especially beneficial for illiquid securities. The improved liquidity and funding conditions reduce the returns required for holding illiquid securities. Consequently, illiquid stocks experience relatively large price increases when monetary conditions become expansive, and thus, the measured return spread between illiquid and liquid stocks expands substantially. Overall, our evidence supports the claim that the price of asset liquidity is dependent on monetary conditions.     

Systemic Bank Risk in Brazil: A Comprehensive Simulation of Correlated Market, Credit, Sovereign and Inter-Bank Risks

In this study we present a comprehensive forward‐looking portfolio simulation methodology for assessing the correlated impacts of market risk, private sector and Sovereign credit risk, and inter‐bank default risk. In order to produce better integrated risk assessment for banks and systemic risk assessments for financial systems, we argue that reasonably detailed modeling of bank asset and liability structures, loan portfolio credit quality, and loan concentrations by sector, region and type, as well as a number of financial and economic environment risk drivers, is required. Sovereign and inter‐bank default risks are increasingly important in the current economic environment and their inclusion is an important model extension. This extended model is demonstrated through an application to both individual Brazilian banks (i.e., 28 of the largest banks) and groups of banks (i.e., the Brazilian banking system) as of December 2004. When omitting Sovereign risk, our analysis indicates that none of the banks face significant default risk over a 1‐year horizon. This low default risk stems primarily from the large amount of government securities held by Brazilian banks, but also reflects the banks' adequate capitalizations and extraordinarily high interest rate spreads. We note that none of the banks which we modeled failed during the very stressful 2007‐2008 period, consistent with our results. Our results also show that a commonly used approach of aggregating all banks into one single bank, for purposes of undertaking a systemic banking system risk assessment, results in a misestimate of both the probability and the cost of systemic banking system failures. Once Sovereign risk is considered and losses in the market value of government securities reach 10% (or higher), we find that several banks could fail during the same time period. These results demonstrate the well known risk of concentrated lending to a borrower, or type of borrower, which has a non‐zero probability of default (e.g., the Government of Brazil). Our analysis also indicates that, in the event of a Sovereign default, the Government of Brazil would face constrained debt management alternatives. To the best of our knowledge no one else has put forward a systematic methodology for assessing bank asset, liability, loan portfolio structure and correlated market and credit (private sector, Sovereign, and inter‐bank) default risk for banks and banking systems. We conclude that such forward‐looking risk assessment methodologies for assessing multiple correlated risks, combined with the targeted collection of specific types of data on bank portfolios, have the potential to better quantify overall bank and banking system risk levels, which can assist bank management, bank regulators, Sovereigns, rating agencies, and investors to make better informed and proactive risk management and investment decisions.     

Cointegration Tests of the Profit-maximising Equilibrium in Greek Manufacturing: 1958–91

This paper applies the recently developed cointegration techniques to test for a long-run equilibrium among real wages and the average productivity of labour as implied by profit maximisation in the Greek manufacturing sector. We find evidence for a profit-maximising equilibrium and for adjustment towards this long-run equilibrium through nominal wages and labour productivity. We have also provided an estimate of the elasticity of substitution of 0.23 which is consistent with that of other studies using alternative approaches.     

US Managers' Use of 'Pro Forma' Adjustments to Meet Strategic Earnings Targets

Abstract:  The practice of reporting manager-adjusted 'pro forma' earnings numbers in quarterly earnings press releases has attracted considerable attention in recent years in the United States. Prior research suggests that while some managers report these adjusted numbers to better reflect core earnings, others may use these earnings adjustments to meet strategic earnings targets on a pro forma basis when they fall short based on GAAP reporting standards. Assuming the latter motivation could potentially mislead investors, the difficulty lies in distinguishing the 'good guys' from the 'bad guys.' Using hand-collected pro forma earnings data, we investigate the extent to which different types of earnings adjustments affect the spread between pro forma earnings and GAAP earnings from continuing operations. Moreover, we investigate which types of adjustments managers use to meet strategic earnings targets. In addition to the exclusion of one-time items like restructuring charges, the results indicate that managers often exclude recurring expenses such as depreciation, research and development, and stock-based compensation to meet these strategic targets. The exclusion of recurring items is especially indicative of aggressive pro forma reporting. Finally, we find that firms that report adjusted earnings numbers only sporadically are more likely than firms that adjust earnings figures on a regular basis to use pro forma reporting to achieve strategic earnings targets by excluding recurring items.     

A simple agent model of an epidemic

This paper presents an agent model that simulates the spread of an infection in a population. The epidemic depicted could be any attribute that is passed from a one person to others in society, for example, a disease, an idea or belief, a fad, a market or a behavioral pattern. The model was constructed to study the sensitivity of factors such as virility of the infectious agent, the “reach” of the vector and the density of the population in which the epidemic takes place. A further goal was to begin the development of a general-purpose forecasting model based on the use of agents. The model and its results are presented in this paper.     

Dynamic analysis of air travel demand in competitive island markets

This paper describes a dynamic demand model, referred to as dynamic abstract mode model, for estimating both the short- and long-term responses of air passengers to changes in relative air-sea travel cost components in competitive markets. The implementation of the model in the competitive market of Aegean islands in Greece demonstrates the importance of considering the past volumes of air passengers and relative travel cost components to explain current air travel demand.     

Producing state of the future indexes using the international futures model

This paper reports on the introduction of the State of the Future Index (SOFI) into the University of Denver's International Futures (IFs) modeling system, a synthesis that will permit the calculation and comparison of the SOFI for all nations covered in the model. The SOFI is an index designed to show whether the future outlook is improving or not; it is also useful in policy analysis since it can be used to demonstrate whether contemplated policies appear to change the future, overall, for the better. It is one of the few indexes that are forecasted.The capability to calculate SOFI has been added to the IFs model; this addition now permits the model to calculate SOFI for all of the countries in the model. With this capability national SOFIs can be computed by anyone and for any country, set of countries, region, or globally. The model, its database, and now the SOFI calculation are available online at no cost to the users. This opens the opportunity to produce an annual or biennial publication that tracks and ranks the State of the Future Index for countries, regions, and the world as a whole.