Judicial Response to the 2010 Horizontal Merger Guidelines

Review of Industrial Organization - We study how the courts have responded to the 2010 Horizontal Merger Guidelines issued by the U.S. Department of Justice and the Federal Trade Commission....     

Stock Option Expensing: The Role of Corporate Governance

Analysis of the corporate stock option expensing decision (before the practice became mandatory in 2006) continues to be of interest because it provides insight into the underlying factors affecting not only expense recognition, but the overall corporate decision‐making process. Using a sample of 207 companies that volunteered to expense options and more than 1,000 non‐expensing firms, the authors found that companies that provide more disclosure and appeared to have a stronger alignment of managerial and shareholder interests were also more likely to expense stock options—a finding that the authors view as indirect evidence that voluntary expensing was more likely to occur in companies that practiced effective corporate governance. And consistent with the prediction of efficient market theorists, the study also found no significant market reaction to announcements of these decisions to expense options. The study also found that companies that were the heaviest users of options—notably, smaller, high—growth, and less‐profitable firms—were least likely to expense them. And while this finding adds to the weight of evidence suggesting that companies often make accounting decisions designed to boost reported earnings, the authors also recognize that the possibility that the decision by other companies not to expense may have been a strategy designed primarily to preserve access to capital markets.     

Financial strategy: Planning and managing the corporate leverage position

Among the important elements of a company's strategic plan is its decision about the degree of financial leverage it elects to imbed in its capital structure. A simple operational framework that can assist in framing that decision, which concentrates on the likelihood of being unable to meet fixed financial charges, is presented. The model is tested empirically, and support for its potential usefulness in the financial planning process is found.     

RISK-TAKING BEHAVIOR AND MANAGEMENT OWNERSHIP IN DEPOSITORY INSTITUTIONS

We examine the relation between risk and ownership structure among depository institutions. The empirical results provide evidence that the relation between managerial ownership and depository institution risk is negative and significant, suggesting that as managerial ownership increases the level of risk-taking decreases. This finding, which supports a risk aversion hypothesis, is consistent across several market-based risk measures. Furthermore, we document greater risk and greater risk aversion for savings institutions relative to commercial banks.     

An empirical test of the Brennan-Schwartz bond pricing model in the Australian context

This paper presents an empirical test of some aspects of the Brennan and Schwartz arbitrage bond pricing model. Specifically it evaluates the assumed discrete version of the joint interest process for the short and long rates by estimating it for a series of sample periods under varying market conditions. The implications of the specified form of these two interest rates within the context of hypotheses of interest rate behaviour are also examined. The bond valuation model is tested for bond price index data. The model is found to have a consistent estimation error of 10% and predominantly overestimated the actual price index. The performance of the model is not found to be sensitive to the value of the utility dependent parameter.We thank seminar participants at the University of New South Wales, the Australian National University, and participants at the Inaugural International Conference on Asian-Pacific Financial Markets, November 16–18, 1989, the National University of Singapore for many helpful comments and suggestions. We are responsible for any remaining errors.     

Pollution abatement and employment

Morgenstern et al. (J Environ Econ Manag 43:412–436, 2002. doi: 10.1006/jeem.2001.1191) are well-known for its investigation of the employment effects of environmental regulations. However, the cost function specified in that paper is handicapped by its reliance on survey data of the costs of inputs assigned to pollution abatement. In this paper, we specify an input distance function that models the joint production of good and bad outputs. This allows us to measure the relative importance of factors associated with changes in employment without pollution abatement cost data. We operationalize our model using a sample of 80 coal-fired electric power plants from 1995 to 2005.     

A Note on the Numerical Computation of the Integral of a Pearson Type III Density

Let the distribution function of X, where a?X ? ∞, defined by the Pearson type III density function be designated by _aH(x;p,β).     

The political economy of gambling in a neocolonial economy

Conclusion This study has attempted to show the entrenched character of parasitic capitalism in the form of gambling in the Jamaican economy on a scale that massively but painlessly redistributes income from the working class to the petite bourgeoisie. It speaks to a dimension of class exploitation that is often ignored in the focus on large multinational corporations and has parallels in the parasitic forms of capitalism that exploit the black community in the United States. Parasitic capitalism is seen as promoting a form of false class consciousness that seeks outlets to class frustrations in precapitalist illusions of luck and chance that feed the coffers of the grasping petite bourgeoisie with hard-earned working class wage incomes. The data and findings point clearly to the need to either eliminate parasitic capitalist activities such as gambling or alternatively remove it from the control of the petite bourgeoisie and convert the capital accumulated to community and mass-oriented development and social projects.