Longevity and the life-cycle of management buy-outs

The longevity debate about buy-outs has hitherto been restricted. By focusing on large highly leveraged transactions, existing research has taken only a partial view of how long buy-outs last and the factors influencing longevity. This paper develops and tests hypotheses concerning the influences on buy-out longevity across the whole spectrum of management buy-out applications. Both quantitative and case study evidence from the U. K. is presented. A heterogeneity view of buy-outs is supported. Tests using quantitative data show that earlier exit is associated with larger buy-outs, and buy-outs arising on privatization from the public sector and from non-U. K. parents. Case study evidence principally supports hypotheses that earlier exit is associated with financing institutions being in a relatively stronger position than management and with more rapidly changing market conditions for the firm.     

CARE/CEASA Roundtable on Managing Uncertainty and Risk

Two distinguished Morgan Stanley “alumni” discuss how their management of risk and uncertainty has not only preserved but increased the profitability of their businesses. In both cases—one involving a commodities trading operation and the other a long‐short hedge fund—the key has been to find cost‐effective ways to “cut off the left tails” of the distribution by avoiding naked long or short positions and creating option‐like payoffs with limited downside. In the case of the hedge fund, the combination of longs and shorts with the use of other risk‐reducing strategies has enabled the fund's managers to produce twice the market's returns with only half the volatility (and only one losing year) during the 18‐year life of the fund. In the case of the commodities trading operation, the strategy is described as combining ownership of physical assets with the use of option pricing models to create what amount to “long gamma positions in the asset” that “produce payoffs regardless of whether the asset goes up or down in value.”     

Employment Protection,Threat and Incentive Effects on Worker Absence

This article provides new evidence on the effect of changes in employment protection on worker absence. We use novel multi‐organization data to examine changes in worker absence as workers move from temporary to permanent employment contracts. We demonstrate a robust positive effect of employment protection on sickness absence. It has also been suggested that the impact of employment protection on absence and effort is due to a fear of dismissal. We also provide evidence that suggests that temporary workers' absence is influenced by incentives to attain jobs with protection that is unrelated to threat of dismissal. This has not been considered in earlier research. This channel of employment protection effects has important policy implications.     

Errata

Previous theoretical work suggests that it is appropriate to adjust the CAPM for information contained in analysts' earnings forecasts. This paper uses non-parametric statistical methods to test the relation between estimation risk and security returns. The evidence supports the theory that neglected firms earn abnormally high risk adjusted returns.     

Where have all the traditional classroom settings gone?—The use of large scale, public sector projects to illustrate a multidisciplinary approach to problem solving

This work describes the evolution and potential of an elective course for students who have already been exposed to the standard techniques of problem solving as presented in traditional courses. Students apply these techniques to large scale problems in directed mullidisciplinary project teams. In doing so, they are provided with a unique learning experience allowing them to serve as a resource to the community. Course projects described here include the promotion of a railing retail district; the formulation, implementation and monitoring of litter reduction strategies; the economic evaluation of using inmate labor to clean public areas; and economic comparisons of recycling strategies for used tires.     

The secularization of science and a new deal for science policy

The secularization of science, by analogy with the separation of Church and state, would divest all science funding from the state, except where it bears directly on matters of public policy. I argue for an intensification of this tendency, which is already occurring across the Euro-American world. I then explore the policy implications in some detail, including historical precedents in New Deal attitudes toward the role of science in public policy. I begin by reviewing the secularization of Christendom, which turns out to be intimately tied with the social ascendency of the natural sciences. I then explore more recent conditions that contribute to the secularization of science itself, during which I claim that the Cold War's scaling up of state support for scientific research should be regarded as a historical aberration that we are currently getting over. However, I still reserve a very strong role for the state in the public distribution of already existing knowledge, the primary vehicle for which will remain the university.     

Options and efficiency: Some experimental evidence

This paper examines the information aggregation role of options when agents possess diverse information about possible asset returns. We construct two identical experimental markets: one with and one without options. We find that options speed the information aggregation process. Asset markets that have parallel option markets aggregate traders' diverse information faster than markets where options trading is not available. Implied ranges were calculated from asset and option prices and compared to the actual ranges. These comparisons suggest that options may provide a means for agents to coordinate beliefs about asset values.     

Net share issues and the cross‐section of equity returns under a dividend imputation tax system

Despite considerable empirical evidence reporting a negative relationship between net share issuance and subsequent returns, it remains unresolved whether this anomaly is explained by risk or investor irrationality. This study examines the net share issuance anomaly using seasoned equity offerings before and after the introduction of an imputation tax system. We report robust evidence of a negative relationship between net share issuance and returns post‐imputation, but no relationship pre‐imputation. Our results provide evidence to support the international pervasiveness of the net share issuance anomaly, but more importantly suggest that this anomaly may be explained by risk.     

Moral Dilemmas of Participation in Dangerous Leisure Activities

Abstract

Participation in risky leisure activities (including so‐called ‘extreme’ sports) has increased in recent years, along with a concomitant growth in the related supporting industries, and in media coverage of events and associated lifestyles. The rise in popularity of dangerous leisure pursuits has led to questions about whether these activities should be regulated, or whether legislation should be enacted to prohibit particular activities. Arguments have centred on harm to individuals, and on the potential costs to others, such as families, rescue workers, and society at large. Very little work has been done on the moral legitimacy of dangerous leisure pursuits, and this paper attempts to address this, using a multidisciplinary approach. The paper evaluates both paternalistic and libertarian approaches, and pursues solutions to the moral problem from both utilitarian (consequence‐based) and deontological (duty‐based) perspectives. It is concluded that mature, rational individuals ought to retain the right to pursue activities that have potential deleterious consequences for themselves. While recognising that individuals ought to concern themselves with the effects of their actions on others, the paper accepts arguments based on autonomy, and defends the right to engage in dangerous leisure activities.