Do analysts add value when they most can? Evidence from corporate spin‐offs

This article investigates how securities analysts help investors understand the value of diversification. By studying the research that analysts produce about companies that have announced corporate spin‐offs, we gain unique insights into how analysts portray diversified firms to the investment community. We find that while analysts' research about these companies is associated with improved forecast accuracy, the value of their research about the spun‐off subsidiaries is more limited. For both diversified firms and their spun‐off subsidiaries, analysts' research is more valuable when information asymmetry between the management of these entities and investors is higher. These findings contribute to the corporate strategy literature by shedding light on the roots of the diversification discount and by showing how analysts' research enables investors to overcome asymmetric information. Copyright © 2013 John Wiley & Sons, Ltd.     

Assessing Systemic Importance With a Fuzzy Logic Inference System

Three metrics are designed to assess Colombian financial institutions' size, connectedness and non-substitutability as the main drivers of systemic importance: (i) centrality as net borrower in the money market network; (ii) centrality as payments originator in the large-value payment system network; and (iii) asset value of core financial services. An aggregated systemic importance index is calculated based on expert knowledge by using a fuzzy logic inference system. We use principal component analysis to calculate a benchmark index for comparison purposes. Overall similarities between both indexes put forward that expert knowledge aggregation is consistent with that based on a purely quantitative standard approach. Specific non-negligible differences concur with the nonlinear features of an approach whose intention is to replicate human reasoning. Both indexes are complementary and provide a comprehensive relative assessment of each financial institution's systemic importance in the Colombian case, in which the choice of metrics pursues the macroprudential perspective of financial stability. Copyright © 2015 John Wiley & Sons, Ltd.     

Information on sellers and buyers characteristics: added value to explain price formation at primary fish markets in managed French scallop fisheries

The aim of this article is to explore, through a hedonic approach, the factors that might explain the price variability for the French-managed fishery of scallop at primary fish markets. In addition to factors classically identified in the current literature like intrinsic product characteristics or markets situation, the characteristics of operators are tested. The relationships of loyalty between sellers and buyers, and market assiduity are notably considered.     

Cost-effectiveness analysis of exenatide once-weekly versus dulaglutide,liraglutide, and lixisenatide for the treatment of type 2 diabetes mellitus: an analysis from the UK NHS perspective

Objective: To assess the cost-effectiveness of exenatide 2?mg once-weekly (EQW) compared to dulaglutide 1.5?mg QW, liraglutide 1.2?mg and 1.8?mg once-daily (QD), and lixisenatide 20?μg QD for the treatment of adult patients with type 2 diabetes mellitus (T2DM) not adequately controlled on metformin.

Methods: The Cardiff Diabetes Model was applied to evaluate cost-effectiveness, with treatment effects sourced from a network meta-analysis. Quality-adjusted life years (QALYs) were calculated with health-state utilities applied to T2DM-related complications, weight changes, hypoglycemia, and nausea. Costs (GBP £) included drug treatment, T2DM-related complications, severe hypoglycemia, nausea, and treatment discontinuation due to adverse events. A 40-year time horizon was used.

Results: In all base-case comparisons, EQW was associated with a QALY gain per patient; 0.046 vs dulaglutide 1.5?mg; 0.102 vs liraglutide 1.2?mg; 0.043 vs liraglutide 1.8?mg; and 0.074 vs lixisenatide 20?μg. Cost per patient was lower for EQW than for liraglutide 1.8?mg (?£2,085); therefore, EQW dominated liraglutide 1.8?mg. The cost difference per patient between EQW and dulaglutide 1.5?mg, EQW and liraglutide 1.2?mg, and EQW and lixisenatide 20?μg was £27, £103, and £738, respectively. Cost per QALY gained with EQW vs dulaglutide 1.5?mg, EQW vs liraglutide 1.2?mg, and EQW vs lixisenatide 20?μg was £596, £1,004, and £10,002, respectively. In the probabilistic sensitivity analysis, the probability that EQW is cost-effective ranged from 76–99%.

Conclusion: Results suggest that exenatide 2?mg once-weekly is cost-effective over a lifetime horizon compared to dulaglutide 1.5?mg QW, liraglutide 1.2?mg QD, liraglutide 1.8?mg QD, and lixisenatide 20?μg QD for the treatment of T2DM in adults not adequately controlled on metformin alone.     

Merger policy in innovative industries

We analyze optimal merger policy in R&D-intensive industries with product innovation aiming to improve the quality of products. Our results suggest that a permissive merger policy is rarely optimal in high-tech industries when the antitrust authority considers a welfare standard that balances the impact of mergers on consumers’ surplus and firms’ profits. In particular, relative to a benchmark where the effects from R&D are absent, we show that the optimal merger policy should not be substantially more permissive in the presence of those effects from R&D.     

Community-Based Tradable Permits for Localized Pollution

This paper considers the assignment of tradable permits—representing property rights of an environmental good—to community members who are harmed by pollution generated by firms. These community members can in turn sell permits to polluters according to their personal preferences. For a special case with a sole household, market transactions between the household and polluters achieve an efficient pollution level. However, for a group of households, the decentralized market solution fails to yield social efficiency because of competitive consumption of the environmental goods. We design a revenue-sharing mechanism akin to unitization, under which market transactions also achieve efficient resource allocation. Importantly, in some cases, efficiency can be achieved even when regulators are ignorant of the private valuation of the environmental good.     

On the test score gap between Roma and non‐Roma students in Hungary and its potential causes

Using unique data from Hungary, the gap in reading and mathematics test scores between Roma and non‐Roma 8th grade students is assessed and a substantial gap between them revealed. Standardized test scores as well as the fraction of students with competences considered inadequate are examined. Regardless of measurement and subject area, the bulk of the gap is explained by social differences in income, wealth and parental education. Using reduced‐form regressions, two major mediating mechanisms are identified: first, on average the home environment of Roma children is less favourable for cognitive development; second, the educational environment of the average Roma student is different from the average non‐Roma student. Comparing students with similar home environments from the same school and class, the ethnic gap in test scores is found to be insignificant. Ethnic differences in the home environment are explained by social disparity, and ethnicity seems to play no additional role in that regard. The unequal distribution of Roma students in schools and classes is found to be explained predominantly by social difference, too, with a significant residual portion, indicating the effect of ethnic segregation.     

BidPacket: trading bandwidth in public spaces

Smart devices such as smartphones and tablets are used extensively in public spaces for the transmission and reception of content in the form of text, photos and streaming videos. Since the bandwidth provided for wireless access is limited in public areas, it becomes an issue for users to gain access to the bandwidth they need at the right times. While an omniscient controller could assign bandwidth to each device on the basis of their needs and overall availability, imperfect information about the instantaneous state of the wifi access patterns and needs of users make for a very inefficient allocation of such bandwidth. This paper provides a solution for bandwidth allocation by creating a market among users of smart devices so that they can bid for extra bandwidth when they need it and sell it when they don’t. They do so by using a virtual currency that is conserved so that each device owner maximizes his own utility. This utility function is composed of both the benefit accrued from accessing bandwidth and the loss of the currency incurred in bidding for such bandwidth. Extensive simulations show that this market-based method outperforms an omniscient model when demand is uncertain, while minimizing bandwidth consumption.