Why do insiders trade? Evidence based on unique data on Swedish insiders

In this paper, we examine if corporate insiders have other motives for trading besides exploitation of private information. Our results show that insiders’ portfolio re-balancing objectives, tax considerations and behavioral biases play the most important role in their trading decisions. We also find that insiders who have allocated a great (small) proportion of their wealth to insider stock sell more (less) before bad news earnings disclosures. Finally, insider selling is informative for future returns among those insiders who have the greatest proportion of wealth allocated to insider stocks.     

Real Exchange Rates and Fundamentals: Evidence from 15 OECD Countries

In an extended Balassa–Samuelson model, long-run real exchange rates are determined by relative productivity and terms of trade. We present evidence of systematic long-run relationships between these fundamental variables and real exchange rates in a data set covering 15 OECD countries from 1960 to 1996. High relative productivity is associated with real exchange rate appreciations in most cases. There is less support for the hypothesis that the terms of trade affect equilibrium real exchange rates.     

Consumer cooperatives as consumer welfare organizations

In a recent article in JCP (Vol. 7, pp. 323–341), Blomqvist argued that consumer researchers should show more interest in the consumer cooperatives' potentials as consumer welfare organizations. The present article supports this view, though with some modifications. An evaluation of the consumer cooperatives' welfare promoting impact depends heavily upon which paradigm of cooperative theory is used. According to ideal type cooperative theory, consumer cooperatives are the best possible spokesmen for the consumers in the marketplace. The cooperatives of today are, however, more accurately described by real type cooperative theory, and according to this, there are severe restrictions on the consumer cooperatives' possibilities to further consumer interests. Nevertheless, the cooperatives are still more consumer oriented than their competitors. They are still very interesting research objects for consumer welfare studies.

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Verbrauchergenossenschaften als Verbraucherorganisationen

Zusammenfassung Kürzlich betonte Blomqvist in dieser Zeitschrift (Jg. 7, S. 233–341), daß die Verbraucherforschung sich stärker mit den Verbrauchergenossenschaften beschäftigen solle. Der vorliegende Beitrag unterstützt diese Ansicht, wenn auch mit etwas anderen Argumenten.Tatsächlich haben Verbraucherforscher die Verbrauchergenossenschaften weitgehend übersehen. Das mag darin liegen, daß diese Genossenschaften nicht so schwerwiegende und spektakuläre Verbraucherprobleme aufgreifen können, wie es anderen Verbraucherorganisationen möglich ist. Verbrauchergenossenschaften müssen auf Märkten im Wettbewerb bestehen können; diese Tatsache begrenzt die Möglichkeit, für strukturelle gesellschaftliche Veränderungen einzutreten, bei ihnen stärker als bei den Instanzen der Verbraucherpolitik oder der Verbraucherbewegung. Von einem übergeordneten Standpunkt aus können sich deshalb die verschiedenen Formen von Verbraucherorganisationen sehr gut ergänzen.Die Einschätzung der Wirkungsmöglichkeiten von Verbrauchergenossenschaften hängt stark vom theoretischen Vorverständnis ab. Unter der idealtypischen Genossenschaftskonzeption sind sie die besten Vertreter des Verbraucherinteresses auf den Märkten; unter der realtypischen Konzeption erweisen sich die Möglichkeiten der Konsumgenossenschaften, das Verbraucherinteresse zu fördern, jedoch als sehr begrenzt. Dennoch werden die Genossenschaften deshalb bestehen bleiben, weil sie stärker konsumentenorientiert sind als ihre Mit-Wettbewerber.Gegenüber den Idealvorstellungen über Verbrauchergenossenschaften sind die real vorhandenen Genossenschaften degeneriert. Aber diese Entartung wird durch Kräfte von außen erzwungen. Genossenschaften müssen sich an die Gesellschaft anpassen. Ihre Verbraucherorientierung könnte nur wachsen, wenn soziale, genossenschaftliche Wertvorstellungen in der Gesamtgesellschaft einen höheren Stellenwert erhielten. Es scheint jedoch, daß die Entwicklung in den westlichen Industriegesellschaften einen anderen Verlauf nimmt.

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Jerker Nilsson is an Associate Professor at the Marketing Institute, The Copenhagen School of Economics and Business Administration, Rosenørns Allé 31, DK-1970 Copenhagen V, Denmark.     

Underpricing of seasoned issues

In this paper we provide a model of the underwritten offerings of new shares of seasoned securities. Our purpose is to explain why the offering price chosen by the underwriter is lower than the market price of the firm's shares. Our model recognizes the interdependence between the markets surrounding the announcement and sale of the new issue and recognizes as well the effect which asymmetric information regarding investor demands has upon the prices in these markets.     

Tourism in peripheral regions: a Swedish policy perspective

To be successful as a motor in the development of declined regions, tourism must be integrated in a carefully planned regional development policy which has clear objectives. Regional development policy in Sweden is reviewed in the context of the northern peripheral areas of the country. The objectives were first economic and relied on the trickling down effect from the core. With the crisis of the 1970s the focus shifted to ‘quality of life’. Regional policy became more active with tourism as a sort of motor in the development plans. Most of the activities failed due to heavy dependence on investment in large public and private enterprises. The focus has now shifted to a more endogenous mode of development and, as a means to this, the restoration of the ‘brain balance’ through inward migration to the declined peripheral regions. The parameters for a tourism policy which would be a significant factor in creating an attractive region for tourism and for an inward migration which would play its role in a wider development process are set out.     

Capital budgeting and delegation

As part of our ongoing research into capital budgeting processes as responses to decentralized information and incentive problems, we focus in this paper on when a level of a managerial hierarchy will delegate the allocation of capital across projects and time to the level below it. In our model, delegation is a way to save on costly investigation of proposed projects. Therefore, it is more extensive the larger are the costs of such investigations. This delegation takes advantage of the fact that the lower-level manager's preferences are assumed to be similar (though not identical) to those of the higher level.     

The Underinvestment and Overinvestment Hypotheses: an Analysis Using Panel Data

We study the relationship between firm value and investment to test the underinvestment and overinvestment hypotheses. The results obtained, using panel data methodology as the estimation method, indicate that the abovementioned relation is quadratic, which implies that there exists an optimal level of investment. As a consequence, firms that invest less than the optimal level suffer from an underinvestment problem, while those investing more than the optimum suffer from overinvestment. The quadratic relation is maintained when firms are classified depending on their investment opportunities, the optimum being in accordance with the quality of investment opportunities.     

Export processing zones as catalysts

A potentially important indirect effect of export processing zones (EPZs) is the catalyst effect. The foreign affiliates attracted to the EPZs could stimulate local firms to begin to export by showing them how to produce, market, sell and distribute manufactured goods on the world market. Our results indicate a significant catalyst effect in Malaysia.     

The measurement of intra-industry trade between unequal partners

Summary This note argues that the inadequacy of the GL index to correctly reflect the level of intra-industry trade in presence of trade imbalances may partly be due to measuring intra-industry trade between countries with large differences in economic size. Several adjustment procedures have been suggested in the literature but it is demonstrated that none of the alternative measures seem capable of eliminating the problem. A new measure of intra-industry trade is proposed in which the bilateral level of intra-industry trade is divided by the total number of products traded between two countries to yield an average level of intra-industry trade per product. This measure may also be applied at industry level, and in contrast to the GL index, it is highly correlated with the actual level of intra-industry trade. In studies of intra-industry trade, one should cautiously interpret the GL index since it may give a false picture of the extent and the volume of intra-industry trade. If the standard GL index is used, it is suggested that also alternative measures of intra-industry trade are employed to complement the GL index in order to correctly observe the true extent of intra-industry trade.