Banks and bubbles: How good are bankers at spotting winners?

This paper examines the bank lending relations of a large sample of technology and nontechnology firms that went public during the 1996–2000 period. We use a unique hand-collected data set to examine the characteristics of firms that establish pre- Initial Public Offering (IPO) bank lending relations and whether post-IPO performance is related to the existence and size of pre-IPO banking relations. We find that the majority of IPO firms have banking relations before they go public. Firms with banking relations are older, more profitable or, in the case of tech firms, have lower losses, and are more likely to have funding from venture capitalists than firms without banking relations. We also find that banks lent aggressively to technology firms in the sense that current earnings and cash flows were significantly less important in determining banking relations for technology firms than for nontechnology firms. Consistent with the importance of so-called soft information in lending decisions, we find that, controlling for ex ante observable risk measures, there is a positive and significant relation between improvements in post-IPO operating performance and the existence and size of pre-IPO banking relations. Overall, our results indicate that firms with the best current and future prospects establish banking relations. Our findings provide an explanation as to why investors could interpret lending relations as a positive signal of firm quality.     

Estimating demand from eBay prices

This paper presents results for identification and estimation of the value distribution from eBay auction prices. The paper presents results for eBay type auctions with independent private values and unobserved participation. It is first shown that the distribution of values is identified from observing the distribution of prices and knowing the distribution of potential bidders. The main identification result presents conditions for which the distribution of values and the distribution of potential bidders are simultaneously identified. Not surprisingly, the intuition is similar to the standard results for identifying demand from observed equilibrium prices. The estimation method suggested by the identification results is used to estimate the value distribution for the “C5” Chevrolet Corvette sold on eBay. The results suggest that a simple OLS model on prices will over estimate the mean value of the item. The estimation results are then used to calculate the optimal reserve price for these cars. The estimated optimal reserves are compared to the actual reserves. Actual hidden reserves are set much higher than actual non-hidden reserves. The evidence suggests sellers set Buy-It-Nows and hidden reserves optimally to account for re-listing opportunities.     

Customer segments as moving targets: Integrating customer value dynamism into segment instability logic

Segmentation is a mature concept in marketing strategy that continues to receive significant attention from managers and scholars alike. The key goal in segmentation is identifying and reaching profitable segments with products and services that meet the common needs of these customers. However, a fundamental issue needing rigorous attention is that customers' needs are dynamic and can induce segment instability. The purpose of this paper is to draw focus to segment instability in business-to-business markets by conceptually exploring its theoretical underpinnings and integrating related theory on customer value change to propose an agenda for future research.     

International communications : Issues in the USA

The author reviews aspects of the current regulatory environment for international communications in the USA. He then contrasts that environment with a possible future. The contrast throws into relief critical shortcomings in the current situation. He concludes by suggesting legislative goals and proposing a framework for regulation.     

Banks as Interest Rate Managers

Most banks have a two-tier pricing system, offering accounts at market-related interest rates and at posted rates that are changed at discrete intervals. In this paper, I develop a model of bank interest rate management. I consider a bank with two classes of loans and deposits in its balance sheet: One pays a market rate of interest, the other a posted rate. Market rates are exogenous and evolve stochastically over time. Posted rates are altered intermittently by the bank itself. The bank faces imperfect arbitrage by its customers between posted and market rate funds. Under simple assumptions about the stochastic process governing the market rate, I derive optimal decision rules for the adjustment of the posted rate and determine conditions under which these rules are asymmetric. A key prediction of the model is a negative correlation between market loan rates and the gap; this is more consistent with the behavior of British banks than is the contrary prediction of more standard models.     

Persistent and Consistent Poverty in the 1994 and 1995 Waves of the European Community Household Panel Survey

This paper focuses on the mismatch between income and deprivation measures of poverty. Using the first two waves of the European Community Household Panel Survey, a measure of relative deprivation is constructed and the overlap between the relative income poor and relatively deprived is examined. There is very limited overlap with the lowest relative income threshold. The overlap increases as the income threshold is raised, but it remains true that less than half those below the 60 percent relative income line are among the most deprived. Relative deprivation is shown to be related to the persistence of income poverty, but also to a range of other resource and need factors. Income and deprivation measures each contain information that can profitably be employed to enhance our understanding of poverty and a range of other social phenomena. This is illustrated by the manner in which both income poverty and relative deprivation are associated with self-reported difficulty making ends meet.     

The hidden cost of wildfires: Economic valuation of health effects of wildfire smoke exposure in Southern California

There is a growing concern that human health impacts from exposure to wildfire smoke are ignored in estimates of monetized damages from wildfires. Current research highlights the need for better data collection and analysis of these impacts. Using unique primary data, this paper quantifies the economic cost of health effects from the largest wildfire in Los Angeles County's modern history. A cost of illness estimate is $9.50 per exposed person per day. However, theory and empirical research consistently find that this measure largely underestimates the true economic cost of health effects from exposure to a pollutant in that it ignores the cost of defensive actions taken as well as disutility. For the first time, the defensive behavior method is applied to calculate the willingness to pay for a reduction in one wildfire smoke induced symptom day, which is estimated to be $84.42 per exposed person per day.     

Auditor Concentration: A Replication and Extension for the UK Audit Market 1991–1995

This paper examines the issue of auditor concentration in the UK during the period from 1991 to 1995. It shows that in 1995 the Big Six held 75% of the total number of audits and collectively earned 92% of the total audit fees. There was only a small increase in auditor concentration during the five year period, resulting from companies switching from small audit firms to Big Six and newly listed companies choosing a Big Six firm. The paper also examines auditor concentration within industries. Finally, the study assesses the measurement methods most commonly used in auditor concentration studies.     

Building organizational integrity

Ethical lapses by employees can put organizations at substantial risk. Although improved compliance procedures can help limit this risk, successful efforts must extend beyond compliance to build a culture of organizational integrity. Recent changes in regulatory requirements and more stringent sentencing guidelines demand an integrated approach to ethical awareness, one that encompasses the four organizational practices of controls, clearly defined principles and purpose, core values, and culture. Inevitably, the most difficult of these is building a culture of high ethical standards that are reflected in day-to-day practice. To overcome the barriers to building organizational integrity, leaders must question key organizational practices while constructing a culture based on ethical behaviors.