Day-of-the-Week Effects in the Long-Run Performance of Initial Public Offerings

This study examines the influence of day-of-the-week patterns in security returns on long-run IPO underperformance. Comparisons are made between the IPOs in Ritter's [20] database, and a constructed set of matching firms based on SIC code and size, using NYSE, AMEX, and NASDAQ securities. It is found that virtually all of the IPO underperformance occurs on Mondays and Tuesdays and that the degree of underperformance significantly differs from other days. Thus, a common explanation may exist for the general day-of-the-week pattern in security returns and IPO long-run underperformance.     

From weed to wealth? Prospects for medic pastures in the Mediterranean farming system of north-west Syria

Medic (Medicago spp.) pastures are widely grown in rotation with dryland cereal crops in Mediterranean climate zones of Australia. Attempts since the 1960's to introduce this system to Mediterranean west Asia and north Africa (the native region of medic) have not lead to significant adoption; farmers in the region recognize medic, but as a weed and natural pasture plant. This first detailed economic evaluation of the rotational medic system was conducted using a whole-farm linear programming model based on the agricultural system of north-west Syria. The model represents in detail impacts of rotation on yields, labor requirements of alternative farm activities, availability of family and hired labor, subsistence income requirements, livestock feed sources and uses at different times and a choice of sheep stocking rates. Biological data for the analysis are based on a large six-year cropping and grazing experiment near Aleppo on terra-rossa soil with rainfall mainly in winter and averaging about 330 mm annually. The trial compared a dryland medic-wheat system and traditional two-year rotations of wheat with: fallow, watermelon, lentil and vetch. Results indicate that, given current prices and yields from the trial, medic is less profitable than traditional rotations. The model was used to investigate situations in which medic would be economically preferred. Selection of a medic rotation by the model was found to be particularly sensitive to the area of the farm and the price of labor. On small farms, labor availability per hectare is high, favouring the production of labor intensive crops such as lentil and watermelon. On larger farms, labor costs of these enterprises are substantial, increasing the relative profitability of medic, especially if labor prices increase. Interestingly, the relative desirability of medic is more sensitive to its impact on subsequent wheat crops than to the level of pasture production. We also found that modest increases in the prices of sheep products (especially milk) have a major impact on the economic performance of medic. These insights will allow improved focusing and targeting of future research and extension activities.     

Believing in employment discrimination: The case of Forrest Mims,Scientific American,and title VII protection

This article reviews the law regarding Title VII employment discrimination protection from religious discrimination. The issues surrounding the principal legal protection in this regard are explored in the context of a recent controversial case in which an author, Forrest Mims, was not hired as a regular contributor forScientific American magazine, ostensibly because of his belief in the theory of creation over the theory of evolution. The definition of what constitutes a protected religious belief or practice is seen to have expanded over time. However, a belief in creationism is not necessarily seen as being tantamount to a religious belief under present legal interpretation of Title VII. The implications of this finding for future needed Title VII revision are discussed.     

Alternative hypotheses and the volume of trade: the gravity equation and the extent of specialization

Abstract.  We examine why the gravity equation works and the implications for its use. First, we demonstrate that the gravity equation as a statistical relationship can be generated from a model with incomplete specialization and trade costs. Second, we analyse the predominance of zero bilateral trade values as a 'puzzle' broadly inconsistent with the complete specialization models typically used to derive the gravity equation, but consistent with the alternative hypothesis of incomplete specialization. Third, we demonstrate that the explanation for why the gravity equation works has considerable relevance for how the gravity equation is interpreted and used and how we view bilateral trade.     

Through Trial and Error to Collusion*

In this article we study a very simple trial and error learning process in the context of a Cournot oligopoly. Without any knowledge of the payoff functions players increase, respectively decrease, their quantity as long as this leads to higher profits. We show that despite the absence of any coordination or punishing device this process converges to the joint‐profit‐maximizing outcome.     

The FRC AND Accounting Standard‐Setting: Should I Still Call Australia Home?

This paper analyses the decision of the Financial Reporting Council (FRC) to replace Australian accounting standards with international accounting standards on 1 January, 2005. Two main topics are considered: the appropriateness of the FRC's directive, and the case against the proposed adoption date. We argue that the FRC has not conducted sufficient consultation with affected parties and that the hasty implementation will impose costs that could have been avoided with the exercise of more caution.     

Further Evidence on PPP Adjustment Speeds: the Case of Effective Real Exchange Rates and the EMS*

Two different approaches intend to resolve the ‘puzzling’ slow convergence to purchasing power parity (PPP) reported in the literature [see Rogoff (1996) , Journal of Economic Literature, Vol. 34.] On the one hand, there are models that consider a non‐linear adjustment of real exchange rate to PPP induced by transaction costs. Such costs imply the presence of a certain transaction band where adjustment is too costly to be undertaken. On the other hand, there are models that relax the ‘classical’ PPP assumption of constant equilibrium real exchange rates. A prominent theory put together by Balassa (1964, Journal of Political Economy, Vol. 72) and Samuelson (1964 Review of Economics and Statistics, Vol. 46) , the BS effect, suggests that a non‐constant real exchange rate equilibrium is induced by different productivity growth rates between countries. This paper reconciles those two approaches by considering an exponential smooth transition‐in‐deviation non‐linear adjustment mechanism towards non‐constant equilibrium real exchange rates within the EMS (European Monetary System) and effective rates. The equilibrium is proxied, in a theoretically appealing manner, using deterministic trends and the relative price of non‐tradables to proxy for BS effects. The empirical results provide further support for the hypothesis that real exchange rates are well described by symmetric, nonlinear processes. Furthermore, the half‐life of shocks in such models is found to be dramatically shorter than that obtained in linear models.