Private saving in India and Malaysia compared: the roles of financial liberalization and expected pension benefits

In this article, we provide a comparative account of the evolution of private saving in India and Malaysia, and analyze how policy changes in the financial sector and pension system help explain differences in their saving performance. Using the Autoregressive Distributed Lag (ARDL) bounds estimation procedure, we find a fairly robust long-run relationship between private saving and its determinants in both countries. Consistent with the predictions made in the life cycle model, our results indicate that higher income growth stimulates private saving and an increase in age dependency retards private saving. The results provide some support for the hypothesis that financial liberalization results in lower private saving in both countries. The evidence also indicates that expected pension benefits tend to stimulate private saving in India, but that the reverse is found in Malaysia.     

Value Orientations, Income and Displacement Effects, and Voluntary Contributions

Identifying the value orientations of subjects participating in market or non-market decisions by having them participate in a ring game may be helpful in understanding the behaviour of these subjects. This experiment presents the results of changes in the centre and the radius of a value orientations ring in an attempt to discover if the measured value orientations exhibit income or displacement effects. Neither significant income effects nor displacement effects are identified. An external validity check with a voluntary contribution game provides evidence that value orientations from rings centred around the origin of the decision-space explain significant portions of voluntary contributions while value orientations from displaced rings do not.     

The valuation consequences of voluntary accounting changes

Firm management typically claims that voluntary accounting method changes (VACs) are made to enhance the informativeness of earnings by better matching accounting practices with economic reality. In contrast, skeptics argue that managers adopt new accounting procedures to opportunistically manage earnings and influence their firm’s stock price. In this paper, we investigate these alternative motives for VACs. Specifically, we investigate whether VACs cause equity prices to deviate from their fundamental values in the short-term by studying the long-run stock-price performance for a sample of firms that voluntarily change accounting methods. In addition, we investigate changes in earnings informativeness by examining the behavior of earning response coefficients and the relationship between earnings and future cash flows in years surrounding the VAC event. In contrast to prior research, we find little evidence that a strategy based solely on the earnings effect of a VAC can generate abnormal returns. While we find weak evidence of post-VAC abnormal returns for extreme VACs, this result appears to be driven by the accruals anomaly documented in Sloan [Sloan, R. G. (1996). The Accounting Review, 71, 289–315]. Our evidence further suggests that earnings informativeness is not significantly altered by voluntary changes in accounting methods. Taken together, our evidence suggests the market recognizes the financial statement effects of alternative acceptable accounting methods and efficiently processes the valuation implications of VACs.

Regulatory Capital Arbitrage and the Potential Competitive Impact of Basel II in the Market for Residential Mortgages

U.S. banking regulators have proposed a bifurcated system of capital regulation where the largest, internationally active banking organizations would be subject to significantly more risk sensitive regulatory capital requirements than are currently in place, while most others would remain subject to the current rules. The proposed new capital regime has the potential to affect the competitive landscape among banking institutions, particularly in the area of residential mortgage lending. We analyze the potential competitive effects of the proposed, bifurcated regulatory capital system on competition in the residential mortgage market from the perspective of the theory of regulatory capital arbitrage. We then apply the theory and available evidence to perform some benchmark calculations that suggest a significant, potential shift of market share and income to the largest banking institutions in the mortgage market.

Resurrecting Lochner: A Defense of Unprincipled Judicial Activism

Lochner v. New York, 198 U.S. 45 (1905), stands as one of theSupreme Court's most reviled decisions. We challenge the criticalconsensus against Lochner and provide a defense, albeit a contingentdefense, of "unprincipled" judicial activism. To do so, we developa game-theoretic model of judicial–legislative interaction.We use the model to compare outcomes generated in a system oflegislative supremacy to outcomes generated in a system in whichjudicial review is provided by a legally unprincipled, activistjudiciary. We show that judicial review, even when providedby an activist, politicized judiciary, can promote importantconstitutional values and improve legislative quality relativeto a deferential judiciary. In doing so, we identify an important"passive" component to the effect that judicial review has onlegislatures and on legislation. Finally, we demonstrate thatthe addition of other institutions and constraints on judicialbehavior amplify the beneficial effects that judicial reviewprovides to the legislative process.     

Volunteering time decisions: a multi‐factor experimental study

Non‐profit organizations often seek volunteers to help staff a fundraising event. In the present research, an experimental study assessed volunteering time decisions for a fundraising event following manipulations of opportunity cost valence, opportunity cost avoidability and question order involving donating time and donating money. Opportunity costs represent foregone alternatives sacrificed (e.g. working) when engaging in an activity (e.g. volunteering), with valence of the opportunity cost indicating the appeal (positive or negative) of the foregone alternative and avoidability of the opportunity cost suggesting how easy it would be to forgo the alternative. Prospective donors are often asked to consider both volunteering time and contributing money, and these two questions posed to individuals can be varied in terms of order. The results of the experiment revealed that individuals intended to volunteer the most time when an opportunity cost was negative and avoidable. The lowest time donation intentions occurred when an opportunity cost was positive and less avoidable with individuals also being asked about donating money prior to being asked to donate time. The results highlighted the importance to non‐profit firms of considering opportunity costs potential volunteers face and suggested care in structuring the order of questions involving time and money posed to those individuals. Copyright © 2011 John Wiley & Sons, Ltd.