Information asymmetry,information dissemination and the effect of regulation FD on the cost of capital

This paper considers the impact of Regulation Fair Disclosure (FD) on firms’ information environments and costs of capital. For NYSE/Amex firms we find little evidence of a change in the cost of capital attributable to Regulation FD. For Nasdaq firms we find that Regulation FD increased firms’ costs of capital by 10–19 basis points per annum though the statistical significance of this change is modest for some of our models. We also show substantial cross-sectional variation in the cost of capital changes. We find that cost of capital changes were negatively related to both pre-regulation firm size and PIN. In addition to the findings regarding Regulation FD, this research contributes to a growing literature that documents links between firms’ information environments and their costs of capital.     

‘Should I Buy,Hoard, or Hide?’- Consumers’ responses to perceived scarcity

Scarce shopping situations often seem to have a greater value for consumers and trigger extreme behaviors. This study examines the effects of scarcity that is strategically created by the marketer in influencing consumer behavior. Drawing from reactance theory, it is suggested that, when scarcity is perceived to be strategically created by the retailer, consumers tend to exhibit deviant and competitive behaviors. The mediating role of emotions like anticipated regret is also examined. Further, the role of human traits like competitiveness and hedonic motivations in moderating the relationships between perceived scarcity and behaviors is also examined. The results of the study suggest that, under the conditions of perceived scarcity, consumers tend to exhibit behaviors like in-store hoarding, and in-store hiding, due in part to the increased urgency to buy. Also, the findings suggest a pertinent role of emotions and human traits in influencing the decision making under the condition of strategically-created scarcity.     

The Legacy of Black Lynching and Contemporary Segregation in the South

Wacquant (2001) and others have argued that social control efforts directed at racial and ethnic minorities frequently shift institutional form and become more nuanced as societies modernize, even as the underlying function persists. This study examines the connection between southern lynching and housing segregation. We argue that legal, political, social and demographic changes in the south made lynching dysfunctional as a means of control. Among other more nuanced control mechanisms, modern housing segregation helped serve as a replacement. We test this proposition by relating historical southern black lynching rates to recent levels of segregation in southern MSAs. We find that an MSA’s historical lynching rate is positively and significantly linked to the MSA’s current segregation levels after accounting for standard determinants of segregation. Thus, segregation does not just occur generally throughout the south, but follows a very particular pattern based on past lynching rates. Our findings add to a growing literature on the legacy of lynching, such as studies examining contemporaneous variation in support for and use of capital punishment.     

Does ‘Best Practice’ in Setting Executive Pay in the UK Encourage ‘Good’ Behaviour?

We examine how UK listed companies set executive pay, reviewing the implications of following best practice in corporate governance and examining how this can conflict with what shareholders and other stakeholders might perceive as good behaviour. We do this by considering current governance regulation in the light of interviews with protagonists in the debate, setting out the dilemmas faced by remuneration-setters, and showing how the processes they follow can lead to ethical conflicts.Current ‘best’ practice governing executive pay includes the use of market benchmarks to determine salary and bonus levels, significant levels of performance-related pay, the desire for executives to hold equity in their companies, the disclosure of total shareholder return compared to an index, and a perceived need for conformity, in order to grant legitimacy to policies. Whilst each of these may in some circumstances lead to good practice, each has the potential to cause dysfunctional behaviour in executives. Overall, we conclude that although best practice might drive good executive behaviour that coincides with the company’s and key stakeholders’ objectives, there are many reasons why it should not.     

Beyond the gravity model

Gravity theory holds that more people will travel from a particular origin to a given destination than will travel to a more distant destination of the same type and size. Distance, according to gravity theory is a deterrent to travel and empirical evidence supports such a relationship in urban settings. This relationship is, however, hypothesized not to be true for long-distance leisure travel where distance may be a utility rather than a friction to be overcome. This study examines the relationship between subjective (perceived) distance and objective (geographic) distance and tests the hypothesis that, all other things being equal, the attractiveness of tourist destinations will increase as subjective distance increases. It is concluded that tourists tend to perceive all destinations to be closer than they actually are. It is also concluded that the far-off destination has a special allure about it simply because it is far-off.     

How it all began: the rise of listing requirements on the London, Berlin, Paris, and New York stock exchanges

The issue of accounting standards for foreign securities listed on a stock exchange arose gradually over the period 1825-1914 among the leading exchanges in the first global financial market—London, New York, Paris, and Berlin. Comparing their listing requirements on the eve of World War I, we find that the London and New York exchanges were most detailed, reflecting their common-law legal environments and their status as self-regulating organizations. The evolution of listing requirements in London and New York therefore influenced the development of accounting standards in those countries. By contrast, Paris and Berlin relied on validation of a security by political authorities. One result of these differences in legal and political environments was that American railroads issued the only securities to be listed on each of the four exchanges.     

Decision making in personal selling: Testing the “K.I.S.S. principle”

The KISS principle (keep it simple, stupid) is often cited as an effective strategy in selling. The premise is that salespeople are more effective when they stick to basics and do not unnecessarily complicate that which is not necessarily complicated. This study tests the KISS principle in the context of salesperson decision making in the prospecting stage of the selling process. Two general research questions are addressed (1) does a simple versus more complex process affect outcomes of decisions made by salespeople, and (2) if so, whom does it affect? The results suggest that process does influence outcome and that lower‐performing salespeople's decisions are most likely to be affected by the decision process used. Higher performers seem to be able to focus on key characteristics of sales prospects regardless of the complexity of the decision task, suggesting that higher performers, at least implicitly, know when to keep it simple. © 1999 John Wiley & Sons, Inc.     

Macro policy in the tropics: How sensible people stand

A model for macro policy analysis is set out, incorporating an inflation theory based on distributional conflict, output and current account adjustment mechanisms, and the money market. Classic structuralist results about contractionary devaluation and stagflationary monetary restriction are derived. Alternative closures of the model are considered — monetarism and external strangulation (or foreign exchange bonanzas) — and it is extended to deal with interest rate reform. Short-term stabilization issues are analyzed — monetary and fiscal policy, import quotas and export subsidies as opposed to devaluation, financial market complications, food subsidies and public sector pricing, and orthodox and heterodox anti-inflationary programs. Finally, medium-term processes of inflation, distribution and growth are described. An example of an irreversible contractionary shock which leads the economy from a distributionally favorable to an unfavorable steady state is presented.     

Vanishing income redistributions: Keynesian clues about model surprises in the short run

A compact, one-sector version of recent large-scale income distribution models is presented. Different specifications of endogenous and exogenous variables in the model (or assumptions about how it is closed) change its qualitative behavior directly. A ‘Keynesian’ closure in which investment is exogenous and nominal changes in prime cost are passed along into price increases demonstrates relative insensitivity of the functional income distribution to factor prices. An alternative ‘neoclassical’ closure in which investment is endogenous (determined by savings) and output prices are fixed is much more responsive. The large-scale models are closed on Keynesian lines, and also have relatively insensitive functional distributions. If these models adequately describe real economies, causes besides general equilibrium price response must be invoked to explain distributional change.     

Monitoring Accounts Payables

In creating shareholder value, one objective of management is to increase the speed of cash inflows and reduce the speed of cash outflows. To accomplish this task, management must understand the relationships that cause accounts receivable and accounts payable to change. The paper expands a receivable monitoring model by Gentry and De La Garza to incorporate the causes of changes in payables. Several examples are developed to show the operation of the model. The three primary contributions of the paper are (a) developing algorithms that measure the causes of changes in payables, plus an interpretation for each set of conditions; (b) showing that a present value approach to monitoring payables is superior to a recommended accounting approach based on variance analysis; (c) finally, presenting an approach for ranking the performance of payable and receivable strategies.