The Effect of Business and Financial Market Cycles on Credit Ratings: Evidence from the Last Two Decades

We analyze the effect of business and financial market cycles on credit ratings using a sample of firms from the Russell 3000 index that are rated by Standard and Poor's over the period 1986–2012. We also examine investor reaction to credit rating actions in different stages of business and financial market cycles. We document that credit rating agencies are influenced by business and financial market cycles; they assign lower credit ratings during downturns of business and financial market cycles and higher ratings during upturns. Our study is the first to find strong evidence of pro‐cyclicality in credit ratings using a long window. We also document stronger investor reaction to negative credit rating actions during downturns. Our results confirm theoretical predictions and inform regulators.     

The size of banking crises in credible fixed exchange rate regimes

Since monetary policy is constrained in fixed exchange rate regimes, we should observe fewer banking crises due to moral hazard in countries with credible currency pegs. However, three countries with seemingly credible pegs in the nineteen-eighties and -nineties, namely China, Hong Kong and Argentina, still suffered crises in their domestic banking sectors. The present note illustrates that bank incentives to take on excess risk still exist in countries with currency peg credibility and that the size of that risk exposure (and thus the potential for crisis) may be positively related to the level of central bank foreign exchange reserves.     

如何为云计算奠定坚实的物理基础

随着企业对性能、成本和能源控制方面的要求越来越高,一种能够有效共享资源、应用程序、软件和信息的平台--云计算技术应运而生.为了在有线或无线基础设施上充分发挥分布式计算模式的优势,企业和云服务供应商都需要可靠和高性能的智能物理网络层,以便在所需环境中实现可管理性和可快速扩展性.为可靠的云服务铺设物理基础需要全而的基础设施解决方案,在整合高性能、智能铜缆和光纤结构布线组件的同时需要明钾地选择无线解决方案.     

Extreme Value Analysis of Mortality at the Oldest Ages: A Case Study Based on Individual Ages at Death

In this article, the force of mortality at the oldest ages is studied using the statistical tools from extreme value theory. A unique data basis recording all individual ages at death above 95 for extinct cohorts born in Belgium between 1886 and 1904 is used to illustrate the relevance of the proposed approach. No leveling off in the force of mortality at the oldest ages is found, and the analysis supports the existence of an upper limit to human lifetime for these cohorts. Therefore, assuming that the force of mortality becomes ultimately constant, that is, that the remaining lifetime tends to the Negative Exponential distribution as the attained age grows is a conservative strategy for managing life annuities.     

Ownership, managerial control and the governance of companies listed on the Brussels stock exchange

This paper examines how corporate control is exerted in companies listed on the Brussels Stock Exchange. There are several alternative corporate governance mechanisms which may play a role in disciplining poorly performing management: blockholders (holding companies, industrial companies, families and institutions), the market for partial control, debt policy, and board composition. Even if there is redundancy of substitute forms of discipline, some mechanisms may dominate. We find that top managerial turnover is strongly related to poor performance measured by stock returns, accounting earnings in relation to industry peers and dividend cuts and omissions. Tobit models reveal that there is little relation between ownership and managerial replacement, although industrial companies resort to disciplinary actions when performance is poor. When industrial companies increase their share stake or acquire a new stake in a poorly performing company, there is evidence of an increase in executive board turnover, which suggests a partial market for control. There is little relation between changes in ownership concentration held by institutions and holding companies, and disciplining. Still, high leverage and decreasing solvency and liquidity variables are also followed by increased disciplining, as are a high proportion of non-executive directors and the separation of the functions of CEO and chairman.     

The role of shareholder proposals in corporate governance

This paper examines the corporate governance role of shareholder-initiated proxy proposals. We find that target firms tend to underperform and have generally poor governance structures, with little indication of systematic agenda-seeking by the proposal sponsors. Governance quality also affects the voting outcomes and the announcement period stock price effects, with the latter strongest for first-time submissions and during stock market peaks. Proposal implementation is largely a function of voting success but is affected by managerial entrenchment and rent-seeking. The results imply that shareholder proposals are a useful device of external control, countering arguments that they should be restricted rather than facilitated under the SEC's current regulatory agenda.     

Risk management,housing and stockholding

This article investigates the possible explanations of the stockholding puzzle by focusing on housing and other uninsurable risks (associated with income, health and business). Taking the French household wealth survey (Patrimoine 2004, French National Statistical Institute), we find that the share of financial wealth invested in stocks depends on transaction and information costs, risk aversion, exposure to real estate risk and, to a lesser extent, labour market risk. These results are obtained by controlling for endogenous home ownership status.     

Urbanization and poverty reduction: the role of rural diversification and secondary towns1

A rather unique panel tracking more than 3,300 individuals from households in rural Kagera, Tanzania, during 1991/1994–2010 shows that about one out of two individuals/households who exited poverty did so by transitioning out of agriculture into the rural nonfarm economy or secondary towns. Only one out of seven exited poverty by migrating to the big cities, even though those moving to the city experienced on average faster consumption growth. Further analysis of a much larger cross‐country panel of 51 developing countries cannot reject that rural diversification and secondary town development lead to more inclusive growth patterns than metropolitization. Indications are that this follows because more of the poor find their way to the rural nonfarm economy and secondary towns, than to distant cities. The development discourse would benefit from shifting beyond the rural–urban dichotomy and focusing more instead on how best to urbanize and develop its rural nonfarm economy and secondary towns.     

Environmental Determinants of Public Sector Innovation: A study of innovation awards in Canada

Abstract

In this article, we conduct an empirical study of administrative innovation in the Canadian public sector by examining applications to the Innovative Management Award of the Institute of Public Administration of Canada (IPAC). After a review of the literature on innovation in the public sector and of the history of this award, we come to the conclusion that the relationship between innovation and environment has been studied only sparingly, which explains the focus of our research and our hypotheses. Through an analysis of award applications over 21 years, and of award finalists and winners, we demonstrate that such environmental variables as strength of the economy, size of the civil service, deficits, unemployment rate, investment in R&D, and type of government have important consequences for administrative innovation in the public sector. We also suggest some implications of our findings for future research on this subject.