RAISING CAPITAL WITH PRIVATE PLACEMENTS OF DEBT

In this study the role of private placements of debt in the capital acquisition decision of public utilities is investigated. Whereas public offerings are sales of securities through financial intermediaries to the public-at-large, private placements are direct sales of securities by an issuing corporation to a limited number of institutional investors. In contrast to the negative stock price reactions typically found for public security sales, private placements are associated with significant positive abnormal returns in the shares of the issuing public utilities. Also, larger private placements appear to elicit a more favorable market response. Results are consistent with reduced information asymmetries and increased monitoring of the issuing firm resulting from the private placement.     

A survey of recent theoretical developments in the econometrics of panel data

This paper surveys some recent developments in panel data analysis. In particular, it focuses on the error component model which is popular in panel data applications, and discusses recent advances in its estimation under heteroscedasticity, serial correlation, and a general variance-covariance matrix. It also surveys the extensions of this model to the seemingly unrelated regressions case, and the simultaneous equations case. The dynamic case and the incomplete panel data case are also considered, as well as a host of other miscellaneous extensions. Prediction with this model is briefly surveyed and alternative tests for this model are reviewed. While the bibliography is not exhaustive, this survey should complement previous surveys and should prove useful for researchers working in this area.     

International evidence on persistence in output in the presence of an episodic change

This paper uses some newly developed methods and techniques to examine the dynamic properties of international output in the presence of a structural break. We provide statistical evidence to show that the unit root test results can, in some cases, be sensitive to whether a one-time structural break in the data is modelled exogenously or endogenously. However, in most cases the unit root test results remain robust to specification of the structural break exogenously or endogenously; moreover, we find that the null hypothesis of a unit root in output can be rejected in favour of a ‘flexible’ trend alternative for a number of countries such as Canada, Denmark, France, and the United States.     

On Bayesian estimation of seemingly unrelated regressions when some observations are missing

In this paper we have considered the problem of estimating the parameters of two seemingly unrelated regression equations when the number of available observations on all the variables in the first equation exceeds the number of available observations on all the variables in the second equation. We have shown how, within the Bayesian framework, extra observations on all the variables in the first equation can be readily and formally utilized in obtaining the exact or an approximate posterior distributions of all the coefficients including those in the second equation.     

The existence of moments of some simple Bayes estimators of coefficients in a simultaneous equation model

In this paper a simple modification of the usual k-class estimators has been suggested so that for 0 ≦ k ≦ 1 the problem of the non-existence of moments disappears. These modified estimators can be interpreted either as Bayes estimators or as constrained estimators subject to the restriction that the squared length of the coefficient vector is less than or equal to a given number.     

Estimation of a dynamic demand function for gasoline with different schemes of parameter variation

In this article we explore the consumer demand for gasoline within the framework of the household production function model. Working with a time series of regional cross-sections, we find the parameters in the gasoline demand model varying across states. Random coefficient model is utilized to analyze temporal cross-section data.     

A Fireside Chat with Raj Gupta: What It Takes to Create Long‐Term Value

The chairman of two public companies (and former chair and CEO of Rohm and Haas) draws on his experience as a director of five private and 15 public companies in discussing the challenges and opportunities facing today's corporate boards. Perhaps the most formidable challenge is the pace of technological change, which is making business models ‘in all industries and countries’ obsolete and forcing companies to adapt much more quickly than in the past. Along with the risk of obsolescence is the increase in ‘reputational risk’ associated with an ‘information age’ in which companies are forced to monitor the nearly continuous flow of fact, hearsay, and outright fabrication. The author recommends that public company boards adopt a new ‘partnership’ model. Besides ensuring an ‘ethical tone at the top,’ corporate directors should aim to become partners with the senior management team by playing more active roles in strategic planning, risk management, and the design of performance evaluation and incentive pay systems. In the most striking departure from current practice, the author urges directors to seize the opportunity created by the ‘reconcentration’ of ownership of U.S. public companies by actively engaging large institutional investors in a strategic dialogue about the companies' strengths and vulnerabilities. In so doing, proactive directors can help their management teams preempt shareholder activists and create long‐run value by creating a more effective two‐way channel of communication, one with the potential to give management more confidence when undertaking large strategic investments with longer‐run payoffs.