ON VALUING STOCHASTIC PERPETUITIES USING NEW LONG HORIZON STOCK PRICE MODELS DISTINGUISHING BOOMS,BUSTS, AND BALANCED MARKETS

For longer horizons, assuming no dividend distributions, models for discounted stock prices in balanced markets are formulated as conditional expectations of nontrivial terminal random variables defined at infinity. Observing that extant models fail to have this property, new models are proposed. The new concept of a balanced market proposed here permits a distinction between such markets and unduly optimistic or pessimistic ones. A tractable example is developed and termed the discounted variance gamma model. Calibrations to market data provide empirical support. Additionally, procedures are presented for the valuation of path dependent stochastic perpetuities. Evidence is provided for long dated equity linked claims paying coupon for time spent by equity above a lower barrier, being underpriced by extant models relative to the new discounted ones. Given the popularity of such claims, the resulting mispricing could possibly take some corrections. Furthermore for these new discounted models, implied volatility curves do not flatten out at the larger maturities.     

Company–Community Agreements,Gender and Development

Company–community agreements are widely considered to be a practical mechanism for recognising the rights, needs and priorities of peoples impacted by mining, for managing impacts and ensuring that mining-derived benefits are shared. The use and application of company–community agreements is increasing globally. Notwithstanding the utility of these agreements, the gender dimensions of agreement processes in mining have rarely been studied. Prior research on women and mining demonstrates that women are often more adversely impacted by mining than men, and face greater challenges in accessing development opportunities that mining can bring. Nonetheless, there is currently little guidance for companies, government or communities in bringing a gender perspective to the fore in mining and agreement processes. It is undisputed in human development literature that investment in women and sensitivity to gender delivers long-term health, education and local development outcomes. In mining and development, a number of key factors remain unexplored. These include: women’s participation in agreement processes, the gendered distribution of agreement benefits, and the extent to which impacts and benefits influence women’s development and economic inclusion. This paper presents the results of the first phase of an applied research project undertaken by the Centre for Social Responsibility in Mining (CSRM) at The University of Queensland and funded by the Minerals Council of Australia (MCA) and the Department of Foreign Affairs and Trade (DFAT). The project sought to connect with experienced practitioners who had been directly involved in mining and agreement processes to document and analyse grounded perspectives on gender dynamics and agreements, and connect those experiences with the broader literature. Findings from this study have implications for the role of mining companies and governments in promoting gender equality and empowerment as part of their commitments to sustainable development. They also have implications for community groups and their representatives in terms of how they might engage in agreement processes to maximise women’s participation and influence. In many social contexts, a key challenge will be navigating the territory of cultural norms and gender equality, particularly in cultures where women’s influence in the public sphere is not strong. The authors argue that without consideration of a gender perspective, including gender’s intersection with other factors such as class, race, poverty level, ethnic group and age, mining agreements will not be inclusive, may exacerbate gender inequalities, and fail to contribute to long-term sustainable development.     

Neuregelung des bundesstaatlichen Finanzausgleichs: Umverteilungs- und Verbleibseffekte

The paper explores effects of the revision of the system of fiscal equalisation in Germany as recently agreed upon by the federal and state governments. More specifically, using a simulation analysis, it explores the distribution of gains and losses associated with changes in horizontal and vertical fiscal flows. In addition, the paper determines the degree of fiscal redistribution. While the degree of fiscal redistribution is found to be reduced for major revenue sources, local tax revenues are subject to much higher redistribution than under the status quo. Increases in local tax revenues might even result in total revenue losses for some states.     

The Face of Fairness: Self-Awareness as a Means to Promote Fairness among Managers with Low Empathy

Although managing fairness is a critical concern for organizations, not all managers are predisposed to enact high levels of fairness. Emerging empirical evidence suggests that personality characteristics can be an important antecedent of managers’ fair behavior. However, relatively little attention has been devoted to understand how to promote fairness among managers who are naturally predisposed to engage in lower levels of fairness. Building upon self-awareness theory, we argue that increasing managers’ self-awareness can motivate managers with low trait empathy to engage in greater levels of justice. We test the interactive effects of trait empathy and state self-awareness using an experimental study (N = 76) in which individuals were asked to communicate negative news. In support of our hypothesis, our results indicate that increasing self-awareness through self-focusing situations can help promote interactional justice when communicating negative news for individuals with low trait empathy. The theoretical and practical implications of these findings are discussed.