The Valuation Effect of Accounting Standard 158 on Firms with High and Low Financial Risk

SFAS 158 mandated balance sheet disclosure of the funded status of firms’ Defined Benefit Pension Plan using the Projected Benefit Obligation (PBO) to estimate the pension liability. SFAS 158 caused a market phenomenon because the use of the PBO engendered dramatically higher estimates of pension liability and hence the perception of risk. Our work focuses on two aspects of this change in pension accounting: first, how will industry firms change their accounting strategy in light of the new rules, and second, how will firms’ stock prices be affected by the new allegedly better estimate of pension liability? Our research suggests that firms’ accounting strategies changed in that they use higher discount rates to estimate pension liability which offset the dramatic impact of using the PBO. In addition, we find that high financial risk firms’ tendencies to use higher discount rates increase with the firms’ leverage and decrease with liquidity. To test the market reaction we utilize standard event study methodology to investigate the effects of SFAS 158 on stock returns. Our findings suggest that firms with high (low) financial risk earn negative (positive) abnormal returns on and around relevant event dates preceding the implementation of SFAS 158.     

Volatility and stock price indexes

The stochastic approach to index numbers has been successfully applied to the estimation of inflation, the world interest rate and international competitiveness.?One distinct advantage of this approach is that it provides the whole distribution of the index, not simply one value. In this article, we extend the stochastic approach to the estimation of a stock market index. We demonstrate how this approach can be used to identify ‘redundant stocks’ that do not contribute significantly to the overall index.?For index tracking purposes, these stocks can be safely excluded.     

Democratization and Real Exchange Rates,

In this article, we combine two so far separate strands of the economic literature and argue that democratization leads to a real exchange rate appreciation. We test this hypothesis empirically for a sample of countries observed from 1980 to 2007 by combining a difference‐in‐difference approach with propensity score matching estimators. Our empirical results reveal a strong and significant finding: democratization causes real exchange rates to appreciate. Consequently, the ongoing process of democratization observed in many parts of the world is likely to reduce exchange rate distortions.     

The influence of advertising on the demand for chocolate confectionery

This paper addresses the impact of advertising on the size of five European chocolate confectionery markets: Belgium, France, Germany, the Netherlands and the UK. It is prompted by suggestions that advertising may be responsible for excessive consumption of confectionery by children. The literature on whether advertising affects the total market size is not one-sided but the balance of previous research indicates market effects to be less likely. Chocolate confectionery in Western Europe is a mature market in slow decline. We found no significant association between the weight of advertising and market growth with either contemporaneous or lagged effects. There was, however, negative correlation between market size and price, as was to be expected. The results were consistent across the five countries.     

Are tourism impacts low on personal environmental agendas?

This paper examines if tourism is an environmental priority for tourism and hospitality students. It is framed within the context of information and choice overload that may result in the need to prioritize issues and make less effective decisions. A series of open-ended questions identified the most important community and global environmental issues, the single greatest cause of climate change and whether students had changed their behaviour in general, or their travel behaviour in particular, to reduce their environmental impact. A total of 2968 useable surveys were returned from students at 63 institutions in 22 economies. Tourism emerged as a low priority issue, which explains why only a small proportion of students had changed their travel behaviour. Moreover, the study noted high knowledge variability, which in turn was closely associated with the type of actions undertaken. Students with specific knowledge were far more likely to adopt specific change actions than those who had less precise knowledge. They, in turn, were more likely to identify generic and less effective actions. The study concludes that the main challenge involved in changing tourism behaviour rests primarily with raising its status to a higher priority, a difficult task given the environmental issue overload that most people face.     

An Analysis of the Deposit-taking Market of Hong Kong

This paper analyzes the deposit-takingmarket in Hong Kong prior to the deregulation ofinterest rates in 1994. We argue that bankingregulations, in the forms of branching restrictionsand interest-rate ceilings, had created amonopsonistic market for short-term bank deposits. Asa result, banks in Hong Kong had earned asubstantially wider interest-rate margin than banks inother Asia-Pacific countries and the United States. We provide procedures to estimate the economicsignificance of the foregone interest and find themonopsonistic rent to be in the order of 1% of theGross Domestic Product of Hong Kong for the period1987 through 1994.     

如何迅速缓解全球粮食危机

【美国《华尔街日报》5月13日】大力加强增加农田产量的研究。增加水利及农村交通方面的投入。以太阳能和风能为非洲农场提供电力。以不可食用的作物代替玉米为原料生产生物柴油。