Land Heterogeneity,Agricultural Income Forgone and Environmental Benefit: An Assessment of Incentive Compatibility Problems in Environmental Stewardship Schemes

This paper examines the issue of incentive compatibility within environmental stewardship schemes, where incentive payments to farmers to provide environmental goods and services are based on foregone agricultural income. The particular focus of the paper is land heterogeneity, either of agricultural or environmental value, leading to divergence between the actual and socially optimal level of provision of environmental goods and services. Given land heterogeneity, such goods and services are likely to be systematically over‐ or under‐provided in response to a flat rate payment for income foregone.     

Political and Regulatory Risk in Water Utilities: Beta Sensitivity in the United Kingdom

UK utilities are generally regulated by the periodic setting of a price cap (the RPI-X mechanism). To establish these caps, regulators must determine what returns are appropriate on the capital employed by utilities. This paper addresses the issue of the level of risk inherent in investment in the equity of regulated water utilities in the UK. It uses the techniques of the Kalman Filter to estimate daily betas for the major utilities in the period from privatisation to mid-1999. The paper demonstrates that water utilities' risk is time-variant. It demonstrates, also, that there have been significant political and regulatory influences in the systematic risk faced by water utility shareholders. It finds beta to display little evidence of cyclical variation across the regulatory review cycle. The paper also confirms that significant excess returns have been generated over the history of the privatised water sector and suggests that over-estimation of systematic risk faced by investors in the sector may imply further excess returns in the next regulatory review period.     

Family-based treatment for obesity in tweens: a three-year longitudinal follow-up study

Children's increasing obesity worldwide is creating negative health and socioeconomic drawbacks. To find the determinants of obesity, this research looked at the influence of (1) media usage; (2) advertising messages/brand recognition; and (3) communication or lack of communication between parents and their children on obesity and food-related Purchase Influence Attempts (PIAs) of tweens. A 3-year longitudinal follow-up study was conducted with 68 families whose children were either obese or at risk of becoming obese. The subjects were divided into the following four groups: (1) media amount was controlled; (2) brand recognition was controlled; (3) communication channel of family members was controlled; and (4) all three conditions were controlled. Our results showed significant weight-loss and reduction in PIAs in all groups except in group 2 (brand recognition controlled). This work shows the importance of changing habits using behavioural treatment and the importance of communication among family members on obesity prevention.     

FDICIA and bank failure contagion: Evidence from the two failures of first city bancorporation

We investigate contagion effects from the two failures of First City Bancorporation—the only large regional bank to fail before and after FDICIA. FDICIA imposes changes in the bank failure resolution process that expose uninsured depositors to substantially greater risk. We find that shocks to First City’s weekly returns affect the conditional volatility of all but the most financially sound banks in the 1985–1987 period. This risk spillover effect is not evident in the period leading up to First City’s 1992 failure, however, which suggests that the regulatory changes embodied in FDICIA have not contributed to a more risky banking system. We appreciate the comments of Richard Cebula, Ken Kroner, Jim Pappas, Joseph Mason, an anonymous reviewer, and seminar participants at the 1996 meetings of the Financial Management Association.     

Production costs for consolidated multibank holding companies compared to one-bank organizational forms

Economies of scale and scope for consolidated multibank holding companies (MBHCs) are examined with a translog cost function and are compared with one-bank holding companies (OBHCs) and independent banks. Empirical results indicate that costs curves are generally U-shaped for independent banks and OBHCs but are relatively flat for MBHCs. This evidence implies that banking organizations should prefer the MBHC to one-bank forms at higher output levels. Implications for bank regulatory policy and interstate banking are discussed.     

DETERMINING COST OF SALES IN THE CCA SYSTEM

The profit concept in the Current Cost Accounting system is based on the objective of maintaining “capital” in the sense of “operating capability”. This paper seeks to demonstrate that the recommended capital maintenance adjustment of the Australian Provisional Accounting Standard on “Current Cost Accounting”, as it relates to cost of sales, is inappropriate for the stated capital maintenance objective. This appears to be because operating capability is a dated concept, since it is the operating capability existing at the beginning of an accounting period which is to be maintained. An alternative adjustment for cost of sales is proposed which is consistent with the stated capital maintenance objective.     

DETERMINANTS OF BANK HOLDING COMPANY DEBT RATINGS

This paper reports on the construction of a multiple discriminant analysis model which explains the specific ratings assigned by Standard and Poor's Corporation to bank holding company (BHC) capital notes and debentures. It thus investigats the ratings of debt securities issued by banking organizations, an area largely ignored in bond rating research to date. Improving on the methodology of current research concerning BHC bond ratings, the model is 78.5 percent accurate in initially classifying the top three rating categories—AAA, AA, and A. Lachenbruch validation finds the model to be 64.6 percent accurate. Size, variability of net income, the economic environment of the issuing BHC, and the amount and composition of total capital appear to be the principal variables allowing successful discrimination among the debet issue ratings.     

A Note on Imperfect Monitoring of Agri-Environmental Policy

In this note the impact of imperfect compliance monitoring on the implementation of agri-environmental policy is analysed. A principal-agent model is used to demonstrate how imperfections in the monitoring process lead to higher levels of incentive payments to ensure compliance. This means that less accurate compliance monitoring results in higher social costs from policy implementation. Technical enhancements in the accuracy of compliance monitoring will therefore lead to a reduction in social costs. This is an important result with significant implications for the design and implementation of agri-environmental policy.