Consumer benefits of policies and regulations in the tent and sleeping bag industry

The need for information on tents and sleeping bags, to enable consumers to make informed purchase decisions, is becoming more urgent as the popularity of outdoor activities increases. From an approach made to a number of companies with international sales of these items, it became obvious that there is a lack of regulation and that information on important attributes of tents (such as water repellency, wind resistance, breathability, ultraviolet resistance and durability) is sadly lacking. For sleeping bags, more of the critical details tend to be available, but the most important one of all, the temperature rating, is not provided in a standard form. The information obtained enabled the authors to speculate on the requirements for an ‘ideal’ tent and sleeping bag.     

Do Municipal Bond Dealers Give Their Customers “Fair and Reasonable” Pricing?

Municipal bonds exhibit considerable retail pricing variation, even for same-size trades of the same bond on the same day, and even from the same dealer. Markups vary widely across dealers. Trading strongly clusters on eighth price increments, and clustered trades exhibit higher markups. Yields are often lowered to just above salient numbers. Machine learning estimates exploiting the richness of the data show that dealers that use strategic pricing have systematically higher markups. Recent Municipal Securities Rulemaking Board rules have had only a limited impact on markups. While a subset of dealers focus on best execution, many dealers appear focused on opportunistic pricing.     

Management's Preferences for FASB Statement No. 52: Predictive Ability Results

Research attempting to explain or predict preferences with respect to accounting rules is a relatively new branch of accounting research. Factors affecting a manager's welfare (e.g., political costs) are identified and then evaluated empirically to ascertain whether such factors are helpful in predicting a manager's decision to respond to proposed changes in the Financial Accounting Standards Board's (FASB's) rules on foreign currency translation. FASB Statement No. 52, issued December 1981, replaced FASB Statement No. 8 and required U.S. multinational corporations to switch from the 'temporal' to the 'current rate' method of translating foreign currency financial statements into U.S. dollars. The models use current economic data as well as information about managers' responses to earlier changes in the rules for translating foreign currency statements. While the models adequately describe management's behaviour, and hence are consistent with earlier research, their predictive ability is only a modest improvement over naive prediction rules.     

Is COVID Revealing a Virus in CMBS 2.0?

Commercial loan valuations crucially depend on accurate loan income, but underwritten income on commercial mortgage-backed securities (CMBS) loans is commonly overstated relative to actual property income. Consistent with these differences being originator-specific, income overstatement in CMBS 2.0 deals varies widely and persistently across originators, is priced by originators, is related across property types within an originator, is predictable ex ante, and is accompanied by inflation of past financials. Risk retention and associated regulation had no discernible effect on income overstatement. Originator income overstatement is highly predictive of pre- and COVID-period loan distress. Overall, recent market stresses reveal large systemic differences in underwriting standards across originators.