The economic rationale for the nature and extent of corporate financial disclosure regulation: A critical assessment

The regulatory framework for corporate financial disclosure has been the subject of a large literature, most of which has focused on the economic rationale for disclosure requirements. This extant economic analysis has not led to any definitive conclusions regarding the necessity for disclosure regulation nor has it provided public policy guidance as to the nature and extent of required corporate financial disclosure. It is evident that broader-based analysis and research incorporating relevant social and political (as well as economic) factors is necessary to gauge appropriate public policy for financial information disclosure.     

The young and the clueless

It's natural to promote your best and brightest, especially when you think they may leave for greener pastures if you don't continually offer them new challenges and rewards. But promoting smart, ambitious young managers too quickly often robs them of the chance to develop the emotional competencies that come with time and experience--competencies like the ability to negotiate with peers, regulate emotions in times of crisis, and win support for change. Indeed, at some point in a manager's career--usually at the vice president level--raw talent and ambition become less important than the ability to influence and persuade, and that's the point at which the emotionally immature manager will lose his effectiveness. This article argues that delaying a promotion can sometimes be the best thing a senior executive can do for a junior manager. The inexperienced manager who is given time to develop his emotional competencies may be better prepared for the interpersonal demands of top-level leadership. The authors recommend that senior executives employ these strategies to help boost their protégés' people skills: sharpen the 360-degree feedback process, give managers cross-functional assignments to improve their negotiation skills, make the development of emotional competencies mandatory, make emotional competencies a performance measure, and encourage managers to develop informal learning partnerships with peers and mentors. Delaying a promotion can be difficult given the steadfast ambitions of many junior executives and the hectic pace of organizational life. It may mean going against the norm of promoting people almost exclusively on smarts and business results. It may also mean contending with the disappointment of an esteemed subordinate. But taking the time to build people's emotional competencies isn't an extravagance; it's critical to developing effective leaders.     

Commercial Mortgage Defaults: Proportional Hazards Estimation Using Individual Loan Histories

This paper examines the theory of commercial mortgage default and tests it using a data set of 2,899 loan histories provided by a major multi-line insurance company. A default model is estimated which relates subsequent default incidence and timing to contemporaneous loan term, borrower, property and economic/market conditions. Maximum likelihood estimation is used to estimate a hazard function predicting conditional probability of default over time. Results confirm many expected default relationships, in particular the dominance of loan terms and property value trends over time in affecting default. The effectiveness of the model in discriminating between "good" and "bad" loans is explored. Implications for underwriting practice and credit risk diversification are noted. Finally, suggestions are made for extending these results in pricing applications.     

Elasticities of substitution for a regulated cost function

This paper proposes a modification to the Uzawa (1962) characterization of the Allen partial elasticity of substitution under cost minimization to take account of the behavioral properties of the cost function for a firm subject to rate-of-return regulation.     

Environmental regulation and optimal investment behavior: A micro-economic analysis

This paper develops a simple optimal control model of the firm's investment decisions in the presence of environmental restrictions. The firm is assumed to jointly decide the optimal levels of gross investment, scrappage of capital, and maintenance expenditures. The results of the model indicate that all investment decisions, including both abatement equipment and productive capital, are affected by the manner in which environmental regulations are designed. Moreover, these impacts can be further altered if other unrelated regulations, such as rate base regulation, are concurrently imposed on the firm.     

Estimates of the option values for water quality improvements

This paper presents estimates of the option values associated with increased oppurtunities for outdoor recreation resulting from improved water quality. The estimates are based on a 1981 survey of 301 households in the Pennsylvania Monongahela River Basin.     

A Renewable Resource-based Ramsey Model with Costly Resource Extraction

This paper derives the analytical solution of arenewable resource-based Ramsey economy withcostly resource extraction. The goal is toascertain whether costly resource extractioncan induce nonlinear dynamical properties in the system. We find that the solution for a model with constant technology can exhibit multiple steady states,and the comparative statics effects for consumption,utility, and the stock of nature capital areambiguous in a number of different cases. Moreover, thesolution for a model with exogenous technological progress exhibits unusual comparative dynamics andthe possibility of multiple balanced growthpaths. An increase in the rate of technologicalprogress induces a long-run growth rate in per capitaconsumption that depends on parameters of the productionfunction. Overall, technological progress inthe model can be less beneficial than in the standardeconomic growth model in which resourceextraction is costless.     

Marine Debris, Beach Quality, and Non-Market Values

This paper reports the first attempt to measure the importance of controlling marine debris as an aesthetic characteristic of beaches and coastal area. The results are based on a contingent valuation survey designed to estimate the economic value people would place on controlling marine debris on recreational beaches in New Jersey and North Carolina. A Weibull survival model was estimated treating for and against votes as defining censoring points for an unknown willingness to pay distribution. The findings suggest: (1) people do distinguish situations with differing amounts of debris when they are described using color photographs; (2) the pilot survey implies measures of people's willingness to pay (WTP) for debris control are consistent with a scope test in that larger WTP is associated with programs intended to address situations for more serious background levels of debris; and (3) local beach conditions seem to influence how people interpreted the plans describing beach conditions without the proposed control programs.