The accounting and market consequences of accelerated share repurchases

We evaluate the representational faithfulness of the accounting treatment of a recent and well-established type of structured transaction—accelerated share repurchases (ASRs). ASRs are popular because accretive earnings per share benefits are recognized immediately, while any gains or losses on the forward contract used to execute an ASR bypass income, and are reported directly in equity. We document lower value relevance for the liabilities of ASR companies compared with a size- and industry-matched sample. ERC tests also indicate a market discount for the earnings of ASR companies compared with the control sample. Finally, we document significant abnormal returns to a trading strategy based on unrealized gains or losses on ASR transactions. Our results indicate that the current accounting for ASRs does not result in representative reporting of these transactions. As a result, financial statement users might benefit from recognition of ASR elements in financial statements.     

The Increasing Selectivity of Foreign Aid, 1984–2003

The Monterrey Consensus includes the idea that foreign aid is more effective when targeted to countries with sound institutions. We examine the extent to which foreign aid, bilateral and multilateral, is “selective” in terms of democracy and property rights/rule of law. We find that multilateral assistance is more selective than bilateral aid in targeting countries with good rule of law. “Selectivity” is a new phenomenon. During 1984–89, both bilateral and multilateral aid had significant negative relationships with rule of law; by 2000–03 this had shifted to a significant positive relationship for multilateral aid, and a positive but statistically insignificant relationship for bilateral aid.     

Can Rich Countries Become Pollution Havens?*

This paper bridges the gap between two‐country Ricardian trade models where differences in environmental policies create pollution havens in a poorer region with weaker pollution regulations, and 2 × 2 Heckscher–Ohlin models that predict under certain conditions that pollution havens may occur in a richer region with tighter regulations. By relaxing the Heckscher–Ohlin assumptions of factor price equalization and no specialization, we show how creation of pollution havens in either region is possible, due to the interplay of policy and factor‐endowment motives. We also analyze the conditions for creating pollution havens in the cases of exogenous and endogenous environmental policy.     

Forms of Opportunism Between Principals and Agents

The purpose of the paper is to discuss the development of the theoretical approach to a rating of the opportunism between the principals and agents within the framework of the neo-institutional theory. The matrix of the opportunistic forms between the principals and agents designed. On the basis of the carried out experimental research of firms of the Ural region of Russia, such opportunistic forms of the agents such as flubbing, negligence, and malversation were investigated. The experimental dependences of an opportunistic level of the agents from a level of wages, level of non-financial stimulus, effectiveness of punishment, share of creative element of labor, and degree of labor specificity are defined. Financial support for the grant from the Russian Humanitarian Scientific Fond, No. 05-02-83214a is acknowledged.     

The South African disability grant: Influence on HIV treatment outcomes and household well-being in KwaZulu-Natal

This paper explores the implications of the disability grant for household members' well-being and adults' success on ART (antiretroviral therapy). It uses case studies based on data from an in-depth qualitative study of 10 households in KwaZulu-Natal. Receipt of the disability grant ensured that the basic needs of the HIV-infected adult could be met by other household members, especially when the grant was received when the person first met the qualifying criteria and in conjunction with ART. Where treatment was effective, HIV-infected adults were able to make substantial contributions to the well-being of other members in addition to the financial support provided by the grant itself. Thus, early access to financial support in conjunction with commencing ART may lead to improved health outcomes and reduce poverty and vulnerability associated with illness in poor households. This synergistic relationship between social welfare and treatment may in turn contribute to greater cost-efficiency.