Reverse convertible bonds analyzed

We study the pricing of reverse convertible (RC) bonds. These are bonds that carry high coupon payments. In exchange, the issuer has an option at the maturity date to either redeem the bonds in cash or to deliver a pre‐specified number of shares. We find that Dutch plain vanilla and knock‐in RC bonds are, on average, overpriced by almost 6%. This overpricing is confirmed in a model‐free analysis with respect to option‐ and bond‐pricing models. We find that rational factors explain 23% of the documented overpricing. In addition, we find that the combination of financial marketing, framing, and the representativeness bias further increases our ability to explain the documented overpricing to more than 35%. © 2009 Wiley Periodicals, Inc. Jrl Fut Mark 29:895–919, 2009     

The dilemma of implementing controls: The case of managerial accounting

Managerial accounting contains a technical theory of control. Whenever this technical theory of control is correctly implemented to deal with issues that are embarrassing or threatening, the players activate their personal-human theory of control in order to remain “in control”. The correct implementation of the personal-human theory of control necessary inhibits the effective implementation of the technical theory and vice versa.     

THE FINANCIAL IMPACT OF ABOLITION

One argument for metropolitan county council abolition in England was that it would save money, yet detailed studies suggested that it would increase expenditure. After abolition, Government statements emphasised the savings that had resulted. Analysis of expenditure change from 1984/5 to 1987/8 shows that rate and grant-borne expenditure on transferred services increased by four percent over the four-year period, compared with nine percent for all metropolitan county council, district council and precepting authority services. Some increases are directly attributable to diseconomies of scale caused by abolition, while others reflect local political choices which have become possible. Expenditure reductions are also evident in some areas.     

In search of legitimacy: personnel management associations worldwide

In considering the development of the HR ‘profession’, there has been little exploration of the role of the professional association. This is particularly true looking across national boundaries, raising questions about the impact and extent of homogeneity of personnel management association activities. It is argued that professional associations have a legitimising role to play in establishing a specialist body of knowledge, regulating practice and providing a source of internal and external identity for practitioners. A recent worldwide survey of personnel management associations found that, although associations are active in these areas, there is a lack of mandatory control and regulation across the profession, diluting the legitimacy accorded by such activities. Association activities were also found to be largely generic across countries, resulting from inter‐association collaboration, although different contexts result in different outcomes.     

"You know we are not an Employment Agency": Manpower, Government, and the Development of the Temporary Help Industry in Britain

This article looks at the early development of the temporaryhelp industry in Britain. It focuses on the activities of oneof the largest suppliers of temporary workers, Manpower, inthe late 1960s and early 1970s. Drawing on material from TheUK National Archives, the article examines Manpower's effortsto gain access as a genuine employer to the state employmentexchange network to advertise their temporary vacancies. Thearticle reveals the incremental changes in attitude within thegovernment towards Manpower's activities and argues that thisgave the company a competitive advantage over other employmentagencies, facilitating their development of relations with thegovernment and the trade unions in Britain over the 1970s and1980s. The main conclusion of the article is that explicit attentionneeds to be paid to the actions and strategies of agencies themselvesin order to develop an adequate understanding of the growthand development of the temporary help industry.     

An Experimental Study of Statistical Discrimination by Employers

This article reports findings of an experiment motivated by a dynamic labor market model that considers the problem faced by employers in making hiring decisions between workers of different types. The question examined here is how quickly employers learn about the ability of a group of workers through observing representatives of that group. If prior opinions are weak, the employer will use Information from the workplace to quickly update any incorrect group-based stereotypes it may have. On the other hand, if priors are heavily weighted, incorrect initial perceptions will result in persistent wage differences. Our experimental findings are twofold. First, subjects' (employers') behavior moves quickly toward optimal choices. Second, strong priors are hard to establish. These results suggest that it would take a long time for employers to form group-based stereotypes and that such stereotypes should go away quickly in response to signals that contradict these stereotypes.     

Labour Market Trends and Structures in ASEAN and the East Asian NIEs

The paper reviews the literature on labour markets in the region with special emphasis on the impact of economic growth and structural change on employment and wages. It deals with labour supply trends, employment creation outside agriculture (especially export orientated industrialization and new high-tech industries), labour absorption in agriculture, wage differentials and the functioning of rural and urban labour markets.
The creation of efficient and equitable labour market institutions and labour market flexibility have emerged as dominant issues in the NIEs. In the ASEAN-4, because of concentration of employment in low productivity and low wage jobs and underutilization of labour, the rate of modern sector labour absorption remains the major policy concern.     

Exploring the Structure of the Illegal Market for Cannabis

Summary This paper explores the middle and retail levels of the illegal market for cannabis in New Zealand using national household drug survey data. Those who reported purchasing half or full ounces of cannabis were defined as middle level market participants, while those who purchased smaller weights or merely used cannabis were defined as retail level participants. Those who had purchased cannabis were then further categorised as either cannabis ‘buyers’ (i.e. those who only purchased sufficient cannabis for their own consumption needs) or cannabis ‘dealers’ based on whether the surplus of cannabis they had, after their own personal consumption was deducted, exceeded the legal definition of cannabis dealing (i.e. possession of 28 g of cannabis or more). Nine per cent of those who had purchased cannabis in the previous year were categorised as middle level participants with 69% of these defined as middle level dealers and 31% as middle level buyers. Middle level cannabis dealers were projected to earn, on average, $2927 (NZD) net annual profit from selling surplus (rate of return of 34%). There was a wide variation in the projected net earnings of the middle level cannabis dealers with the majority earning only modest incomes (bottom 50% – $260 per year, top 10% – $25000 per year). Participants at all levels of the market commonly reported receiving cannabis for ‘free’ and this is likely to reflect the social sharing of cannabis during group consumption and non-cash payments for cannabis. This barter and gift giving tradition may provide cannabis users with a degree of insulation from any price increases for cannabis brought about by law enforcement activity. Cannabis selling creates a convenient source of income for heavy cannabis users to finance their own personal cannabis consumption, which may also dampen the impact of any rise in price brought about by law enforcement success.The 2003 HBS-Drug Use was funded by the New Zealand Ministry of Health and carried out as part of the Public Health Intelligence (PHI) Health Behaviours Survey Monitor. The statistical design for the 2003 survey was completed by Dr. Megan Pledger at SHORE, and by James L. Reilly from Statistical-Insights. The questionnaire was adapted and extended from the National Drug Survey questionnaire for the Health Behaviours programme by Dr. Chris Wilkins. Data collection was managed by Dr. Chris Wilkins, Rachael Lane, Joe Morley and Mary Blade. The statistical analysis of 2003 HBS-Drug Use was completed by Paul Sweetsur. The analysis in this paper was partly funded by the New Zealand Police.