The values of insurance companies under different uncertain portfolios

The value of an insurance company mainly depends on the premiums received in each underwriting period, the probability distribution of the accumulated claims against the company, the equity capital, and the risk-adjusted rate of return determined by the market. We analyze how the value of the company is affected by marginal changes in the underlying determinants, when there is a regulatory requirement on equity capital. The major factor we are interested in is the claims against the company in each underwriting period, which we represent by a stationary stochastic process. The existing orders for partially ranking risks do not suffice for our purpose, and new conditions are found on the risks facing the companies, for the successful ranking of the company values.     

Stock exchange self-listing and value effects

The stock exchange industry has experienced strong competition in recent years. The commercial realities of the day have compelled some exchanges to change their ownership and governance structure from mutual to public ownership and have listed their shares on their own exchanges. This paper examines the value effects of self-listing and the attendant change in business strategy on the performance of listed exchanges. The results provide considerable support for the proposition that exchanges whose traditional sources of revenue have come under severe pressure, and those that have experienced a slow growth in net profit margin but high growth in market activities, are likely to change their ownership structure from mutual to public ownership. A comparison of the operating performance of the listed exchanges to that of a control group of non-listed exchanges shows that the self-listed exchanges have performed better than their non-listed counterparts. The self-listed exchanges also outperformed the stock market indexes and a control group of non-exchange firms that went public in the same year as the listed exchanges. I submit that better monitoring of managerial performance, the potential threat of takeover from the market for corporate control that accompanies self-listing and the reduction in agency costs associated with the mutual form of exchange contribute to unlock growth opportunities and value for the publicly traded stock exchanges.     

Accounting and Finance at forty: a retrospective evaluation

Accounting and Finance has evolved from a news bulletin to a full-grown refereed academic journal that has published papers written by authors from Australia, New Zealand, the United States of America, Canada, Europe and Asia. The Journal published its 41^st volume in 2001 and that anniversary issue coincides with the beginning of the new millennium. As part of the celebration of this important milestone, this article reviews the Journal's evolution, the variety of papers published and the Journal's impact on accounting and finance research in the Asia Pacific region. Data for 394 papers published in the Journal by 570 authors are analysed. I find that the distribution of institutions and authors that have published in the Journal is highly skewed, with the top five (11) institutions accounting for 35 per cent (51 per cent) of the published papers in the Journal. Similarly, 8 per cent of the authors have published 26 per cent of the articles in the Journal. Analysis of the citation pattern indicates that Accounting and Finance does not have much impact on research published in the Asia Pacific region, with the Journal accounting for only 1.06 per cent of all citations in the selected Asia Pacific journals. Sub-period analysis indicates that not even the establishment of the editorial board in the latter half of the 1990s has helped improve the impact of the Journal on research published in the Asia Pacific region. However, compared with other Asia-Pacific journals, Accounting and Finance has the strongest impact on publications in the selected journals. The impact is even stronger in the latter half of the 1990s. Also, the impact of Accounting and Finance on the more recent journals in the Asia Pacific region is stronger than that of the other more established journals.     

Institutional destruction resulting from donor and project proliferation in Sub-Saharan African countries

This note suggests that the most important feature distinguishing foreign aid in the 1970s from earlier programmes was the proliferation of donors and projects. This donor and project build-up, which continues into the 1980s, is having a negative impact on the major government institutions of developing nations. Instead of working to establish comprehensive and consistent national development objectives and policies, government officials are forced to focus on pleasing donors by approving projects that mirror the current development ‘enthusiasm’ of each donor. Further, efforts to implement the large number of discrete, donor-financed projects, each with its own specific objectives and reporting requirements, use up far more time and effort than is appropriate. Project consolidation is needed, but this is unlikely to occur on a significant scale because of the competitive nature of donor interactions. Second-best solutions include a greater emphasis on institution-building and new projects expressly intended to facilitate implementation of existing project portfolios.     

What Has Been Happening to Pay in the Public-Service Sector of the British Economy? Developments over the Period 1970–1992

This study presents a detailed analysis of the most important developments in public-service workers' pay over the period since 1970. It records the real earnings growth of all the largest groups of public-service workers in Britain and details the consequences of the different rates of earnings growth enjoyed by the various groups for pay differentials and relative pay in the public sector. It details the size of wage settlements and calculates the magnitude of wage drift for all major groups of public-service-sector workers, and it considers the extent to which the fastest rates of earnings growth appear to result from particular institutional arrangements for determining pay, offering a brief discussion of the role of pay review bodies in this process. The study uses unpublished data from the New Earnings Survey together with detailed information on the size and timing of wage settlements over the period 1970–1992.     

Reverse Mortgages: Contracting and Crossover Risk

A pricing model is developed for a reverse mortgage contract where the borrower receives payments either as a lump sum or in an annuity while the loan balance accumulates as a claim against the house. No underwriting criteria on income are applied. One risk of default is that the borrower will remain in the house after the negatively amortizing loan balance exceeds the value of the house. An explicit pricing model of the reverse mortgage permits the evaluation of this default "crossover" option. Alternative methods involving life insurance contracts and securitization are compared as secondary market channels.     

Incentive generating state dependent penalty system: The case of income tax evasion

Penalty systems can very often be looked upon as corrective measures established in order to eliminate or reduce costly externalities generated by optimizing economic agents. Hence, penalties can be viewed as regulatory measures and their efficient structure should be of interest to economists. We propose a dynamic incentive generating penalty system which, if instituted, may reduce, at a given cost, the generation of undesirable externalities. The special case to which we refer is income tax evasion, although our scheme should be applicable to any kind of externalities, such as pollution of the environment, violation of antirust laws and others which are created by repititive actions of economic agents.