Markets and the state and the role of local regeneration strategies: A case study of the defence sector in the UK in the 1980s

This article reviews current practice and thinking in the UK with respect to changes occurring in the defence sector. Planned responses and interventionist measures to deal with the consequences of large scale job losses have not been approaches adopted by the UK Government during the 1980s. However, many of the changes have been triggered or directly caused by the Government's own policies to create a free trade and liberalised market economy. An opportunity has arisen for localities, through a growing local economic development function, to play a role in such readjustment. This article examines the extent to which such local responses can exercise any effective control over the future direction and impact of restructuring, and in particular address the role of the military-industrial complex, arms conversion and the peace dividend from this perspective.     

Deposit Insurance, Capital Adequacy Requirements and Interest Rate Dynamics

This paper examines the long run interaction among deposit insurance, bank deposit rates and capital adequacy requirements. Using analysis similar to the price discrimination model of Lott and Roberts (1991) we find that a competitive environment among banks would link the spread between insured and uninsured deposit rates to the size of the insurance premium. We also find that banks that choose to operate at the regulatory minimum capital level, would increase asset risk with increased capital requirements if (1) the implicit interest paid to insured and uninsured depositors is equally sensitive to changes in risk and capital adequacy and (2) the insurance premium is independent of the level of risk and capital adequacy. Under the present risk-based premium structure, asset risk has the potential to decline when the regulatory agency raises capital requirements. Finally, we examine the time series behavior of insured and uninsured interest rates to see if it is consistent with our theoretical model. We find that insured and uninsured rates, along with deposit insurance premiums, are cointegrated series as suggested by our model.     

ON PREFERRED STOCK

Preferred stock is issued by many corporations in spite of its apparent disadvantages. This study explains why. A simple partial equilibrium model is presented in which preferred shares are both supplied and demanded. Stronger tax incentives in Canada than in the United States may create a positive preferred equilibrium. Empirical evidence on the relative use of preferred stock in the two countries is presented to support this hypothesis.     

The Market for Corporate Assets: Who Engages in Mergers and Asset Sales and Are There Efficiency Gains?

We analyze the market for corporate assets. There is an active market for corporate assets, with close to seven percent of plants changing ownership annually through mergers, acquisitions, and asset sales in peak expansion years. The probability of asset sales and whole-firm transactions is related to firm organization and ex ante efficiency of buyers and sellers. The timing of sales and the pattern of efficiency gains suggests that the transactions that occur, especially through asset sales of plants and divisions, tend to improve the allocation of resources and are consistent with a simple neoclassical model of profit maximizing by firms.     

A GAME THEORY ANALYSIS OF MANAGEMENT STRATEGIES FOR THE SOUTHERN BLUEFIN TUNA INDUSTRY

Game theory offers an alternative approach to standard means of resource assessment which can be of value in the definition and assessment of policy options for competing parties. Using a Nash co-operative game it has been possible in this paper to show the significance of fishing strategies for southern bluefin tuna which take into account the age distribution of the catch. Assuming Japan and Australia act according to a cooperative game then the optimal fishing strategy was found to involve Australia avoiding the fishing of the very young cohorts and Japan taking a moderate catch in subsequent older age classes but not the oldest of the age classes. Sub-optimal strategies were also presented and evaluated along with an indication of the level of biomass associated with different strategies. It was concluded that harvesting policies need to be developed both according to weight of fish harvested and age class.     

The market as a commons: Is catching customers like catching fish?

Summary This note is a critique of an article by P. Copes published in the February 1984 issue ofDe Economist. Copes argues that an open access market must be regarded as a common property resource. By analogy to the economics of the fishery, he derives the proposition that free access to any market results in excess capacity because competitive entry dissipates what he calls the market rent. Copes claims that his results hold for the limiting case of perfect competition. Our critique explains why the analogy between a perfectly competitive market and a open access fishery is invalid.     

The role of the paid preparer in nonprofit reporting quality

The purpose of this paper is to examine whether the preparer of the Form 990 influences the Form 990 reporting quality. Currently, the Form 990 is the only widely available source of governance and financial information for nonprofit organizations. The leading rater of nonprofit organizations, Charity Navigator, relies primarily on information from the Form 990 in developing their ratings. We identify misreporting by utilizing five measures of reporting quality. We find organizations that hire an outside accounting firm to prepare the Form 990 report higher quality financial information than organizations that choose to prepare the Form 990 in house. Interestingly, the size of the accounting firm is not associated with the quality of Form 990 reporting with the exception that paid preparers who are sole proprietors are more likely to misreport. Further exploration reveals that paid preparers who file more returns are less likely to misreport indicating that specialization is associated with more accurate reporting on Form 990. Our study contributes to the literature by using multiple reporting measures to examine the impact of paid preparers on the reporting quality of 990s. Furthermore, our study is the first to consider how specialization affects the accuracy of 990 returns.