Designing long-term disability plans: tax efficiency vs. maximizing wage replacement

The tax treatment of long-term disability plans raises difficult questions for employers and employees, as it necessitates a tradeoff between tax efficiency and maximizing wage replacement for disabled workers. By using simplified case examples, this article illustrates the advantages and disadvantages of different plan design choices. The authors conclude that, in most cases, long-term disability coverage should be mandatory but that employees should be given the choice to decide whether their coverage is taxable.     

The Influence of Uncertain Job Location on Urban Form and the Journey to Work

Standard urban models assume residents never think about their next job. More likely, the individual value of a given home and the choice of commute length are based not only on the current job site, but also on the expectation of where future jobs will be and the likelihood of both job separations and residential moves. The first factor lessens the value of access to the present job, while the second determines the opportunity cost of moving. Both sets of factors lead to flatter rent gradients and more sprawl than predicted by standard theories. The analysis further suggests that relatively stable jobs are likely associated with relatively shorter commutes. Past studies of the regional balance of jobs and housing, of “wasteful” commuting, of differences in the length of commute by gender, and of spatial tests for discrimination in housing and local labor markets have neglected these considerations, and may yield biased results as a consequence.     

Is U.S. CEO Compensation Broken?

This article addresses four major concerns about the pay of U.S. CEOs: (1) failure to pay for performance; (2) excessive levels of pay; (3) failure to index options and other equity-based pay, resulting in windfalls; and (4) too much unwinding of incentives. The authors' main message is that most if not all of these concerns are exaggerated by the popular tendency to focus on the annual income of CEOs (consisting of salary, bonus, and stock and option grants) while ignoring their existing holdings of company equity.
Taking into account the effect of stock price changes on CEO wealth leads the authors to a number of interesting conclusions. First, the pay-for-performance relationship is strong and has grown significantly in recent years. Second, what may appear as above-normal growth in annual pay levels may be necessary to compensate CEOs for the increased risk associated with their growing level of equity-based incentives. Third, conventional (that is, unindexed) stock and options, when viewed as a combination of market risk and firm-specific risk, may provide an optimal solution to two conflicting demands: shareholders' demand for executive rewards tied to company performance and executives' preference to diversify their wealth. Finally, there is little evidence of widespread CEO unwinding of incentives, and levels of CEO equity ownership in the U.S. remain impressively high.     

《社区再投资法》和近期抵押贷款危机

美国19美联储和其他联邦金融监管当局以<社区再投资法>为指导,在解决欠发达地区信贷需求方面已经积累了不少经验.<社区再投资法>鼓励金融机构面向低收入社区和居民,提供抵押贷款、小额贷款以及其他形式的信贷,而且还应向低收入地区和居民进行投资和提供服务,以此作为促进这些地区发展的总体努力的一部分.     

Is Australia on a sustainability path? Interpreting the clues*

Genuine savings is a conceptually valid one‐sided indicator as to whether Australia is on a weak sustainability path (negative GS would warn that current welfare is unsustainable). The World Bank's adjusted net savings (ANS) data summarise the available evidence, and by this indicator Australia is muddling along, at best. ANS misses some important pieces of the picture – net depletion of water, soil and biodiversity, and most kinds of pollution damage – and thus overstates Australia's genuine savings performance. Weak sustainability can be promoted by getting the prices right, and piecemeal efforts are underway via regulatory approaches and resource/environmental markets of various kinds. Nevertheless, particular resource problems – habitat conservation, biodiversity, climate change and dryland salinity – are likely to also require strong sustainability approaches. A sustainable future involves pushing weak sustainability as far as the body politic permits, invoking precautionary instruments for specific resource crises, and nurturing policy processes that encourage the consensus‐building that will be necessary to get it done.     

Explaining the accrual anomaly by market expectations of future returns and earnings

This study examines the accrual anomaly under the framework of the Campbell [Campbell, J.Y. (1991). A variance decomposition for stock returns. Economic Journal 101 (405), 157-179.] model. The Campbell (1991) model shows that realized asset returns are a joint function of 1) expected returns, 2) revisions in market expected future returns (i.e., return news), and 3) revisions in market expected future cash flows (i.e., cash flow news). The current study adopts the Easton [Easton, P. (2004). PE ratios, PEG ratios, and estimating the implied expected rate of return on equity capital. The Accounting Review 79 (1), 73-96.] model to estimate proxies for expected returns, return news, and cash flow news. The results show that firms with low accruals have lower expected returns than firms with high accruals, which is contradictory to prior research that argues that firms with low accruals are more risky. However, investors underestimate (overestimate) future earnings growth, a proxy for cash flow growth, for low (high) accrual firms. Further analysis demonstrates that earnings news (proxy for cash flow news) plays a major role in explaining abnormal returns associated with the accrual anomaly.     

A multidimensional scale for measuring business ethics: A purification and refinement

Many researchers in the field of business ethics have attempted to develop methods to determine and evaluate the ethics of a variety of different classes of people, including students, professionals, and mixed samples of students and professionals. Unfortunately, most of these studies were disjunctive, simply adding confusion to an already unfocused area of research. However, Reidenbach and Robin (1988, 1990), have changed this trend by attempting to quantify the various ethical philosophies into a multi-dimensional scale of business ethics. This paper examines the background of the Reidenbach and Robin (1988, 1990) scale — including the authors' findings, empirically tests the scale, and concludes that the scale needs further refinement. A promising result is a model with four dimensions: a broadbased ethical judgment dimension, a deontological judgment dimension, a teleological judgment dimension, and a social contract dimension.Randall S. Hansen is ABD at Florida State University, where his major is marketing and his support area is strategic management. His research interests are directed toward the applied areas of managerial and consumer ethical decision-making as well as strategic issues in social responsibility. He has published in theProceedings of the Academy of Marketing Science, Proceedings of the Southern Marketing Association, andProceedings of the Southern Management Association.     

STICKY PRICES AND COSTLY CREDIT

We develop a theory of money and credit as competing payment instruments, then put it to work in applications. Agents use cash and credit because the former (latter) is subject to the inflation tax (transaction costs). Frictions that make the choice of payment method interesting also imply equilibrium price dispersion. We derive closed-form solutions for money demand, and show how to simultaneously account for the price-change facts, cash–credit shares in micro data, and money-interest correlations in macro data. The effects of inflation on welfare, price dispersion and markups are discussed, as are nonstationary equilibria with dynamics in the price distribution.     

Does backdating explain the stock price pattern around executive stock option grants?

Extant studies show that stock returns are abnormally negative before executive option grants and abnormally positive afterward. We find that this return pattern is much weaker since August 29, 2002, when the Securities and Exchange Commission requirement that option grants must be reported within two business days took effect. Furthermore, in those cases in which grants are reported within one day of the grant date, the pattern has completely vanished, but it continues to exist for grants reported with longer lags, and its magnitude tends to increase with the reporting delay. We interpret these findings as evidence that most of the abnormal return pattern around option grants is attributable to backdating of option grant dates.