Causes and consequences of short-term institutional herding

This paper provides new evidence on the causes and consequences of herding by institutional investors. Using a comprehensive database of every transaction made by financial institutions in the German stock market, we show that institutions exhibit herding behavior on a daily basis. Herding intensity depends on stock characteristics including past returns and volatility. Return reversals indicate a destabilizing impact of herds on stock prices in the short term. Results from panel regressions suggest that herding is mainly unintentional and partly driven by the use of similar risk models. Our findings confirm the importance of macro-prudential aspects for banking regulation.     

How costly is the Sarbanes Oxley Act? Evidence on the effects of the Act on corporate profitability

The Sarbanes-Oxley Act (SOX) was intended to protect investors by improving the accuracy and reliability of corporate disclosures. However, critics have argued that the costs of SOX far outweigh its intended benefits. Prior studies based on stock-price reactions to SOX-related events document mixed evidence on the expected impact of SOX. In contrast, we provide evidence on the net realized costs of SOX by examining its impact on operating profitability. We find that average cash flows decline by 1.3% of total assets after SOX. These costs are more significant for smaller firms, for more complex firms, and for firms with lower-growth opportunities. Annually, these costs range from $6 million for smaller firms to $39 million for larger firms. Further, we document that net SOX-related costs are not limited to one-time expenses associated with internal-control design and implementation. In aggregate, for the 1428 firms in our sample, these costs amount to about $19 billion per year. Profitability is lower for up to four years post-SOX. To our knowledge, ours are the first estimates of the realized net costs imposed by SOX.     

SUPPLY RESPONSES IN THE SOUTH AUSTRALIAN POTATO INDUSTRY

The potato industry in South Australia is characterised by very unstable prices. One hypothesis for this instability is that potato growers' acreage responses follow a cobweb pattern, that is, a one year lag of acreage to price. This hypothesis is tested, together with a two year lag and a distributed lag. The distributed lag model seems the most satisfactory and gives a short-run elasticity of acreage to price of 0.36 and a long-run elasticity of 1.09. An alternative to the lagged price hypothesis is the "constant cash return" hypothesis which postulates that potatoes are grown to provide a certain cash income to permit farm development. This explanation of acreage response only seems relevant in the dairying and fat lamb areas of the State.     

The sadness of lives and the comfort of things: Goods as evocative objects in bereavement

Abstract

This paper seeks to understand the texture and emotional tenor of the relations that bereaved people can have with a range of objects, including those that seem mundane or simply part of the flotsam and jetsam of everyday life. Taking Joan Didion's best-selling book, The Year of Magical Thinking, as its focus, the paper examines the varied and significant roles that certain objects played as she negotiated the vagaries of her first year as a widow. While previous literature has mined the memorialising function of goods for survivors, our analysis suggests that goods and consumption experiences can also play a powerful role as tools to think with for those struggling to create a meaningful narrative of death and loss. It concludes by considering the contribution of the analysis to the understanding of goods as ‘active life presences’ (Turkle, 2007 Turkle, S. 2007. Evocative objects: Things we think with, Cambridge, MA: MIT Press.  [Google Scholar]), the relationship between consumption and bereavement, and ‘the sadness of lives and the comfort of things’ (Miller, 2008 Miller, D. 2008. The comfort of things, Cambridge: Polity Press.  [Google Scholar]).