Uncertainty Associated with Future Environmental Costs and the Market's Differential Response to Earnings Information

This study examines whether the uncertainty arising from a firm's exposure to future environmental costs (environmental uncertainty) affects the market's price sensitivity to reported earnings. Specifically, when environmental uncertainty is significantly high, are investors more responsive to reported earnings released by 'high-polluting' firms than reported earnings announced by 'low-polluting' firms within the same industry? The initial impact of Title IV (the acid rain provisions) of the 1990 Clean Air Act Amendments (1990 CAAA) on the US electric utility industry provides the research setting required to isolate the effects of environmental uncertainty while addressing this question. Consistent with theoretical predictions, we find that the earnings response coefficients (ERCs) of high-polluting electric utilities are significantly greater than those of their low-polluting counterparts during a predicted period of elevated environmental uncertainty. In adjoining sample years associated with lower environmental uncertainty, we observe no statistical difference in the magnitude of the ERCs between these two groups. In addition, the study's findings suggest that the magnitude of the ERC is increasing in the firm's exposure to future environmental costs, after controlling for other factors that potentially affect ERCs.     

Information Flows across Markets: Evidence from China–Backed Stocks Dual–Listed in Hong Kong and New York

Using a bivariate generalized autoregressive conditional heteroskedasticity (GARCH) model, we examine patterns of information flows for China–backed stocks that are cross–listed on exchanges in Hong Kong and New York. Results analyzing the dual–listed stocks indicate significant mutual feedback of information between domestic (Hong Kong) and offshore (New York) markets in terms of pricing and volatility. Stocks listed on the domestic market appear to play a more significant role of information transmission in the pricing process, whereas stocks listed on the offshore market play a bigger role in volatility spillover.     

How Issue Size, Risk, and Complexity are Influencing External Financing Costs: German IPOs Analyzed from an Economies of Scale Perspective

This paper is focused on the cost of raising capital in Germany. A cross-sectional analysis of flotation cost data for 117 IPOs over the years 1993–1998 is presented. We find average flotation costs to be 7.77 percent of gross proceeds, while underwriting fees average 5.01 percent. Our results extend the literature in two important directions. First, contrary to the conventional economies of scale view we find marginal spreads to be rather constant in gross proceeds and to be higher for more risky and more complex offerings. Fixed costs amount to 5 to 9 percent of underwriting fees. Second, by applying a principal component analysis we find issue size, an issuer risk factor, and an offering method complexity factor to have an economicaly meaningful impact on underwriting fees.     

The Impact of Regulation Fair Disclosure on Information Asymmetry and Trading: An Intraday Analysis

This study examines the impact of Regulation Fair Disclosure (FD) on liquidity, information asymmetry, and institutional and retail investors trading behavior. Our main findings suggest three conclusions. First, Regulation FD has been effective in improving liquidity and in decreasing the level of information asymmetry. Second, retail trading activity increases dramatically after earnings announcements but there is a significant decline in institutional trading surrounding earnings announcements, particularly in the pre‐announcement period. Last, the decline in information asymmetry around earnings announcements is closely associated with a lower participation rate in the pre‐announcement period and more active trading of retail investors after earnings releases.     

试析新闻发言人制度在中国升温原因及实践的基本准则

新闻发言人制度有其历史溯源与理论渊源,它在信息传播过程中在一定程度上具有对信息筛选、过滤的“守门人”品质。该制度在中国大陆重新升温主要因为：一、满足公众知情权的需要;二、应对海量信息、匡正视听的需要;三、SARS等突发事件的催化。客观真实、迅速及时、切中热点是新闻发言人制度在实践中必须遵循的基本准则。     

International Trade, OECD Membership, and Religion

Transaction costs in trade gravity equation are proxied by the distance that separates two trading partners, under the assumption that the distance elasticity is the same across all trading partners. We show that distance elasticity, however, critically depends on whether trading partners are industrial countries (i.e., members of the OECD) or share same religion. These heterogeneities are both statistically and economically significant. For instance, expected trade flows are the largest when an OECD member trades with a non-member and both are non-religious. Expected trade flows fall as much as by 62.9% between two non-religious, non-OECD members. Expected bilateral trade drops by 48.1% when both countries in the pair are OECD members while one is Christian and the other is Islamic. Both religion and OECD membership significantly affect the typical transaction costs implied by the gravity equation. JEL Classification Number: F13     

ADOPTION AND PRODUCTIVITY IMPACT OF MODERN RICE VARIETIES IN BANGLADESH

Technological progress has helped Bangladesh to achieve self‐sufficiency in rice production in 2001 from a heavy import‐dependence, despite doubling of population and a reduction in arable land since its independence in 1971. As the adoption of modern varieties (MV) of rice is reaching a plateau, particularly for the irrigated ecosystem, an important issue is whether the research system will be able to sustain the growth of production. The present paper addresses the following questions: (i) to what extent farmers have been replacing the old MV with the new MV, and (ii) what has been the impact of the variety replacement on productivity and profitability. How crucial is the continuous research and release of improved rice varieties toward improving farm production and income for farmers comes out as a clear message to policymakers from the current paper.     

Trade Costs,Trade Balances and Current Accounts: An Application of Gravity to Multilateral Trade

In this paper we test the well-known hypothesis of Obstfeld and Rogoff (NBER Macroeconomics Annual 7777:339–390, 2000) that trade costs are the key to explaining the so-called Feldstein–Horioka puzzle. Our approach has a number of novel features. First, we focus on the interrelationship between trade costs, the trade account and the Feldstein–Horioka puzzle. Second, we use the gravity model to estimate the effect of trade costs on bilateral trade and, third, we show how bilateral trade can be used to draw inferences about desired trade balances and desired intertemporal trade. Our econometric results provide strong support for the Obstfeld and Rogoff hypothesis and we are also able to reconcile our results with the so-called home bias puzzle.

Multinationals: Too Many or Too Few?— The Proximity–concentration Trade-off

The paper builds an analytically tractable model that illustrates the “proximity–concentration trade-off” involved in horizontal multinationals. For low trade costs, firms are single-plant firms, for intermediate costs, some are single-plant firms whereas others are multinationals, for large trade costs, firms are multinationals. Because of the modeling strategy, the model is suited for a welfare analysis of multinationals. It shows that too many firms choose to concentrate their production in only one location. Also, for some transport costs, a reduction in transport costs worsens welfare.

Hybrid governance and governance performance in industrial purchasing relationships

Hybrid governance arrangements (e.g. joint action, long-term contracting and vertical coordination) feature regularly as an effective response to inter-firm dependence in the literature of business-to-business relationships. However, current empirical work has paid little attention to whether such governance arrangements really do improve governance efficacy and reduce transaction costs. The present study focuses on the governance efficacy of vertical coordination in industrial business-to-business relationships. Building on transaction costs arguments, the author examines whether vertical coordination is an effective means for adapting to inter-firm dependence, realized as the substantial employment of specific assets.Empirical findings from a survey of 170 industrial supplier–buyer relationships demonstrate that when asset specificity reaches a certain level, greater vertical coordination reduces ex post transaction costs significantly. On the other hand, this efficacy pattern is modest or non-existent in relationships with low asset specificity.The research findings support the basic TCA assumption that the performance of hybrid governance arrangements is highly dependent on a situation of substantial inter-firm dependence with subsequent small-number conditions.