Product Standards and the Economics of Time

It is increasingly common for policy makers to evaluate product standards in cost-benefit terms. However, such evaluations focus on the product itself rather than the product in use. The possible impact of the standard on consumers’ use of time is therefore overlooked. As a result, cost-benefit relationships could be systematically misrepresented.     

Middle-School Children's Sources and Uses of Money

Despite their growing economic power, children's acquisition and use of money rarely has been investigated in academic research, although it has been a frequent topic in the media. This study (1) describes sources and uses of money children (age 10–15) receive; and (2) investigates the association of children's uses of money with their age, gender, family structure, and sources of money. The sources of money are associated with children's uses of it, but age, gender, and family situation do not relate to the way they use money. Consumer education should focus on the sources of children's money in relation to the way they use it.     

Economic determinants of family development processes

Economic activities of families have important influences on processes of family development and family change over time. Knowledge of these special relations has expanded in recent years, as has the literature on the economics of family life as a general field. As a result, scholars and professionals in consumer studies and home economics need conceptual frameworks that organize areas of specific findings and identify specific issues for research. A conceptual framework which identifies four economic activities performed by families and six fundamental family development and family change processes is proposed. Then, a matrix of testable hypotheses is formulated, emphasizing economic activities as independent variables in family development and change. The matrix portrays the central roles economic influences play in contemporary family life, and suggests a complete, holistic understanding of these influences. The matrix also provides a conceptual guide to the design of empirical research and synthesis of findings on the economics–family development interface.     

THE EFFECTS OF CORPORATE RESTRUCTURING ON AGGREGATE INDUSTRY SPECIALIZATION

It has been widely argued that the purpose of corporate restructuring during the 1980s was to produce a population of more industry-specialized, competitive firms in response to intensifying global competition. A number of studies show that corporate restructuring resulted in increased corporate focus during the 1980s. However, no study has yet examined whether corporate restructuring resulted in increased specialization at the industry level during the 1980s. This study examines this issue. First, we examine whether or not aggregate industry specialization increased during the 1980s. That is, we ask: did the average firm in any given U.S. industry become more or less specialized to that industry during the 1980s? Second, we examine whether corporate restructuring was a significant determinant of change in aggregate industry specialization during the 1980s. Using a sample of 686 four-digit SIC industries and 64 two-digit industry groups, this study finds that aggregate industry specialization declined very slightly at both the four-digit and two-digit level between 1981 and 1989. This study also finds that sell-offs of establishments through corporate control transactions or interfirm asset sales had no significant effect on aggregate industry specialization.     

A Note on Unsuccessful Tender Offers and Stockholder Returns

Recent research shows that unsuccessful tender offers may affect target share returns for two years past the offer's announcement. This note examines target returns in the interim between the announcement and one year after the offer's withdrawal. Analyzing a recent sample of targets that did not get another bid in the year following a failed tender offer, this study reaches two conclusions. First, all of an offer's premium disappears by the time failure becomes public. Second, excess returns are zero in the post-failure year. An explanation that is based on the causes of the tender offers' failures is presented.     

Implied Spot Rates as Predictors of Currency Returns: A Note

Currency call option transactions data and the Black-Scholes option pricing model, as modified by Merton for continuous dividends and as adapted to currency options by Biger and Hull and by Garman and Kohlhagen, are used to imply spot foreign exchange rates. The proportional deviation between implied and simultaneously observed spot rates is found to be a direct and statistically significant determinant of subsequent returns on foreign currency holdings after controlling for interest rate differentials. Further, an ex ante trading rule reveals that the additional information contained in implied rates often is sufficient to generate significant economic profits.     

To Guide or Not to Guide? Causes and Consequences of Stopping Quarterly Earnings Guidance

In recent years, quarterly earnings guidance has been harshly criticized for inducing “managerial short‐termism” and other ills. Managers are, therefore, urged by influential institutions to cease guidance. We examine empirically the causes of such guidance cessation and find that poor operating performance — decreased earnings, missing analyst forecasts, and lower anticipated profitability — is the major reason firms stop quarterly guidance. After guidance cessation, we do not find an appreciable increase in long‐term investment once managers free themselves from investors’ myopia. Contrary to the claim that firms would provide more alternative, forward‐looking disclosures in lieu of the guidance, we find that such disclosures are curtailed. We also find a deterioration in the information environment of guidance stoppers in the form of increased analyst forecast errors and forecast dispersion and a decrease in analyst coverage. Taken together, our evidence indicates that guidance stoppers are primarily troubled firms and stopping guidance does not benefit either the stoppers or their investors.