Reflections on per diems in international development projects: Barriers to and enablers of the project cycle

The concept of what a per diem is and who should receive one is a complex idea that, within the development context, can either support or hinder the achievement of development projects’ goals. This paper seeks to explain the evolving nature of per diems and their use within the development context; explore how they serve as barriers or enablers in achieving project goals; and touch on their impact on the development project cycle. Through a 3-year-long internationally funded development programme in Malawi and South Africa, the authors compare lessons drawn from their experience with existing literature to determine the practicalities of paying per diems and address the question: To what extent do per diems support or hinder international development projects?     

Securities laws in the host countries and the capital structure of US multinationals

We examine whether securities laws in the host countries influence the capital structure choice of United States (US) multinational corporations. We develop firm-level global indices to classify each corporation in terms of its exposure to the security laws that govern the rights of security holders in the countries where it has subsidiaries. The results show that the use of long-term debt is positively related to the firm's global standing in terms of common law legal origin, burden of proof, investor protection, disclosure requirements, and public enforcement. The securities laws in a country affect the capital structure of multinational corporations that has subsidiaries in that country.     

Ownership Structure and Capital Structure: A Study of Vietnamese Listed Firms

This paper examines the relationships between ownership structure and capital structure for non‐financial listed firms in Vietnam during the period 2007–2012. Although different approaches are applied in this research, all results from those models are consistent. The study finds that while foreign ownership has a negative impact on leverage, state ownership has a positive influence. Managerial ownership has a positive relation with debt level, while the effect of large ownership on debt level is not conclusive.     

Did the regulatory changes of 1999 and 2001 affect income smoothing behavior of US banks?

This study examines the impact of the regulatory changes introduced by the Federal Financial Institutions Examination Council (FFIEC) in 1999 and by the Securities and Exchange Commission and FFIEC in 2001 on the income smoothing approaches and mechanisms employed by the United States (US) banking industry. We find that the relationship between previous quarter charge-offs and current quarter recoveries that was prevalent in the 1990’s to be insignificant for homogeneous loans but for heterogeneous loans the relationship became significant in the years following the regulatory changes. Recoveries are positively and significantly associated with the surprise net interest margin or return on assets which implies recoveries are primarily determined by the economic realities of the charged-off loans. The regulatory changes have strengthened the relationship between current quarter recoveries from heterogeneous loans and current quarter charge-offs but for homogeneous loans this relationship weakened insignificantly. The new regulations reduced the surprise gross loan charge-offs suggesting that the enforcement improved the accuracy of the provision as a predictor of next quarter’s gross loan charge-offs.

     

The Intraday Pattern of Information Asymmetry,Spread, and Depth: Evidence from the NYSE

Studies suggest that investment flows, liquidity imbalances, and institutional trading may create intraday trading patterns and opportunities for investors to time their trades to reduce transaction costs. Motivated by these studies, we divide each trading day into 13 half‐hour trading intervals and measure information asymmetry from price changes, trade sizes, and trade directions. We find that information asymmetry starts high in the morning, drops continuously until it reaches a midday low during Interval 7, rises to a midday high during Interval 10, and drops continuously after. In contrast, neither the spread nor the depth exhibit similar midday extreme values. Essentially, we identify a 90‐min window in the afternoon when net valuable information arrives to the market in high frequency while liquidity is stable, and that may be an opportunity for some investors to time their trades. In addition, we show that market makers employ dynamic strategies that change the spread, the depth, or both to manage information asymmetry. This is particularly evident during the last three trading intervals, where the significant drop in information asymmetry is countered primarily by a significant increase in the depth while the spread is almost constant.     

Canadian takeover announcements and the job security of top managers

This study measures the turnover rate of top managers (Chief Executive Officers or Presidents) in acquisition targets following the public announcements of takeovers in Canada. Turnover rates following the announcements of completed and unsuccessful takeover attempts did not differ from each other but were higher than the norm for CEOs from a control group of nontarget firms. The turnover rate was particularly high for widely‐held firms and negatively correlated with the preannouncement performance of the targets. Overall, results suggest that a major objective of takeovers in Canada is to reduce management failings, inefficiency, and agency costs. Copyright © 2007 ASAC. Published by John Wiley & Sons, Ltd.     

Capital Budgeting for Advertising Expenditures: A Contingent Claims Approach

Advertising expenditures constitute a big part of the budgets of firms. Through their impact on demand and costs, advertising activities affect the firm's pricing and output decisions as well as the firm's market value. Yet, there is no analytical framework by which these effects can be measured. This paper develops a cash flow model for a product where the advertising budget is divided between a strategic component designed to increase expected demand and a contingent component allocated to be used only if sales fall short of capacity. Contingent claims techniques are employed to evaluate the present value of the cash flows and to provide a framework for determining the size of the advertising budget, and the pricing and production strategies that maximize the firm's value. The impact of the price sensitivity, volatility, and growth rate of demand on the size of the advertising budget is also analyzed.     

Expected Time Value Decay of Options: Implications for Put‐Rolling Strategies

Assuming the underlying asset price remains constant, previous studies show that the time value of an option decays gradually at a rate that accelerates over time and peaks at the expiration date. Thus, a significant portion of time value is lost in the four weeks leading up to expiration. This paper shows the time value of currently at‐ or near‐the‐money options should be expected to decay at a rate that decreases over time. The time values of options that are currently deep‐in‐ or deep‐out‐of‐the‐money are expected to initially rise and then resume the normal decay pattern.     

Investment in salvage equipment

Manufacturers are faced with three options for disposing of excess finished items: they can (1) continue to mark down the item until it sells; (2) dispose of or scrap it; or (3) salvage it in order to reclaim valuable raw materials and components. In many situations the option of a markdown is not viable, thus the choice is to either scrap or salvage. Although many manufacturers have invested in salvage equipment, they have not deduced the impact of this investment as it affects not only the risk-adjusted value of the project but also the production run size and the selling price. Hence, their decisions frequently turn out to be suboptimal. This paper develops a project-valuation model that adds a new dimension to traditional capital budgeting decisions by incorporating salvage capacity.     

Home Fire Safety Checks in New South Wales: an economic evaluation of the pilot program

Traumatic events such as fire can result in fatality, injury, and loss of property; even a minor fire can interrupt the normal flow of people’s lives. During the years 2009–2013, urban and regional New South Wales (NSW) experienced an annual average of 4329 residential structural fires with 593 injuries and 22 fatalities at an annual cost of $656 million dollars. In 2014, Fire and Rescue NSW piloted a program called Home Fire Safety Checks (HFSC), aimed at high-risk households. In total, 228 homes in 8 suburbs received safety checks, including having smoke alarms installed, having batteries changed in smoke alarms, and being provided with fire blankets and fire safety information. The pilot study design enabled detailed economic evaluation of the program, including both development costs and ongoing costs for a full roll-out. Analysis of the cost of fire within NSW, combined with measurements of the success of similar programs internationally, demonstrates the program’s cost effectiveness. Savings per dollar spent exceed $12 if the program includes 1% of high-risk homes and obtains a 0.75% reduction in number of fires. These results demonstrate that a full roll-out of the HFSC program warrants ongoing funding. External factors affecting program delivery include community acceptance and willingness to participate in the program, particularly very high-risk individuals, and ongoing behavioral change. In addition, HFSC faces the same ongoing funding challenges other preventative community programs face in a period of tightening state budgets.