What Role Taxes and Regulation? A Second Look at Open Market Share Buyback Activity in the UK

This paper re-examines the evidence on open market share repurchase activity reported by Rau and Vermaelen (2002) for the UK. Using data from the Securities Data Corporation (SDC), Rau and Vermaelen conclude that the level of repurchase activity is trivial. They attribute the low repurchase volume to regulatory restrictions that limit companies' ability to take advantage of an undervalued stock price and conclude that the bulk of repurchase activity that does occur is driven by the desire to generate tax credits for pension funds. Using data collected from a variety of sources, we find that the SDC substantially understates UK open market buyback activity. Based on our more comprehensive dataset we conclude that (a) pension funds' tax considerations are not the primary cause of UK share repurchases and (b) despite the prevailing regulatory environment, underpricing still represents an important determinant of repurchase activity.     

An appropriate model for joint regional action in southern Africa after apartheid

Market‐based integration is not appropriate to the joint development of the southern African region; the region's political, technical and institutional immaturity requires instead loose, function‐based economic cooperation. This will also facilitate intraregional trade. Subregions in the meantime could progress to higher levels of integration: international experience has shown that successful integration is most likely when it takes place on the basis of ‘regions within regions’. Cooperative development of the subcontinent is likely to be best achieved through the ‘concentric circles’ approach to regional cooperation, in which a revised Southern African Customs Union‐Common Monetary Area forms the highly integrated core of a loose, function‐based cooperative arrangement covering the whole of southern Africa.     

Using an approximate kiefer-weiss solution for testing insect population densities

Summary A sequential testing procedure called 2-SPRT for the meanμ of the negative binomial distribution with known exponentk is presented. For any fixedμ ₀(μ ₁<μ ₀<μ ₂), the 2-SPRT provides an asymptotic solution to the modified Kiefer-Weiss problem. Determination ofμ ₀ such that the test provides an approximate solution to the Kiefer-Weiss problem is described. The behavior of the 2-SPRT and the Sequential Probability Ratio Test is investigated using Monte Carlo methods. The error probabilities and the average sample numbers are compared. All the computations were carried out on the Alabama Supercomputer.     

Managerial Equity Ownership and the Demand for Outside Directors

This paper examines the linkage between the use of outside directors and managerial ownership. We conjecture there are two linkages: the standard incentive‐alignment demand for monitoring when managers own little stock and an entrenchment‐amelioration demand when managerial stock ownership is high. As a consequence, we predict the association between managerial ownership and board composition will be nonlinear (U‐shaped if the entrenchment effect is sufficiently pronounced). Using UK data, we find that both quadratic and logarithmic models outperform the simple linear relationship assumed in prior research and that the substitution between managerial ownership and board composition is stronger than hitherto supposed.     

Hard Times or Great Expectations? Dividend Omissions and Dividend Cuts by UK Firms*

This paper uncovers an increasing proportion of quoted UK companies omitting cash dividends. Using a large panel of quoted UK firms, we estimate panel data probit models for the incidence of dividend omissions and cuts as functions of financial characteristics including cash flow, leverage, investment opportunities, investment and company size. These variables account for most of the increase in omission since 1995. There is relatively little evidence to link this to the major tax reform of 1997 that abolished tax refunds on dividend income payable to tax‐exempt institutions. Significant persistence effects indicate companies are slow to adjust their balance sheets through their dividend.     

Educational attainment and cohort size

"We argue that the postwar baby boom [in the United States] caused substantial fluctuations in both the economic rewards to education and educational attainment over the last 3 decades. If substitutability between young and old workers diminishes with education, the present value of lifetime earnings for a boom cohort is depressed more for highly educated workers, reducing incentives for educational attainment. The opposite is true for pre- and postboom cohorts. The diminishing substitutability hypothesis explains the declines in both the returns to college and college completion rates in the 1970s and predicts a substantial increase in educational attainment for postboomers."     

Uncertainty and the theory of international trade in long-run equilibrium

We consider a country with two factors and two industries, each of which faces technical and price uncertainty. Entrepreneurs choose outputs in order to maximize the expected utility of profits. They also draw factor payments and purchase consumption goods after the uncertainty isresolved. They enter and exit from an industry according to whether participation there increases their expected utility. Within this model, the validity of the propositions of neoclassical trade theory depends on how the entrepreneurs' entry decisions are affected by parameter changes via their roles as risk bearers, consumers and factor owners.     

The mixed economy for public service consumers. The case of consumer agencies for public transportation

The phrase mixed economy of welfare refers to the observation that the provision of public services in western countries frequently involves the participation of other sectors in addition to government. For example, a service may be privately financed and produced but regulated by government, financed by government subsidies or vouchers but produced privately, or produced by a commercial or voluntary organization under contract to government. But such different ways in which government can arrange public service supply by no means exhaust the varieties of arrangements in a mixed economic system. Other examples include alternative institutional arrangements for articulating consumer wants for public services, evaluating consumer satisfaction, and holding the producers of services accountable for their performance.This paper examines the role of official public advisory bodies and private, voluntary associations whose purposes are to improve services to users of U.S. public transportation. At variance with some of the theory of political economy, it is found that the public and private consumer organizations generally enjoy a symbiotic rather than substitute or competitive relationship with one another, and that both kinds of organizations arise and complement each other in addressing the problems of consumers of a government service produced under monopoly conditions.

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Die Beteiligung mehrerer Wirtschaftssektoren bei der Versorgung mit öffentlichen Diensten — der Fall der amerikanischen Verbraucher-Agenturen für öffentlichen Nahverkehr

Zusammenfassung Der Ausdruck mixed economy of welfare bezieht sich auf die Beobachtung, daß die Versorgung mit öffentlichen Gütern in westlichen Ländern häufig nicht allein durch den Staat erfolgt. So kann zum Beispiel ein öffentliches Gut privat finanziert und hergestellt werden, aber unter öffentlicher Aufsicht stehen, oder es kann von der öffentlichen Hand bezahlt aber privat produziert werden, oder es kann durch eine kommerzielle oder gemeinnützige Organisation in Absprache mit staatlichen Stellen produziert werden. Ebenso gibt es Fälle, wo öffentlicher und privater Hersteller eines vergleichbaren Gutes verschiedene Marktseggmente versorgen. Beispielsweise stehen in den USA den Bürgern, die mit öffentlichen Schulen unzufrieden sind, private Schulen zur Verfügung.Diese Beispiele zeigen, auf welchen unterschiedlichen Wegen die Versorgung mit öffentlichen Gütern rangiert werden kann. Solche angebotsorientierten Beispiele zeigen aber nur einen Teil der möglichen Sektorverbindungen in einer Mischwirtschaft. Andere Beispiele treffen eher die Nachfrageseite bei öffentlichen Gütern, insbesondere die institutionellen Möglichkeiten für die Artikulation von Verbraucherwünschen hinsichtlich öffentlicher Güter für die Erfassung der Zufriedenheit und dafür, daß die Anbieter öffentlicher Güter für ihr Leistungsniveau einstehen müssen. Solche Beispiele zeigen, daß Einrichtungen wie Kommissionen für öffentliche Dienste, Departements für Konsumentenfragen, Ombudsmänner und eine Vielzahl privater und freiwilliger Organisationen in unterschiedlichster Weise tätig werden, um die Interessen von Bürgern zu schützen, die öffentliche Leistungen in Anspruch nehmen.Der vorliegende Beitrag betrachtet solche Einrichtungen für öffentlichen Nah- und Fernverkehr in den USA. Ebenso wie in England gibt es hier sowohl offizielle öffentliche Beratungsgremien wie auch private freiwillige Einrichtungen, deren Zielsetzung ganz ähnlich sind, nämlich die Leistungen der öffentlichen Verkehrsunternehmungen zu verbessern. Der Beitrag berichtet über die Ergebnisse einer empirischen Studie beider Arten von Gremien und versucht die Rolle beider Arten in einer Mischwirtschaft zu beschreiben. Insbesondere versucht der Beitrag, zu erklären, warum beide Arten von Gremien entstehen, welches Verhältnis sie zu einander und zu den Transportunternehmen haben. Im Gegensatz zu manchen theoretischen Annahmen erwies sich, daß öffentliche und private Verbraucherorganisationen weniger in einem substitutiven oder wettbewerblichen Verhältnis zueinander stehen, sondern eher eine Symbiose miteinander bilden, und daß sich beide Arten von Organisationen häufig bei der Behandlung von Problemen ergänzen.The author is indebted to his former student and research assistant Chester Phillips for carrying out the survey for this paper. He would also like to thank his colleague Richard Silkman for insightful comments and suggestions on the first draft and Beverly Dolinsky of the Permanent Citizens Advisory Committee to the MTA in New York City for the time and information she provided. Finally, the author wants to thank Ken Judge for providing the stimulus to write this paper through the invitation to participate in the 1983 Social Administration Association Conference in Canterbury, England, where this paper was first presented, and Harry Weiner for arranging support to allow attendance at that conference.

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Dennis R. Young is a Professor at W. Averell Harriman College for Policy Analysis and Public Management, State University of New York at Stony Brook, Stony Brook, New York 11794, USA.