DO GOVERNMENTS SUPPRESS GROWTH? INSTITUTIONS,RENT‐SEEKING,AND INNOVATION BLOCKING IN A MODEL OF SCHUMPETERIAN GROWTH

This paper argues that some governments adopt growth-reducing policies due to the rational self-interest of the political elites. The model takes a rent-seeking government that can block innovation and incorporates it into a Schumpeterian growth model. The quality of a country's institutions is reflected in the cost of innovation blocking. An increase in the level of innovation-blocking activity will reduce the rate of innovation and therefore reduce growth. The government also faces the possibility of losing power whenever an innovation occurs. We examine the conditions under which a government will choose to block innovation and suppress growth.     

DETERMINANTS OF BANK ACQUISITION PREMIUMS: ISSUES AND EVIDENCE

The recent interstate bank merger phenomenon has received little attention in the literature. Specifically, existing studies fail to explain sufficiently the variation of premiums paid and fail to investigate adequately the bank merger wave in terms of its interstate banking context.
This study employs models with substantial overall explanatory levels. The interstate banking context proves to be very significant. First, the study considers and finds significant the effective date of a state's interstate statute in relation to a deal's announcement date. This contrasts sharply with other studies. Second, the study uses and also finds significant a binary variable distinguishing intrastate deals from interstate deals. The premiums paid for interstate market entry, on average, exceeded those paid for intrastate transactions. Third, including regional binary variables reveals a pattern of variation in pricing throughout the country. The Southeast, the study's base of comparison, exhibited the highest premium level.
Other significant determinants of premiums paid include profitability as measured by returns on equity, growth proxied by state deposit growth and future expected population growth, and charge-offs to total loans as an indicator of loan quality.     

THE WESTERN AUSTRALIAN POWER DILEMMA*

From 1984 gas‐fired power generation had been gradually increasing its share of the electricity market in Western Australia (WA) starting at 1 per cent and rising to about 50 per cent by 2008. Had it continued on this trajectory, the WA power system would have made great advances in terms of cost and environmental efficiencies given the looming commencement of the Carbon Pollution Reduction Scheme in Australia from 2011. However, more recently the cost of natural gas has increased from $3/GJ to $7/GJ following the sudden collapse of the East Spar gas field in the North West Shelf. In this article, we analyse the impact of the gas price increase and demonstrate that despite being the most environmentally efficient conventional technology, natural gas combined cycle plant has been squeezed out of the market which in turn will increase forward electricity price risks to WA consumers through greater exposure to CO₂ pricing in the long run.     

Informativeness of Annual Reports for Firms in Financial Distress*

Abstract. This article reports the results of an investigation into the informativeness of financial communications with shareholders when the level of market uncertainty regarding future firm performance varies. Specifically, it is hypothesized that the informativeness of annual reports is positively associated with the level of market uncertainty. The informativeness of annual reports is measured by the extent of price reaction, regardless of direction, at the time of disclosure. To obtain a sample of firms with temporal variation in the level of market uncertainty, the article investigates firms nearing financial distress. Financial distress is represented by the firm's receipt of a going-concern audit report from the external auditor. Time periods immediately preceding receipt of the going-concern report are presumed to exhibit changing market uncertainty regarding future firm prospects. The empirical evidence is consistent with the article's hypothesis in that price reactions to annual reports systematically vary the nearer the firms are to financial distress. Specifically, price reactions to annual reports for the three years preceding distress are more than 35 percent larger than the price reactions to reports from earlier periods. This evidence is consistent with the informativeness of financial disclosures being dependent on the level of market uncertainty and advances our understanding of the usefulness of accounting disclosures to market participants. To the extent that accounting regulatory agencies are interested in environmental factors that determine the usefulness of accounting information to shareholders, this article offers evidence on one important factor. Résumé. Les auteurs exposent les résultats d'une analyse du contenu informationnel des renseignements financiers communiqués aux actionnaires lorsque varie le degré d'incertitude du marché relativement aux perspectives de rendement d'une entreprise. Ils posent plus précisément l'hypothèse selon laquelle le contenu informationnel des rapports annuels est en relation positive avec le degré d'incertitude du marché. Le contenu informationnel des rapports annuels est mesuré en termes d'importance de la réaction du cours des actions, peu importe l'orientation, au moment de la communication des renseignements financiers. Pour constituer un échantillon d'entreprises à l'égard desquelles le degré d'incertitude du marché a varié dans le temps, les auteurs ont choisi d'analyser des entreprises sur le point de connaître des difficultés financières. La réception, par l'entreprise, d'un rapport des vérificateurs externes mettant en question la continuité de l'exploitation témoigne de ces difficultés financières. Les auteurs posent l'hypothèse selon laquelle on enregistre, au cours des exercices qui précèdent immédiatement la réception d'un rapport de cette nature, une variation du degré d'incertitude du marché relativement aux perspectives d'avenir de l'entreprise. Les constatations empiriques confirment l'hypothèse formulée, en ce sens que la réaction du cours des actions à la publication des rapports annuels varie de façon systématique lorsque les entreprises se rapprochent des difficultés financières. Plus précisément, la réaction du cours des actions à la publication des rapports annuels pour les trois exercices précédant les difficultés financières est plus de 35 pour cent supérieure à la réaction du cours des actions à la publication des rapports des exercices antérieurs. Cette constatation vient confirmer le fait que le contenu informationnel des renseignements financiers publiés dépend du degré d'incertitude du marché, et elle nous permet de mieux comprendre l'utilité de la publication d'information comptable à l'intention des participants au marché. Dans la mesure où les organismes de réglementation comptable sont intéressés aux facteurs liés à l'environnement qui déterminent l'utilité de l'information comptable pour les actionnaires, les auteurs nous permettent d'acquérir certaines certitudes à l'égard d'un facteur important.     

Effect of Investor Speculation on Earnings Management

This paper considers how the presence of a speculative investor, who bets on a firm's future earnings report, affects how the firm's management manipulates that report. We examine the influence of the speculator's information on earnings management behavior, quality of reported earnings, and stock price efficiency. We also provide predictions for, and interpretations of, short‐window event studies and long‐window association studies.     

Consumer attitudes to ‘Healthy’ restaurants

This paper describes the results of a qualitative research study that sought the views of consumers about using restaurants as a setting for health promotion and, specifically, for providing low-fat healthy food choices. As health promotion has evolved from a major focus on individual change toward a greater focus on the environments in which people live, work and recreate, restaurants in Australia are now being targeted as appropriate organizations for change. Consumers in this study expressed cautious interest in the idea. However, it was clear that their prime motivation for choosing a restaurant and a restaurant meal did not lie with healthy food considerations. Instead, issues such as cost, personal preference and hygiene appeared to be more important.