Internal labour markets in the Australian banking industry: their nature prior to the Second World War and their recent decline

This paper uses evidence from late nineteenth-and early twentieth-century personnel records of two Australian banks to examine the nature of internal labour markets prior to the Second World War. It is argued that the industry possessed all the classic features of internal labour markets: limited ports of entry, internal promotion, long careers, and assignment of wages by well-defined rules. The paper then examines the reasons why banks adopted internal labour markets. Finally, the paper examines the recent decline of internal labour markets and examines the role of technological and social changes in this decline.     

The Fiscal Straitjacket

Andrew Sentance concludes that it will be difficult for the new British Government to limit government borrowing without raising taxes.     

passive drinking

The threat to health from passive smoking is now well understood. Andrew Wilson, a freelance healthcare journalist, reveals the alarming results of recent research into ‘passive drinking’. Without wishing to cause alarm Economic Affairs wonders how seriously we should treat these new findings?     

Regulatory Monitoring and the Impact of Bank Holding Company Dividend Changes on Equity Returns

This paper examines the impact of announcements of dividend changes by bank holding companies (BHCs) on equity returns. Many empirical studies of dividend behavior reveal positive market responses to dividend increases, which have been interpreted as confirmation of the signalling theory of dividend behavior. These studies typically focus on “large” changes, however. We argue that BHCs allow for a stronger test of signalling theory because regulatory monitors, in effect, “certify” dividend signals. Consequently, even “small” dividend increases should result in positive abnormal equity returns. Using the event study methodology, our results generally confirm this hypothesis for a sample covering the period 1973–1987.     

Long-Term Performance Following Rights Issues and Open Offers in the UK

Abstract:  This study finds evidence of significant long-term underperformance following rights issues made during 1986-95 in the UK. The findings are resilient to a number of methodological controls. In contrast, our results for a smaller sample of open offers made during 1991-95 show strong positive performance over a 5-year post-issue period, implying that firms making open offers had better growth prospects than firms making rights issues. During 1986-90, a period when open offers were rarely used, firms appeared to be making rights issues to exploit overvaluation. However, this was not evident for rights issues made during 1991-95, a period when open offers were more commonly used.     

Dividend Imputation and Shareholder Wealth: The Case of New Zealand

On April 1, 1988, New Zealand stopped the double taxation of dividends by implementing a full dividend imputation program. Because many believed that the tax advantage of debt had led to more highly leveraged firms subject to greater financial risk than was socially optimal, it was hoped the removal of incentives to finance with debt would result in a more efficient allocation of capital. The empirical results suggest that the shareholder wealth gain from dividend imputation was more than offset in firms with large debt levels. Moreover, an examination of debt ratios indicates debt levels declined in the post–imputation period.     

The Robustness of the APT to Alternative Estimators

We test the robustness of the APT to two alternative estimation procedures: the Fama and MacBeth (1973) two-step methodology; and the one-step procedure due to Burmeister and McElroy (1988). We find that the APT is indeed sensitive to the chosen estimator and assumptions about the factor structure of stock returns. We believe that our findings have implications for the estimation of asset pricing models in general.     

SOME ANALYTICS OF WHY CONDITIONAL IRRs CAN CONTAIN GROWTH RATE RELATED MEASUREMENT ERROR

This paper investigates the consequences of incorrectly modelling the investment outflow/benefit inflow relationship on estimates of the internal rate of return (IRR) prepared by using cash recovery rates (CRRs). The main result of this paper is that CRR-based estimates of the IRR will contain such bias if and only if either the duration of the assumed shape of the investment outflow/benefit inflow relationship is less than the duration of the true investment outflow/benefit inflow relationship for all rates of interest or the duration of the assumed shape of the investment outflowlbenefit inflow relationship is greater than the duration of the true investment outflowlbenefit inflow relationship for all rates of interest. This result is then applied to the case where both the true and the assumed shape of the investment outflow/benefit inflow relationships have benefit inflows that change exponentially over time. It is shown that if the exponential rate of change is mis-specified the resulting CRR-based estimate of the IRR will contain systematic bias monotonically related to the rate of growth.