On Market Efficiency and Financial Accounting

It can be observed that heroin is used but this does not permit one to validly conclude that it is useful.     

Municipal Bond Demand Premiums and Bond Price Volatility: A Note

The behavior of different components of municipal bond yields may have a significant impact upon bond price behavior. Specifically, demand premiums created by banks may stabilize bond yields in some maturity ranges but not in others; for example, short-term municipals may be stabilized but not long-term. This research implies that bank demand behavior may create demand premiums that stabilize prices of short-term municipal bonds relative to those of Treasury bonds of like maturity. While this implication is inconsistent with the residual theory of bank demand, it is consistent with the tax-shield theory attributed to Hendershott and Koch [3, 4].     

Is Common Stock Obsolete?

Agency theory rests on a well-defined relationship between shareholders and managers. That relationship is examined and found to be a poorly denned state-contingent contract. The implications of that finding, and the existence of only a weak market for managers, lead to the conclusion that the traditional assumptions about the rights of shareholders no longer apply and that common stock (ordinary share capital) is obsolete.     

Profits,Variability of Profits and the Prices Justification Tribunal*

In 1973 the Prices Justification Tribunal was established and given certain powers over the price-setting practices of large firms in Australia. This paper addresses itself to the impact of that body on firms' markup. Using a large sample of Australian firms observed from 1969 to 1978, this paper establishes evidence that although a statistically significant downward effect on firms' markup can be attributed to the tribunal, in numerical terms the effect has been very small.     

CORPORATE FINANCE AND NORMALISED PRICE

The contention that an operational choice criterion is lacking for investment alternatives which would result in criss-crossing time patterns of share prices is examined. In efficient markets, the capital asset pricing model is shown to provide an unambiguous criterion. In inefficient markets, it is contended that the problem is not financial choice criteria but rather accounting information production and dissemination. In this regard, the level of information, rather than lack of bias in its interpretation, is deemed significant.
Dans cet article. on examine la contestation suscitée par un manque de critère d'après lequel il serait possible de sélectionner des investissements qui entraineraient des variations dans les prix des actions, suivant ainsi unrythmealternatif. Dans les Marchés efficaces, le modèle déterminant le prix des capitaux de l'actif apparaft comme étant un critère précis. Dans les marchés inefficaces, on soutient que la question n'a pas rapport è des critères financiers sélectifs mais concerne plutôt la production et la diffusion d'informations comptables. A cet effet, la quantité d'informations se révèlt: ainsi plus significative que la perfection d'interprétation de ces informations.
Die Behauptung wird überpruft, dass ein operationales Auswahlkriterium für Investitionsalternativen fehit, welchrs sich überschneidende Zeitprofile von Aktienkursen liefern würde. Es wird festgestellt, dass das 'Capital Asset Pricing' Modell ein eindeutiges Kriterium anbietet. Es wird behauptet, dass in unwollkommenen Kapitaldrkten das Problem nicht Auswahlkriterien, sondern die Verarbeitung und Verbreitung von Bilanzinformationen ist. In dieser Hinsicht ist die Infoimationsmenge und nicht eine unvoreingenormnene Interpretation von Bedeutung.     

EQUITY AND EFFECTIVENESS OF POSSIBLE CO2 TREATY PROPOSALS

The Montreal Protocol on chlorofluorocarbon control established an important precedent for global environmental treaties that include both developing countries and industrial countries. This paper evaluates seven possible treaty proposals to control carbon dioxide (CO₂) emissions. Growth-rate control proposals fail on effectiveness of control or on equity differences between developing countries and industrial countries. Complex proposals link policies in population growth, economic development, world energy taxation, and forestation. These complex proposals, which appear to be both effective and equitable, can defer or avoid CO2 doubling.     

Immigrant Wage Adjustment in Australia: Cross Section and Time-Series Estimates*

Cross-sectional estimates of the comparative wage performance of natives and immigrants can be distorted if there are changes in labour market quality between immigrant cohorts. This question is investigated with a study of 1973 and 1981 cross-sections of Australian migrants. We find that migrants from non-English-speaking countries entering Australia about 1965 perform significantly better between 1973 and 1981 than predicted from the 1973 cross-section. Migrants from English-speaking countries time-series wage performance is consistent with the 1973 cross-section prediction. The paper interprets the analytic importance of these results.     

A CRITICAL ANALYSIS OF CLIMATE CHANGE POLICY RESEARCH

After more than a decade of scientific warning, the policy community has begun to take up the challenge of global climate change. This paper considers recent efforts to analyze policymaking in this area. Shortcomings in present policy research include: (i) inconsistencies in data and methods, (ii) myopic vision of available options, (Hi) overly anthropocentric cost/benefit assessments, (iv) inadequate treatment of uncertainly and irreversibility, (v) lack of recognition of developing and developed countries' differential motives, (vi) unsatisfactory presentation and interpretation of results, and (vii) limited peer review.     

Futures Manipulation with “Cash Settlement”

This paper investigates the susceptibility of futures markets to price manipulation in a two-period model with asymmetric information and “cash settlement” futures contracts. Without “physical delivery,” strategies based on “corners” or “squeezes” are infeasible. However, uninformed investors still earn positive expected profits by establishing a futures position and then trading in the spot market to manipulate the spot price used to compute the cash settlement at delivery. We also show that as the number of manipulators grows, profits from manipulation fall to zero. However, even in the limit, manipulation still has a nontrivial impact on market liquidity. More broadly, we interpret manipulation as a form of endogenous “noise trading” which can arise in multiperiod security markets.