market efficiency and insider trading new evidence that corporate insiders earn profits from stock trading does not surprise most financial economists but that outsiders can earn abnormal returns by using pub licly available insider trading data constitutes a serious exception to stock market efficiency the authors show that this anomaly conti nues to exist despite the publication of studies attesting to its exi stence they suggest that the anomalous profits to outsiders are a ma nifestation of the size and earnings price ratio effects controlling for these factors reduces outsider profits by half the additional a ssumption of a 2 percent transactions cost makes outsider profits zer o or negative insider profits after an assumed 2 percent transactio ns cost are a moderate 3 percent per annum for annual holding period s copyright 1988 by the university of chicago

nonparametric bounds on the returns to language skills this paper applies the theoretical literature on nonparametric bounds on treatment effects to the estimation of how limited english proficiency lep affects wages and employment opportunities for hispanic workers in the united states i analyse the identifying power of several weak assumptions on treatment response and selection and stress the interactions between lep and education occupation and immigration status i show that the combination of two weak but credible assumptions provides informative upper bounds on the returns to language skills for certain subgroups of the population adding age at arrival as a monotone instrumental variable also provides informative lower bounds copyright 2005 john wiley sons ltd

the strategic advantage of being less skilled abstract ability need not pay if public goods are financed by voluntary contributions this result first shown for exogenously given income is reinforced if income is endogenously generated in equilibrium welfare of complete free riders is ranked according to their wage rate whereas for contributors a higher productivity is disadvantageous furthermore it can be shown that the set of contributors consists of the skilled agents and only the less productive will act as complete free riders this results in a strong incentive for being less skilled

tax authority to the european parliament in this paper we analyze whether countries of the ec community should plead for a decentralized system to finance the european funds rather than using a uniform tax imposed by the european parliament the analysis is within a multistage game theoretic framework in which the implication of the financing system of a confederation on the investment behavior in the respective states is considered the paper is in the tradition of the literature which claims that from a view of global efficiency property rights structures inducing ex post efficient allocations may be worse than a system leading to an ex post inefficient allocation for this specific economic issue we elucidate the tradeoff between incentive effect and distributional policy especially we demonstrate that rather homogeneous countries benefit by installing a central tax institution if the countries are rather heterogeneous the countries may have opposing interests with respect to the answer of the question which is presented in the title it is possible that the high developed country prefers to install a central tax authority while the low developed country does not however in general the reverse ordering which is more in line with our intuition results

industry window dressing we explore a new mechanism by which investors take correlated shortcuts and present evidence that managers using sales management take advantage of these shortcuts specifically we exploit a regulatory provision wherein a firm s primary industry is determined by the highest sales segment exploiting this regulation we provide evidence that investors classify operationally nearly identical firms as starkly different depending on their placement around this sales cutoff moreover managers appear to exploit this by manipulating sales to be just over the cutoff in favorable industries further evidence suggests that managers engage in activities to realize large tangible benefits from this opportunistic action

nash equilibrium existence and uniqueness in a club model abstract we model a single club heterogeneous consumer exogeneous income economy as an aggregative public good game under common assumptions if club quality functions are homogeneous of positive degree in the club facility investment and use an unique nash equilibrium exists

language training language proficiency and earnings of immigrants in norway this paper uses a simple probit model to determine the impact of language training on the language proficiency of third world immigrant men in norway it also estimates the labour market returns to norwegian language proficiency the results show that immigrants who participate in language training programme are more likely to acquire speaking and reading proficiencies in norwegian language than those who do not contrary to expectation language proficiency has no significant effect on immigrants earnings a probable explanation may be that immigrants need norwegian language proficiency to get into jobs in the norwegian labour market once they are in employment their wages are not necessarily determined by their proficiency in norwegian consistent with the assimilation hypothesis earlier waves of immigrants have higher earnings than do more recent waves and part of the initial earnings deficit experienced by more recent immigrants can be attributed to language deficiency there was no evidence of s

mimickers of corporate insiders who make large volume trades most prior research shows that corporate insiders can systematically earn abnormal returns by buying or selling their own securities also several studies have investigated whether outsiders can earn abnormal returns by mimicking the trades of insiders after the latter report their trades the findings of these studies suggest that they cannot in contrast this study s results indicate that outsiders can earn significant abnormal returns by mimicking such trades this conclusion is consistent with a growing body of empirical literature that suggests that the market is not efficient in the semistrong form i e is not efficient with respect to all publicly available information

insider trades and demand by institutional and individual investors there is a strong inverse relation between insider trading and institutional demand the same quarter and over the previous year our analysis suggests a combination of factors contribute to this relation first institutional investors are more likely to provide the liquidity necessary for insiders to trade second insiders are more likely to buy low valuation and low lag return stocks while institutions are attracted to the opposite security characteristics last the results are consistent with the hypothesis that insiders are more likely to view their securities as overvalued undervalued following a period when institutions were net buyers sellers the author 2010 published by oxford university press on behalf of the society for financial studies all rights reserved for permissions please e mail journals permissions oxfordjournals org oxford university press

those who know most insider trading in eighteenth century amsterdam this paper studies how private information is incorporated into prices using a unique setting from the eighteenth century that is closer to stylized models of price discovery than modern day markets specifically the paper looks at english securities traded in both london and amsterdam private information reached amsterdam through sailing boats that sailed only twice a week and in adverse weather could not sail at all results are consistent with a kyle model in which informed agents trade strategically most importantly the speed of information revelation in amsterdam depended on the expected time until the private signal would become public

the gap between male and female pay in the spanish tourism industry abstract this paper analyzes wage differentials between male and female workers in the spanish tourism industry using a large administratively matched employer employee data set obtained from a representative sample of companies this allows us to control for unobserved firm specific factors likely to affect the magnitude of the gender wage gap our findings indicate that male workers earn on average 6 7 higher monthly wages than their socially comparable female counterparts in particular the type of contract held the qualifications required for the job and the specific sub sector of employment are very important variables in explaining this gender wage difference we also find that only around 12 of the mean wage difference in the tourism industry cannot be explained by differences in observable characteristics which is well below the average for the rest of the industries in spain 87 our interpretation is that minimum wage legislation provides a particularly effective protection to women in the tourism industry which is characterized by a large number of low wage earners

what insiders know about future earnings and how they use it evidence from insider trades abstract this paper provides evidence that insiders possess and trade upon knowledge of specific and economically significant forthcoming accounting disclosures as long as 2 years prior to the disclosure stock sales by insiders increase three to nine quarters prior to a break in a string of consecutive increases in quarterly earnings insider stock sales are greater for growth firms before a longer period of declining earnings and when the earnings decline at the break is greater consistent with avoiding an established legal jeopardy there is little abnormal selling in the two quarters immediately prior to the break

the uniqueness of nash equilibrium in the private provision of public goods abstract this note provides an alternative elementary proof of bergstrom blume and varian s well known result on the uniqueness of nash equilibrium in the private provision of a public good when all goods are normal

rumor has it sensationalism in financial media the media has an incentive to publish sensational news we study how this incentive affects the accuracy of media coverage in the context of merger rumors using a novel dataset we find that accuracy is predicted by a journalist s experience specialized education and industry expertise conversely less accurate stories use ambiguous language and feature well known firms with broad readership appeal investors do not fully account for the predictive power of these characteristics leading to an initial target price overreaction and a subsequent reversal consistent with limited attention overall we provide novel evidence on the determinants of media accuracy and its effect on asset prices

cancellable insider trading plans an analysis of sec rule 10b5 1 rule 10b5 1 enables insiders to preplan future trades before becoming informed within a strategic rational expectations equilibrium framework i characterize an insider s unique optimal trading plan which balances portfolio diversification against exploitation of the rule s selective termination option because the rule reduces adverse selection and provides insurance against bad outcomes the rule generally improves welfare for both the insider who later becomes informed and uninformed outsiders provided there exists a sufficient degree of information asymmetry eliminating the rule s selective termination option results in an even greater welfare improvement under a large subset of parametric conditions received march 9 2018 editorial decision january 11 2019 by editor wei jiang

insider trading stock return volatility and the option market s pricing of the information content of insider trading abstract we find strong evidence that net insider selling is positively associated with future stock return volatility consistent with insider selling increasing outside investors uncertainty the positive effect of net insider selling is significantly stronger when the volatility is measured around the earnings announcement apparently option prices do not fully reflect the information content of insider trading for future volatility more specifically we find no evidence that option traders adjust the implied volatility for the insider trading effect in a timely manner consequently net insider selling is significantly associated with future option straddle returns and delta neutral returns

overreaction and insider trading evidence from growth and value portfolios insider transactions are not random across growth and value stocks we find that insider buying climbs as stocks change from growth to value categories insider buying also is greater after low stock returns and lower after high stock returns these findings are consistent with a version of overreaction which says that prices of value stocks tend to lie below fundamental values and prices of growth stocks tend to lie above fundamental values do market prices reflect investor overreaction 1 the purpose of this paper is to provide evidence on this question however new evidence is unlikely to change many minds if the findings depend on the newly controversial capital asset pricing model capm or multifactor models or if they involve datasnooping 2 we bypass these problems by not using capm or a benchmark model and by examining a new set of data we measure insider buying and selling in stocks that are ranked by measures such as the ratio of cash flow per share to price per share cf p 3 current practice refers to stocks with low cf p as growth stocks and to stocks with high cf p as value stocks we examine the direction of insider trades along the growth value spectrum to see if they are consistent with attempts to profit from market overreaction by overreaction we mean price movements that predictably reverse this experiment does not require an asset pricing model because we do not examine the returns accruing to insider trades 4

insider trading and the short swing profit rule abstract the short swing profit rule is a federal statute that requires insiders to forfeit any trading profit earned from a combined purchase and sale that occurs within a six month period using a multi period strategic rational expectations equilibrium framework i demonstrate that the rule tends to reduce both the amount of insider trading and the amount of profit earned by an informed insider from information based trades because the rule imposes a constraint on the insider s dynamic trading strategy nevertheless the rule increases the insider s welfare at the expense of uninformed investors outsiders because the rule inhibits risk sharing which leads to an ex ante wealth transfer from outsiders to the insider

uniqueness of nash equilibrium in private provision of public goods an improved proof our 1986 paper private provision of public goods presents a theorem on the uniqueness of nash equilibrium in the private provision of public goods richard hirth of the university of pennsylvania and clive fraser of warwick have independently suggested that although our theorem is correct our proof is incorrect each writer proposes an alternative method of proof for the theorem with characteristic charity to our own deficiencies we prefer to view our earlier proof as unduly opaque rather than wrong whichever view one takes a more transparent proof is called for the proof presented here follows the same outline as our 1986 proof but explains a step of the argument that was far from obvious in the original proof this proof uses the notation of the 1986 paper and refers to facts that are proved there

discussion of earnings announcement promotions a yahoo finance field experiment abstract lawrence et al run a field experiment on yahoo finance which randomly promotes some earnings stories they find that firms in promoted stories have higher contemporaneous returns i begin by reviewing the media and finance literature and discuss the difficulty in solving the identification problem lawrence et al wish to solve i then discuss how their results fit with existing theories of attention and suggest some changes that could help pin down which theory best explains the results finally i discuss possible directions for future research i would like to thank john core editor and participants at the 2017 journal of accounting and economics conference for their comments and suggestions all errors here are my own

decoding inside information exploiting the fact that insiders trade for a variety of reasons we show that there is predictable identifiable routine insider trading that is not informative about firms futures a portfolio strategy that focuses solely on the remaining opportunistic traders yields value weighted abnormal returns of 82 basis points per month while abnormal returns associated with routine traders are essentially zero the most informed opportunistic traders are local nonexecutive insiders from geographically concentrated poorly governed firms opportunistic traders are significantly more likely to have sec enforcement action taken against them and reduce trading following waves of sec insider trading enforcement

labor market discrimination against hispanic and black men h ispanic american men have lower average wage rates than white non hispanics in 1975 the average white non hispanic male wage earner in the united states earned 5 97 an hour mexican men earned 4 31 72 as much as white non hispanics puerto rican men earned 4 52 76 as much and cuban men earned 5 33 89 as much as white non hispanics by way of comparison black men s average wages in 1975 were 4 65 78 of the white male wage several possible reasons for the hispanics lower wages come to mind among them are age and education geographic location immigration language difficulties and discrimination for example as shown in table 1 mexicans and puerto ricans are younger on average than the white non hispanic population and earnings tend to rise with age hispanics have lower average levels of education than white non hispanics and wages are positively associated with education many mexican americans live in the southwest where prices are relatively low moreover hispanics are more likely to be recent immigrants and to lack fluency in english than white non hispanics and so to be at a disadvantage in the labor market in addition there is a widespread belief that hispanics suffer from employment discrimination and cannot obtain the wages that their human capital would command if they were non hispanic whites how much of the wage differentials described above are due to each of these factors and to other inter group differences in wage related characteristics in particular how much impact does labor market discrimination have on the average hispanic man s wage and how does this compare with discrimination against blacks this paper provides answers to these questions a few other efforts have been made to analyze the relative earnings of hispanic and white nonhispanic men using 1960 and 1970 census data fogel 1966 poston and alvirez 1973 poston alvirez and tienda 1976 long 1977 and gwartney and long 1978 we use more recent data from the 1976 survey of income and education this data set enables us to measure wage rates more accurately and to specify the wage function more completely than does the census unlike previous analysts in estimating the wage function we take account of possible selectivity bias due to the distinction between average wage offers and average observed wages thus we hope to obtain a more accurate and up to date measure of labor market discrimination against hispanic men section ii explains the method used to separate the minority white non hispanic wage differential into the portions due to differences in average characteristics and the portion due to differences in unobserved factors and discrimination taking into account the possibility of selectivity bias in the observed wage sample section iii describes the data used in the study and the specification of the wage equation the breakdown of the observed wage differentials into components due to differences in participation in the wage and salary sector local price levels average characteristics and discrimination are presented in section iv section v summarizes our findings and discusses their implications for efforts to improve the economic situation of hispanics in the united states

gender earnings and the english skill acquisition of hispanic workers in the united states i introduction recently the number of english deficient residents has escalated in the united states according to the 1980 and 1990 decennial censuses individuals aged five years and older whose reported english verbal skills are not well or not at all rose from 4 22 million 2 of the population to 6 67 million 3 this percentage is more pronounced in the public schools according to han et al 1997 over 2 12 million students 5 1 of the 41 62 million public school students in grades k 12 were identified as being limited english proficient lep in the 1993 1994 school year other estimates such as those made by henderson abbott and strang 1993 put the public school lep share at over 6 increases in the lep numbers mirror the growth in the immigrant population as well as the relatively high fertility rates of language minority americans the hispanic and asian pacific islander ethnic groups account for much of this growth as shown by the national research council 1997 hispanics in fact are projected by the u s census bureau 1996 to become this nation s largest racial ethnic minority group in less than a decade policywise the growing lep population raises economic and social questions concerning for example the best schooling programs for children in this group as well as the impact of english proficiency in labor markets answers to some of these questions clearly require detailed and inclusive analyses 1 indeed many social scientists have linked the ability to communicate in english to labor market value and occupational selection 2 the bulk of this research however primarily focuses on men less is known on whether gender differently affects the english proficiency outcomes of language minorities researchers in other social science fields such as stevens 1985 1986 1992 cameron 1992 and ellis 1994 have considered gender disparities with respect to the acquisition of english skills 3 however these investigations have not fully implemented some of the empirical advances made by economists to analyze english proficiency moreover this extant work tends to focus solely on gender related english skill differentials at a single point in time in this study we use recent empirical strategies in the economics field to analyze labor market facets associated with the english skill acquisition of hispanic men and women we also employ a two period analysis that allows us to observe whether gender differences in the accumulation of english skills exist with respect to our previous discussion such knowledge facilitates the design of programs aimed at improving the english fluency of the lep population in particular we first track synthetic cohorts to investigate if the english proficiency acquisition made by hispanic workers during the 1980s varies with respect to gender we then test whether poor english skills differently affect the earnings and occupational sorting of hispanic men and women the 1 1980 and 1990 public use microdata samples pums are utilized in these labor market analyses our findings suggest that english skill procurement varies between hispanic men and women depending on age and schooling location we also find that women face a lower english deficiency earnings penalty that rises more rapidly with education than the penalty obtained by their otherwise similar male peers our occupational selection results parallel this penalty difference where english skills serve as a stronger sorting mechanism for hispanic women than men policy prescriptions from such analyses suggest that male oriented studies overestimate the earnings gains and understate the occupational sorting associated with acquiring english fluency ii english skill acquisition in the labor market our first objective tests whether women acquire english proficiency at a different rate than their male peers all of our empirical work relies on the 1 pums of the 1980 and 1990 u

the economics of immigration this literature review concerns the impact of immigration on the economy of the host country focusing on the experience of the united states the emphasis is on the period from the 1970s to the 1990s the author shows that research earlier in this period generally concluded that the economic effects of immigration were positive but that more recent research on later migrations have generally concluded that immigration may be having an adverse effect on the earnings of native unskilled workers and be placing an increased burden on welfare programs the importance of such economic analysis for the formulation of appropriate migration policies is stressed

advance disclosure of insider trading using a strategic rational expectations equilibrium framework we show that forcing a well informed insider to disclose her trades in advance tends to increase welfare for both the insider and less informed outsiders advance disclosure generates price risk for the insider and to mitigate this risk the insider trades less aggressively on her private information consequently outsiders face lower adverse selection costs which improves risk sharing and increases welfare the drop in trading aggressiveness also causes market efficiency to decline furthermore pretrade disclosure encourages excessive risk taking but may either encourage or discourage managerial effort

expectations management and stock returns we establish a link between firms managing investors performance expectations earnings announcement premiums and cyclical patterns i e seasonalities in returns firms that are more likely to manage expectations toward beatable levels predictably earn lower returns before and higher returns during their earnings announcements this pattern repeats across firms fiscal quarters suggesting firms manufacture positive surprises by negatively biasing investors expectations ahead of announcing earnings we corroborate these findings using non price based outcomes indicative of expectations management together our findings are consistent with the pressure for firms to meet earnings targets shaping the cross section of firms stock returns

double inefficiency in optimally organized firms abstract the management of a single product monopoly sets the number of employees and the number of production teams which are to be established however it is well known that employees shirk in teams moreover there is yet another inefficiency which is caused through the management s adjustment to its uncertain environment the management will not choose the internal organization of the firm which minimizes costs because this would reduce the expected revenue or surplus if it manages a public firm public firms are more likely to choose a technology where cost inefficiency and shirking reinforce each other government price regulation fails to eliminate cost inefficiency

the uniqueness of the subscription equilibrium with endogenous labor supply abstract this paper presents a proof of the uniqueness of the nash equilibrium if public goods are financed through private donations and distortionary income taxation