strikes and holdouts in wage bargaining theory and data we develop a private information model of union contract negotiations in which disputes signal a firm s willingness to pay previous models have assumed that all labor disputes take the form of a strike yet a prominent feature of u s collective bargaining is the holdout negotiations often continue without a strike after the contract has expired production continues with workers paid according to the expired contract we analyze the union s decision to strike or hold out and highlight its importance to strike activity strikes are more likely to occur after a drop in the real wage or a decline in unemployment

information holdouts and land assembly abstract this paper solves for the equilibria of a land assembly game there are multiple perfect bayesian equilibria but only one involves no play of weakly dominated strategies the equilibrium has three important characteristics first the develop s bid is uninformative the counteroffers of the landowners depend therefore only on their priors second there is a holdout problem smaller landowners ask larger per acre prices for their land this means that when there are many landowners the price will be larger if there is an agreement and mutually beneficial agreements will more frequently be missed third when the asking prices of the landowners are strategic complements some landowners can be induced to accept a low bid because this leads other landowners to moderate their own asking prices

analytical evaluation of lead time demand in polytree supply chains with uncertain demand lead time and inter demand time abstract in a stochastic supply chain network knowing the exact distribution of lead time demand ltd for each node allows determining inventory policy parameters service levels and optimal costs to determine the ltd distributions a stochastic analytical model has been developed for a multi echelon supply chain organised into an arbitrary polytree network where the variables demand quantity lead time and inter demand time are uncertain and can follow any probability distribution the model is based on a conventional nq batch policy for each node with discrete time and continuous demand any network can be broken down into four basic elements which represent root and leaf node topologies the model derives key convolutions for the four basic elements and then follows the same technique for evaluating resulting ltd distributions for each node in the network the paper presents the formulation in seven steps that can be used to obtain exact ltd distributions either in the two dimensional form or as a compound one dimensional ltd distribution per variable lead time for each node in any polytree supply chain the ltd distributions can be calculated either analytically for smaller networks or using numerical integration for larger networks the validation of the developed framework has been conducted by comparing the obtained formalism based ltd distribution for two test networks against simulation the pairs of simulated and formalism based distributions have been plotted against each other as well as subjected to various goodness of fit tests and error analysis the results suggest that the formalism based and simulated probability distributions are consistent

executive incentives and the horizon problem an empirical investigation abstract this paper investigates the hypothesis that ceos in their final years of office manage discretionary investment expenditures to improve short term earnings performance we examine the behavior of r d expenditures for a sample of firms in industries that have significant ongoing r d activities the results suggest that ceos spend less on r d during their final years in office however we find the reductions in r d expenditures are mitigated through ceo stock ownership there is no evidence that the reduced r d expenditures are associated with either poor firm performance or reductions in investment expenditures that are capitalized for accounting purposes

the effect of bond rating changes on common stock prices abstract the evidence in this paper suggests that downgrades by both moody s and standard and poor s are associated with negative abnormal stock returns in the two day window beginning the day of the press release by the rating agency significant negative abnormal performance can still be detected after eliminating observations containing obvious concurrent potentially contaminating news releases there is little evidence of abnormal performance on announcement of an upgrade significant abnormal returns are associated with announcements of additions to the standard and poor s credit watch list if either a potential downgrade or a potential upgrade is indicated

the use of accounting flexibility to reduce labor renegotiation costs and manage earnings abstract we investigate the determinants of discretionary sfas 106 choices of non regulated firms we find that more unionized firms are more likely to use immediate recognition consistent with incentives to reduce labor renegotiation costs immediate recognition is more prevalent among post adoption plan modifiers particularly if their transition obligation is large consistent with incentives to increase future reported earnings immediate recognition together with post adoption benefit plan reduction frees future income from the transition obligation amortization expense and adds a positive component as negative prior service costs are amortized immediate recognition is less prevalent among firms with higher potential debt contracting costs

value creation and corporate diversification the case of sears roebuck co abstract we provide clinical evidence of corporate restructuring at sears roebuck co beginning with the firm s 1981 diversification into financial services by acquiring coldwell banker co and dean witter reynolds inc the initial purchases resulted in a wealth gain to shareholders of approximately 400 million anticipated synergies did not materialize however and sears retail performance deteriorated coincident with pressure from institutional investor activists in 1992 sears announced the divestiture of financial services and a refocusing on retail operations this led to a 1 113 billion gain for shareholders despite more than 1 5 billion in gains over the entire diversification divestiture period sears shareholders suffered a significant opportunity loss when compared with a portfolio of focused firms

sovereign debt restructuring the judge the vultures and creditor rights what role did the us courts play in the argentine debt swap of 2005 what implications does this have for the future of creditor rights in sovereign bond markets the judge in the argentine case has it appears deftly exploited creditor heterogeneity between holdouts seeking capital gains and institutional investors wanting a settlement to promote a swap with a supermajority of creditors our analysis of argentine debt litigation reveals a judge mediated sovereign debt restructuring which resolves key issues of transition and aggregation two of the tasks envisaged for the imf s stillborn sovereign debt restructuring mechanism for the future we discuss how judge mediated sovereign debt restructuring together with creditor committees could complement collective action clauses in sovereign bond contracts

a theory of holdouts in wage bargaining holdouts the continuation of negotiations beyond the contract expiry date are the most common form of disputes in labor contract negotiations the authors model holdouts as a delaying tactic employed by unions to obtain information about other bargaining outcomes in their industry novel implications of their model include a positive association between holdout duration and the number of bargaining pairs negotiating contracts simultaneously bunching of holdout durations within these negotiating groups and fewer strikes among holdouts which end later in groups using a large panel of contract negotiations in canadian manufacturing the authors find considerable support for these predictions copyright 1998 by american economic association

an experimental study of the holdout problem in a multilateral bargaining game abstract when an economic exchange requires agreement by multiple independent parties the potential exists for an individual to strategically delay agreement in an attempt to capture a greater share of the surplus created by the exchange this holdout problem is a common feature of the land assembly literature because development frequently requires the assembly of multiple parcels of land we use experimental methods to examine holdout behavior in a laboratory bargaining game that involves multi person groups complementary exchanges and holdout externalities the results of six treatments that vary the bargaining institution number of bargaining periods and the cost of delay demonstrate that holdout is common across institutions and is on average a payoff improving strategy for responders both proposers and responders take a more aggressive initial bargaining stance in multi period bargaining treatments relative to single period treatments but take a less aggressive bargaining stance when delay is costly nearly all exchanges eventually occur in our multi period treatments leading to higher overall efficiency relative to the single period treatments both with and without delay costs

discussion of acquisition profitability and timely loss recognition by j francis and x martin abstract francis and martin 2009 test whether accounting conservatism induces managers to make better acquisition decisions this discussion highlights three main issues first the hypothesized links between conservatism and future investments are potentially incomplete in particular the possibility that conservatism can have dysfunctional outcomes if acquisition decisions are based on anticipated earnings effects is ignored second the evidence is insufficient to infer a causal relation between conservatism and acquisition profitability third the hypothesis development fails to indicate whether timely loss recognition or the asymmetric timeliness of loss versus gain recognition is the more appropriate measure of conservatism given the context

information distortion in a supply chain the bullwhip effect this article originally appeared in management science april 1997 volume 43 number 4 pp 546 558 published by the institute of management sciences consider a series of companies in a supply chain each of whom orders from its immediate upstream member in this setting inbound orders from a downstream member serve as a valuable informational input to upstream production and inventory decisions this paper claims that the information transferred in the form of orders tends to be distorted and can misguide upstream members in their inventory and production decisions in particular the variance of orders may be larger than that of sales and distortion tends to increase as one moves upstream a phenomenon termed bullwhip effect this paper analyzes four sources of the bullwhip effect demand signal processing rationing game order batching and price variations actions that can be taken to mitigate the detrimental impact of this distortion are also discussed

on the land assembly problem abstract we consider a segment of the land market where the entire available land stock is needed for the realization of some indivisible development project the stock is shared by several landholders who either collude or negotiate independently with the developer over the prices of their lots investigating the price setting behavior of the landowners and the optimal strategy of the developer we show that landowners set more moderate prices under collusion than when acting independently in the latter case the individual asking price falls with the size of the land share and the total price increases with the number of landowners as regards the optimal strategy we find that the developer will in general not offer the lowest price he expects to be accepted by the landowners

corporate takeover bids methods of payment and bidding firms stock returns this study explores the role of the method of payment in explaining common stock returns of bidding firms at the announcement of takeover bids the results reveal significant differences in the abnormal returns between common stock exchanges and cash offers the results are independent of the type of takeover bid i e merger or tender offer and of bid outcomes these findings supported by analysis of nonconvertible bonds are attributed mainly to signalling effects and imply that the inconclusive evidence of earlier studies on takeovers may be due to their failure to control for the method of payment recent studies on corporate takeovers provide inconclusive results on the valuation effects of acquisitions on the common stock of bidding firms 1 substantial differences are reported between the studies that analyze acquisitions initiated as tender offers and those that confine their samples to merger proposals the existence of mixed empirical findings for the bidding firms makes it difficult to interpret existing evidence and to draw conclusions about the managers acquisition motivations nevertheless the reason for the substantial difference between empirical findings on mergers and tender offers still remains an unresolved issue it is observed however that mergers are usually common stock exchange offers whereas tender offers are usually cash offers given that different methods of financing a project have different signalling implications myers and majluf 39 the differential stock returns of bidders in mergers and tender offers may be due to the method of acquisition financing

on the bias of intermittent demand estimates forecasting and inventory control for intermittent demand items has been a major problem in the manufacturing and supply environment croston operational research quarterly 23 1972 289 proposed a method according to which intermittent demand estimates can be built from constituent events croston s method has been reported to be a robust method but has shown more modest benefits in forecasting accuracy than expected in this research one of the causes of this unexpected performance has been identified as a first step towards improving croston s method certain limitations are identified in croston s approach and a correction in his derivation of the expected estimate of demand per time period is presented in addition a modification to his method that gives approximately unbiased demand per period estimates is introduced all the conclusions are confirmed by means of an extended simulation experiment where croston s and revised croston s methods are compared the forecasting accuracy comparison corresponds to a situation of an inventory control system employing a re order interval or product group review

an improved method for forecasting spare parts demand using extreme value theory inventory control for spare parts is essential for many organizations due to the trade off between preventing high holding cost and stockouts the lead time demand distribution plays a central role in inventory control the estimation of this distribution is problematic as the spare part demand is often intermittent and as a consequence often only a limited number of non zero data points are available in practice the well known empirical method uses historical demand data to construct the lead time demand distribution although it performs reasonably well when service requirements are relatively low it has difficulties in achieving high target service levels in this paper we improve the empirical method by applying extreme value theory to model the tail of the lead time demand distribution to make the most out of a limited number of demand observations we establish that extreme value theory can be applied to lead time demand periods computed over overlapping intervals we consider two service levels the expected waiting time and cycle service level our experiments show that our method improves the inventory performance compared to the empirical method and is competitive with the wss method croston s method and sba for a range of demand distributions

the cyclical behavior of holdout durations abstract holdouts are the negotiation periods between the expiration of an old wage contract and the signing of a new one this paper presents an analysis of the hazard function for holdout durations using data on wage negotiations in the netherlands the unemployment rate is found to have a significant negative effect on the holdout hazard rate holdout duration is counter cyclical

are small firms less vulnerable to overpriced stock offers we show an inverted u relation between targetiveness probability of being targeted and firm size however this pattern describes stock offers and is more pronounced during hot markets characterized by higher stock valuations for cash offers we find a negative and monotonic relation these contrasting patterns suggest that small firms in the bottom nyse size quartile are less vulnerable to overpriced stock offers in addition we find that the stock acquirers of small targets are less overvalued than those of large targets and that the announcement returns are less negative for stock acquirers of small targets than for those of large targets

the accuracy of a modified croston procedure a modified croston procedure to forecast intermittent demand is reviewed the modified procedure published in this journal in 2004 consists of a new method for estimating the mean demand and a smoothing method for estimating the variance of the forecasted demand rate it is found that the smoothed variance estimate is based on an invalid measure of forecast accuracy moreover it is shown that the method of forecasting mean demand produces biased forecasts the accuracy of this method is assessed using simulated data and the mean square error measure and compared with croston s method and single exponential smoothing it is found that croston s method is generally more accurate than its modification particularly for strongly intermittent series

on the variance of intermittent demand estimates intermittent demand occurs at random with many time periods showing no demand at all forecasting such demand patterns constitutes a challenging exercise because of the associated dual source of variation demand intervals and demand sizes research in this area has developed rapidly in recent years with new results implemented into supply chain software solutions because of its practical implications in an inventory context both the accuracy of the forecasts and their variability sampling error of the mean have equal importance in terms of service level achievement and or inventory cost minimisation although the former issue has been studied extensively mainly building upon croston s model 1972 the latter has been largely ignored the purpose of this paper is to analyse the most well cited intermittent demand estimation procedures in terms of the variance of their estimates detailed derivations are offered along with a discussion of the underlying assumptions as such we hope that our contribution may constitute a point of reference for further analytical work in this area as well as facilitate a better understanding of issues related to modelling intermittent demands

earnings management through transaction structuring contingent convertible debt and diluted earnings per share in this article we examine whether firms structure their convertible bond transactions to manage diluted earnings per share eps we find that the likelihood of firms issuing contingent convertible bonds cocos which are often excluded from diluted eps calculations under statement of financial accounting standard sfas 128 is significantly associated with the reduction that would occur in diluted eps if the bonds were traditionally structured we also document that firms use of eps based compensation contracts significantly affects the likelihood of coco issuance and find weak evidence that reputation costs measured using earnings restatement data play a role in the structuring decision these results are robust to controlling for alternative motivations for issuing cocos including tax and dilution arguments in addition an examination of announcement returns reveals that investors view the net benefits and costs of cocos as offsetting one another our results contribute to the literature on earnings management diluted eps financial reporting costs and financial innovation

full stock payment marginalization in merger and acquisition transactions the number of merger and acquisition m a transactions paid fully in stock in the u s market declined sharply after 2001 when pooling and goodwill amortization were abolished by the financial accounting standards board did this accounting rule change really have such far reaching implications using a difference in differences test and canada as a counterfactual this study reveals that it did we also report several other results confirming the role of pooling abolishment including i that the decrease in full stock payment relates to ceo incentives and ii that previously documented determinants of the m a mode of payment cannot explain the post pooling abolishment pattern these results are also robust to controls for various factors such as the internet bubble the exclusion of cross border deals the presence of canadian cross listed firms the use of a constant sample of acquirers across the pooling and post pooling abolishment periods the use of europe as an alternative counterfactual and

claimholder incentive conflicts in reorganization the role of bankruptcy law when a firm is financial distress in most cases a set of mutually advantageous reorganization plans exist this article shows that the bankruptcy code by providing rules governing the negotiation process yields a unique solution to the reorganization process in addition the structure imposed by the code mitigates the holdout problem created by the individual claimant s divergent incentives article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

can buyer mobility reduce aggregation failures in land assembly abstract in this paper we examine whether site development competition can be used to facilitate land assembly in the absence of contingent contracts in particular we attempt to determine 1 whether competition can be induced among prospective sellers 2 whether or not competition increases aggregation rates and 3 what effects competition has on the distribution of surplus among the bargaining parties we also study the incidence with which a buyer endogenously chooses to deal with a single large parcel owner vs multiple small parcel owners to do so we make use of a laboratory experiment where all the relevant information about the project is common knowledge and landowner valuations are private information our results show that competition more than doubles aggregation rates with aggregation rates of approximately 40 in the baseline and at least 84 in the competitive treatments we also find that developers have a strong preference to make transactions with landowners who have consolidated land holdings doing so in 24 27 successful aggregations providing empirical evidence that there is a link between the transactions cost associated with land assembly and suburbanization as suggested by miceli and sirmans 2007

the effect of accounting procedure changes on ceos cash salary and bonus compensation abstract this paper examines the effect of accounting procedure changes on cash salary and bonus compensation to ceos we estimate whether there is an adjustment to the statistical relation between compensation and corporate earnings following changes that lower earnings fifo to lifo inventory valuation and that raise earnings accelerated to straight line depreciation the results indicate that 1 subsequent to these changes salary and bonus payments are based on reported earnings rather than earnings under the original accounting method and 2 the potential compensation effect of the changes is small compared to the effect of economy or industry wide changes in compensation

bargaining behavior and the tragedy of the anticommons abstract to date most experimental studies of the tragedy of the anticommons treat individuals preferences as common knowledge here we conduct experiments in which values are private information we vary the bargaining institution the buyer s signaled willingness to pay and the fraction of sellers whose inputs must be assembled in our experiments simultaneous bargaining gives the buyer a better tradeoff between the total price paid and the risk of failure than sequential bargaining when all sellers inputs are necessary when two thirds are necessary assembly failure virtually disappears but simultaneous bargaining still generates lower prices for the buyer

an analysis of value destruction in at t s acquisition of ncr abstract at t s 7 5 billion acquisition of ncr decreased the wealth of at t shareholders by between 3 9 billion and 6 5 billion and resulted in negative synergies of 1 3 to 3 0 billion we find that at t paid a documented 50 million and possibly as much as 500 million to satisfy pooling accounting thus boosting eps by roughly 17 but leaving cash flows unchanged we conclude that at t s decision to acquire ncr in what the market perceived as a value destroying transaction was related at least in part to the 1984 consent decree with the department of justice that led to the break up of at t

holdouts backdating and wage negotiations the haller and holden jet 1990 wage bargaining model is extended to incorporate holdouts with and without work to rule inefficient holdouts and backdating of new contracts the union s most effective action inflicts the highest costs upon the firm among the credible actions necessary and sufficient conditions for equilibria with lengthy holdouts are derived backdating does not affect the bargaining positions of the parties the settlement wage negatively depends upon the length of the holdout and this dependence does not disappear as the time between bargaining rounds vanishes this result has implications for empirical work moreover this negative effect is small and confirms empirical evidence for the netherlands

intermittent demand forecasting an empirical study on accuracy and the risk of obsolescence intermittent demand items account collectively for considerable proportions of the total stock value of any organization forecasting the relevant inventory requirements constitutes a very difficult task and most work in this area is based on croston s estimator that relies upon exponentially smoothed demand sizes and inter demand intervals this method has been shown to be biased and a number of variants have been introduced in the literature including the recently proposed tsb method that updates the demand probability instead of the demand interval and in doing so reacts faster to decreasing demand the tsb has been shown theoretically to be unbiased for all points in time but its empirical performance has not been investigated yet and this constitutes one of the objectives of our work more generally we explore the empirical performance of forecasting methods used in an intermittent demand context paying particular attention to the effects and implications of the smoothing constant values employed for updating purposes we do so by means of experimentation on large empirical datasets from the military sector and automotive industry the results enable insights to be gained into the sensitivity of the various methods forecasting and stock control performance to the smoothing constant values used the paper concludes with an agenda for further research

the holdout problem and urban sprawl experimental evidence abstract conventional wisdom as well as economic theory suggests it is more costly to reassemble fragmented land due to transactions costs and strategic bargaining costs both costs are expected to increase with the number of sellers inefficient allocation of land resources may result including property entropy parisi 2002 urban sprawl miceli and sirmans 2007 and deteriorating inner cities given the difficulty of observing actual values attached by buyers and sellers to land little empirical evidence exists to support the conventional wisdom and theoretical work we use experimental methods to examine transactions costs and strategic bargaining costs in a land assembly market game with one buyer 1 4 sellers and complementary exchanges the buyer s final earnings vary inversely with the number of sellers ceteris paribus indicating an incentive to purchase consolidated land delay costs reduce holdout but result in lower payoffs for both buyers and sellers competition between sellers reduces holdout and the buyer s total purchase price