the collateral channel how real estate shocks affect corporate investment abstract what is the impact of real estate prices on corporate investment in the presence of financing frictions firms use pledgeable assets as collateral to finance new projects through this collateral channel shocks to the value of real estate can have a large impact on aggregate investment to compute the sensitivity of investment to collateral value we use local variations in real estate prices as shocks to the collateral value of firms that own real estate over the 1993 2007 period the representative us corporation invests 0 06 out of each 1 of collateral jel d22 g31 r30

investor valuation of the abandonment option abstract we investigate whether investors price the option to abandon a firm at its exit value theory prices this real option as an american put with both a stochastic strike price exit value and a stochastic value of the underlying security the value of cash flows the empirical implications are that firm value increases in exit value after controlling for expected going concern cash flows and that more generalizable assets produce more abandonment option value using discounted earnings forecasts to proxy for expected cash flows and prior literature to categorize asset generalizability we find strong support for the predictions of abandonment option theory

a threshold in inflation dynamics evidence from emerging countries using monthly data over the period january 1976 november 2002 the present paper detects significant threshold non linearities in the inflation rates of three emerging countries namely india singapore and south africa a two regime self exciting threshold autoregressive setar model of inflation constituting a significant improvement over the corresponding linear ar model is estimated for these countries singapore is shown to have a much lower implied equilibrium inflation rate than india while there is a possibility of seasonal inflation equilibria for south africa

drexel burnham lambert s bankruptcy and the subsequent decline in underwriter fees abstract in the 1980s drexel burnham lambert dominated the underwriting of junk bonds with close to a 50 market share in 1990 drexel went bankrupt and was liquidated and the percentage underwriting fees for junk bonds subsequently dropped dramatically we present strong evidence that the exit of drexel burnham lambert and the resulting increase in competition for market share were major contributing factors to the decline in junk bond underwriter fees

stock market returns and inflation evidence from other countries this paper investigates the relation between common stock returns and inflation in twenty six countries for the postwar period our results do not support the fisher hypothesis which states that real rates of return on common stocks and expected inflation rates are independent and that nominal stock returns vary in one to one correspondence with expected inflation there is a consistent lack of positive relation between stock returns and inflation in most of the countries

predicting consumer demand responses to carbon labels abstract providing carbon footprint labels for all food products is a daunting and potentially infeasible project knowing how consumers substitute away from high carbon goods and what they choose as substitutes is essential for understanding which goods are likely to result in meaningful reductions in carbon emissions this paper proposes a model to systematically estimate how consumers will respond to information from a carbon footprint label our model uses consumers value of their individual carbon footprint with own and cross price elasticities of demand data on carbon emissions from life cycle analysis to simulate shifts in consumer demand for 42 food products and a non food composite and subsequent changes in carbon emissions from different labeling schemes our simulation results have several findings including 1 carbon labels can reduce emissions but labeling only some items could lead to perverse impacts where consumers substitute away from labeled goods to unlabeled goods with a higher carbon footprint 2 carbon labels can inform consumers such that their previous beliefs about carbon footprints matter and 3 carbon labels on alcohol and meat would achieve the largest decreases in carbon emissions among the 42 food products studied

accounting conservatism and firm investment efficiency abstract we argue that conservatism improves investment efficiency in particular we predict that it resolves debt equity conflicts facilitating a firm s access to debt financing and limiting underinvestment this permits the financing of prudent investments that otherwise might not be pursued our empirical results confirm these predictions we find that more conservative firms invest more and issue more debt in settings prone to underinvestment and that these effects are more pronounced in firms characterized by greater information asymmetries we also find that conservatism is associated with reduced overinvestment even for opaque investments such as research and development

earnings quality in uk private firms comparative loss recognition timeliness abstract uk private and public companies face substantially equivalent regulation on auditing accounting standards and taxes we hypothesize that private company financial reporting nevertheless is of lower quality due to different market demand regulation notwithstanding a large uk sample supports this hypothesis quality is operationalized using basu s 1997 time series measure of timely loss recognition and a new accruals based method the result is not affected by controls for size leverage industry membership and auditor size or by allowing endogenous listing choice the result enhances understanding of private companies which are predominant in the economy it also provides insight into the economics of accounting standards

costly external finance corporate investment and the subprime mortgage credit crisis abstract we study the effect of the recent financial crisis on corporate investment the crisis represents an unexplored negative shock to the supply of external finance for non financial firms corporate investment declines significantly following the onset of the crisis controlling for firm fixed effects and time varying measures of investment opportunities consistent with a causal effect of a supply shock the decline is greatest for firms that have low cash reserves or high net short term debt are financially constrained or operate in industries dependent on external finance to address endogeneity concerns we measure firms financial positions as much as four years prior to the crisis and confirm that similar results do not follow placebo crises in the summers of 2003 2006 nor do similar results follow the negative demand shock caused by september 11 2001 the effects weaken considerably beginning in the third quarter of 2008 when the demand side effects of the crisis became apparent additional analysis suggests an important precautionary savings motive for seemingly excess cash that is generally overlooked in the literature

what if consumers decided to all go green environmental rebound effects from consumption decisions shifting consumer preferences towards green consumption is promoted by many governments and environmental groups rebound effects which reduce the effectiveness of such actions are estimated for cost saving green consumption choices using australian data cases examined are reduced vehicle use reduced electricity use changing to smaller passenger vehicles and utilising fluorescent lighting it is found that if rebound effects are ignored when evaluating green consumption environmental benefits will be overstated by around 20 for reduced vehicle use and 7 for reduced electricity use rebound effects are higher and environmental benefits lower when more efficient vehicles or lighting are utilised rather than simple conservation actions of forgoing use in addition lower income households have higher rebound effects suggesting that environmental policy directed at changing consumer behaviour is most effective when targeted at high income households an inherent trade off between economic and environmental benefits of green consumption choices is demonstrated the size of the rebound effect and the observed variation with household income is attributed to life cycle analysis lca methodologies associated with the calculation of embodied ghg emissions of consumption goods these results should be therefore be interpreted as the minimum rebound effect to include in policy evaluation

implications for gaap from an analysis of positive research in accounting based on extant literature we review the positive theory of gaap the theory predicts that gaap s principal focus is on control performance measurement and stewardship and that verifiability and conservatism are critical features of a gaap shaped by market forces we recognize the advantage of using fair values in circumstances where these are based on observable prices in liquid secondary markets but caution against expanding fair values to financial reporting more generally we conclude that rather than converging u s gaap with ifrs competition between the fasb and the iasb would allow gaap to better respond to market forces

real wages profit margins and inflation in turkish manufacturing under post liberalization this article reports investigations into the behaviour of gross profit margins mark ups in turkish manufacturing industries for the post 1980 liberalization period in relation to price inflation trade liberalization openness and real wage costs panel data econometrics over 29 subsectors of turkish manufacturing are used over the period 1980 1996 results suggest that profit margins are positively and significantly related both to price inflation and real wage costs however openness is found to have very little impact on profit margins

the relation between stock prices and inflationary expectations the international evidence this paper provides empirical evidence on the relation between stock returns and inflationary expectations for nine countries over the period 1971 80 the fisherian assumption that real returns are independent of inflationary expectations is soundly rejected for each major stock market of the world using interest rates as a proxy for expected inflation our data provide consistent support for the geske and roll model whose basic hypothesis is that stock price movements signal negative revisions in inflationary expectations finally a weak real interest rate effect was found for some of these countries

estimation and empirical properties of a firm year measure of accounting conservatism we estimate a firm year measure of accounting conservatism examine its empirical properties as a metric and illustrate applications by testing new hypotheses that shed further light on the nature and effects of conservatism the results are consistent with the measure c score capturing variation in conservatism and also predicting asymmetric earnings timeliness at horizons of up to 3 years ahead cross sectional hypothesis tests suggest firms with longer investment cycles higher idiosyncratic uncertainty and higher information asymmetry have higher accounting conservatism event studies suggest increased conservatism is a response to increases in information asymmetry and idiosyncratic uncertainty

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

the rebound effects of switching to vegetarianism a microeconomic analysis of swedish consumption behavior sustainable diets in particular vegetarianism are often promoted as effective measures to reduce our environmental footprint yet few conclusions take full scale behavioral changes into consideration this can be achieved by calculating the indirect environmental rebound effect related to the re spending of expenditure saved during the initial behavioral shift this study aims to quantify the potential energy use and greenhouse gas emission savings and most likely rebound effects related to an average swedish consumer s shift to vegetarianism using household budget survey data it estimates engel curves of 117 consumption goods derives marginal expenditure shares and links these values to environmental intensity indicators results indicate that switching to vegetarianism could save consumers 16 of the energy use and 20 of the greenhouse gas emissions related to their dietary consumption however if they re spend the saved income according to their current preferences they would forego 96 of potential energy savings and 49 of greenhouse gas emission savings these rebound effects are even higher for lower income consumers who tend to re spend on more environmentally intensive goods yet the adverse effect could be tempered by purchasing organic goods or re spending the money on services in order to reduce the environmental impact of consumption it could thus be recommended to not only focus on dietary shifts but rather on the full range of consumer expenditure

missing carbon reductions exploring rebound and backfire effects in uk households households are expected to play a pivotal role in reducing the uk s greenhouse gas ghg emissions and the uk government is encouraging specific household actions to help meet its targets however due to the rebound effect only a portion of the ghg emission reductions estimated by simple engineering calculations are generally achieved in practice for example replacing short car journeys by walking or cycling reduces consumption of motor fuels but this frees up money that may be spent on for example purchasing extra clothes or flying on vacation alternatively the money may be put into savings since all of these options lead to ghg emissions total ghg savings may be less than anticipated indeed in some instances emissions may increase a phenomenon known as backfire we estimate that the rebound effect for a combination of three abatement actions by uk households is approximately 34 targeting re spending on goods and services with a low ghg intensity reduces this to a minimum of around 12 while re spending on goods and services with a high ghg intensity leads to backfire our study highlights the importance of shifting consumption to lower ghg intensive categories and investing in low carbon investments

economic energy and greenhouse emissions impacts of some consumer choice technology and government outlay options abstract the impacts of selected spending options in the australian economy are determined in terms of energy consumption greenhouse gas emissions and a range of economic parameters six case studies of one current practice and one alternative environmentally motivated spending option are carried out describing consumer choices technologies and government outlays the assessment method is based on input output theory and as such enables both the direct and indirect effects of spending to be quantified in general the results indicate that pro environmental objectives such as reductions in energy consumption and greenhouse gas emissions are compatible with broad socio economic benefits such as increases in employment and income and reductions in imports

climate change and dietary choices how can emissions of greenhouse gases from food consumption be reduced abstract results from an analysis of greenhouse gas emissions and energy consumption during the life cycle of carrots tomatoes potatoes pork rice and dry peas consumed in sweden are presented and discussed the life cycle is delineated to the part of the production chain prior to purchase by the consumer the study shows that emissions expressed in g co2 equivalents are highest for pork and rice and lowest for potatoes carrots and dry peas the most important stages of emissions in the life cycle are identified for each of the different food items crop farming is the most important stage for rice and tomatoes while rearing of animals is the most important stage for pork and storage is the most important stage for carrots comparison with an energy analysis shows that important stages in the life cycle of food may be under evaluated when energy only is accounted for this may lead to a sub optimisation of pollution control exemplified by the case of transportation also it is shown that the choice of functional unit has a decisive influence on the outcome of the study the recommendation is to compare whole meals or diets with the same nutritional qualities a comparison of four meals composed of the food items under analysis shows that a meal with tomatoes rice and pork has nine times higher emissions than a meal made from potatoes carrots and dry peas emissions of greenhouse gases from consumption patterns based on the food items analysed are compared with an assumed sustainable limit of greenhouse gas emissions the conclusion is that current food consumption patterns in the developed countries exceed the level of sustainability by at least a factor of 4 prospects for achieving sustainable food consumption patterns are questionable in view of current trends in food demand

economic growth sustainable development and food consumption evidence across different income groups of countries abstract considering that high population and income growths will lead the coming decades an increase in global food demand is expected livestock products such as meat are closely related to this trend but also associated with impacts on the environment and public health from land and water depletion to greenhouse gases emissions and higher risks of non communicable diseases this trend raises doubts about the sustainability of the food industry and thus a solution is needed for the problem how to feed the world population without compromising present and future generations the literature suggests that meat consumption should be reduced for the sake of the environment and global population however without considering the effects that such reduction would have on the economy inspired by these facts this paper empirically analyses the interactions between food consumption economic growth and sustainable development measured by the index of sustainable economic welfare more specifically the paper assesses the effect that food consumption has on the economy the econometric analysis applies the autoregressive distributed lag model for 77 countries further distinguished by their income group from 1995 to 2013 the findings support that meat consumption has different impacts on economic growth and sustainable development considering different income groups however there is an evident dilemma between economic growth and sustainable development since meat consumption has contradictory effects on each thus it is crucial to understand how to promote sustainability i e reducing the environmental externalities and chronic health diseases without compromising economic growth

inflation real returns and capital investment we find evidence for the hypothesis of mundell 1963 and tobin 1965 that the expected real return component of interest rates is negatively related to the expected inflation component in the mundell tobin model the variation in expected real returns is caused by the variation in expected inflation our evidence suggests however that the variation in expected real returns is more fundamentally an outcome of the capital expenditures process equilibrium expected real returns vary directly with capital expenditures in order to induce equilibrium allocations of resources between consumption and investment this positive relation between expected real returns and real activity which comes out of the real sector combines with a negative relation between expected inflation and real activity which is traced to the monetary sector thus inducing the negative relation between expected inflation and expected real returns predicted by mundell and tobin but explained in terms of a model much different from theirs

are stocks a good hedge against inflation evidence from emerging markets theory suggests that equities are a good hedge against inflation however most of the empirical evidence for industrialized economies suggests that the relationship between stock returns and inflation is negative one explanation is the negative correlation between inflation and real output growth this paper examines the relationship between inflation and stock returns for ten important emerging stock market esm markets namely chile mexico brazil argentina thailand s korea malaysia hong kong philippines and turkey during the 1990s to anticipate the results the relationship between stock returns and inflation for the whole sample period is positive and statistically significant for three of the sample esms while it is positive but statistically insignificant for a further three only for one esm is the relationship negative and statistically significant this result may be due to the role of money and the positive relationship between consumer prices and output

climate change mitigation potential of norwegian households and the rebound effect abstract an increasing number of studies show that efficiency improvements alone will not be sufficient to attain the substantial emission reductions needed to mitigate global warming to a target of 2 c consumption side changes are likely to be needed to achieve sufficient emission reductions the united nations emphasize the importance of developed countries taking the lead in lowering emissions to achieve the sustainable development goals this paper assess to what extent norwegian households can lower their carbon footprint consistent with territorial emission reductions towards the 2 c target of global warming through implementing a set of behavioral actions we evaluate the efficacy of the set of actions both initially and after considering rebound effects a multiregional environmentally extended input output database is linked with the norwegian consumer expenditure survey to analyze both average and marginal expenditure per unit of increased income further linear programming is applied to examine the changes needed by households to reach different emission reduction targets we find that households implementing the full set of actions without re spending can obtain a 58 decrease in their carbon footprint when accounting for the effect of re spending this reduction drops to 24 35 which is not within the requirements of the 2 c target the optimization analysis suggests households can achieve reductions up to 45 by restricting re spending to specific goods and services this indicates that curbing the rebound effect is key to achieving real reductions in household carbon footprints we show that changing consumption patterns can significantly contribute to lowering anthropogenic greenhouse gas emissions without compromising the level of economic activity

rebound effects in agricultural land and soil management review and analytical framework abstract increasing the efficiency of production is the basis for decoupling economic growth from resource consumption in agriculture more efficient use of natural resources is at the heart of sustainable intensification however technical improvements do not directly translate into resource savings because producers and consumers adapt their behaviour to such improvements often resulting in a rebound effect where part or all of the potential resource savings are offset in extreme cases increases in efficiency may even result in higher instead of lower resource consumption the jevons paradox rebound effects are particularly complex in agricultural land and soil management where multiple resources are used simultaneously and efficiency gains aim to lower the need for farmland water energy nutrients pesticides and greenhouse gas emissions in this context quantification of rebound effects is a prerequisite for generating realistic scenarios of global food provision and for advancing the debate on land sparing versus land sharing however studies that provide an overview of rebound effects related to the resources used in agriculture or guidelines for assessing potential rebound effects from future innovations are lacking this paper contributes to closing this gap by reviewing the current state of knowledge and developing a framework for a structured appraisal of rebound effects as a test case the proposed framework is applied to emerging technologies and practices in agricultural soil management in germany the literature review revealed substantial evidence of rebound effects or even jevons paradox with regard to efficiency increases in land productivity and irrigation water use by contrast there were few studies addressing rebound effects from efficiency increases in fertilizer use pesticide application agricultural energy use and greenhouse gas emissions while rebound effects are by definition caused by behavioural adaptations of humans in agriculture also natural adaptations occur such as resistance of pests to certain pesticides future studies should consider extending the definition of rebound effects to such natural adaptations the test case revealed the potential for direct and indirect economic rebound effects of a number of emerging technologies and practices such as improved irrigation technologies which increase water productivity and may thereby contribute to increases in irrigated areas and total water use the results of this study indicated that rebound effects must be assessed to achieve realistic estimates of resource savings from efficiency improvements and to enable informed policy choices the framework developed in this paper is the first to facilitate such assessments

who rebounds most estimating direct and indirect rebound effects for different uk socioeconomic groups this study estimates the combined direct and indirect rebound effects from various types of energy efficiency improvement and behavioural change by uk households and explores how these effects vary with total expenditure the methodology is based upon estimates of the expenditure elasticity and ghg intensity of 16 categories of goods and services and allows for the capital cost and embodied emissions of the energy efficiency measures themselves the study finds that rebound effects in ghg terms are modest 0 32 for measures affecting domestic energy use larger 25 65 for measures affecting vehicle fuel use and very large 66 106 for measures that reduce food waste furthermore measures undertaken by low income households are associated with the largest rebound effects with direct emissions forming a larger proportion of the total rebound effect for those households measures that are subsidised or affect highly taxed energy commodities may be less effective in reducing aggregate emissions these findings highlight the importance of allowing for rebound effects within policy appraisals as well as reinforcing the case for economy wide carbon pricing

high inflation and returns on residential real estate evidence from turkey this study examines the hedging behaviour of real estate investment in a high inflationary environment the hypothesis that the real estate investment hedges both expected and unexpected inflation is tested the returns of investment on residential apartments in several neighbourhoods in the capital of turkey are used in the analysis expected inflation is measured by three proxies it is found that in a high inflationary environment real estate investment does not provide hedge against inflation a reverse causality between returns on real estate and changes in expected inflation is not observed however a relationship between real returns and changes in inflationary expectations seem to be different in relatively low and relatively high income neighbourhoods

the inflation hedging properties of turkish reits this study empirically tests the inflation hedging abilities of turkish reits in comparison to the indices of common stocks listed on the istanbul stock exchange ise over the period december 1999 to december 2004 two main factors motivate this study first compared to their counterparts in developed capital markets turkish reits have some important tax incentives as well as flexibility in managing their portfolios second the turkish economy provides a rare and good opportunity to test the hedging behaviour of real estate stocks in periods of both high and moderate inflation rates the empirical results show that turkish reits in general provide a better hedge against both actual and expected inflation than do the ise common stock indices dividing the entire sample period into the high and moderate inflation sub periods we find that the hedging ability of reits is better under high inflation than under moderate inflation

discussion of an economic framework for conservative accounting and bushman and piotroski 2006 abstract we offer an economic framework for generating predictions about the demand for conservative accounting reports we define conservatism as more timely recognition of losses than gains as a result of the costs and benefits of reporting verifiable information by managers and or firms being asymmetric we also discuss bushman and piotroski s interpretation of the speeds of good news recognition and incremental bad news recognition in basu type regressions as separate signals about accounting conservatism finally we suggest avenues for future research that seeks to investigate the links between institutions and contracts and between contracts and conservatism

non discretionary conservatism evidence and implications a large body of accounting research finds that various contracting incentives lead managers to engage in conservative accounting practices we extend existing research by modeling the impact of extant accounting rules on conservative accounting accounting rules typically require assets to be written down when their fair values drop sufficiently below their book values we document evidence of the resulting non discretionary conservatism and show that it appears to explain some of the results from previous research on contracting incentives

asymmetric timely loss recognition adverse shocks to external capital and underinvestment evidence from the collapse of the junk bond market abstract using the collapse of the junk bond market in the early 1990s as an exogenous shock to external capital i document in both difference in differences and triple difference designs that speculative grade firms that recognize economic losses in a timely manner experience a smaller reduction in investment following the collapse the effect is more pronounced for speculative grade firms with a low level of asset liquidation value using the excess bond premium as a proxy for fluctuations in the supply of capital i also extend the generalizability of my findings to a broader sample of 84 421 firm years over the 1972 2011 period

enjoying the quiet life corporate governance and managerial preferences much of our understanding of corporations builds on the idea that managers when they are not closely monitored will pursue goals that are not in shareholders interests but what goals would managers pursue this paper uses variation in corporate governance generated by state adoption of antitakeover laws to empirically map out managerial preferences we use plant level data and exploit a unique feature of corporate law that allows us to deal with possible biases associated with the timing of the laws we find that when managers are insulated from takeovers worker wages especially those of white collar workers rise the destruction of old plants falls but the creation of new plants also falls finally overall productivity and profitability decline in response to these laws our results suggest that active empire building may not be the norm and that managers may instead prefer to enjoy the quiet life

cash flow asymmetry causes and implications for conditional conservatism research earnings asymmetric timeliness captures both accrual and operating cash flow cfo asymmetric timeliness because recognition of operating cash flows does not reflect differential verification thresholds for recognizing unrealized gains versus losses cfo asymmetry adds noise or bias to tests of conditional conservatism we show that cfo asymmetry is predictable in the cross section and varies systematically with life cycle characteristics removing cfo from earnings and using accruals based measures of asymmetric timeliness eliminates several biases that prior studies have attributed to other sources moreover accrual asymmetric timeliness varies in the cross section as theory predicts going forward we recommend researchers use accruals based asymmetric timeliness measures when testing for conditional conservatism

monetary transmission mechanism in turkey under the monetary conditions index an alternative policy rule this study analyses monetary transmission mechanism in turkey using a small structural macroeconomic model the core equations of the model consist of aggregate demand wage price setting uncovered interest rate parity foreign sector and a monetary policy rule the aim of the paper is to analyse the disinflation path the output gap the output level the exchange rate and the interest rate and also the output inflation variance frontier of the economy under various scenarios the first scenario assumes that a standard taylor rule is implemented as the policy rule in the alternative scenario instead of the standard taylor rule the mci monetary conditions index combination of the changes in the short term real interest rate and in the real effective exchange rate in a single variable is used as a policy instrument the results indicate that the economy stabilizes much more quickly and shows significantly less volatility under this new setting therefore the paper concludes that the policymakers

an empirical test of the incentive effects of deposit insurance the case of junk bonds at savings and loan associations this paper analyzes how financial markets reacted to s l diversification into junk bonds the authors report that junk bond holdings are positively correlated with both the volatility of s l equity returns and the interest rates paid on large cds next they examine the impact of junk bonds on equity returns for poorly capitalized s ls greater risk taking increases the value of deposit insurance and should lead to higher stock returns however a well capitalized institution that increases junk bond holdings should not experience stock price gains the authors find that this is the case for the sample of s ls they studied copyright 1994 by ohio state university press