tests for price effects of new issues of seasoned securities do new issues of seasoned securities cause significant price movements in the neighborhood of the issue day this paper presents an empirical comparison of three competing hypotheses the sec view that a new issue causes a permanent price decline the underwriter view that there is only a temporary price decline during the distribution period and the efficient market hypothesis emh that implies the absence of any price effects several empirical tests of the competing hypotheses using data on new issues of utility stocks traded on the nyse reject the sec and underwriter views in favor of the emh

can poor consumers pay for energy and water an affordability analysis for transition countries low income households spend a substantial share of their income on utility services such as electricity heating and water the difficulty of these socially vulnerable consumers to absorb further price increases is often used as an argument against tariff reform however detailed quantitative information on the affordability of tariff adjustments for low income consumers is actually quite scarce much of the available information is based on households this paper takes a more detailed look at the affordability of electricity district heating and water for low income consumers in transition countries while the available data are incomplete the paper finds that affordability is a problem for low income consumers in most countries in particular in the water sector and in the commonwealth of independent states cis the affordability consequences of tariff reform ultimately depend on the speed of tariff adjustments relative to the growth in household income the level of tariffs needed for cost recovery the level of effective tariffs at the outset tariffs adjusted for non payment and the demand response to the tariff increase the paper finds that delaying tariff reform by a few years makes little difference to affordability constraints and may therefore not be an effective way to mitigate the social impact of utility reform

stimulus context and the formation of consumer ideals when a choice set consists of a distribution of alternatives with correlated benefits and costs consumers often exhibit single peaked preferences they prefer an alternative having moderate costs and benefits theories disagree about how adding additional lower benefit lower cost or higher benefit higher cost alternatives to this choice set will affect relative preferences for the initial set of alternatives prototype theory predicts that adding alternatives should produce assimilation whereas multiattribute range frequency theory predicts that it creates contrast we reconcile these two theories by assuming that single peaked preferences reflect a composition of underlying benefit and cost valuations moreover we claim that the correlational structure of the benefit and cost dimensions in the contextual stimuli determines whether these stimuli will exert an assimilation or contrast effect we show that when benefits and costs are correlated uncorrelated adding alternatives that extend the range of offerings produces assimilation contrast for preference judgments we propose a cost benefit trade off model that incorporates elements of single peaked preference theory and range frequency theory to explain the complex fashion in which contextual stimuli affect consumer ideals

objective vs subjective fuel poverty and self assessed health abstract identification of fuel poverty and its impact on individuals is a growing social issue classifying households using subjective measures of fuel poverty yields different results than when objective measures are used moreover there are assessment related difficulties in establishing the effects on health and wellbeing which hinders policy design to tackle this problem in this paper we propose a latent class ordered probit model to control for subjectivity when analysing the influence of fuel poverty on self reported health this methodology is applied to a sample of 25 000 individuals in 11 000 households for the 2011 2014 period in spain where 5 1 million people 11 of the population could not afford to heat their homes to an adequate temperature in 2014 the results show that poor housing conditions low income material deprivation and fuel poverty have a negative impact on health we also find that the effect of objective fuel poverty and other poverty related factors on health are stronger when we control for unobserved heterogeneity among individuals since objective measures alone may not fully capture the adverse effect of fuel poverty on health we advocate policy approaches that combine both objective and subjective measures and its application by policymakers

issuing costs to existing shareholders in competitive and negotiated underwritten public utility equity offerings abstract this paper presents the results of an empirical investigation of whether there is any difference in the cost incurred by public utilities if they issue new equity through a negotiated or competitive underwriting we conclude that the expected cost of a competitive offer is less than the expected cost of a negotiated offer but that the variance of the cost is substantially greater with a competitive offer these results are interesting because most public utilities use negotiated underwriting unless forced by regulation to use competitive offers this paper is also an addition to the growing agency theory literature

the rule 415 experiment equity markets rule 415 allows a firm to register all the securities it reasonably expects to sell over the next two years and then at the management s option to sell those securities over these two years whenever it chooses this paper examines whether equity offerings made under rule 415 shelf offerings differ in issuing costs from equity offerings not sold under this rule we find that shelf offerings cost 13 less for syndicated issues and 51 less for nonsyndicated issues we also investigate the empirical relevance of the market overhang argument which suggests that shelf registrations depress the price of the registering firm s shares more than traditional registrations our data does not support the market overhang argument the securities and exchange commission s sec rule 415 which was permanently adopted for large firms in november 1983 allows a firm to register all the securities that it reasonably expects to sell over the next two years and then sell those securities whenever it chooses this procedure is known as shelf registration investment bankers securities regulators and corporate issuers vigorously debate the effect of rule 415 on firms issuing cost for new securities some mostly investment bankers argue that rule 415 increases new issue costs while others mostly issuers argue that rule 415 decreases new issue costs in addition many investment bankers argue that placing common stock on the shelf depresses the price of a firm s outstanding shares of stock most issuers

can pay won t pay or economic principles of affordability the term afford ability has been gaining currency in housing policy debates but neither government nor academic researchers have given much consideration to defining it this paper considers what meanings have been given to the term affordability in practice and suggests a range of analytically more useful definitions it argues from economic first principles that it is more logical to use some form of residual income definition than one based on a prescribed ratio of housing costs to income most researchers have been using a ratio definition the paper then uses data from a household survey in the glasgow travel to work area in 1988 89 to examine the incidence of unaffordability of housing costs according to a variety of definitions

energy poverty policies in the eu a critical perspective abstract once confined to the uk context where it was struggling to receive political recognition for years the concept of energy or fuel poverty is slowly entering the eu s agenda where it has crept into a number of regulatory documents and policy proposals using evidence gathered from an international workshop and semi structured interviews with decision makers experts and advocacy activists in brussels and sofia this paper explores the adoption of policies aimed at addressing energy poverty within i the organisational context of the eu and ii national state institutions in bulgaria a member state facing considerable problems at the energy affordability social inequality nexus while the former are largely nascent and poorly co ordinated the latter have already been implemented de jure to a significant extent however many unresolved issues surrounding their de facto implementation remain at the same time national policy makers remain largely unaware of the existence of direct energy poverty related initiatives at the eu level

assimilation and contrast in price evaluations how are price judgments influenced by the distribution of observed prices for other items in the same category processing goals will moderate price judgment processes when the processing goal is discrimination price perceptions will be influenced by variations in range and ranks of prices in a distribution and contrast effects will be observed for example lowering the price of the lowest priced product in a set will increase perceived expensiveness of higher priced products when the processing goal is generalization however price perceptions will be influenced by variations in the mean of the price distribution in which case assimilation is observed for example lowering the price of the lowest priced product in a set will decrease perceived expensiveness of higher priced products this latter finding is in sharp contrast to findings in the current literature on the effect of price structure on price judgments

specifying price judgments with range frequency theory in models of brand choice abstract to construct a price judgment consumers compare a focal price with one or more reference prices however reference price operationalizations in the brand choice literature use single point summary measures that cannot account for several distributional effects to account for effects beyond the first moment of the reference price distribution the authors specify price judgments in models of brand choice in accordance with range frequency theory the findings indicate that range frequency price judgments provide a more complete specification of reference price effects and become more important with an increase in the second and third moments of a reference price distribution the data also indicate that range effects are stronger for coupon users and frequency effects are stronger for consumers exposed to a trend of prices the results have several implications for choice modeling pricing theory and pricing strategy

a simple model for merit good arguments abstract in this paper we examine a way of representing merit goods by allowing governments to apply a specific form of correction to consumers preferences the model builds upon an approach to the analysis of taste and quality change due to fisher and shell we look at the first best allocation of resources where this is done we also consider second best policies in which the government must charge the same price to all consumers of the merit good and when optimal lump sum transfers are not available

empirical generalizations from reference price research considerable theoretical justification for consumers use of psychological reference points exists from the research literature from a managerial perspective one of the most important applications of this concept is reference price an internal standard against which observed prices are compared in this paper we propose three empirical generalizations that are well supported in the marketing literature first there is ample evidence that consumers use reference prices in making brand choices second the empirical results on reference pricing also support the generalization that consumers rely on past prices as part of the reference price formation process third consistent with other research on loss aversion consumers have been found to be more sensitive to losses i e observed prices higher than reference prices than gains we also propose topics for further research on reference prices

objective and subjective measures of fuel poverty as energy prices continue to rise to reflect the real cost of carbon the numbers of households in fuel poverty is increasing rapidly this paper uses a unique data set to explore one alternative measure of fuel poverty based on whether consumers feel able to afford their energy similar to one introduced by the government a few years ago we explore the links between an expenditure based and our subjective measure of fuel poverty and compare these differences with those between official measures amongst low income households 28 spent more than a tenth of their income on energy in the home and so would be likely to qualify as fuel poor under the most usual definition but only 16 felt unable to afford sufficient energy to keep their homes warm amongst this group who felt they had difficulty in affording sufficient energy less than half were expenditure fuel poor the paper argues that reintroduction of a self reported measure by the government would be a valuable aid to policy development

assimilation or contrast status inequality judgment of product quality and product choices in markets much of organizational status research has been conducted at the micro level by examining the effect of individual status positions to answer calls for more status research at the macro level this study extends psychological research on assimilation and contrast effects to examine how status inequality as a distributional property influences product choices in markets in the context of u s college bowls a specific type of organization within u s collegiate athletics this study analyzes how the status inequality among bowls influences bowls stadium attendance which reflects the judgment of bowls by football fans as the key buyers the analyses yield evidence consistent with assimilation and contrast effects below the middle level of status inequality the relationship between status inequality and stadium attendance is positive for low status bowls but negative for high status bowls above the middle level of status inequality the relationships are reversed the effect of status inequality is a

corporate compliance with debt covenants in this paper i present and test a model of corporate compliance with the debt covenant requiring payment of a current obligation this study adds to the empirical literature on forecasting financial distress by showing conditions under which debt default may be a rational economic decision by the firm s shareholders this analysis departs from empirical financial distress studies which are often not linked to an underlying economic theory the focus on covenant default also extends the literature which has modeled bankruptcy bulow and shoven 1978 and liquidation decisions titman 1984 but which has not considered a common first symptom of financial distress covenant default briefly the model examines the costs that influence shareholders decision to comply with or violate a particular debt covenant payment of a current obligation these costs include those associated with bondholders reaction to possible default the model predicts that shareholders will default when holding other factors constant i interest rates have declined relative to coupon rates stated in the debt issue ii the probability of paying future obligations is high and iii the cost of obtaining funds to pay the obligation is high the model also predicts when stockholders and bondholders will renegotiate the debt contract and the amount of wealth transferred in the renegotiation finally the

a range theory account of price perception it is well accepted in the behavioral pricing literature that a consumer s perception of the attractiveness of a market price depends on a comparison of the market price to an internal reference price the rationale underlying this dynamic has its roots in adaptation level theory however consistent with range theory we postulate that a consumer s assessment of the attractiveness of a market price may also depend on a comparison of the market price to the endpoints of the evoked price range four experiments provide evidence that variance in the width of the evoked price range affects price attractiveness judgments in the absence of any variance in the internal reference price of theoretical importance findings from the present article suggest that pricing theory is in need of augmentation in order to account for this effect of managerial relevance these findings suggest that changes in context can bring about changes in the evoked price range and perceptions of the attractiveness of a market price

towards an accurate description of affordability this paper draws upon the poverty literature and examines the desirable properties of a descriptive statistic of affordability namely that it should satisfy three axioms monotonicity transfer and transfer sensitivity the descriptive statistics of headcounts and averages do not satisfy these three axioms and policies using these statistics as allocative tools may be misallocating resources the paper advocates the use of a foster greer thorbecke statistic fgt examples of different hypothetical households are used to show the contradictory results that can be obtained by using the current statistics as a case study the paper compares regional affordability rankings in england by looking at the fgt headcount and mean values of the rent income ratio using the 1995 96 existing tenants survey

from targeting to implementation the role of identification of fuel poor households this paper proposes to evaluate the efficiency of fuel poverty policies by looking at them as a three step process these steps are policy targeting identification of households and implementation of measures each of these steps are costly and can face feasibility problems this is particularly true in the case of fuel poverty policies because of the multidimensional aspect of fuel poverty therefore public policies in that field are necessarily imperfect and this should be taken into account in the analysis of policies this three step framework is applied to the french fuel poverty policy which has been developed in 2010 as its practical modalities of implementation are still under discussion we mainly discuss the choices made in terms of targeting and highlight the role of identification of fuel poor households as a key factor for the success of that policy the general idea behind this discussion is that the efficiency of such policies has to be viewed in a comprehensive way which includes the three policy steps

direct equity financing a resolution of a paradox when raising new equity capital managers have historically rejected the direct offer method favoring instead the seemingly more expensive underwritten public issue this paper provides a resolution for this equity financing paradox by demonstrating empirically that firms which engage in direct offers enjoy a comparative cost advantage that is more than sufficient to account for the absolute reported cost differences between the two methods of equity financing

the effect of liberalizing uk retail energy markets on consumers this paper describes the evolution of supply competition in the uk residential energy market and the extent to which consumers in general and vulnerable households in particular have benefited from liberalization it concludes that earlier fears about higher prices for vulnerable groups from tariff rebalancing have not so far been realized however in assessing the extent to which suppliers may be able to exploit individual or joint market power increasing concentration in the downstream market may result in adverse effects on all consumers especially low income households this poses a threat to the government s programme to reduce fuel poverty particularly at a time when upstream costs are expected to rise to reflect environmental concerns copyright 2005 oxford university press

a new measure of italian hidden energy poverty abstract as highlighted by european policymakers and academic research the global economic crisis of 2008 emphasized the energy poverty phenomenon a number of households have had to considerably reduce their energy expenditure but the traditional criteria adopted to calculate energy poverty are not able to measure their number placed in this framework the paper aims to define a new measure of hidden energy poverty suitable to identify which italian households restrain their energy consumption due to their inability to afford energy services a review of the available energy poverty metrics supports the definition of a new indicator that is able to include hidden energy poor consumers considering some key peculiarities such as the poor energy efficiency of buildings the poverty situation low energy consumption and sensitivity to the climate using data from the household budget survey provided by the italian national institute of statistics in 2018 the newly identified indicator supports the assessment of the percentage of italian households in hidden energy poverty and supplies useful insight to policymakers in their effort to support vulnerable consumers

stock price effects and costs of secondary distributions abstract this study does not support the view that a large number of shares can be sold at the prevailing market price and at a small cost a significant stock price decrease is observed at the initial announcement of secondary distributions the price declines are greater for offerings by officers and directors and for larger offerings but are significant for all types of sellers and for large and small offerings there is no significant price decline at the offering when secondaries are announced in advance underwriting and other selling costs are substantial and are positively related to relative offering size

energy affordability and the benefits system in italy abstract in this paper we discuss a number of ways to define and measure the affordability of energy consumption and we examine the emergence of energy poverty in italy in the period from 1998 to 2011 the paper examines the eligibility criteria for claiming the benefits available to support energy consumption for vulnerable families and it identifies the potential beneficiaries the study assesses the appropriateness of the eligibility criteria by comparing the population targeted by the policy with the population actually facing affordability problems a simulation exercise using the hypothetical scenario most likely to result in energy benefits being made available shows that regardless of the affordability index adopted the provision of state energy benefits has little impact on fuel poverty

the effect of pre emptive right amendments on shareholder wealth abstract pre emptive rights allow existing shareholders to purchase a new offering of shares before the general public this paper investigates the effect on shareholder wealth of removing pre emptive rights from corporate charters two hypotheses are constrasted 1 shareholder wealth maximization suggests that management uses this extra degree of freedom to pick the least cost method for raising new equity hence the amendment increases shareholder wealth 2 management welfare maximization holds that management will use the passage of the amendment to maximize their own welfare sometimes to the detriment of shareholders hence the amendment decreases shareholder wealth the evidence indicates that the amendment decreases shareholder wealth

reference price and price perceptions a comparison of alternative models reference price effects on consumer price perceptions are often explained by helson s adaptation level theory in which the cognitive representation of reference price is the prototype of the relevant category however recent conceptualizations and empirical evidence suggest the possibility of an exemplar model which may be specified using volkmann s range theory or parducci s range frequency theory in two experiments these three contextual models of reference price effects are pitted against one another based on the manova and model fitting range frequency theory accounted for reference price effects that the other theories could not suggesting that consumers compare the target price against specific members of the category rather than the category prototype a third experiment demonstrated that range and frequency effects are moderated by the stimulus presentation condition suggesting that consumers place greater weight on extreme prices anchoring the range for internal reference prices than for external reference prices

ex post welfare economics and the theory of merit goods in recent years a number of papers have questioned the extension of the main theorems of welfare economics to a world of uncertainty stemming from the work of arrow 1953 and debreu 1959 the arrow debreu extension is based on the idea that consumer preferences may be defined on state contingent commodities as a special but important case these preferences may be represented by von neumann morgenstern utilities with this interpretation of the commodity space the main theorems of weltare economics remain valid in a world of uncertainty a competitive equilibrium is a pareto optimum a pareto optimum can be sustained as a competitive equilibrium and the diagnosis of the causes of market failure remains as before there are several reasons why one may feel uneasy about this construction a good deal of attention has been paid to the assumption of universality of markets necessary to establish the connection between equilibrium and optimum on a deeper level perhaps are the doubts that one may have about the criterion of welfare or efficiency first should social welfare be a function of individuals expected utilities or should the appropriate concept be that of expected welfare second if probability beliefs are not identical across individuals whose probabilities if any should be used for welfare evaluation in the next section we review some concepts and results in the recent literature on ex post welfare economics and in section ii it is argued that this literature can provide the foundations for a more satisfactory theory of merit goods a concept originally introduced by musgrave 1959 this idea is applied in section iii to a model with a complete set of markets in the arrow debreu sense and in sections iv and v to an incomplete markets model which provides the most natural framework for the study of merit goods various remarks on further aspects of the problem are collected in the concluding section of the paper