earnings surprise materiality as measured by stock returns ranked earnings surprise portfolios formed from first call files for 1992 97 are used to assess the annual earnings surprise magnitude for an individual firm sufficient to expect a significant market reaction we find that for an individual firm the maximum probability of a gain from trading on prior knowledge of any surprise magnitude is 622 the lack of probable trading gains is due to the s shaped surprise return relation and the large variance of returns for a given magnitude of surprise in turn we find that the s shape is related empirically to the dispersion of analyst forecasts thus factors underlying dispersion differences are related to the importance or materiality of earnings surprise as measured by stock returns and explain at least part of the s shaped surprise return relation

the tenure imbalance in spain the need for social housing policy spain is usually chosen as an example of an unbalanced picture among tenures the owner occupied sector has been growing since the 1950s while the rental sector has become smaller surprisingly other european countries are at present following the same pattern but mostly we also see an important function for social housing taking into account that public housing built by public developers is almost negligible and that government housing policy programmes basically stimulate ownership the social housing concept lacks an adequate definition in spanish housing policy in this sense the encouragement of the rental sector through public policy should provide an alternative for low income families despite different cultural housing backgrounds the emergence of a reliable rental sector in spain appears to be the most promising strategy for solving current housing problems the aim of the paper is twofold on the one hand it analyses the evolution of the rental sector through recent decades stressing

the determinants of homeownership affordability among the sandwich class empirical findings from guangzhou china the sandwich class is an east asian term referring to the lower middle class using a large and unique micro dataset collected in guangzhou this paper examines empirically the potential determin

costly arbitrage evidence from closed end funds arbitrage costs lead to large deviations of prices from fundamentals using a sample of closed end funds i find that the market value of a fund is more likely to deviate from the value of its assets 1 for funds with portfolios that are difficult to replicate 2 for funds that pay out smaller dividends 3 for funds with lower market values and 4 when interest rates are high these factors are related to the magnitude of the deviation as opposed to the direction i e whether discount or premium and explain a quarter of cross sectional mispricing variation these findings are consistent with noise trader models of asset pricing

inconsistent preferences in environmental protection investment and the central government s optimal policy environmental protection plans cannot succeed without full cooperation among related units however inconsistent investment preferences toward environmental protection increase the damage to the environment this article employs the contract mechanism to analyse environmental protection effects when the central government directly subsidizes the local governments the results reveal that subsidies from the central government are not only unable to solve the problem of the inconsistent investment preferences among the central and local governments but also induce the free riding behaviour of local governments because of the free riding behaviour of the local governments there is no such equilibrium in which the central government prefers the sequential investment mode while the local governments prefer the simultaneous investment mode

trust and stock price crash risk evidence from china abstract this paper examines the impact of social trust on stock price crash risk social trust measures the level of mutual trust among the members of a society using a large sample of chinese listed firms for the 2001 2015 period we find that firms headquartered in regions of high social trust tend to have smaller crash risks this result is robust to a battery of sensitivity tests and is more prominent for state owned enterprises soes for firms with weak monitoring and for firms with higher risk taking moreover we observe that firms in regions of high social trust are associated with higher accounting conservatism and fewer financial restatements our study suggests that social trust is an important variable that is omitted in the literature investigating the predictors of stock price crashes

political connections and stock price crash risk evidence from china abstract we examine how political connections may influence a firm s crash risk in china we find that politically connected firms have lower crash risk than their counterparts moreover the effect of political connections varies according to their strength and types

the rationale of the mean standard deviation analysis skewness preference and the demand for money publisher summary this chapter discusses the rationale of the mean standard deviation analysis skewness preference and the demand for money in january 1969 issue of the review of economic studies karl borch and martin feldstein separately criticized the widely used mean variance analysis of portfolio selection borch contended that any system of upward sloping mean standard deviation e s indifference curves can be shown to be inconsistent with the basic axiom of choice under uncertainty he pointed out that one can always pick any two points on an upward sloping indifference curve to represent two bernoulli distributions with probability 1 p of gaining the same amount x in both the cases and probability p of gaining y1 in the case of one distribution and y2 in the case of the second distribution with y2 y1 if the second distribution represents the point to the northeast of the other point then by the dominance axiom the second distribution must be preferred to the first which contradicts the basic meaning of indifference curves feldstein by using a log utility function and a lognormal distribution for investment outcome showed that e s indifference curves for a risk averter need not be convex downwards though upward sloping they would change from convex to concave once the standard deviation of the outcome exceeds the mean multiplied by on the face of it this seems to suggest that risk aversion might decrease as risk is increased beyond a certain extent

financial statement comparability and expected crash risk this study examines the impact of financial statement comparability on ex ante crash risk using the comparability measures of de franco et al 2011 we find that expected crash risk decreases with financial statement comparability and this negative relation is more pronounced in an environment where managers are more prone to withhold bad news we also provide evidence that comparability can mitigate the asymmetric market reaction to bad versus good news disclosures our results suggest that financial statement comparability disinclines managers from bad news hoarding which reduces investors perceptions of a firm s future crash risk

protection or expropriation politically connected independent directors in china abstract this paper empirically investigates politically connected independent directors among chinese listed firms using 7487 firm year observations from the shanghai stock exchange during the period of 2003 2012 we distinguish between privately controlled firms and state controlled firms we find that the value effect and incentives of appointing independent directors with political ties are shaped by a firm s ownership structure more exactly chinese listed privately controlled firms with a large fraction of politically connected independent directors tend to outperform their non connected counterparts due to the ease of access to external debt financing and more subsidies from the government however the appointment of politically connected independent directors also enlarges the magnitude of related party transactions with the controlling party in listed privately controlled firms in contrast having politicians as independent directors does not help to add value to listed state controlled firms especially firms controlled by the local government due to the expropriation of minority investors via more related party transactions and more severe over investment problems

implied volatility functions empirical tests derman and kani 1994 dupire 1994 and rubinstein 1994 hypothesize that asset return volatility is a deterministic function of asset price and time and develop a deterministic volatility function dvf option valuation model that has the potential of fitting the observed cross section of option prices exactly using s p 500 options from june 1988 through december 1993 we examine the predictive and hedging performance of the dvf option valuation model and find it is no better than an ad hoc procedure that merely smooths black scholes 1973 implied volatilities across exercise prices and times to expiration

the value of active investing can active institutional investors remove excess comovement of stock returns this study uses cremers and petajisto s 2009 method to separate active institutional investors from passive ones and shows that active investors can alleviate the anomalous comovement of stock returns focusing on 2 events linked to the excess comovement anomaly standard poor s 500 index additions and stock splits i find that if an event stock has more active institutional investors trading in the post event period the anomalous comovement effect disappears in contrast if an event stock experiences a massive exit of active investors this anomaly persists the exit of active institutional investors also results in a strong price synchronicity effect

rational asset price movements without news this paper argues that an important part of movements in asset prices may be caused by neither external news nor irrationality but by the revelation of information by the trading process itself two models are developed that illustrate this general idea one model is based on investor uncertainty about the quality of other investors information the other is based on dispersion of information and small costs to trading the analysis is used to suggest a possible rational explanation of the october 1987 crash copyright 1993 by american economic association

the regional economic consequences of tariffs and domestic transportation costs a small open economy is assumed to consist of two regions where interregional transport costs are higher than international transport costs cross hauling of identical commodities occurs and things such as terms of trade changes tariffs and domestic taxes have distinctly regional effects if tariffs generate interregional trade a welfare loss equal to the previous tariff collection occurs tariffs may also increase welfare for one region and may reverse the trade pattern for the economy tariffs and domestic taxes subsidies are not equivalent in this model tariffs also generate regional factor price differences which will not be eliminated by migration unless relative endowments are equalized les effets economiques regionaux des tarifs douaniers et des coats de transport domestique l auteur examine le cas d une petite 6conomie ouverte faite de deux regions entre lesquelles les couits de transport sont plus 6lev6s que les couits de transport internationaux on observe des mouvements de biens identiques entre pays dans les deux directions et des changements dans les termes d echange dans les tarifs douaniers et dans la fiscalit6 domestique ont des effets regionaux distincts si les tarifs douaniers engendrent un commerce interregional une perte de bien etre 6gale a la perte des droits de douane collect6s ant6rieurement se produit l introduction de tarifs douaniers peut accroftre le bien etre d une region et renverser le pattern de commerce international pour l 6conomie dans son ensemble dans ce modele tarifs douaniers et taxes subventions ne s 6quivalent pas les tarifs douaniers peuvent engendrer des diff6rences regionales dans le prix des facteurs qui ne s 6limineront pas par les mouvements migratoires a moins que les dotations relatives de facteurs ne soient 6galis6es

entry to home ownership in germany some comparisons with the united states new research on migration mobility and housing tenure choice using the concept of the life course is providing an enriched analysis of the context within which housing choices are made and of the demographic and economic variables which are critical determinants of the decisions to move and to change tenures the availability of panel series data for the us and germany allows cross national comparisons of the migration and tenure choice processes there are substantial differences in the rates of mobility and the rates of moves of households from the rental sector to ownership especially for couples but the results confirm the overall similarities in the mobility and tenure choice processes despite the differing government commitments to housing policy the models show that it is primarily couples and families who make the transition to ownership and that income and number of earners are important in both contexts and german households have even higher incomes before they make the transition to ownersh

short interest and stock price crash risk abstract using a large sample of u s public firms we find robust evidence that short interest is positively related to one year ahead stock price crash risk the evidence is consistent with the view that short sellers are able to detect bad news hoarding by managers additional findings show that the positive relation between short interest and future crash risk is more salient for firms with weak governance mechanisms excessive risk taking behavior and high information asymmetry between managers and shareholders empirical support is provided showing that the relation between short interest and crash risk is driven by bad news hoarding

auto pollution and congestion in an urban model an analysis of alternative strategies abstract congestion and pollution externalities associated with automobile driving are examined for their effect on urban structure a monocentric urban model which incorporates household preferences for both an unpolluted environment and for leisure time is presented and used to evaluate alternative pricing and emissions policies on automobile use and their effects on city structure optimal tax gradients for driving are derived and compared with second best cases of per mile taxes and no taxes as externalities gradients become more nonlinear the welfare gains from employing optimal taxes rather than a per mile tax are increased the appropriate choices of an emission standard highway capacity and highway pricing policy must be made simultaneously and depend on household preferences

public information and uninformed trading implications for market liquidity and price efficiency abstract we develop a rational expectations equilibrium model in which noise trading comes from discretionary liquidity traders the equilibrium quantity of aggregate noise trading is endogenously determined by the population size of liquidity traders active in the financial market by improving market liquidity public information reduces the expected trading loss of liquidity traders and thus attracts more such traders to the market which negatively affects information aggregation analyzing an alternative setting that models noise trading as coming from hedgers yields similar insights in a setting with endogenous information public information can harm information aggregation both through crowding out private information and through attracting noise trading

divergence of cash flow and voting rights opacity and stock price crash risk international evidence this study investigates whether and how the deviation of cash flow rights ownership from voting rights control or simply the ownership control wedge influences the likelihood that extreme negative outliers occur in stock return distributions which we refer to as stock price crash risk we do so using a comprehensive panel data set of firms with a dual class share structure from 20 countries around the world for the period of 1995 2007 we predict and find that opaque firms with a large wedge are more crash prone than opaque firms with a small wedge in addition we predict and find that the positive relation between the wedge and crash risk is less pronounced for firms with more effective external monitoring and for firms with greater growth opportunities the results of this study are broadly consistent with jin and myers s theory that agency costs combined with opacity exacerbate stock price crash risk

insiders incentives for asymmetric disclosure and firm specific information flows abstract recent research suggests that insiders incentives for capturing cash flows affect price formation process in which insiders are inclined to withhold good news and to accelerate the release of bad news jin and myers 2006 we investigate whether insiders incentives for private control benefit proxied by control ownership wedge affect firm specific return characteristics we find that control ownership wedge is negatively related to the likelihood of positive return jumps and positively related to the extent of asymmetric market reaction to good news rather than to bad news overall our results support the notion that corporate insiders increase opaqueness and withhold good news in order to capture unexpected cash flow

high frequency trading and comovement in financial markets abstract using the staggered entry of chi x in 12 european equity markets as a source of exogenous variation in high frequency trading hft we find that hft causes significant increases in comovement in returns and in liquidity about one third of the increase in return comovement is due to faster diffusion of market wide information we attribute the remaining two thirds to correlated trading strategies of hfts the increase in liquidity comovement is consistent with hft liquidity providers being better able to monitor other stocks and adjust their liquidity provision accordingly our findings suggest a channel by which hft impacts the cost of capital

individualism and stock price crash risk employing a sample of 26 473 firms across 42 countries from 1990 to 2013 we find that firms located in countries with higher individualism have higher stock price crash risk furthermore individualism can be transmitted by foreign investors from overseas markets to influence local firms crash risk and can exacerbate the impact of firm risk taking and earnings management on crash risk moreover the positive relation between individualism and crash risk is amplified during the global financial crisis and attenuated by enhanced country level financial information transparency and the adoption of international financial reporting standards

commitment risk and consumption do birds of a feather have bigger nests abstract consumption commitments goods like housing for which adjustment is costly change the relationship between risk and consumption commitment provides a motive to reduce consumption when possible future losses are too small to warrant adjustment but not when losses are large enough that adjustment would be worthwhile this implies conditions under which mean preserving increases in risk can increase housing consumption our empirical evidence exploits the interaction of these conditions with a novel proxy for unemployment risk couples sharing an occupation consistent with our model same occupation couples consume more housing only when adjustment costs are high and potential losses are sufficiently large

press freedom externally generated transparency and stock price informativeness international evidence abstract this paper examines the impact of press freedom on stock price informativeness in a sample of firms from 50 countries we find a significant relation between more press freedom and lower stock price synchronicity our results suggest that the freedom of the press can enhance the information environment of stock markets

auditor gender and stock price crash risk evidence from china stock price crash risk is attributed to agency problems and information asymmetry auditors generally play a more important governance function in countries with weak legal institutions previous s

political incentives to suppress negative information evidence from chinese listed firms this paper tests the proposition that politicians and their affiliated firms i e firms operating in their province temporarily suppress negative information in response to political incentives we examine the stock price behavior of chinese listed firms around two visible political events meetings of the national congress of the chinese communist party and promotions of high level provincial politicians that are expected to asymmetrically increase the costs of releasing bad news the costs create an incentive for local politicians and their affiliated firms to temporarily restrict the flow of negative information about the companies the result will be fewer stock price crashes for the affiliated firms during these event windows followed by an increase in crashes after the event consistent with these predictions we find that the affiliated firms experience a reduction an increase in negative stock return skewness before after the event these effects are strongest in the three month period directly preceding the event among firms that are more politically connected and when the province is dominated by faction politics and cronyism additional tests document a significant reduction in published newspaper articles about affected firms in advance of these political events suggestive of a link between our observed stock price behavior and temporary shifts in the listed firms information environment

bank valuation and accounting discretion during a financial crisis this paper shows that banks overstate the value of distressed assets and their regulatory capital during the us mortgage crisis real estate related assets are overvalued in banks balance sheets especially those of bigger banks compared to the market value of these assets banks with large exposure to mortgage backed securities also provision less for bad loans furthermore distressed banks use discretion over the classification of mortgage backed securities to inflate their books our results indicate that banks balance sheets offer a distorted view of the financial health of the banks and provide suggestive evidence of regulatory forbearance and noncompliance with accounting rules

state enterprise relation local economic priority and corporate environmental responsibility this paper empirically investigates how the state enterprise relation and local government s economic priority affect corporate environmental responsibility in a sample of chinese polluting enterpr

opaque financial reports r2 and crash risk abstract we investigate the relation between the transparency of financial statements and the distribution of stock returns using earnings management as a measure of opacity we find that opacity is associated with higher r2s indicating less revelation of firm specific information moreover opaque firms are more prone to stock price crashes consistent with the prediction of the jin and myers 2006 r2 around the world new theory and new tests journal of financial economics 79 257 292 model however these relations seem to have dissipated since the passage of the sarbanes oxley act suggesting that earnings management has decreased or that firms can hide less information in the new regulatory environment

spatial bias and the location of footloose industry a simple regional model this paper develops a simple regional model to analyse the spatial consequences of sectoral policies the model focuses on the regional specificity and footlooseness of different sectors and shows that any policy that alters the balance between sectors in an economy inevitably alters the distribution of economic activities across regions this is true even when the effect of policy is to expand a sector in which production units are completely footloose

national elections and tail risk international evidence abstract we investigate stock tail risk around national elections worldwide over the period of 1982 2012 we find that firm stock is less likely to crash during the election years and is more likely to crash during the post election period this inter temporal pattern is consistent with the suppression of negative information when there is heightened political uncertainty around elections and with the subsequent release of adverse news when the uncertainty is reduced further analysis shows that the impact of political uncertainty on tail risk is stronger in countries with poorer investor protection fewer electoral checks and balances more uncertain election outcomes and pro business incumbent governments in industries which are more politically sensitive and in firms with larger information asymmetry

firm location political geography and environmental information disclosure abstractas the subjective and objective factors that influence corporate behaviours political region and firm location are of great importance to environmental information disclosure eid with spatial and political geography as a research perspective this article makes a study by using the samples of manufacturing listed companies from 2009 to 2011 as a result we determine that regulatory distance and political geography had negative effects on eid while political geography weakens regulatory distance s function after considering an enterprise s administrative rank we determined that when the rank is higher regulatory distance has negative effects on eid when the rank is lower the effects are the opposite regarding political geography it always weakened the regulatory distance s function moreover the effects are significant only when the enterprises had low governmental regulation the study shows the effects that firm location and political geography have made on eid at the same time th

mutual fund herding and stock price crashes abstract we investigate the impact of mutual fund herding behaviours on stock price crashes there are competing hypotheses with respect to how investors herding behaviours are associated with information processing our empirical evidence shows that mutual fund herding is associated with a poor information environment and low disclosure quality more importantly mutual fund herding amplifies stock price crash risk afterwards the main finding is concentrated on buy herding rather than sell herding to mitigate the endogeneity concern we use the 2004 sec mutual fund disclosure regulation change as an exogenous shock and the results hold we further use propensity score matching to alleviate the impact of information asymmetry finally additional analysis reveals that our results are not driven by the price impact hypothesis

labor income uncertainty skewness and homeownership a panel data study for germany and spain abstract in this paper we empirically investigate the effect of labor income uncertainty on the probability of homeownership in germany and spain this study is motivated by two facts firstly theoretical models tend to provide ambiguous results on this issue secondly previous empirical evidence focuses exclusively on the us housing market to carry out our analysis we propose more precise income uncertainty measures based on panel data labor income equations we observe that households facing high levels of income uncertainty display a preference for renting while those located in more positively skewed income distributions show a greater propensity for homeownership

compensating wage differentials for schooling risk in denmark in this paper we analyse the association between wage differentials and risk using detailed information on length and type of education as seen in danish administrative registers our contribution to the literature is that we distinguish between transitory time series and permanent cross sectional income shocks and estimate the compensation for both sorts of risk we find that wage risk in a given education cell is associated with higher wages while skewness is associated with lower wages as a robustness check we see that ad hoc risk measures based on earnings mobility indicators confirm these findings

can big bath and earnings smoothing co exist as equilibrium financial reporting strategies we study a model of financial reporting where investors infer the precision of reported earnings reporting a larger earnings surprise reduces the inferred earnings precision dampening the impact on firm value of reporting higher earnings and providing a natural demand for smoother earnings we show that for sufficiently bad news the manager under reports earnings by the maximum preferring to take a big bath in the current period in order to report higher future earnings if the news is good the manager smoothes earnings with the amount of smoothing depending on the level of cashflows observed he either over reports or partially under reports for slightly good news and gradually increases his under reporting as the news gets better until he is under reporting the maximum amount for sufficiently good news this result holds both when investors are naive and ignore management s ability to manipulate earnings or sophisticated and correctly infer management s disclosure strategy

the mortality cost of political connections we study the relationship between the political connections of chinese firms and workplace fatalities in our preferred specification we find that the worker death rate for connected companies is two to three times that of unconnected firms depending on the sample employed a pattern that holds for within firm estimations the connections mortality relationship is attenuated in provinces where safety regulators promotion is contingent on meeting safety targets in the absence of fatalities connected firms receive fewer reports of major violations for safety compliance whereas in years of fatal accidents the rate of reported violations is identical moreover fatal accidents produce negative returns at connected companies and are associated with the subsequent departure of well connected executives these results provide suggestive evidence that connections enable firms to avoid potentially costly compliance measures rather than using connections to avoid regulatory response after accidents occur our findings emphasize the social costs of political connections and suggest that appropriate regulatory incentives may be useful in mitigating these costs

do political factors affect stock returns during presidential elections abstract this study investigates whether or not political factors such as government policy and political connections affected stock returns during the 2008 taiwanese presidential election we find that firms that benefitted from were threatened by the proposed three links policy of the winning party experienced positive negative stock returns during the election we use the sensitivities of firms returns to bilateral trade flows between taiwan and china to measure the government policy effect our results show that the effects of political connections weakly exist but they become more significant when the support ratio of the winning party increased in polling data we also find that only the government policy effect holds for different crash risk and corporate governance levels finally investment strategies based on both political factors can generate positive abnormal returns with respect to the fama french three factor model

effects of income variability on the demand for owner occupied housing abstract this study investigates whether the uncertainty associated with an income stream affects the demand for owner occupied housing theoretical models yield an ambiguous sign for the direction of change in consumption but our empirical findings are consistent with the hypothesis that the consumption of housing falls when the uncertainty of receipt of income increases specifically in a sample of military employees the income earned by wives had little or no effect on the demand for housing we also find evidence that suggests the demand for housing is affected by pension rights the closer to retirement the stronger the effect

earnings manipulation pension assumptions and managerial investment decisions managers appear to manipulate firm earnings through their characterizations of pension assets to capital markets and alter investment decisions to justify and capitalize on these manipulations managers are more aggressive with assumed long term rates of return when their assumptions have a greater impact on reported earnings firms use higher assumed rates of return when they prepare to acquire other firms when they are near critical earnings thresholds and when their managers exercise stock options changes in assumed returns in turn influence pension plan asset allocations instrumental variables analysis indicates that 25 basis point increases in assumed rates are associated with 5 percent increases in equity allocations

general trends in financing social housing in spain the affordability of houses has become one of the main problems for spanish families in recent decades the government has been actively involved in designing policies to solve this problem theoretically the characteristics of the housing stock and population always determine the type of public intervention in the spanish case there are some features that give rise to a particular approach which is slightly different from that of the rest of europe the following elements among other things have been taken into account when designing housing policies in spain the cultural importance of home ownership the evolution of prices the distinct condition of large cities such as barcelona and madrid the high proportion of mortgage burdens in relation to family income and the role played by the several levels of government in present spanish housing policy it is possible to identify at least two main trends both the 1992 95 scheme and the 1996 99 scheme seek to provide financial support basically to t

two way capital flows cross hauling in a model of foreign investment this paper presents a simple model of a small open economy which is open to both commodity trade and foreign investment of a sector specific kind and which exhibits the phenomenon of cross hauling or reverse flows of internationally mobile capital in two different sectors the model which assumes that a single domestic factor is combined with internationally mobile but sector specific capital in each of two sectors one of which produces a non traded good appears to be the simplest possible which permits cross hauling as an endogenous phenomenon

household behavior under income uncertainty in a monocentric urban area abstract for a household living outside of but commuting to and from the cbd of an urban area and experiencing income uncertainty housing consumption and location distance from the cbd are inversely related to the probability of unemployment and directly related to the level of unemployment compensation under fairly unrestrictive assumptions under more restrictive assumptions it is found that these variables are inversely related to housing price and transportation costs finally income compensation causes housing consumption and location to be directly related to the probability of unemployment and the level of unemployment compensation

corporate political strategy an examination of the relation between political expenditures environmental performance and environmental disclosure two fundamental business ethics issues that repeatedly surface in the academic literature relate to business s role in the development of public policy suarez s l 2000 does business learn the university of michigan press ann arbor mi roberts r w and d d bobek 2004 accounting organizations and society 29 5 6 565 590 and its role in responsibly managing the natural environment newton l 2005 business ethics and the natural environment blackwell publishing oxford when studied together researchers often examine if and how corporations influence environmental policy decisions drawing from literatures on corporate political activity corporate social and environmental performance and corporate environmental disclosure we develop and empirically examine two research questions concerning the relations between corporate political expenditures environmental performance and environmental disclosure the questions are 1 do corporations that are poorer environmental performers spend more on political activities than their better performing counterparts 2 is there an association between corporations spending on political activities and the extent of their financial report environmental disclosures we investigated these questions through analyses of data we gathered on a sample consisting of 119 u s environmentally sensitive firms for the 2001 2002 election cycle after controlling for firm size and specific industry effects our tests reveal a significant inverse relationship between firm environmental performance and political spending this is consistent with the notion that u s firms with relatively poorer environmental performance records engage more intensely in corporate political activities as part of their overall strategic management of their relationship with the state in addition a significant and positive association between the amount of political spending and the extent of environmental disclosure suggests that environmental disclosure and political spending are both proactive complementary tactics to strategically manage public policy pressure if corporations strategies are intentionally designed to unreasonably limit their environmental responsibilities or to misrepresent firm environmental performance then we argue that these activities reflect a significant lapse in ethical conduct

rationality and analysts forecast bias this paper proposes and tests a quadratic loos utility function for modeling corporate earnings forecasting where financial analysts trade off bias to improve management access and forecast accuracy optimal forecasts with minimum expected error are optimistically biased and exhibit predictable cross sectional variation related to analyst and company characteristics empirical evidence from individual analyst forecasts is consistent with the model s predictions these results suggest that positive and predictable bias may be a rational property of optimal earnings forecasts prior studies using classical notions of unbiasedness may have prematurely dismissed analysts forecasts as being irrational or inaccurate

migration unemployment and development a dynamic two sector analysis abstract a time minimizing problem of attaining a full employment state is solved in a dual economy model with harris todaro migration mechanism and with a positive level of urban unemployment in the starting period it appears that the optimum solution lies in the specialization of investment in the urban sector at least in the initial stage of development if the per capita capital stock in the urban sector is very small in the starting period

the economic consequences of labor unionization evidence from stock price crash risk this study investigates the impact of labor unionization on stock price crash risk we find that labor unionization is negatively associated with stock price crash risk such negative relation is more pronounced when firms can intimate more credible evidence on unfavorable prospects and when firms face more powerful labor unions our findings are consistent with the notion that firms take strategic actions to reduce the bargaining advantages enjoyed by labor unions and that labor unions force firms to take less risky investments and discontinue underperformed projects more timely which leads to lower stock price crash risk

institutional interest ownership type and environmental capital expenditures evidence from the most polluting chinese listed firms this study empirically examines whether firms environmental capital expenditures impact institutional investors investment decisions in the chinese market we particularly examine the impact of ownership type on the relationship of environmental capital expenditures and the behavior of different types of institutional investors by classifying institutional investors into two categories short term and long term investors in addition this study further investigates whether environmental capital expenditures related to ownership type increase firm value we find that long term institutional investors tend to invest in state owned firms soes making environmental capital expenditures results also indicate that with governmental backing and encouragement the market value of soes making more environmental capital expenditures is likely to increase however no similar results are found for non soes

do star analysts know more firm specific information evidence from china abstract using a unique database in china we extend the literature to further distinguish the information production role of star vs non star analysts we confirm the general conclusion of a positive association between analyst coverage and stock return synchronicity measured by a firm s r2 in china the findings from star analysts however show that star analyst coverage actually decreases stock return synchronicity we contend that the firm specific human capital in star analysts helps the analysts overcome the challenges of information production in an emerging market the superior firm specific human capital argument of star analysts is further supported by the negative association of star analysts firm specific experiences and stock return synchronicity our conclusions are robust to different specifications of star analyst presence and different definitions of analysts firm specific experiences we also find that star analysts exhibit a more accurate earnings forecast than non star analysts

housing purchases and transitory income a study with panel data in this paper we explore the role of transitory income in the housing purchase decision because of moral hazard considerations banks typically require downpayments to be financed internally hence transitory income is potentially important in overcoming the downpayment constraint using a novel approach to the measurement of permanent and transitory income we estimate a two stage model in which households decide whether to purchase housing in the first stage and the quantity to be purchased in the second the results indicate a significant role for transitory income in both decision stages