why initial public offerings are underpriced evidence from switzerland abstract the underpricing of initial public offerings is a well documented phenomenon for almost every equity market that has been examined in switzerland for a sample of 42 stocks that were issued in the market between 1983 and 1989 a 35 8 percent average initial return between the offering price and the closing price on the first trading day is found in switzerland the excess returns from offering price persist for at least three years however if the purchase is made at the first day s closing price then the three year returns are negative the paper discusses special institutional settings in the swiss stock market and provides some explanations implying that underpricing can be regarded as an equilibrium situation

population dynamics and consumer demand the authors analyze the effects on consumption in the united states of 11 demographic variables including regional location and the urban rural base of the household its age size race sex and marital characteristics and the education and the employment status of the household head and the spouse data are from the 1972 1973 consumer expenditure survey the expenditure functions are first specified followed by descriptions of the data sources and the empirical estimates of expenditure functions for various items of consumption spending excerpt

the winner s curse problem interest costs and the underpricing of initial public offerings this paper provides the first direct test of the winner s curse problem proposed by k rock 1986 as an explanation to the underpricing of initial public offerings moreover it tests the proposition that the underpricing of initial public offerings in the united kingdom is due to the combined effect of the winner s curse problem and the particular nature of the settlement mechanism applicable in the british new issues market the evidence demonstrates that when these two factors winner s curse problems and interest rate costs are taken into consideration the emerging first day net returns are on average markedly lower than the level of actual underpricing consistently superior performance can only be achieved by predicting the market s response to the individual new issue the results however indicate that such predictive ability is largely unattainable copyright 1990 by royal economic society

ipos signalling effects for speculative stock detection evidence from the stock exchange of thailand abstractusing a unique data set from the thai stock market about the so called turnover list tol of speculative stocks spanning the period 2004 2012 we investigate and provide new evidence on the relationship between ipos pricing effects and subsequent classification as speculative investments to be more specific we examine the signalling effects for the detection of speculative stocks in relation to the degree of their prior ipos underpricing we also employ the market feedback hypothesis to investigate this signalling process our results reveal a significant positive relationship between the magnitudes of the ipo underpricing and the probability of an ipo firm being classified officially as speculative on the tol furthermore we find that a 6 month abnormal return after going public increases the probability of speculative dealing in the ipos next we consider all listed firms in the thai stock market and highlight the role of both abnormal return and trading volume in the transmission of pr

litigation risk and ipo underpricing abstract we examine the relation between risk and ipo underpricing and test two aspects of the litigation risk hypothesis 1 firms with higher litigation risk underprice their ipos by a greater amount as a form of insurance insurance effect and 2 higher underpricing lowers expected litigation costs deterrence effect to adjust for the endogeneity bias in previous studies we use a simultaneous equation framework evidence provides support for both aspects of the litigation risk hypothesis

getting off to a good start the effects of upper echelon affiliations on underwriter prestige the initial public offering ipo is one of the most critical events in the lifetime of a young firm prior research has shown that firms tend to have successful ipos if they go public with the endorsement of a prestigious lead underwriter this paper examines the antecedents to receiving endorsement by a prestigious underwriter and links this to the experience base of a firm s upper echelon we theorize that the amount and type of upper echelon experience serve as important symbols of a young firm s legitimacy to critical outsiders we introduce a typology of upper echelon experience that distinguishes between upper echelon upstream horizontal and downstream employment based affiliations and suggest that these different types of upper echelon affiliations allay different types of endorser concerns regarding firm legitimacy affecting the endorsement process further we theorize that the relationships between upper echelon experience and investment bank prestige will be moderated by technological uncertainty we test our assertions on a comprehensive sample of public and private biotechnology firms that were founded between 1961 and 1994 and that went public between 1979 and 1996 analyses of the five year career histories of the over 3 200 executives and directors that make up the upper echelons of these firms show that firms with upper echelons with affiliations with prominent downstream organizations i e pharmaceutical and or healthcare companies and with prominent horizontal organizations i e biotechnology companies are more likely to attract the endorsement of a prestigious investment bank we also find that the greater the range of upper echelon affiliations across the categories of upstream horizontal and downstream affiliations the more prestigious the firm s lead underwriter we also find that these latter results are moderated by technological uncertainty the present research has implications for the study of organizational legitimacy interorganizational endorsements and entrepreneurship

speculative prices and popular models t he rational expectations revolution in economics was born of the recognition that the expectations people hold for future economic variables are fundamental to their behavior thus our economists economic models require their those who make up the economy economic models models which they use to generate their expectations the key idea of rational expectations models is to collapse the two models into one to assume that people know or behave as if they know the true model that describes the economy this idea allows economists to construct simple and elegant models of the economy models that are appealing theoretically and that can be studied without collecting any data about the models in the minds of economic actors the problem with the rational expectations models is that collapsing the two kinds of models into one is a gross oversimplification obviously the popular models the models that are used by the broad masses of economic actors to form their expectations are not the same as those held by economists once one accepts the difference economic modelling cannot proceed without collecting data on the popular models themselves this paper reports on such a data collection effort on popular models using questionnaire survey methods with the purpose of understanding speculative markets i will report here on my research to understand the u s stock market crash of october 1987 research fumiko konya yoshiro tsutsui and i undertook to understand the japanese stock market crash of october 1987 research karl case and i undertook to understand recent real estate booms and research john pound and i undertook to understand the periodic hot markets for initial public offerings ipo s of common stock

vagabond shoes longing to stray why foreign firms list in the united states abstract how do firms that go public decide whether to list on a major stock exchange or locally using a unique data set on israeli ipos in the us and tel aviv we show that companies that list in the us are young and overwhelmingly high tech oriented we argue that high quality innovative firms are willing to incur additional costs associated with listing in the us in order to reveal their value and distinguish themselves from firms that issue stock back home costs of listing in the us include first day underpricing and relinquishing corporate control

the optimal spread and offering price for underwritten securities abstract the paper develops the net proceeds maximization theory explaining how the spread and offering price are determined in all underwritten offerings in the u s the theory yields solutions for the optimal spread and offering price for all underwritten securities and it yields comparative statics that explain the cross sectional variation in actual spreads and initial returns across different types of underwritten securities the theory also suggests two alternative explanations to the ones offered by chen and ritter j finance 55 2000 1105 for the clustering of unseasoned equity offerings spreads at 7

share issue privatizations as financial means to political and economic ends abstract this study examines how political and economic factors affect the offer price share allocation and other terms governments choose when they privatize state owned enterprises via a public share offering using a 59 country sample of 630 share issue privatizations sips with total proceeds of over 446 billion during the period 1977 1997 we find that governments consistently underprice sip offers tilt their share allocation patterns to favour domestic investors impose control restrictions on privatized firms and typically use fixed price offers rather than book building or competitive tender offers all to further political and economic policy objectives

the winner s curse legal liability and the long run price performance of initial public offerings in finland abstract rationing data for initial public offerings ipos in the finnish market make possible a test of rock s 1986 winner s curse hypothesis the evidence from 80 ipos issued between 1984 and 1989 confirms the presence of the winner s curse average returns adjusted for the bias in allocation are lower than average unadjusted returns but the initial returns of these ipos appear unrelated to lawsuit avoidance as the sample firms seem unlikely to incur legal liabilities in the long run consistent with the evidence in the united states the ipo firms substantially underperform the helsinki stock exchange value weighted index

comparing static and dynamic estimates of behavioral responses to changes in family composition or income comparing static estimates of behavioral responses with dynamic estimates and using different time spans for the latter reveals striking differences in estimated effects of changing family composition income and wife s work these are interpreted to be the result of several things 1 bias in the cross section estimates from unmeasured and perhaps unmeasurable variables that do not affect the dynamic change data 2 lags in adjustment with static data being closer to long run effects and 3 different relative importance of errors in measuring the explanatory variables the effects of changing family composition appear to be less affected by any of these problems than are the estimated effects of changes in income or wife s work

consumption and income some simple excercises with panel data this paper reports on the performance of simple versions of the rational expectations permanent income hypothesis of hall 1978 and the error correction approach of davidson et al 1978 in explaining nondurable consumption expenditure from austrian panel data paying particular attention to the characterization of nondurability we examine the parameter restrictions implied by the respective models and then select favoured dynamic consumption income relationship our findings suggest that the models receive limited support only for the narrowest category of nondurables food consumed at home particularly for broader categories the strength of model rejections and the complex dynamic paths observed imply that the models provide an inadequate description of consumption at the micro level

income elasticities of household expenditures a us cross section perspective two linear engel functions are estimated for household total expenditure and for 15 aggregated classifications of consumer durable non durable and service expenditures one model contains only income as the regressor variable the second model incorporating a broad range of household demographic variables introduces three new regressors number of earners in the household self employment status of the reference person and value of household financial assets utilizing cross section data on annual expenditures income elasticities are derived and compared across models the expanded engel model dramatically strengthens estimates for all expenditure categories and generates income elasticities generally lower than those derived from the simpler engel function

a direct test of rock s model of the pricing of unseasoned issues unique data availability and institutional arrangements for new issues in singapore allow a direct test of the empirical implications of rock s model of pricing unseasoned new issues our empirical results are consistent with the model specifically we find that the unseasoned new issues anomaly disappears when the rationing associated with new issues is incorporated into the analysis the winner s curse is evident in allocation patterns used in singapore

ownership versus competition efficiency in public enterprise certainly the introduction of product market competition into potentially competitive or at least contestable markets can improve performance to take just one example morrison and whinston 1986 1986 estimate that even in the imperfectly contestable u s airline industry the annual u s welfare gains from deregulation have been around 6 billion

primary versus secondary pricing of high yield bonds previous research has found systematic underpricing of newly floated securities vis a vis secondary market levels this conclusion is based on the observation that primary issues provide superior risk adjusted returns in the period immediately following issuance those returns however are not known at the time of pricing to gauge whether a new issue is offered at a premium or a concession to the secondary market investors must use standard valuation benchmarks in the case of high yield bonds an analysis based on agency ratings and yields to maturity indicates that new issues are priced richer than seasoned issues in some periods and cheaper in other periods using regression analysis the authors model the magnitude of the premium or concession prevailing in a given period the regressions explain 64 percent of the variance in the primary secondary yield spread through proxies for supply demand and liquidity of the high yield sector

anatomy of initial public offerings of common stock initial public offerings of common stocks ipos are typically underpriced in this paper the author develops and tests the hypothesis that underpricing serves as a form of insurance against legal liability and the associated damages to the reputations of investment bankers the empirical results based on samples of ipos that were brought to the market before and after the securities act of 1933 provide considerable support for the implicit insurance hypothesis specifically gross underpricing and market segmentation between prestigious and fringe investment bankers in originating unseasoned new issues appear to be peculiar to the post 1933 era a number of studies have documented that unseasoned common stocks typically garner large positive abnormal returns during a short period following the initial offering in his recent review of the empirical evidence on the initial returns of common stock offerings smith 36 concluded that the returns from offer price to after market price have exceeded fifteen percent his calculations did not include some of the earlier results obtained by mcdonald and fisher 23 and logue 20 when their samples are combined with those in smith s review the initial returns of unseasoned equity offerings appear even larger over seventeen percent these results imply that underwriters consistently offer the securities at substantial discounts from their values that are set in the after market in other words initial public offerings ipos appear to be underpriced what is even more puzzling is the fact that in some time periods underpricing appears to be systematically larger than in other periods ibbotson and jaffe 15 and ritter 29 have documented that during the postwar era there have been a number of periods in which the initial returns of common stocks have been extremely high ritter for example reported that the average return from the offer price to the first after market price was over forty eight percent for ipos in 1980 and 1981 1 similarly the initial returns of unseasoned issues of common stock brought to the market in 1950 1951 1961 and 1968 were unusually large these periods in which ipos were grossly underpriced are referred to as the hotissue markets why do investment bankers underprice ipos why do issuers

pricing initial public offerings evidence on the pricing of initial public offerings is presented for germany a data set of 92 going publics over the years 1961 1987 is analyzed on average the initial return from the offer price to the first day of trading adjusted for market movements is more than 15 o tests of several hypotheses indicate that underpricing is related to ex ante uncertainty about the value of the shares

testing for deliberate underpricing in the ipo premarket a stochastic frontier approach we re evaluate the ipo underpricing phenomenon using the stochastic frontier methodology the advantage of the stochastic frontier is that it can be used to measure the level of deliberate underpricing in the premarket without using after market information this is accomplished through the estimation of a systematic one sided error term that measures inefficiency or the difference between the maximum predicted offer price and the actual offer price data for the analysis are comprised of 1 035 ipos of common stock issued by firm commitment between 1975 and 1984 ipos appear to be deliberately underpriced in the premarket in both hot market and nonhot market periods moreover the determinants of the maximum ipo price have different effects in the two time periods article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

food expenditures at home and away from home in the united states a switching regression analysis the results of this study showed that the decision to eat away from home was positively affected by income while the amount spent away from home was only affected by income again positively at higher levels of household income food expenditures at home were similarly affected by income only at higher levels of household income provided the household also ate away from home if the household did not eat away from home food expenditures at home were positively affected by income at all levels the effect decreasing in magnitude with the level of income a significant economic trend in recent vdecades is the declining share of consumer expenditures on food expenditures for food fell steadily from 20 0 of disposable personal income in 1960 to 16 1 in the third quarter of 1983 usda this drop occurred as a result of a decline in the share of consumer expenditures on food purchased for consumption at home the share of consumer expenditures on meals purchased at restaurants cafeterias and fast food chains remained constant at about 4 of disposable personal income hence the consumption of purchased meals away from home has become more important relative to food consumed at home a number of studies on food consumption at home and away from home have been made houthakker and taylor 1970 obtained results that indicate away from home food expenditures were more responsive to total consumption expenditures than at home expenditures based on 1960 61 household budget data time series data were also employed by houthakker and taylor to investigate the dynamics of food consumption prochaska and schrimper 1973 found that along with income the opportunity cost of time is an important factor in determining away from home food consumption fishe et al 1979 employing simple and heteroscedastic tobit models found that income and household specific circumstances are important determinants of restaurant expenditures lamm 1982 estimated a translog demand system for food consumed at home purchased meals and non food items his results indicated that consumers have been eating away from home more often primarily as a result of increases in their incomes recently huang and raunikar 1984 estimated engel equations for at home and away from home food expenditures using ordinary least squares and tobit regressions respectively in their study huang and raunikar found that in general at home food consumption is less income responsive than away from home food consumption the major objective of huang and raunikar s study was to investigate the importance to household food expenditures of consigned income for committed expenditures this study further investigates food consumption at home and away from home employing a switching regression model the same basic data analyzed by huang and rauniker hr are also analyzed here however since the hr study focused on consigned income households not reporting complete information with regard to committed expenditures e g rent or mortgage or after tax income were not included in their study in this study the emphasis is placed on the household s choice of whether to eat out and the factors affecting consequent away from home and at home food expenditures the sample includes all households that reported before tax income and is significantly larger than the sample used in the hr study

unions and the capture of economic rents an investigation using british firm level data this paper considers the relationship between unions and profitability in a sample of large british firms in 1984 and 1985 the initial finding is that unionised firms have significantly lower profit margins than otherwise comparable non union firms tests of whether the ability of unions to influence profit margins varies with the product and labour market characteristics of the firms in which they are located are then conducted the ability of unions to capture economic rents is seen to be significantly greater in firms which have a high market share and or operate in highly unionised industries

a complete system of engel curves in the spanish economy the main goal of this article is the estimation of the consumption income relationship along with socio economic factors using cross section data from the spanish household expenditure survey 1991 the data has been grouped according to exogenous criteria to avoid the problem of null expenditure first a non linear system of equation is estimated from which the linear form that best fits the used data is tested finally income elasticities are calculated considering three alternative formulations depending on how an initial income increment is distributed among consumers income elasticities are shown for the whole income distribution

evidence on price stabilization and underpricing in early ipo returns using data on 560 firm commitment initial public offerings of common stock for the 1982 1983 period we find that the cross sectional distribution of one day returns is modeled better as a mixture of two distributions with the parameter estimates of one distribution being consistent with underpricing and the other with price stabilization further the evidence that early ipo returns are drawn from a mixture distribution persists for at least four weeks the implications of these results for the analysis of ipo returns are illustrated by examining the influence of a measure of ex ante price uncertainty on ipo pricing

on the determination of the us aggregate health care expenditure per capita real health care expenditure is examined against three major groups of explanatory variables economic demographic and health stock and it is found that the three groups of variables have an impact on real health care spending other subcategories such as real private and government health care pharmaceutical dental home nursing ambulatory personal medical consumption and in patient expenditures have also been examined and have been found to be affected by the explanatory variables for several subcomponents there is evidence of supplier inducement of the demographic group of variables the ageing population had an impact only on the per capita real overall and private health care outlay and pharmaceutical spending also cointegrating relationships were found and consistent estimators of the elasticities found

differential information and security market equilibrium we propose a simple model of equilibrium asset pricing in which there are differences in the amounts of information available for developing inferences about the returns parame ters of alternative securities in contrast with earlier work we show that parameter uncer tainty or estimation risk can have an effect upon market equilibrium under reasonable conditions securities for which there is relatively little information are shown to have relatively higher systematic risk when that risk is properly measured ceteris paribus the initially very limited model is shown to be robust with respect to relaxation of a number of its principal assumptions we provide theoretical support for the empirical examination of at least three proxies for relative information period of listing number of security returns observations available and divergence of analyst opinion

evaluating the costs of raising capital through an initial public offering abstract this article provides an empirical analysis of the costs of going public based on a sample of 1852 offerings during 1977 1987 the sample includes 1556 firm commitment issues and 296 best efforts issues three components of the cost of going public are examined 1 direct cash expenses such as legal and accounting costs 2 investment bank s commission and 3 costs resulting from the investment bank practice of pricing initial public offerings below their market values all of the cost components are significantly higher for best efforts offerings than for firm commitments in fact best efforts offerings are more than three times as expensive on a percentage basis than are firm commitments in addition there are marked economies of scale in the process of going public the total costs of going public were 40 of gross proceeds for the smallest firm commitment issues but only 15 for the largest in dollar terms we estimate that a typical small firm commitment offering of 2 5 million will cost approximately 800 000 32 of gross proceeds whereas a large issue of 25 million will cost approximately 4 million 16 of gross proceeds the issuing firm s earnings as well as the type of investment bank underwriting the issue were also important cost determinants the primary implication of our results for entrepreneurs is that it is quite expensive to attempt a public offering prematurely the marginal issuer with a small capital requirement and a poor earnings history will be at a large cost disadvantage to more established firms more specifically we advise that the firm have capital requirements of at least 10 million and positive operating income before attempting a public offering postponing a public offering until the issue will be well received by investors and investment banks is likely to be worth the wait until that time alternative sources of funds will be more cost effective

which ties matter when the contingent effects of interorganizational partnerships on ipo success this paper investigates the contingent value of interorganizational relationships at the time of a young firm s initial public offering ipo we compare the signaling value to young firms of having ties with two types of interorganizational partnerships endorsement relationships such as those with venture capital firms and investment banks and strategic alliance partnerships we propose that under different equity market conditions potential investors in an issuing firm attend to different types of uncertainty attention to these different types of uncertainty affects investors perceptions of the relative value of a young firm s different kinds of endorsements and partnerships and hence ipo success results from a sample of young biotechnology firms show that ties to prominent venture capital firms are particularly beneficial to ipo success during cold markets while ties to prominent investment banks are particularly beneficial to ipo success during hot markets a firm s strategic alliances with major pharmaceutical health care firms did not have such contingent effects implications for understanding the contingent value of interorganizational ties are discussed copyright 2003 john wiley sons ltd

a simple test of baron s model of ipo underpricing abstract this paper tests baron s 1982 model of initial public offering ipo underpricing that model relies on information asymmetries between issuers and underwriters and predicts that offer prices will be lower than would prevail in the absence of asymmetric information we examine the initial public offerings of 38 investment banks that went public in the period 1970 1987 and participated in the distribution of their own securities we find that contrary to the implication of baron s model such self marketed offerings are characterized by statistically significant underpricing comparable to that of other ipos

you are known by the directors you keep reputable directors as a signaling mechanism for young firms in this paper we develop an analytical model of outside directors signaling role a role that is especially important for entrepreneurial firms we formally demonstrate that in the face of a market failure in which stakeholders refuse to align themselves with new firms high quality new ventures may be able to credibly signal their type by appointing reputable directors to their boards however this option is not universally feasible both directors reputations and the quality of their information determine the effectiveness of this strategy in contrast to earlier adverse selection models we demonstrate that when the middlemen directors have incomplete information on firm quality bad and good firms can coexist in equilibrium in this equilibrium the quality of the directors information determines the mix of good and bad firms in the population of surviving firms avenues for future research and normative implications for practitioners are discussed

a new methodology linking concentration dynamics to current and steady state profits examining korean industrial policy during take off abstract we model the dynamics of industrial structure and market power using korean manufacturing data during the take off period 1978 82 structure conduct performance scp methodologies have been criticized for using accounting data and because a few superior firms may have greater shares and greater profits both are argued to present possible spurious correlations between concentration and profits this paper follows earlier work which shows that market structure responds to observed accounting profits as if these were accurate indices of real profits and not as if leading firms are perceived to have unmatchable advantages the methodological contribution of this model is a new latent variable for steady state profits derived from the speed of structural adjustment long run profits are identified by the hypothesis that structural adjustment will be more rapid when industries are farther from steady state levels we analyze the long run profits latent variable finding strong support for this hypothesis the speed of adjustment is greater for positive and negative deviations from steady state structure we show that the profits and structural adjustment relationship is non monotone the scp criticisms above are based on spurious correlations which are monotone in profits and structure positing spurious correlations which are at the same time monotone in structure and non monotone in structural adjustment seems less plausible than accepting the scp results which are consistent with both our analysis also is new in that it is the first direct econometric analysis of korean industrial policy during its take off years we note that in korea unlike elsewhere industrial policy was hypothesized to lead to concentration and market power in the popular press and by professional economists ours is the first direct econometric analysis of this hypothesis and we find it supported

a model of the demand for investment banking advising and distribution services for new issues this paper presents a theory of the demand for investment banking advising and distribution services for the case in which the investment banker is better informed about the capital market than is the issuer and the issuer cannot observe the distribution effort expended by the banker the optimal contract under which the offer price decision is delegated to the better informed banker in order to deal with the adverse selection and moral hazard problems resulting from the informational asymmetry and the observability problem is characterized the model demonstrates a positive demand for investment banking advising and distribution services and provides an explanation of the underpricing of new issues an investment banker performs three functions which may be of value to an issuer of new securities underwriting advising and distribution this paper presents a theory of the demand for investment banking advising and distribution services based on an informational asymmetry between an issuer of new securities and an investment banker ultimately a theory of the organization of the financial intermediary industry is required that would predict which firms would use which types of financial intermediaries for which purposes and which firms would raise capital without engaging the services of a financial intermediary only a limited set of such predictions are developed here in the context of a model of a fixedprice offering under a negotiated contract in which the investment banker is

equity issue specific versus broad regulatory protections against expropriation risk international evidence from seos abstract we compare non issue specific broad investor protections against expropriation by firm s insiders with regulations that specifically protect investors of new equity issues issue specific since in nation regulations rarely change and are homogenous for all firms it is difficult to compare issue and non issue specific investor protection mechanisms in country specific studies we utilize cross country differences in regulations to study the relative importance of issue specific and broad regulatory protections using data on seasoned equity offerings seo we find that seo underpricing is related to broad protections in particular seo underpricing is negatively positively related with the strength of ex post ex ante anti self dealing laws independent of broad protections seo underpricing is unaffected by issue specific investor protections that is neither by disclosure requirements imposed on equity issuers nor by equity issue specific liability rights conferred on investors interactions between broad protections and issue specific protections indicate issue specific protections reduce seo underpricing only in countries with strong broad protections

consumer expenditure responses to income redistribution programs reforming current welfare programs targeted on low income households will change the disposable income of families and individuals affected by the reform financing the new program with an increase in personal taxes redistributes income on net from high and middle income households to low income ones this empirical study investigates expenditure responses elicited by these changes in disposable income regression equations for a complete set of 22 individual expenditure items are estimated with the 1960 61 bureau of labor statistics survey of consumer expenditures sce data described in u s department of labor 1971 income coefficients from these equations are used to predict household expenditure responses to microsimulated disposable income changes in the sce data from two separate surtax financed negative income tax nit programs the regression analysis tracks nonlinear in income engel curves for each of the commodities the two simulated nit programs redistribute 3 04 billion and 33 4 billion in disposable income from surtaxpayers to nit recipients about one third of this new disposable income is spent on basic necessities food clothing and shelter by program beneficiaries a deficitfinanced nit program provides relatively strong stimulation to only clothing markets among the necessity items but a surtax financed program injects a relatively large stimulus into both food and shelter markets in general markets for nondurables are relatively stimulated while durable good markets either grow less than normal or contract under a modest guarantee surtaxfinanced nit program from a macroeconomic perspective a deficit financed nit program increases total consumer expenditure by between 75 and 100lo of program net costs while a surtax financed program generally stimulates the economy by raising aggregate consumption by between 10 and 50 of the net program cost the paper is organized as follows section ii presents the expenditure regression models and reports regression statistics income elasticities and selected income spending propensities from the full set of expenditure equations estimated under both current and permanent income models of consumer behavior section iii discusses the nit simulations and section iv reports and analyzes the expenditure response predictions to the simulated nit programs conclusions and suggestions for future research appear in section v

the pricing of initial public offerings a dynamic model with information production this paper presents an information theoretic model of ipo pricing in which insiders sell stock in both the ipo and the secondary market have private information about their firm s prospects and outsiders may engage in costly information production about the firm high value firms knowing they are going to pool with low value firms induce outsiders to engage in information production by underpricing which compensates outsiders for the cost of producing information the information is reflected in the secondary market price of equity giving a higher expected stock price for high value firms

initial performance of new issues of shares in malaysia this paper presents the levels of under pricing for new issues in a developing country malaysia over a more recent period january 1990 december 1998 than reported in prior studies three types of new issues were examined namely public issue offer for sale and combination or hybrid of offer for sale and public issue comparisons of initial return between types of new issues and between different board of listing were made the results of independent t tests for difference in mean initial returns indicate that in general there are significant differences in mean initial returns between types of new issues and between boards of listing the results of step wise regression reveal that on average only over subscription ratio contributes significantly to the initial returns however caution should be taken when interpreting the models formed because the durbin watson rest indicate that some models are not free from problem of auto correlation of the residuals