contractual arrangement and marketing practices in the indirect export channel the association between contractual arrangement and the marketing practices of export intermediaries and domestic supplies is examined based on data collected from a national sample of export management companies the effect of structuring the export arrangement as a contractual administrative or conventional channel is analyzed prior research suggests that contractual form establishes the framework within which all the economic and sociopolitical interactions between the supplier and export middleman take place hypothesized relationship between export practices and channel structure are empirically tested and the central role of structure in the operation of export channels is largely confirmed

the fetal origins hypothesis in finance prenatal environment the gender gap and investor behavior we find that differences in individuals prenatal environments explain heterogeneity in financial decisions later in life an exogenous increase in exposure to prenatal testosterone is associated with the masculinization of financial behavior specifically with elevated risk taking and trading in adulthood we also examine birth weight those with higher birth weight are more likely to participate in the stock market whereas those with lower birth weight tend to prefer portfolios with higher volatility and skewness consistent with compensatory behavior our results contribute to the understanding of how the prenatal environment shapes an individual s behavior in financial markets later in life received may 2 2014 accepted september 30 2015 by editor david hirshleifer

the information content of annual earnings releases a trading volume approach this paper reports the results of an empirical examination of the relations between the volume of securities traded the magnitude of surprises in annual earnings announcements and firm size although early trading volume studies e g beaver 1968 kiger 1972 and foster 1973 replicated basic information content studies with findings similar to those based on security prices we should not expect that security price and trading volume research will continue to yield identical results when more refined hypotheses are tested trading volume reflects investors activity by summing all market trades whereas security prices reflect an aggregation or averaging of investors beliefs as a result we will on occasion observe differences between price and volume reactions to earnings announcements as did morse 1981 this study extends the recent trend toward tests of more refined hypotheses by using a larger sample to examine the associations between unexpected earnings firm size and trading volume and testing whether such associations can be generalized across fiscal year end dates and stock exchange listing my results show a continuous positive relationship between trading

when transparency improves must prices reflect fundamentals better no in the presence of speculative opportunities investors can learn about both asset fundamentals and the beliefs of other traders we show that this learning exhibits complementarity learning more along one dimension increases the value of learning about the other as a result regulatory changes may be counterproductive first increasing transparency i e making fundamental information cheaper to acquire can make prices less informative when investors respond by learning relatively more about others second public disclosures discourage private learning about fundamentals while encouraging information acquisition about others accordingly disclosing more fundamental information can decrease overall informational efficiency by decreasing price informativeness received april 20 2016 editorial decision september 30 2017 by editor itay goldstein

analysts forecasts as proxies for investor beliefs in empirical research abstract we analyze how analysts forecasts relate to investor beliefs and describe the implications of these relations for price and volume reactions to earnings surprises we show that dispersion among forecasts does not fully capture investor uncertainty we also show how the relations between market reactions and forecast properties differ under the alternative assumptions of exogenous and endogenous private information acquisition finally the analysis suggests refined tests for volume reactions at the time of an announcement our results indicate that the model is useful for understanding and interpreting empirical work and developing empirical tests of market reactions to announcements

disagreement and asset prices abstract how do differences of opinion affect asset prices do investors earn a risk premium when disagreement arises in the market despite their fundamental importance these questions are among the most controversial issues in finance in this paper we use a novel data set that allows us to directly measure the level of disagreement among wall street mortgage dealers about prepayment speeds we examine how disagreement evolves over time and study its effects on expected returns return volatility and trading volume in the mortgage backed security market we find that increased disagreement is associated with higher expected returns higher return volatility and larger trading volume these results imply that there is a positive risk premium for disagreement in asset prices we also show that volatility in and of itself does not lead to higher trading volume instead only when disagreement arises in the market is higher uncertainty associated with more trading finally we are able to distinguish empirically between two competing hypotheses regarding how information in markets gets incorporated into asset prices we find that sophisticated investors appear to update their beliefs through a rational expectations mechanism when disagreement arises

a theory of trading volume a theory of trading volume is developed based on assumptions that market agents frequently revise their demand prices and randomly encounter potential trading partners the model describes two distinct ways informational events affect trading volume one is consistent with conjectures made by empirical researchers that investor disagreement leads to increased trading but the observation of abnormal trading volume does not necessarily imply disagreement and volume can increase even if investors interpret the information identically if they also have had divergent prior expectations simulation tests support the model and are used to contrast the random pairing environment with costless market clearing volume is lower in the costly market and volume increases caused by an informational event persist after the event period this is consistent with existing empirical evidence and suggests that markets do not immediately clear all orders or that investors have demands to recontract

an equilibrium politico economic model an equilibrium politico economic model i introduction recent empirical studies by alesina and sachs 1986 and haynes and stone 1987 have found that political elections have significant implications for the time paths of employment and inflation explnations of this phenomenon fall into two general categories political business cycle theories and partisan theories in political business cycle models it is assumed that the government has both the ability and desire to manipulate the economy for electoral purposes partisan theories suggest that if competing parties follow different policies it is the surprise of an election result that causes a response from the economy however partisan theories can only explain why different parties experience different levels of employment and output early in an electoral term here a partisan model is developed in which economic and political shocks before an election have asymmetric effects on inflation employment and voting behavior depending on which party is in power and which economic variables effect voting ii political structure and voting two political parties compete periodically for control of the government the parties are distinguished by their expected monetary growth rates denoted mu sup h high and mu sup l low the electorate consists of a continuum of voters distributed uniformly on the interval p p individuals located closer to p are more favorably pre disposed to party h let x sub t be an index of the relative popularity of the parties at time t if x sub t 0 party h has a plurality of support if x sub t in nonelection years the expected monetary growth rate will be the incumbents trend rate while in election years it will be the probabilistically weighted average of the two parties expected monetary growth rates iii economic structure the economy is described by a rational expectations macro model unemployment is determined by the surprise phillips curve u sub t eta sub 0 eta sub 1 sub t 1 pi sup e sub t pi sub t epsilon sub t where sub t 1 pi sup e sub t denotes expected inflation and epsilon sub t a real shock distributed epsilon sub t is approx n 0 sigma sup 2 sub epsilon independent over time eta sub 0 is greater than 0 and eta sub 1 is greater than 0 are constants eta sub 0 is the natural rate the rate of inflation is given by pi sub t mu sup s sub t mu sup d sub t where mu sup s sub t and mu sup d sub t are respectively the growth rates of the nominal money supply and demand for real beginning of period cash balances

does anticipated information impose a cost on risk averse investors a test of the hirshleifer effect this paper theoretically and empirically investigates how the risk of future adverse price changes created by the anticipated arrival of information influences risk averse investors trading decisions in institutionally imperfect capital markets specifically i examine how the selling activity of individual investors immediately following an earnings announcement is influenced by the tradeoff between risk sharing benefits of immediate trade and explicit transaction costs imposed on such trades consistent with my theoretically derived predictions i find that investors current trading decisions are less sensitive to the incremental transaction costs created by short term capital gains taxes on trading profits as both the duration and intensity of the risk of future adverse price changes increase this evidence is consistent with an incremental cost to investors that results from the revelation of precise information which is commonly referred to as the hirshleifer effect

market implication of predisc10sure information size and exchange effects differential market reactions to earnings announcements can inter alia be ascribed to the extent to which such announcements entail surprise i e unexpected information the greater the predisclosure information the less the surprise element in earnings announcements since there is no direct measure of predisclosure information the literature has utilized two different proxies i firm size the size effect atiase 1980 1985 and ii exchange listing the exchange effect grant 1980 atiase 1980 argues that private predisclosure information production and dissemination are an increasing function of firm size capitalization if so the amount of unexpected information conveyed to the market by actual earnings reports should be inversely related to firm size other things equal empirical evidence in atiase 1985 supports this hypothesis grant 1980 found that for otc firms the average price revaluation associated with annual earnings announcements is significantly higher in the report week relative to both nonannouncement

why do some households trade so much when agents can learn about their abilities as active investors they rationally trade to learn even if they expect to lose from active investing the model used to develop this insight draws conclusions that are consistent with empirical study of household trading behavior households portfolios underperform passive investments their trading intensity depends on past performance and they begin by trading small sums of money using household data from finland the article estimates a structural model of learning and trading the estimated model shows that investors trade to learn even if they are pessimistic about their abilities as traders it also demonstrates that realized returns are significantly downward biased measures of investors true abilities the author 2011 published by oxford university press on behalf of the society for financial studies all rights reserved for permissions please e mail journals permissions oup com oxford university press

predisclosure information firm capitalization and security price behavior around earnings announcements several studies on the relationship between earnings reports and security price behavior provide evidence suggesting that a significant portion of the information revealed through earnings reports is reflected in security prices prior to the report month e g ball and brown 1968 and brown and kennelly 1972 this has been attributed at least partly to the existence of other more timely sources of information which allow market agents to forecast earnings prior to their release the evidence above reflects an average finding across all firms one question of interest is whether there are significant systematic crosssectional differences in the security price reactions to earnings announcements of firms which are associated with specific firm characteristics that lead to differential amounts of predisclosure information this study focuses on firm size capitalization as one such characteristic a firm

behind intermediary performance in export trade transactions agents and resources integrating transaction cost agency and resource based theories this study extends the work of peng and ilinitch 1998 by undertaking the first empirical efforts to explore the determinants of export intermediary performance we suggest that given the transaction cost constraints and principal agent conflicts export intermediaries performance depends on their possession of valuable unique and hard to imitate resources which help minimize their clients transaction and agency costs survey results from 166 firms largely support our hypotheses

divergence of opinion in complete markets a note we consider an arrow debreu model with agents who have different subjective probabilities in general asset prices will depend only on aggregate consumption and the distribution of subjective probabilities in each state of nature if all agents have identical preferences then an asset with more dispersed subjective probabilities will have a lower price than an asset with less dispersed subjective probabilities if risk aversion does not decline too rapidly it seems that this condition is likely to be met in practice so that increased dispersion of beliefs will generally be associated with reduced asset prices in a given arrow debreu equilibrium there have been several recent investigations concerning the effect of heterogeneous probability beliefs on asset prices most of these investigations have taken place in the context of capm like mean variance models see for example lintner 5 miller 7 williams 10 jarrow 4 and mayshar 6 comparatively little has been done in the analysis of differences of opinion in an arrow debreu contingent claims context rubinstein 8 breeden and litzenberger 2 and breeden 1 have presented nice analyses of asset price determination in an arrow debreu model but most of their results have assumed commonly held probability beliefs in this paper we analyze the impact of divergence of opinion on asset prices in an arrow debreu economy the results serve to generalize the findings of rubinstein and breeden litzenberger to the case of different probability beliefs among the results we establish are 1 in equilibrium asset prices depend only on aggregate consumption and the distribution of subjective probability beliefs 2 asset values are an increasing function of any one individual s probability beliefs 3 an increase in the spread of the probability beliefs of investors may increase or decrease equilibrium asset values depending on the value of a parameter of the utility function however the most likely effect is to decrease the asset values these results are especially interesting in light of the recent empirical work of cragg and malkiel 3 they studied the relationship between ex post return and various measures of risk for common stocks and found that the measure of risk that performed best in their analysis was a measure of divergence of opinion

disagreement and learning dynamic patterns of trade we study volume dynamics when there are disagreements among investors for that purpose we develop a dynamic model in which differences in the interpretation of public information lead to trade we obtain a simple linear equilibrium in closed form in which risk averse agents take into account future trading opportunities when solving for their optimal portfolio allocation using this framework we then study what restrictions on the disagreement process are needed to generate empirically observed patterns in volume and prices we show that having infrequent but major disagreements leads to autocorrelation in volume and correlation between volume and absolute price changes when agents disagree on past news but agree on the interpretation of current news there is learning and the convergence of agents opinions leads to trade

investor attention overconfidence and category learning abstract motivated by psychological evidence that attention is a scarce cognitive resource we model investors attention allocation in learning and study the effects of this on asset price dynamics we show that limited investor attention leads to category learning behavior i e investors tend to process more market and sector wide information than firm specific information this endogenous structure of information when combined with investor overconfidence generates important features observed in return comovement that are otherwise difficult to explain with standard rational expectations models our model also demonstrates new cross sectional implications for return predictability

testing the satisficing version of the political business cycle 1905 1984 this paper develops a test of the satisficing version of the political business cycle previous tests have focused on maximizing models of political behavior and are not sufficiently general to test for satisficing behavior using annual u s data for the period 1905 to 1984 we find evidence supporting the satisficing version of the political business cycle model but we reject the maximizing version in accordance with the satisficing hypothesis we find that increasing inflation or unemployment and decreasing monetary base growth in the third year of a presidential term are followed typically by reversals during the election year

the political theory of the business cycle two strands of recent empirical work pose a challenge for the macro theorist when brought together one is the rational expectations interpretation of the business cycle the other is the political theory of the business cycle this paper attempts a reconciliation of these two strands in a theory where national political parties have to satisfy the preference of their own supporters as well as the floating voter the implications are that party voters evaluate government performance with respect to expected inflation and output and their variances and that parties will pursue different feedback rules

impact of firm performance expectations on ceo turnover and replacement decisions abstract our analysis suggests that boards focus on deviation from expected performance rather than performance alone in making the ceo turnover decision especially when there is agreement less dispersion among analysts about the firm s earnings forecast or there are a large number of analysts following the firm in addition our results suggest that boards are more likely to appoint a ceo that will change firm policies and strategies i e an outsider when forecasted 5 year eps growth is low and there is greater uncertainty more dispersion among analysts about the firm s long term forecasts

nonconcavity and proper optimal periodic control this paper deals with optimal periodic control problems in an economic context the main result is that nonconcavity is necessary for proper periodicity of optimal solution paths the theoretical results are illustrated by an unemployment and inflation trade off model

on political business cycles with endogenous election dates abstract the pattern of policy generated cycles which result in the nordhaus model is examined under different hypotheses regarding election date determination

born global or born regional evidence from an exploratory study in the costa rican software industry this paper provides empirical evidence about born global firms in the software industry of a small developing country with an open economy costa rica the paper is based on data collected through interviews with ceos or founders of 40 costa rican software companies findings show that there are few born global firms among costa rican software providers we find that most companies followed a gradual approach to internationalization and they did not export immediately upon birth a careful analysis of firms that exported soon after they were born reveals that most firms are actually born regional

trading volume reactions to annual accounting earnings announcements the incremental role of predisclosure information asymmetry abstract this study provides empirical evidence regarding the effect of annual accounting earnings announcements on investors trading behavior we find that the magnitude of trading volume reaction is an increasing function of both the magnitude of the associated price reaction and the level of predisclosure information asymmetry these results are consistent with kim and verrecchia s 1991a theoretical trading volume proposition

institutional ownership differential predisclosure precision and trading volume at announcement dates abstract this study examines the relation between ownership structure as revealed by the percentage of outstanding shares held by institutional investors and trading volume at earnings announcement dates we find that volume response as a function of institutional ownership is quadratic with the quadratic curve that reaches a maximum at around 50 institutional ownership when risk tolerances are identical across investor types such a relation is consistent with kim and verrecchia s 1991a proposition that trading volume response to public announcements increases with the level of cross investor variation in precision of private predisclosure information

manufacturer overseas distributor relations and export performance the export arrangement which makes use of overseas distributors is examined in this article although this method is important for many manufacturers operating in foreign markets there are reservations about the performance levels that are achieved under such arrangements it is suggested that there is an important link between the performance level achieved and the very nature of the relationship that exists between the manufacturer and overseas distributor the authors assert also that the nature of the manufacturer overseas distributor relationship is associated with certain characteristics of the participating companies namely their stake in the relationship their experience and their uncertainty surrounding the relationship these propositions are tested and largely corroborated through analysis of data collected from 41 companies in canada and the uk

differential interpretation of public signals and trade in speculative markets most models of trade in speculative markets assume that agents interpret public information identically we provide empirical evidence on the relation between the volume of trade and stock returns around public announcements and we argue that the evidence is inconsistent with this assumption we then develop a model of trade around public announcements that incorporates differential interpretations and is consistent with the observed volume return relation then we test the standard model of belief revision underlying most models of trade using stock brokerage research analysts earnings forecasts the hypthesis of identical interpretations seems inconsistent with the forecast revisions in these data

information value and investor wealth the case of earnings announcements this paper empirically investigates the relation between investor wealth and the value of annual and quarterly earnings announcements as implied by 1 the behavior of mean stock trade transaction sizes at announcement dates and 2 transaction size stratified trading activity in postannouncement time periods announcement period mean transaction sizes are found to exceed expected mean transactions sizes estimated from trading activity occurring in nonannouncement periods this result is attributed to a greater relative trading response to earnings announcements by wealthier investors consistent with ohlson s 1975 proposition that information value increases with investor wealth in a security market setting further evidence of a positive relation between value and wealth is found when postearnings announcement stock transactions are stratified by share size into three strata where the first stratum small stratum is transactions of 100 and 200 shares the second stratum large stratum is transactions of 300 to 900 shares and the third stratum institutional

price and trading volume reaction surrounding earnings announcements a closer examination the process of information dissemination and interpretation in securities markets is very complex and mostly unobservable while changes in prices and the amount of trading that takes place at the market level provide evidence of information processing verrecchia 1981 demonstrated that these are not sufficient to describe completely the dissemination of information and its interpretation by investors a descriptive study of price changes and trading volume however may still provide some insights into how investors react to information this paper is an empirical investigation of price changes and trading volume during the days surrounding the announcement of quarterly and annual earnings in the wall street journal wsj in the original paper investigating trading volume and price changes surrounding earnings announcements beaver 1968 was primarily concerned with whether the annual earnings announcement had information content i e led to changes in investors assessments of the probability distribution of future returns if there were any significant price changes and or trading volume during the week of the announcement then the annual earnings announcement was assumed to have had

when saving is gambling abstract prize linked savings pls accounts which allocate interest using lottery payments rather than fixed interest encourage savings by appealing to households gambling preferences i introduce new data on casino cash withdrawals to measure gambling and examine how individual gambling expenditures respond to the introduction of pls in nebraska using a difference in differences design after pls is introduced individuals who live in counties that offer pls reduce gambling by at least 3 more than unaffected individuals the substitution effect is stronger in low frills gambling environments which most resemble pls indicating that these accounts fulfill the desire to gamble

informational efficiency and information subsets this paper proposes a new definition of the efficient markets hypothesis with respect to information which is more formal and precise than those of rubinstein 13 fama 4 jensen 6 and beaver 1 and which fits well as a framework for interpreting the many tests of the efficient markets hypothesis in the literature security markets are here considered efficient with respect to information set if and only if revealing to all agents would change neither equilibrium prices nor portfolios in addition to other desirable features this definition has the subset property efficiency with respect to implies efficiency with respect to any subset of

born international smes bi level impacts of resources and intentions the katz and gartner 1988 model describes four central properties of emerging organizations resources intention exchange and boundary while designed as a general model for organizations the approach has the potential to explain the early lives of born international firms in this study boundary is used to define the central sampling frame two other properties resources and intention are evaluated in terms of their impact on the fourth property exchange measured as a firm s export growth and intensity given the inherent presence of two levels of analysis in emerging organizations intention and resources are evaluated at both the individual and the organizational level a sample n 47 of young born international firms in the indian software industry was studied using a questionnaire results of the analysis are mixed for resources at both the individual and firm level variables intention is significant at the individual level but not the firm level contrary to other studies these findings suggest that during the early stages of firm development owner not firm characteristics play a pivotal role in performance especially exports the speculation is that this occurs because in early stages firms are relatively disorganized relative to the owner

the relation between price changes and trading volume a survey this paper reviews previous and current research on the relation between price changes and trading volume in financial markets and makes four contributions first two empiri cal relations are established volume is positively related to the magnitude of the price change and in equity markets to the price change per se second previous theoretical research on the price volume relation is summarized and critiqued and major insights are emphasized third a simple model ofthe price volume relation is proposed that is consis tent with several seemingly unrelated or contradictory observations and fourth several directions for future research are identified

why don t we agree evidence from a social network of investors we study sources of investor disagreement using sentiment of investors from a social media investing platform combined with information on the users investment approaches e g technical fundamental we examine how much of overall disagreement is driven by different information sets versus differential interpretation of information by studying disagreement within and across investment approaches overall disagreement is evenly split between both sources of disagreement but within group disagreement is more tightly related to trading volume than cross group disagreement although both sources of disagreement are important our findings suggest that information differences are more important for trading than differences across market approaches

factors affecting export intermediaries service offerings the british example this study attempts to determine and explain the service offering behavior of british export intermediaries eis it was empirically confirmed that eis offer two categories of services transaction creating and physical fulfillment services it was postulated that the extent to which an ei offers these types of services is influenced by a set of factors that are internally product market supplier and buyer related empirical tests on a sample of 135 british eis established that an ei s exporting role number of employees amount of undifferentiated products carried number of suppliers and number of countries served all have a direct impact on an ei s service offering behavior

the congress and fiscal policy although the common belief is that the congress has paid little attention to fiscal policy the same kinds of political economic models which have been used to explain presidential budgetary policy may be used equally well to explain congressional budgetary behavior the congress fiscal policy appears to be systematically sensitive to both economic and political factors changes in the unemployment rate have a major impact on congressional budgetary policy as for political factors the president s lead is followed most closely on revenue proposals and not at all on the expenditure side the electoral cycle in particular the off year congressional election year is also important inducing larger deficits and smaller increases in revenues

the more we know about the fundamental the less we agree on the price i allow trading horizon heterogeneity across groups in a standard differential information model of a financial market this approach can explain the well established phenomenon that after a public announcement trading volume increases more private information is incorporated into prices and volatility increases in such environments public information has the important secondary role of helping agents learn about the information of other agents therefore whenever the correlation between the private information of different groups is sufficiently low a public announcement increases disagreement among short horizon traders regarding the expected selling price even as it decreases disagreement about the fundamental value of the asset additional testable implications are also suggested

trading as entertainment among 1 000 german brokerage clients for whom both survey responses and actual trading records are available investors who report enjoying investing or gambling turn over their portfolio at twice the rate of their peers including entertainment attributes as additional explanatory variables in cross sectional regressions of portfolio turnover on objective investor attributes more than doubles the fraction of the total variation of portfolio turnover that can be explained the results are robust to controlling for gender and proxies for overconfidence constructed from survey responses nonpecuniary benefits of trading thus appear to offer a straightforward explanation of the excessive trading puzzle

the evolution of the u s international trade intermediary in the 1980s a dynamic model international trade intermediaries such as export management companies have long existed in the united states many studies and reports have provided snapshots of their activities and roles over time their evolution however has hardly been researched mainly for lack of an appropriate dynamic model this paper integrates various conceptual frameworks and theories to develop a useful mode of the evolution of the u s international trade intermediary in the 1980s

the political business cycle under rational voting behavior this essay argues that politically motivated business cycles could persist in a democratic society even if the electorate votes in a rational fully informed manner provided that government policymakers have the means to systematically generate macroeconomic fluctuations this cyclic outcome reflects the preferences of an electorate that is composed of imperfectly altruistic voters belonging to different overlapping generations since each generation has a different horizon over which it would like to have elected politicians provide an optimal economic policy plan an intergenerational conflict of interests situation arises this conflict is placed into an explicit political context whereby cycles become generated under the institutional constraint of periodic elections