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Market Value (market + value)
Kinds of Market Value Selected AbstractsTests of a Deferred Tax Explanation of the Negative Association between the LIFO Reserve and Firm Value,CONTEMPORARY ACCOUNTING RESEARCH, Issue 1 2000DAN S. DHALIWAL Guenther and Trombley (1994) and Jennings, Simko, and Thompson (1996) document a negative association between a firm's last-in, first-out (LIFO) reserve and the market value of its equity. In this paper, we test a deferred tax explanation of this negative association. Specifically, we argue that investors, conditional on adjusting inventory to as-if first-in, first-out (FIFO), estimate a firm's future LIFO liquidation tax burden as its LIFO reserve multiplied by the appropriate corporate tax rate and include this tax-adjusted LIFO reserve in the valuation of a LIFO firm's net assets. On the basis of this argument, the tax-adjusted LIFO reserve is in effect an estimate of an off-balance-sheet deferred tax liability and, as a result, we predict a negative association between the tax-adjusted LIFO reserve and market value of equity. We test our deferred tax explanation by estimating a valuation model in which a firm's market value of equity is expressed as a function of the firm's assets, liabilities, deferred tax liability, and tax-adjusted LIFO reserve; the model is estimated separately in years preceding and following the reduction of tax rates mandated by the US Tax Reform Act of 1986. Test results provide strong support for the deferred tax explanation of the negative association between a firm's LIFO reserve and the market value of its equity. [source] Redesigning Corporate Governance Structures and Systems for the Twenty First CenturyCORPORATE GOVERNANCE, Issue 3 2001Robert A.G. Monks How a corporation is governed has become in recent years an increasingly important element in how it is valued by the market place. McKinsey & Company in June 2000 published the results of an Investor Opinion Survey of attitudes about the corporate governance of portfolio companies. The survey gathered responses about investment intentions from over 200 institutions who together manage approximately $3.25 trillion in assets. Ranging from 17 per cent in the US and Britain to over 27 per cent in Venezuela, investors placed a specific premium on what was called "Board Governance". To put this into perspective, consider how greatly sales would have to increase, expenses be cut and margins improved to achieve a comparable impact on value. "For purposes of the survey, a well governed company is defined as having a majority of outside directors on the board with no management ties; holding formal evaluations of directors; and being responsive to investor requests for information on governance issues. In addition, directors hold significant stockholdings in the company, and a large proportion of directors' pay is in the form of stock options." This correlation of governance with market value by one of the most respected consulting companies in the world creates the foundations of a new language for management accountability. McKinsey has great credibility as a value-adding advisor to corporate managements. Governance is not a cause or a theology for McKinsey; it is an important element in the value of an enterprise. By getting the opinion of what we call Global Investors with portfolios of holdings on every continent, McKinsey has importantly impacted the cost of capital for all corporations henceforth. Admittedly, McKinsey's criteria of "board governance" are blunt. "Every organization attempting to accomplish something has to ask and answer the following question," writes Harvard Business School professor Michael C. Jensen in the introduction to his recent working paper: "What are we trying to accomplish? Or, put even more simply: When all is said and done, how do we measure better versus worse? Even more simply: How do we keep score... . I say long-term market value to recognize that it is possible for markets not to know the full implications of a firm's policies until they begin to show up.... Value creation does not mean succumbing to the vagaries of the movements in a firm's values from day to day. The market is inevitably ignorant of many of our actions and opportunities, at least in the short run...". Surprisingly little attention is paid to what we all intuitively know, that talented people are not entirely motivated by financial compensation. Directors therefore must pay special attention to creating an appropriate environment for stimulating optimum management performance. [source] Communication via responsibility reporting and its effect on firm value in FinlandCORPORATE SOCIAL RESPONSIBILITY AND ENVIRONMENTAL MANAGEMENT, Issue 2 2010Hannu Schadewitz Abstract n this paper, we first analyzed the responsibility reporting literature with an emphasis on the linkage between responsibility reporting and a firm's performance and valuation. Based on the literature review, we developed a research question: How does communication via responsibility reporting affect firm value? We analyzed the market valuation of listed Finnish firms through a conventional valuation model combined with responsibility reporting. The starting point for our valuation was the Ohlson model. We expanded upon the conventional valuation by studying whether communication via responsibility reporting is related to firm valuation. Our research question is linked to the broader academic question of whether earnings worth as an information source has been erased over the last few years. In addition, we contribute to the literature that tries to understand the link between corporate social responsibility and firm performance/share performance. Specifically, we focused on responsibility reporting according to the Global Reporting Initiative (GRI) and especially on whether the existence of these reports provides a further explanation for firm value. Our sample was a population type that covered all listed Finnish firms that have adopted GRI. No other responsibility reporting practice was used by listed firms in their responsibility reporting communication during the years 2002,2005. The other necessary information for valuation models was obtained from Thomson Financial Services (commercial database). The applied model supported the conclusion that communication via GRI responsibility reporting is an important explanatory factor for a firm's market value. The result indicates that responsibility reporting is a part of a firm's communication tools in order to decrease information asymmetry between managers and investors. In other words, GRI responsibility reporting is called for in order to produce a more precise market valuation of a firm. Copyright © 2010 John Wiley & Sons, Ltd and ERP Environment. [source] Does the market value corporate environmental responsibility?CORPORATE SOCIAL RESPONSIBILITY AND ENVIRONMENTAL MANAGEMENT, Issue 2 2008An empirical examination Abstract Although researchers have applied different theoretical perspectives to illustrate the relationship between corporate environmental responsibility and profitability, to date theories are contested and empirical findings are inconclusive. Therefore, the aim of this research was to present empirical evidence regarding the influence of engaging in environmental responsibility on corporate market value, as the first study to be applied in the Egyptian context. The findings demonstrate that the market compensates those firms that care for their environment, as environmental responsibility exerted a positive and significant coefficient on the firm market value measured by Tobin's q ratio. This aligns stakeholder theory as well as resource-based theory arguments, and provides supporting evidence for those studies that have concluded that it pays to be environmentally responsive. Copyright © 2007 John Wiley & Sons, Ltd and ERP Environment. [source] Does Competition for Clients Increase Service Quality in Cleaning Gobies?ETHOLOGY, Issue 6 2008Marta C. Soares In a biological market, members of one trading class try to outbid each other to gain access to the most valuable partners. Competition within class can thus force individuals to trade goods or services more cheaply, ultimately resulting in conflict (e.g. cheating) over the value of commodities. Cleaning symbioses among fish appear to be good examples of biological markets. However, the existence and effect of outbidding competition among either types of traders (cleaners or clients) have never been tested. We examined whether increasing competition among cleaning gobies (Elacatinus spp.) for access to clients results in outbidding in the form of provision of a better cleaning service. On reefs where fish clients visited cleaning stations less frequently, and thus competition among cleaners was higher, cleaning gobies ingested fewer scales relative to the number of ingested parasites, i.e. they cleaned more honestly. This shift in cleaner behaviour towards greater honesty is consistent with a greater market value of access to clients in the face of competition among cleaners. However, this pattern could have also arisen as a result of differences in ectoparasite availability across reefs and therefore in value of the commodity offered by clients. Experimental manipulations will be required to determine whether cleaning service quality by cleaning gobies was enhanced solely because of competitive outbidding. [source] Value Maximisation, Stakeholder Theory, and the Corporate Objective FunctionEUROPEAN FINANCIAL MANAGEMENT, Issue 3 2001Michael Jensen This paper examines the role of the corporate objective function in corporate productivity and efficiency, social welfare, and the accountability of managers and directors. I argue that since it is logically impossible to maximise in more than one dimension, purposeful behaviour requires a single valued objective function. Two hundred years of work in economics and finance implies that in the absence of externalities and monopoly (and when all goods are priced), social welfare is maximised when each firm in an economy maximises its total market value. Total value is not just the value of the equity but also includes the market values of all other financial claims including debt, preferred stock, and warrants. In sharp contrast stakeholder theory, argues that managers should make decisions so as to take account of the interests of all stakeholders in a firm (including not only financial claimants, but also employees, customers, communities, governmental officials and under some interpretations the environment, terrorists and blackmailers). Because the advocates of stakeholder theory refuse to specify how to make the necessary tradeoffs among these competing interests they leave managers with a theory that makes it impossible for them to make purposeful decisions. With no way to keep score, stakeholder theory makes managers unaccountable for their actions. It seems clear that such a theory can be attractive to the self interest of managers and directors. Creating value takes more than acceptance of value maximisation as the organisational objective. As a statement of corporate purpose or vision, value maximisation is not likely to tap into the energy and enthusiasm of employees and managers to create value. Seen in this light, change in long-term market value becomes the scorecard that managers, directors, and others use to assess success or failure of the organisation. The choice of value maximisation as the corporate scorecard must be complemented by a corporate vision, strategy and tactics that unite participants in the organisation in its struggle for dominance in its competitive arena. A firm cannot maximise value if it ignores the interest of its stakeholders. I offer a proposal to clarify what I believe is the proper relation between value maximisation and stakeholder theory. I call it enlightened value maximisation, and it is identical to what I call enlightened stakeholder theory. Enlightened value maximisation utilises much of the structure of stakeholder theory but accepts maximisation of the long run value of the firm as the criterion for making the requisite tradeoffs among its stakeholders. Managers, directors, strategists, and management scientists can benefit from enlightened stakeholder theory. Enlightened stakeholder theory specifies long-term value maximisation or value seeking as the firm's objective and therefore solves the problems that arise from the multiple objectives that accompany traditional stakeholder theory. I also discuss the Balanced Scorecard, the managerial equivalent of stakeholder theory. The same conclusions hold. Balanced Scorecard theory is flawed because it presents managers with a scorecard which gives no score,that is, no single-valued measure of how they have performed. Thus managers evaluated with such a system (which can easily have two dozen measures and provides no information on the tradeoffs between them) have no way to make principled or purposeful decisions. The solution is to define a true (single dimensional) score for measuring performance for the organisation or division (and it must be consistent with the organisation's strategy). Given this we then encourage managers to use measures of the drivers of performance to understand better how to maximise their score. And as long as their score is defined properly, (and for lower levels in the organisation it will generally not be value) this will enhance their contribution to the firm. [source] Are non-audit services associated with firm value?ACCOUNTING & FINANCE, Issue 3 2009Evidence from financial information system-related services M42 Abstract The purchase of non-audit services from incumbent auditors has generated considerable attention. Surprisingly, limited empirical evidence exists on the association of non-audit services with firm value. Focusing on services related to financial information system (FIS), we find that the market value of equity is greater for firms that purchase FIS-related services from their incumbent auditors relative to firms that do not. The levels of FIS fees are also positively related to firm value after controlling for total other fees, or total other non-audit fees. Hence, despite the negative perception associated with non-audit services, investors regard FIS-related services as value-adding activities. [source] Audit quality, auditor compensation and initial public offering underpricingACCOUNTING & FINANCE, Issue 3 2008Xin Chang G32; D82; M42 Abstract We jointly study the impact of audit quality on auditor compensation and initial public offering (IPO) underpricing using a sample of Australian firms going public over the period 1996,2003. We find that quality (Big Four) audit firms earn significantly higher fees than non-Big Four auditors, and audit quality is positively associated with IPO underpricing. The positive relation between audit quality and underpricing is more pronounced for small issues, IPOs underwritten by non-prestigious underwriters, and those that are not backed by venture capitalists. Taken together, our results suggest that quality auditors serve as a signalling device that enhances post-issue market value of equity. [source] Knowledge-intensive firms: the influence of the client on HR systemsHUMAN RESOURCE MANAGEMENT JOURNAL, Issue 3 2003Juani Swart HR systems play a critical role in growing knowledge-intensive firms (KIFs) by facilitating the conversion of human capital into intellectual capital, which has market value. However, the choice of HR system is constrained by the relatively small number of clients they have in business-to-business relationships. This article seeks to understand how and why these client relationships affect the choice of HR practices in these firms. We address this issue by drawing on extensive empirical research currently under way in KIFs. Our research shows that HR practices can be influenced strongly by the client, both directly and indirectly. However, some KIFs will use their HR practices as a means of managing the relationships they have with their clients by shaping their boundaries with their clients and building organisational, professional and client identities. The varying client influence can be understood by examining the nature of the power relationship between the client and supplier, which is influenced by the uniqueness of the services provided. This has implications for our understanding of the factors affecting the exercise of a constrained choice of HR systems. [source] Personal Taxation in Firm Market Valuation: Theory and Test,ACCOUNTING PERSPECTIVES, Issue 1 2002ZENG TAO ABSTRACT In this paper, I extend Ohlson's 1995 firm market valuation model to incorporate personal taxes: the taxes on dividends and the taxes on capital gains. Without personal taxes, firm market value can be expressed as the present value of future benefits received by the shareholders (dividends, in this case). With personal taxes, the benefits received by the shareholders should be classified into three categories (due to their different tax treatments): dividends, share repurchases, and new share issues (i.e., contributed capital). The extended model shows the effects of personal taxation on firm market valuation: retained earnings are valued less than contributed stocks, both dividends taxes and capital gains taxes affect retained earnings valuation and firm market value, and firms choose cash distribution methods (paying dividends and repurchasing shares) to increase their retained earnings valuation, therefore increasing their market value. An empirical test using a sample from the Disclosure Select Canada and Financial Post Card data bases for the years 1995-98 supports these personal tax effects. [source] Domestic Accounting Standards, International Accounting Standards, and the Predictability of EarningsJOURNAL OF ACCOUNTING RESEARCH, Issue 3 2001Hollis Ashbaugh We investigate (1) whether the variation in accounting standards across national boundaries relative to International Accounting Standards (IAS) has an impact on the ability of financial analysts to forecast non-U.S. firms' earnings accurately, and (2) whether analyst forecast accuracy changes after firms adopt IAS. IAS are a set of financial reporting policies that typically require increased disclosure and restrict management's choices of measurement methods relative to the accounting standards of our sample firms' countries of domicile. We develop indexes of differences in countries' accounting disclosure and measurement policies relative to IAS, and document that greater differences in accounting standards relative to IAS are significantly and positively associated with the absolute value of analyst earnings forecast errors. Further, we show that analyst forecast accuracy improves after firms adopt IAS. More specifically, after controlling for changes in the market value of equity, changes in analyst following, and changes in the number of news reports, we find that the convergence in firms' accounting policies brought about by adopting IAS is positively associated with the reduction in analyst forecast errors. [source] CONVERTIBLE SECURITIES: A TOLLBOX OF FLEXIBLE FINANCIAL INSTRUMENTS FOR CORPORATE ISSUERSJOURNAL OF APPLIED CORPORATE FINANCE, Issue 1 2000Trevor Ganshaw During the 1990s, convertible and equity-linked securities emerged as a major source of financing for U.S. corporate issuers. Issuance volume grew steadily throughout the decade and the secondary market value of U.S. convertible securities now exceeds $200 billion. In this overview of the market, the authors discuss the following: (1) the growth of issuance volume in the U.S. equity-linked market; (2) the basic characteristics of convertible securities; (3) convertible debt alternatives; and (4) convertible preferred alternatives. As a result of the proliferation of new convertible structures, corporate issuers are now able to adjust coupon/dividend, conversion premium, and call protection in order to meet their tax, accounting, rating agency, and cost-of-capital objectives. Historically, the convertible new issue market has had a broad variety of issuers, spanning all industry sectors as well as both investment grade and high yield credits. But in the last two years, the most aggressive issuers have been technology-oriented companies, including telecommunications, Internet, hardware, software, and biotechnology concerns. Such technology-related issuers, which are often rated below investment grade and unable to secure straight debt capital, are generally in heavy-spending phases and view convertible bonds as a source of inexpensive financing. At the same time, investment-grade, "old-economy" issuers have continued to use convertible securities selectively, in most cases as cheap "quasi-equity" in the context of mergers and acquisitions, or as a tax-deferred strategy for selling cross-holdings of stock. [source] Annual miles drive used car pricesJOURNAL OF APPLIED ECONOMETRICS, Issue 1 2009Maxim Engers This paper investigates whether the net benefits from owning a vehicle, proxied by annual miles driven, explain the price declines observed over a vehicle's life. We first model the household decision on how much to drive each of its vehicles. Then we empirically establish that variation in household annual miles across brands explains observed price declines. Furthermore, the effect of vehicle age on annual miles decisions (and consequently on market value) depends on household characteristics and the composition of the vehicle stock owned. Copyright © 2008 John Wiley & Sons, Ltd. [source] Stock Market Valuation, Profitability and R&D Spending of the Firm: The Effect of Technology Mergers and AcquisitionsJOURNAL OF BUSINESS FINANCE & ACCOUNTING, Issue 7-8 2009Juha-Pekka Kallunki Abstract:, In this paper, we investigate whether a firm can enhance the effect of its R&D spending on its current market value and future profitability through technology-oriented M&As. On the basis of an analysis of 1,879 M&As, we find that when a technology firm acquires another technology firm, the magnitude of the stock price response to the R&D spending of an acquirer increases by 107% in the year of the M&A. In contrast, we find no such increase in the stock price response to the R&D spending of a non-technology acquirer. We also find that technology acquirers are more successful in converting their R&D spending into positive future profitability than non-technology acquirers. Our results are robust for different alternative specifications of our model and when various firm differences are controlled for. [source] An Aggregation Theorem for the Valuation of Equity Under Linear Information DynamicsJOURNAL OF BUSINESS FINANCE & ACCOUNTING, Issue 3-4 2003David Ashton We state an Aggregation Theorem which shows that the recursion value of equity is functionally proportional to its adaptation value. Since the recursion value of equity is equal to its book value plus the expected present value of its abnormal earnings, it follows that the adaptation value of equity can normally be determined by a process of simple quadrature. We demonstrate the application of the Aggregation Theorem using two stochastic processes. The first uses the linear information dynamics of the Ohlson (1995) model. The second uses linear information dynamics based on the Cox, Ingersoll and Ross (1985),square root' process. Both these processes lead to closed form expressions for the adaptation and overall market value of equity. There are, however, many other processes which are compatible with the Aggregation Theorem. These all show that the market value of equity will be a highly convex function of its recursion value. The empirical evidence we report for UK companies largely supports the convexity hypothesis. [source] The Valuation of Deferred Taxation: Evidence from the UK Partial Provision ApproachJOURNAL OF BUSINESS FINANCE & ACCOUNTING, Issue 7-8 2001David B. Citron The UK provides a virtually unique environment in which to examine the information content of the partial provision approach to deferred tax accounting. In addition this issue is of particular interest to UK accounting standard setters in the light of trends towards international accounting standard harmonisation. Taking the total amount of deferred taxation to be equal to the partial balance sheet provision plus the potential portion appearing in the notes, this study tests the relationship between these various deferred tax components and market value. It also examines the economic rationale for the potential portion. The study is based on 1,512 company/years from the period 1989,1991. It finds that, while the full amount of deferred taxation is not valued by the market as a liability, there is evidence of the partial balance sheet provision being so valued. There is also evidence that the potential portion is positively related to market value, consistent with its proxying for information about future growth. This result is supported by the positive relation between the potential portion and measures of future capital spending, indicative of an underlying economic rationale for this deferred taxation component. From a regulatory perspective, the study concludes that the main benefit of the partial provision approach is that the balance sheet amount constitutes a reasonably reliable measure of the portion likely to crystallise as a liability, information that would be lost were only the full amount to be disclosed. [source] The Effect of Earnings Permanence, Growth, and Firm Size on the Usefulness of Cash Flows and Earnings in Explaining Security Returns: Empirical Evidence for the UKJOURNAL OF BUSINESS FINANCE & ACCOUNTING, Issue 5-6 2001Andreas Charitou This paper examines the relative information content of earnings and cash flows for security returns using a methodology incorporating contextual factors which may affect earnings and cash flow response coefficients. For our UK dataset, we provide evidence that the earnings coefficient is related to earnings permanence, growth and firm size and that the cash flow coefficient may be related to growth. Although our results emphasise the value relevance of earnings, they also suggest that both contemporaneous and prior period cash flow are positively related to security returns and that market-to-book and market value of equity have predictive power for returns. [source] Ethnic differences in use value and use patterns of baobab (Adansonia digitata L.) in northern BeninAFRICAN JOURNAL OF ECOLOGY, Issue 3 2009E. De Caluwé Abstract The aim of this study was to combine qualitative and quantitative tools to evidence ethnic differences in use value and use patterns of baobab for the rural populations of northern Benin. The study was carried out in the municipalities of Boukoumbé and Karimama, focusing on Ottamari and Dendi ethnic groups, respectively, who have good knowledge on baobab uses. Ethnobotanical data were gathered through semi-structured individual interviews and processed by quantitative (multiple use curve, use value and fidelity level) and qualitative (flow chart) analytical and ethnobotanical methods. Leaves, fruit pulp and seeds of baobab were shown to be well-known for several food uses and were often the main ingredient in sauces, pastes, porridges and beverages. Medicinal uses were especially well-known for the bark, which was also used for making ropes. In both communities, a total of 38 different uses were mentioned for baobab products. There were significantly more uses known by the Ottamari than by the Dendi, with use values of 8 and 5, respectively. There were no differences detected in knowledge between sexes and age classes. As a result of its nutritional and high potential market value, preservation of ethnobotanical knowledge on baobab and exchange between communities is critical. Résumé Le but de cette étude était de combiner des outils qualitatifs et quantitatifs pour mettre en évidence des différences ethniques dans la valeur d'utilisation et dans les schémas d'utilisation du baobab chez les populations rurales du nord du Bénin. Cette étude fut réalisée dans les municipalités de Boukoumbé et de Karimama, spécifiquement chez les groupes ethniques Ottamari et Dendi, respectivement, qui ont une bonne connaissance des utilisations du baobab. Des données ethnobotaniques furent récoltées grâce à des interviews individuelles semi-structurées et elles furent traitées par des méthodes analytiques et ethnobotaniques quantitatives (courbe d'utilisation multiple, valeur d'utilisation et degré de fidélité) et qualitatives (graphique d'évolution). Les feuilles, la pulpe de fruits et les semences de baobab se sont avérées être bien connues pour plusieurs utilisations alimentaires et elles étaient souvent les ingrédients principaux dans des sauces, des pâtes, des bouillies et des boissons. Des utilisations médicinales étaient particulièrement bien connues pour l'écorce qui servait aussi pour fabriquer des cordes. Dans les deux communautés, un total de 38 utilisations différentes ont été mentionnées pour des produits du baobab. Il y avait significativement plus d'utilisations connues chez les Ottamari que chez les Dendi, avec des valeurs d'utilisation de 8 et de 5, respectivement. On n'a décelé aucune différence de connaissances en fonction de l'âge ni du sexe. Suite à sa valeur nutritionnelle et à sa haute valeur commerciale potentielle, la préservation des connaissances ethnobotaniques sur le baobab et des échanges entre communautés est critique. [source] Gonadal maturation in the blackspot seabream Pagellus bogaraveo: a comparison between a farmed and a wild broodstockJOURNAL OF FISH BIOLOGY, Issue 2004V. Micale The blackspot seabream Pagellus bogaraveo(Brünnich, 1768) has been regarded as a possible alternative to traditionally cultured Mediterranean species such as seabream and seabass, due to its high market value and good adaptation to captivity. Broodstock establishment and management represent the first step towards reliable production of eggs and fry, which is required to develop aquaculture of this new species. Two different broodstocks were tested for gonadal maturation and spawning, one constituting of wild fish caught as juveniles and reared in tanks until sexual maturity (4 years), and one assembled from wild adult fish caught during or just before the reproductive season. All fish were maintained under the same rearing conditions and fed the same diet. Gonadal stripping and biopsies were performed weekly to monitor maturation in both males and females. Ovarian samples were staged for maturity on the basis of follicular diameter and migration of germinal vesicle. Sperm samples were tested for density (number of spermatozoa ml,1) and motility. The fish reared in captivity reached ovarian maturity during the breeding season of the wild stock. Eggs were obtained by stripping from both farmed and wild specimens, but appeared degenerated as a result of being retained too long in the ovarian cavity due to the absence of spontaneous spawning. Spermiation was prolonged in the farmed fish, but appeared to be blocked in the wild breeders after first sampling. However, the sperm was very viscous and the motile spermatozoa did not exceed 10%. [source] Pigmentation development in hatchery-reared flatfishesJOURNAL OF FISH BIOLOGY, Issue 5 2000J. A. Bolker Malpigmentation is common in hatchery-reared flatfishes, decreasing the market value of whole fish, and increasing the risk of predation for juveniles released to enhance wild stocks. Pigmentation development in flatfishes occurs in two phases. First, during embryonic and larval stages pigment cells differentiate on both sides of the body. Second, at metamorphosis larval melanophores disappear, and adult melanophores differentiate on the ocular but not on the blind side. Malpigmentation seems to result from disruptions of the second phase, and may take the form of albinism on the ocular side or darkening of the blind side. Both types of aberration may be related to aspects of the hatchery environment such as lighting, substratum, and diet. Larval nutrition appears to be a key factor and enrichment of larval diets with fatty acids and Vitamin A can greatly reduce malpigmentation rates; however, levels suffcient to prevent pigmentation defects frequently cause other abnormalities. Two developmental explanations for albinism have been proposed. The first is that differentiation of ocular-side skin follows the normal blind-side pathway and adult melanophores therefore fail to develop on the ocular side. The second hypothesis suggests that dietary deficiencies inhibit retinal development and the resulting visual defects lead to failure of a hormonal signal required for melanophore differentiation. These hypotheses may well be complementary; as yet neither has been thoroughly tested. Definitive tests will require a combination of manipulative techniques such as tissue transplantation and cell culture with nutritional, behavioural and hormonal assays. Such integrative studies will further the understanding both of normal pigmentation development and of the environmental factors that contribute to high rates of albinism in hatchery-reared flatfish. [source] Where Corporate Governance and Financial Analysts Affect ValuationJOURNAL OF INTERNATIONAL FINANCIAL MANAGEMENT & ACCOUNTING, Issue 3 2009Ran R. Barniv We examine whether corporate governance and financial analysts affect accounting-based valuation models for B and H shares traded by foreign investors in China and Hong Kong, respectively. We expect that better corporate governance and more effective analyst activity mitigate potential adverse effects on accounting valuation models generated by country-specific problems in accounting, auditing, and legal systems. We find that valuation models perform better for companies with a greater analyst following, smaller forecast errors, relatively high public ownership and a strong board structure. Valuation models and accounting numbers have only limited explanatory power and valuation role for companies with weak governance and less effective analyst performance. The findings are robust across various market value, return, unexpected return, and other accounting valuation models. The results are consistent with less informed foreign investor clienteles searching for signals of more effective analyst activity and better corporate governance mechanisms. [source] The Impact of Standard Setting on Relevance and Reliability of Accounting Information: Lower of Cost or Market Accounting Reforms in ChinaJOURNAL OF INTERNATIONAL FINANCIAL MANAGEMENT & ACCOUNTING, Issue 3 2005Ziyun Yang During the period from 1998 to 2000, China implemented several new asset write-down regulations that mandate lower of cost or market accounting (LCM) for most non-cash assets. This is a study of the relevance and reliability of those regulations for investors in China. The study measures the association of net asset value with market value of equity and the association of accounting income with stock return, on both a historical cost accounting (HCA) basis and on an LCM basis. A fixed-effects model controlling both year and firm effects is used in a balanced panel sample. The panel regressions show high levels of explanatory power. LCM values can be relevant but may be measured with sufficient error that they do not improve the prediction of firm values. Reliability is measured using non-nested, overlapping model comparison tests (J and Cox). The paper also considers whether discretionary motivations influence the amount of write-down. The study supports the relevance of LCM reforms, but finds that reliability is not increased over HCA during the period under study. Reliability appears to be reduced by the voluntary nature of LCM provisions during part of the period and by the effects of opportunism for some firms in the sample. [source] Equity Valuation and Current Cost Disclosures: the Case of MexicoJOURNAL OF INTERNATIONAL FINANCIAL MANAGEMENT & ACCOUNTING, Issue 3 2001Paquita Y. Davis-Friday This study uses an accounting-based valuation model to investigate the relation between the market value of publicly traded Mexican firms and their disclosures of price-level adjusted accounting information. The model is estimated on a sample of Mexican companies during 1987,1990, when annual inflation rates in Mexico decreased from 130 per cent to 20 per cent. The results indicate that general price level-adjusted and current cost disclosures explain a significant portion of the cross-sectional variation in the market-to-book ratios of the sample firms. Further, the explanatory power of holding gains is robust to decreases in the general level of inflation, which suggests that current cost and constant peso disclosures are relevant for determining firm value over a wide range of inflation rates. These results are particularly important now since the Mexican Institute of CPAs has proposed eliminating the measurement of holding gains in order to make Mexican financial statements more comparable to US and Canadian GAAP. [source] Analysis of Participating Life Insurance Contracts: A Unification ApproachJOURNAL OF RISK AND INSURANCE, Issue 3 2007Nadine Gatzert Fair pricing of embedded options in life insurance contracts is usually conducted by using risk-neutral valuation. This pricing framework assumes a perfect hedging strategy, which insurance companies can hardly pursue in practice. In this article, we extend the risk-neutral valuation concept with a risk measurement approach. We accomplish this by first calibrating contract parameters that lead to the same market value using risk-neutral valuation. We then measure the resulting risk assuming that insurers do not follow perfect hedging strategies. As the relevant risk measure, we use lower partial moments, comparing shortfall probability, expected shortfall, and downside variance. We show that even when contracts have the same market value, the insurance company's risk can vary widely, a finding that allows us to identify key risk drivers for participating life insurance contracts. [source] To Hedge or Not to Hedge: Managing Demographic Risk in Life Insurance CompaniesJOURNAL OF RISK AND INSURANCE, Issue 1 2006Helmut Gründl Demographic risk, i.e., the risk that life tables change in a nondeterministic way, is a serious threat to the financial stability of an insurance company having underwritten life insurance and annuity business. The inverse influence of changes in mortality laws on the market value of life insurance and annuity liabilities creates natural hedging opportunities. Within a realistically calibrated shareholder value (SHV) maximization framework, we analyze the implications of demographic risk on the optimal risk management mix (equity capital, asset allocation, and product policy) for a limited liability insurance company operating in a market with insolvency-averse insurance buyers. Our results show that the utilization of natural hedging is optimal only if equity is scarce. Otherwise, hedging can even destroy SHV. A sensitivity analysis shows that a misspecification of demographic risk has severe consequences for both the insurer and the insured. This result highlights the importance of further research in the field of demographic risk. [source] The Use of Dynamic Financial Analysis to Determine Whether an Optimal Growth Rate Exists for a Property-Liability InsurerJOURNAL OF RISK AND INSURANCE, Issue 4 2004Stephen P. D'Arcy Prior research on the aging phenomenon has demonstrated that new business for property-liability (P-L) insurers generates high loss ratios that gradually decline as a book of business goes through successive renewal cycles. Although the experience on new business is initially unprofitable, the renewal book of business eventually becomes profitable over time. Within this context, insurers need to manage their exposure growth in order to maximize long run profitability. Dynamic financial analysis (DFA), a relatively new tool for P-L insurers, utilizes Monte Carlo simulation to generate the overall financial results for an insurer under a large number of scenarios. This article uses a publicly available DFA model,along with the estimated market value of an insurer, based on 1990,2001 data for stock P-L insurers and underlying financial variables,to determine optimal growth rates of a P-L insurer based on mean,variance analysis, stochastic dominance, and constraints on leverage. [source] Guaranteeing Defined Contribution Pensions: The Option to Buy Back a Defined Benefit PromiseJOURNAL OF RISK AND INSURANCE, Issue 1 2003Marie-Eve Lachance After a long commitment to defined benefit (DB) pension plans for U.S. public sector employees, many state legislatures have introduced defined contribution (DC) plans for their public employees. In this process, investment risk that was previously borne by state DB plans has now devolved to employees covered by the new DC plans. In light of this trend, some states have introduced a guarantee mechanism to help protect DC plan participants. One such guarantee takes the form of an option permitting DC plan participants to buy back their DB benefit for a price. This article develops a theoretical framework to analyze the option design and illustrate how employee characteristics influence the option's cost. We illustrate the potential impact of a buy-back option in a pension reform enacted recently by the State of Florida for its public employees. If employees were to exercise the buy-back option optimally, the market value of this option could represent up to 100 percent of the DC contributions over their work life. [source] ECONOMIC VALUATION OF RIPARIAN BUFFER AND OPEN SPACE IN A SUBURBAN WATERSHED1JOURNAL OF THE AMERICAN WATER RESOURCES ASSOCIATION, Issue 6 2006Zeyuan Qiu Abstract: This study evaluates the economic value of riparian buffers and open space in a suburban watershed through two nonmarket valuation methods. A contingent valuation survey was implemented in the Dardenne Creek watershed, a suburban watershed of the St. Louis metropolitan area in Missouri, to evaluate the residents' perceptions of and willingness to pay (WTP) for adopting riparian buffers and preserving farmland in a hypothetical real estate market. A hedonic pricing model based on actual sale prices of homes in the watershed was applied to estimate the market value of open space and other environmental conditions such as flood zone and stream proximity in the study area. The results showed that residents' WTP was consistent with the economic values of open space and proximity to streams embedded in existing home prices. Through a better understanding of residents' perceptions and values, riparian buffer and open space programs can be designed and promoted to achieve greater implementation success and environmental benefit. [source] The Cost of Children When Children are a ChoiceLABOUR, Issue 1 2000Ugo Colombino The standard methods of measuring the cost of children are flawed because of the endogeneity of fertility decisions and because , even if they were exogenous , children bring (or may bring) utility to the household. This paper presents a simple structural model of household allocation of time and income to ,children's (quantity and quality) production'. From the estimates one can compute the cost of children as the market value of resources devoted to children. Some policy simulations illustrate the relevance of accounting for the endogeneity of children. [source] Equity in Toxic Tort Litigation: Unjust Enrichment and the Poor,LAW & POLICY, Issue 2 2004ALLAN KANNER This paper proposes to explore the current and prospective role of equitable theories and remedies in toxic tort litigation. The argument is for an unjust enrichment remedy in certain property pollution cases. The idea is to remove the monetary incentive for polluting economically depressed areas. Two specific areas of investigation come immediately to mind. First, courts have already embraced equitable remedies to address pollution damages. Under Ayers and its progeny, many states have allowed the equitable remedy medical monitoring. What is important to understand is how legal relief for increased risk claims would have been inadequate and also the propriety of finding an equitable approach. Second, moving from personal injury to real property damage claims, we see a similar opportunity for use of equitable relief under an unjust enrichment theory. Currently, there is much debate about the propriety of restoration damages as opposed to fair market value (FMV) damages for the landowners whose property is damaged by the pollution of another. Each approach has various strengths and weaknesses. A better approach might be to use unjust enrichment on a law and economics basis as a remedy to force polluters to internalize the cost of pollution. For instance, take a polluter who pollutes the neighboring environs in lieu of paying one million dollars in disposal and storage costs. Assume the neighboring properties are only worth three hundred thousand dollars on a FMV approach. Assume further that restoration costs are ten million dollars, but that the relevant government agency would accept a natural attenuation clean-up approach. How should the remedy be set, and should one consider allowing a de facto pollution easement? [source] | |||||||||||||||||||||||||||||||||||||