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While increases in earnings are common, we identify a setting in which they signal a separating equilibrium. Firms that “defy gravity' (DG) by reporting increases in earnings despite experiencing a decline in sales from continuing operations, signal their viability as a going- concern, and...
Persistent link: https://www.econbiz.de/10011558021
We examine the economic determinants of short-sale supply, and its consequences for future stock returns. Lendable supply increases with expected borrowing costs and decreases with financial statement constructs that indicate overvaluation. Although rising loan fees help ease supply, we find...
Persistent link: https://www.econbiz.de/10010259797
Persistent link: https://www.econbiz.de/10003730133
In this paper, the authors examine a supply base diversification problem faced by a buyer who periodically holds auctions to award short term supply contracts among a cohort of suppliers (i.e., the supply base). To mitigate significant cost shocks to procurement, the buyer can diversify her...
Persistent link: https://www.econbiz.de/10008556592
In a recent paper, Machina (2008) suggested choice problems in the spirit of Ellsberg (1961) which challenge tail-separability, an implication of Choquet Expected Utility (CEU) to a similar extent as the Ellsberg paradox challenged the sure-thing principle implied by Subjective Expected Utility...
Persistent link: https://www.econbiz.de/10004997496
The design of employment protection legislation (EPL) is of particular importance in the European debate on the contours of labor market reform. In this article we appeal to an equilibrium unemployment model to investigate the virtues of EPL reform which reduces the red tape and legal costs...
Persistent link: https://www.econbiz.de/10004997497
Since September 11, 2001; and during the ensuing economic slowdown, U.S airline companies have experienced significant financial difficulties, including bankruptcies and near bankruptcies on the part of several major carriers. In an economic setting where U.S. airlines are struggling to achieve or...
Persistent link: https://www.econbiz.de/10004998429
The social business idea borrows some concepts from the capitalist economy, and therefore the implementation of social businesses can likewise borrow some concepts from conventional business literature. As an illustration, the notion of business model, which is currently attracting much...
Persistent link: https://www.econbiz.de/10005041791
This paper proposes a model of the decision-maker’s confidence in his probability judgements, in terms of an implausibility measure – a real-valued function on the set of probability functions. A decision rule is axiomatised according to which the decision-maker evaluates acts using sets of...
Persistent link: https://www.econbiz.de/10005041794
In this paper, the authors study the possibility of controlling asset price volatility through financial innovation in a three-period finite competitive exchange economy with incomplete financial markets and retrading.
Persistent link: https://www.econbiz.de/10005041795