Corporate financing decisions: UK survey evidence

Despite theoretical developments in recent years, our understanding of corporate capital structure remains incomplete. Prior empirical research has been dominated by archival regression studies which are limited in their ability to fully reflect the diversity found in practice. The present paper reports on a comprehensive survey of corporate financing decision-making in UK listed companies. A key finding is that firms are heterogeneous in their capital structure policies. About half of the firms seek to maintain a target debt level, consistent with trade-off theory, but 60 per cent claim to follow a financing hierarchy, consistent with pecking order theory. These two theories are not viewed by respondents as either mutually exclusive or exhaustive. Many of the theoretical determinants of debt levels are widely accepted by respondents, in particular the importance of interest tax shield, financial distress, agency costs and also, at least implicitly, information asymmetry. Results also indicate that cross-country institutional differences have a significant impact on financial decisions

Successful and Unsuccessful Attacks: Evaluating the Stability of the East Asian Currencies

The key objective of our study is to re-examine again the stability of selected East Asian currencies. Had there been any other attacks on these currencies prior to their meltdowns in 1997? Equally important, have the currencies stabilized during the post-1997 crisis? To address these questions, we adopt the concept of exchange market pressure (EMP) index of Kaminsky, Lizondo, and Reinhart (1998). Due to non-normality of the statistical distribution of the EMP indices in general, this study applies the Extreme Value Theory (EVT) as proposed by Huisman, Koedijk, Kool, and Palm (2001). Lastly, we document events that arguably contribute to speculative attacks on these currencies.Currency Crisis; Exchange Market Pressure; Extreme Value Theory; East Asia.

Big ideas: education

Sandra McNally surveys CEP evaluations of a wide range of school policies in the UK. Education is a key policy instrument for addressing unemployment, rising inequality and falling intergenerational mobility, the social problems that were the focus of the first three contributions to CEP's 'big ideas' series. In the latest overview of the Centre's research, Sandra McNally surveys evaluations of a wide range of school policies in the UK.

Applying refinement to the use of mice and rats in rheumatoid arthritis research

Rheumatoid arthritis (RA) is a painful, chronic disorder and there is currently an unmet need for effective therapies that will benefit a wide range of patients. The research and development process for therapies and treatments currently involves in vivo studies, which have the potential to cause discomfort, pain or distress. This Working Group report focuses on identifying causes of suffering within commonly used mouse and rat ‘models’ of RA, describing practical refinements to help reduce suffering and improve welfare without compromising the scientific objectives. The report also discusses other, relevant topics including identifying and minimising sources of variation within in vivo RA studies, the potential to provide pain relief including analgesia, welfare assessment, humane endpoints, reporting standards and the potential to replace animals in RA research

Spatial Aggregation and Weather Risk Management

Previous studies identify limited potential efficacy of weather derivatives in hedging agricultural exposures. In contrast to earlier studies which investigate the problem at low levels of aggregation, we find using straight forward temperature contracts that better weather hedging opportunities exist at higher levels of spatial aggregation. Aggregating production exposures reduces idiosyncratic (i.e. localized or region specific) risk, leaving a greater proportion of the total risk in the form of systemic weather risk which can be effectively hedged using weather derivatives. The aggregation effect suggests that the potential for weather derivatives in agriculture may be greater than previously thought, particularly for aggregators of risk such as re/insurers.weather derivatives, spatial aggregation, corn, yield risk, crop insurance, hedging, Risk and Uncertainty,