A new operational matrix based on Bernoulli polynomials

In this research, the Bernoulli polynomials are introduced. The properties of these polynomials are employed to construct the operational matrices of integration together with the derivative and product. These properties are then utilized to transform the differential equation to a matrix equation which corresponds to a system of algebraic equations with unknown Bernoulli coefficients. This method can be used for many problems such as differential equations, integral equations and so on. Numerical examples show the method is computationally simple and also illustrate the efficiency and accuracy of the method

Breach of continuous disclosure in Australia

Given that disclosure is important for the efficient functioning of capital markets, this paper explores the impact of infringement of continuous disclosure by Australian listed firms. We observe a significantly negative market reaction for our sample firms around the day an infringement is announced. Our findings also provide partial evidence of an increase in spreads and a decrease in price informativeness following the announcement of a breach. Overall, our results indicate that the market considers the breach of continuous disclosure to be a relatively important incident

Why do financial literacy programmes fail?

Numerous studies have found a positive relationship between financial literacy and financial experience. Typically, this relationship is interpreted as being a causal relationship, i.e. an increase in financial literacy leads to better financial decision making. However, a simple relationship cannot be interpreted in a causal way. In this paper, we show evidence for a causal relationship running the opposite way, i.e. people with more financial experience seem to acquire more financial knowledge and become more financially literate. This finding has important implications as it suggests that programmes targeted at improving financial literacy could be more effective if they incorporate experiential components

Insider trading, regulation and the components of the Bid-Ask Spread

Insiders pose a risk to providers of liquidity, who require compensation for this and consequentially widen spreads. In this paper we investigate the relationship between insider trading regulation and the cost of trading by decomposing the components of the spread before and after the enactment of strict new laws. We find a significant decrease in information asymmetry, which is mainly observed in illiquid and high prechange information asymmetry companies. Results are robust to model specification. We also see a decrease in the contribution of information asymmetry to price volatility. Overall, our results may have implications for markets with similar characteristics

Do insiders crowd out analysts?

Both insiders and analysts are involved in the collection and dissemination of information to the market, roles which impact heavily on price efficiency and resource allocation. The differences between the two groups, however, result in a competitive relationship with analysts at a disadvantage as they face greater costs associated with information gathering. As a result they may choose not to participate in a onesided competition. We employ transaction data to examine the impact of firm-year aggregate insider trading intensity on the level of analyst following. We find a negative relationship between insider trading intensity and analyst coverage. This result was driven by large blockholders suggesting that analysts are attracted to higher levels of information asymmetry from which they profit

Price discovery in US-Canadian cross-listed shares

Given the increasing integration of markets around the world, concerns have been expressed about the survival of smaller national exchanges in competition with larger, more liquid exchanges. Several theories have been put forward regarding the likely long-term survival of smaller exchanges, but little actual empirical evidence has been presented to suggest which of the theories, if any, are correct. We explore this issue within the setting of Canadian and US firms cross-listing onto each other’s exchanges using the component share measure of each exchanges contribution to price discovery. We look at Gonzalo and Granger (1995) component shares over a 14 year period from 1996-2009 and find that each market is on average informationally dominant for its own companies, with the exception of Canadian firms listing on the NASDAQ. We also find that there is considerable time variation in the component shares, but little evidence that the Canadian market is systematically losing competitiveness to the US exchanges as has been feared. We also find that known determinants of the level of price discovery appear unrelated to the changes in price discovery