When No Law is Better than a Good Law

This paper argues, both theoretically and empirically, that sometimes no securities law may be better than a good securities law that is not enforced. The first part of the paper formalizes the sufficient conditions under which this happens for any law. The second part of the paper shows that a specific securities law - the law prohibiting insider trading - may satisfy these conditions. The third part of the paper takes this prediction to the data. We find that the cost of equity actually rises when some countries enact an insider trading law, but do not enforce it.insider trading, cost of capital, emerging markets, securities law, enforcement, International Development, G15, G18, K22, K42,

When No Law is Better than a Good Law

This paper argues, both theoretically and empirically, that sometimes no security law may be better than a good security law that is not enforced. The first part of the paper formalizes the sufficient conditions under which this happens for any law. The second part of the paper shows that a specific security law - the law prohibiting insider trading - may satisfy these conditions, which implies that our theory predicts that it is sometimes better not to have an insider trading law than to have an insider trading law but not enforce it. The third part of the paper takes this prediction to the data. We revisit the panel data set assembled by Bhattacharya and Daouk (2002), who showed that enforcement, not the mere existence, of insider trading laws reduced the cost of equity in a country. We find that the cost of equity actually rises when a country introduces an insider trading law, but does not enforce it.

Is Unlevered Firm Volatility Asymmetric?

Asymmetric volatility refers to the stylized fact that stock volatility is negatively correlated to stock returns. Traditionally, this phenomenon has been explained by the financial leverage effect. This explanation has recently been challenged in favor of a risk premium based explanation. We develop a new, unlevering approach to document how well financial leverage, rather than size, beta, book-to-market, or operating leverage, explains volatility asymmetry on a firm-by-firm basis. Our results reveal that, at the firm level, financial leverage explains much of the volatility asymmetry. This result is robust to different unlevering methodologies, samples, and measurement intervals. However, we find that financial leverage does not explain index-level volatility asymmetry, which is consistent with theoretical results in Aydemir, Gallmeyer and Hollifield (2006).Volatility asymmetry, Financial leverage, Financial Economics, Research Methods/ Statistical Methods, G12,

Do Investors Learn About Analyst Accuracy?

We study the impact of analyst forecasts on prices to determine whether investors learn about analyst accuracy. Our test market is the crude oil futures market. Prices rise when analysts forecast a decrease (increase) in crude supplies. In the 15 minutes following supply realizations, prices rise (fall) when forecasts have been too high (low). In both the initial price action relative to forecasts and in the subsequent reaction relative to realized forecast errors, the price response is stronger for more accurate analysts. These price reactions imply that investors learn about analyst accuracy and trade accordingly.Financial Economics, Institutional and Behavioral Economics, Political Economy,

When an event is not an event : the curious case of an emerging market

Shares trading in the Bolsa mexicana de Valores do not seem to react to company news. Using a sample of Mexican corporate news announcements from the period July 1994 through June 1996, this paper finds that there is nothing unusual about returns, volatility of returns, volume of trade or bid-ask spreads in the event window. This suggests one of five possibilities: our sample size is small; or markets are inefficient; or markets are efficient but the corporate news announcements are not value-relevant; or markets are efficient and corporate news announcements are value-relevant, but they have been fully anticipated; or markets are efficient and corporate news announcements are value-relevant, but unrestricted insider trading has caused prices to fully incorporate the information. The evidence supports the last hypothesis. The paper thus points towards a methodology for ranking emerging stock markets in terms of their market integrity, an approach that can be used with the limited data available in such markets

Resilience as Governmentality: The DFID's Discourse of Resilience as a New Field of Power

The purpose of this paper is to shed light on the relation between resilience as a discourse and governmentality. Drawing on theory by Foucault, a comparison and application of liberal governmentality will be made with contemporary resilience policy. The DFID, a global leader in resilience-building, will serve as a case to show in what ways power-relations are embedded within the organisation’s discourse. In doing so, I am interrogating the nature of resilience. Moreover, a Foucauldian discourse analysis will demonstrate how ideology and political interests are invested in resilience, which otherwise is presented as a normative referent to sustainable change. My theory and method will, hence, bring together a counter-narrative of resilience. Because this paper adopts a critical perspective, my interpretations of resilience will point to concepts such as bio-power, how it gives meaning to resilience as a term, and how it renders populations amenable to calculated intervention. Based on this, emphasis will be put on reading language and knowledge as aspects of power. Together, they shape a wider discourse of resilience that can be understood as a modern governmentality operating within liberal frameworks

Physical Activity and Obesity Indicators: National Cross Sectional Study on Lebanese Adults

Association between higher levels of physical activity and lower rates of obesity has been shown. The aim is to assess the relation between the prevalence of physical activity and the Physical Activity Index (PAI) of 300 Lebanese healthy adults, with age, gender, occupation, body mass indices and waist circumferences (WC). The cutoff points of WC for both genders were determined using the values of Body Mass Index (BMI). A cross-sectional study using self-reported valid questionnaire was conducted randomly on 150 men and 150 women, between 18 and 74 years, from Beirut region. Association between variables was performed using chi2, T-Test and ANOVA. Linear regression determined the WC cutoffs based on BMI. 22% of the population was obese with WC mean level of 92.47±14.4cm (87.71±14.4 cm for women and 97.24±12.96 cm for men). The prevalence of physical activity was 34% in overall population (27% in women and 40% in men).There was no significant association between BMI values and PAI (p< 0.085 for men and p< 0.300 for women). However there was an inverse association between WC values and PAI in both genders (p<0.043 in men and p< 0.036 in women). Linear regression showed WC cut-off point in Lebanese women with BMI ≥25 kg/m2 and ≥30 kg/m2 of 86 cm and 100 cm respectively, whereas for men it was 92.12 cm and 105 cm respectively. The prevalence of physical activity in Beirut is low with differences among genders. The highest physical activity index is associated with the decreased values of waist circumference

The social patterning of tobacco use among women in Jordan: the protective effect of education on cigarette smoking and the deleterious effect of wealth on cigarette and waterpipe smoking

Introduction: The presence of social inequalities in tobacco-use has been fully recognized in the international literature. Even though cigarette and waterpipe tobacco smoking (WTS) are prevalent in the Arab region, the literature has not addressed the social determinants of the impending tobacco epidemic. This study examined the socioeconomic patterning of cigarette and WTS among Jordanian women.Methods: We analyzed pooled data from four waves of the Jordan Demographic and Health Surveys: 2002 (N = 5851); 2007 (N = 10 654); 2009 (N = 9879), and 2012 (N = 11 113). We specified logistic regression models to test the association between education and household wealth and the two outcome measures, cigarette and WTS, adjusting for other covariates. For each outcome, we ran time-unadjusted and time-adjusted logistic models.Results: Cigarette smoking prevalence among Jordanian women remained almost constant (around 10%) between 2002 and 2012. WTS prevalence steadily increased from 4.1% in 2002 to 10.2% in 2012. Increasing education predicted lower odds of cigarette smoking, whereas increasing household wealth weakly predicted higher odds. As to WTS, increasing household wealth strongly predicted higher odds of use.Conclusions: Among Jordanian women, increasing education is protective against cigarette smoking. Household wealth, on the other hand, exerts a deleterious effect on both forms of tobacco consumption, particularly WTS. This pattern shows that Jordan has not fully undergone the socioeconomic crossover in tobacco prevalence which characterizes high-income countries. Future control policies should aim to decrease prevalence but also preempt increasing social inequalities in tobacco use

An Econometric Evaluation of A Geopolitical Theory of Oil Price Behavior

WP 2005-27 December 2005Previous work on crude oil price modeling has generally focused on two theoretical approaches, either the optimal control analysis of pricing of a depletable resource, or OPEC as a partial monopolist setting oil prices to maximize net present value. Neither has been wholly satisfactory. We consider a different perspective, a game theory based framework in which political and military factors interact with economic considerations for oil exporters and importers to define a target price zone (TPZ). We analyze several issues in this context: monthly vs. annual average prices, beginning and ending dates for TPZs, degree of stability in several price series (WTI, Brent, etc.), FOB and landed prices, real or nominal prices, OPEC behavior, and effect of the Euro exchange rate on dollar denominated oil prices. We conclude that a TPZ system was in operation from 1986 through 2003 and that OPEC acted as a political cartel exercising market power by controlling production in order to seek to maintain prices within the TPZ. The TPZ worked imperfectly but with a substantial degree of predictability for 18 years. In 2004 and 2005 the TPZ system deteriorated for several reasons, and has not yet been re-established