Income Trusts--Understanding the Issues

An income trust is an investment vehicle that distributes cash generated by a set of operating assets in a tax-efficient manner. The market capitalization of income trusts has grown rapidly over the past two years, reaching $45 billion at year-end 2002. The sharp rise of income trust valuations, the large supply of new issues, and the complexity of their legal structure have increased scrutiny of this asset class. Because retail investors are the principal owners of income trusts, the author explores whether the cash returns from income trusts are in line with the risks. The structure and valuation of a typical income trust are outlined. The benefits of income trusts and the issues related to investment are elaborated, focusing on legal and regulatory issues, corporate governance, operational issues, and market issues.Financial Markets

Post-transcriptional regulation of the steady-state levels of mitochondrial tRNAs in HeLa cells

In human mitochondrial DNA (mtDNA), the tRNA genes are located in three different transcription units that are transcribed at three different rates. To analyze the regulation of tRNA formation by the three transcription units, we have examined the steady-state levels and metabolic properties of the tRNAs of HeLa cell mitochondria. DNA excess hybridization experiments utilizing separated strands of mtDNA and purified tRNA samples from exponential cells long term labeled with [32P]orthophosphate have revealed a steady-state level of 6 x 10(5) tRNA molecules/cell, with three-fourths being encoded in the H-strand and one-fourth in the L-strand. Hybridization of the tRNAs with a panel of M13 clones of human mtDNA containing, in most cases, single tRNA genes and a quantitation of two-dimensional electrophoretic fractionations of the tRNAs have shown that the steady-state levels of tRNA(Phe) and tRNA(Val) are two to three times higher than the average level of the other H-strand-encoded tRNAs and three to four times higher than the average level of the L-strand-encoded tRNAs. Similar experiments carried out with tRNAs isolated from cells labeled with very short pulses of [5-3H]uridine have indicated that the rates of formation of the individual tRNA species are proportional to their steady-state amounts. Therefore, the approximately 25-fold higher rate of transcription of the tRNA(Phe) and tRNA(Val) genes relative to the other H-strand tRNA genes and the 10-16-fold higher rate of transcription of the L-strand tRNA genes relative to the H-strand tRNA genes are not reflected in the steady-state levels or the rates of formation of the corresponding tRNAs. A comparison of the steady-state levels of the individual tRNAs with the corresponding codon usage for protein synthesis, as determined from the DNA sequence and the rates of synthesis of the various polypeptides, has not revealed any significant correlation between the two parameters

First records of Micromalthidae and Jacobsoniidae (Coleoptera) in Alabama, USA

The first Alabama, USA, collection records of the families Micromalthidae and Jacobsoniidae (Coleoptera) are reported

Pricing, production, and persistence.

Though built with increasingly precise microfoundations, modern optimizing sticky price models have displayed a chronic inability to generate large and persistent real responses to monetary shocks, as recently stressed by Chari, Kehoe, and McGrattan [2000]. This is an ironic finding, since Taylor [1980] and other researchers were motivated to study sticky price models in part by the objective of generating large and persistent business fluctuations. ; The authors trace this lack of persistence to a standard view of the cyclical behavior of real marginal cost built into current sticky price macro models. Using a fully-articulated general equilibrium model, they show how an alternative view of real marginal cost can lead to substantial persistence. This alternative view is based on three features of the "supply side" of the economy that we believe are realistic: an important role for produced inputs, variable capacity utilization, and labor supply variability through changes in employment. Importantly, these "real flexibilities" work together to dramatically reduce the elasticity of marginal cost with respect to output, from levels much larger than unity in CKM to values much smaller than unity in this analysis. These "real flexibilities" consequently reduce the extent of price adjustments by firms in time-dependent pricing economies and the incentives for paying fixed costs of adjustment in state-dependent pricing economies. The structural features also lead the sticky price model to display volatility and comovement of factor inputs and factor prices that are more closely in line with conventional wisdom about business cycles and various empirical studies of the dynamic effects of monetary shocks.Prices ; Production (Economic theory)

Family Values: Ownership Structure, Performance and Capital Structure of Canadian Firms

This study examines how family ownership affects the performance and capital structure of 613 Canadian firms using a panel dataset from 1998 to 2005. In particular, we distinguish the effect of family ownership from the use of control-enhancing mechanisms. We find that freestanding family-owned firms with a single share class have similar market performance than other firms based on Tobin's q ratios, superior accounting performance based on ROA, and higher financial leverage based on debt-to-total assets. By contrast, family-owned firms that use dual-class shares have valuations that are lower by 17% on average relative to widely-held firms, despite having similar ROA and financial leverage. Finally, concentrated ownership by either a corporation or a financial institution does not significantly affect firm performance.Financial markets; International topics

Pre-Bid Run-Ups Ahead of Canadian Takeovers: How Big Is the Problem?

The authors study the price--volume dynamics ahead of the first public announcement of a takeover for 420 Canadian firms from 1985 to 2002. Pre-bid price run-ups in a target firm's shares may be caused by some combination of information leakage due to illegal insider trading or market anticipation based on rumours in the press. The authors review empirical studies of illegal insider trading and trading ahead of unscheduled announcements to generate predictions for abnormal returns and abnormal volume ahead of the takeover announcement. They observe serially correlated volume and a pattern of return reversals in their sample. Pre-bid run-ups occur shortly before the actual announcement, accompanied by significantly positive abnormal returns and share volume. The stock prices of the target firm react significantly to the actual announcement, with both positive and negative reactions. These price–volume dynamics are more consistent with the predictions of the market anticipation hypothesis than the hypothesis of illegal insider trading.Financial markets

Monetary Instruments and Policy Rules in a Rational Expectations Environment

This paper explores the implications of rational expectations and the aggregate supply theory advanced by Lucas (1973) for analysis of optimal monetary policy under uncertainty along the lines of Poole (1970), returning to a topic initially treated by Sargent and Wallace (1975). Not surprisingly, these two "classical"concepts alter both the menu of feasible policy choice and the desirability of certain policy actions. In our setup, unlike that of Sargent and Wallace (1975),the systematic component of monetary policy is a relevant determinant of the magnitudeof "business fluctuations" that arise from shocks to the system. Central bank behavior--both the selection of monetary instruments and the framing of overall policyrespJnse to economic conditions--can work to diminish or increase the magnitude of business fluctuations. However, the "activist" policies stressed by the present discussion bear little (if any) relationship to the policy options rationalized by the conventional analysis of monetary policy under uncertainty. In particular,in contrast to Poole's analysis, money supply responses to the nominal interestrate are not important determinants of real economic activity. Rather, the central bank should focus on policies that make movements in the general price level readily identifiable by economic agents.