Rationing in IPOs

We provide a model of bookbuilding in IPOs, in which the issuer can choose to ration shares. We consider two allocation rules. Under share dispersion, before informed investors submit their bids, they know that, in the aggregate, winning bidders will receive only a fraction of their demand. We demonstrate that this mitigates the winner’s curse, that is, the incentive of bidders to shade their bids. It leads to more aggressive bidding, to the extent that rationing can be revenue-enhancing. In a parametric example, we characterize bid and revenue functions, and the optimal degree of rationing. We show that, when investors’ information is diffuse, maximal rationing is optimal. Conversely, when their information is concentrated, the seller should not ration shares. We determine the optimal degree of rationing in a class of credible mechanisms. Our model reconciles the documented anomaly that higher bidders in IPOs do not necessarily receive higher allocations.IPOs

Competition for Listings

We develop a model in which two profit maximizing exchanges compete for IPO listings. They choose the listing fees paid by firms wishing to go public and control the trading costs incurred by investors. All firms prefer lower costs, however firms differ in how they value a decrease in trading costs. Hence, in equilibrium, the exchanges obtain positive expected profits by charging different trading fees and different listing fees. As a result, firms that list on different exchanges have different characteristics. The model has testable implications for the cross-sectional characteristics of IPOs' on different quality exchanges and the relationship between the level of trading costs and listing fees. We also find that competition does not guarantee that exchanges choose welfare maximizing trading rules. In some cases, welfare is larger with a monopolist exchange than with oligopolist exchanges.market microstructure; listings; competition; exchanges; regulation

We need to get serious about money laundering in Europe. CEPS Policy Insights No 2019/08, May 2019

2019 marks 30 years since the Sommet de l’Arche in Paris established the Financial Action Task Force (FATF) to combat money laundering. So where have we come to in Europe and what remains to be done? Money laundering has been criminalised not just in Europe but the world over. The term ‘money laundering’, unheard of in 1989, is now in common parlance. However, the amount of proceeds of crime recovered as a result of successful money laundering prosecutions, as compared to the amount thought to be available to be laundered, is around 0.1% at best. So why is the European AML system so ineffective in reducing the impact of the underlying crimes upon European citizens? The major AML issues in Europe can be divided into three distinct areas: governance, risk management and capability. Some feel it is a simple question of reforming the European AML supervisory architecture, but the answer is much more complex and nuanced than that. Money laundering, like climate change and the threats to the natural world, is a truly European issue and needs a truly European response. CEPS intends to create a Task Force on how to achieve progress in the combat against money laundering at EU level. Interested parties are invited to contact the author, or CEPS direct

The retention of children\u27s mental health workers in northern Ontario

In this qualitative study, I explore with Northern Ontario children’s mental health administrators and clinicians their concerns about employee retention, given the high costs of turnover in human (providers and consumers) and financial terms. I use an ecological framework, borrowed by community psychology from the biological sciences, whereby retention is considered to be not only a work-related phenomenon but also influenced by a variety of non-work factors. In the belief that employee retention is best understood from a holistic, multi-level perspective, I review literature from a variety of related areas. I consider the characteristics of rural life, practice and practitioners; the antecedents and effects of burnout among human service workers; the constituent elements Quality of Life and Quality of Work Life; relevant job satisfaction and dissatisfaction research; the impact of management and leadership styles, including the role of gender; and research pertaining to turnover and retention in human service organizations and in rural areas. To better comprehend the unique qualities of life and work experiences that may impact on personal turnover and retention decisions in Northern Ontario, I used open-ended questions to interview 14 administrators and 41 clinicians. As well, 16 clinicians participated in the mail survey portion of the research. The data were analyzed on the basis of comparison groups defined by the gender of the participant, the size of the community in which the participant worked, the participant’s place of origin, and the gender of the participant’s executive director. The results indicated that, while high turnover was an immediate concern to some but not all agencies, retention was perceived to be of long-term interest to most agencies, given problems with recruitment and with maintaining competitive salaries. Workers identified factors contributing to their life satisfaction and dissatisfaction, and to their job satisfaction and dissatisfaction. While clinicians generally seemed more satisfied than not with life outside of work, they expressed more dissatisfaction with their jobs, except those working for female directors. These clinicians cited an empowerment philosophy within their organizations as contributing to their high level of job satisfaction. Gender-related concerns were also raised by a number of participants. Suggestions for change from participants focused on increased learning opportunities and job supports, a reduction in job stresses and gender-related concerns, and improved recruitment practices, communications, personnel policies, and salaries, encompassed within an empowering work environment. Changes were also offered at the individual, community, and government levels. I conclude by also recommending organization development as a useful tool in assessing each agency’s overall effectiveness with personnel and with service consumers. Future research would do well to more thoroughly explore, within a rural organizational context, the burnout phenomenon and the relationship of gender, management style and job satisfaction

Has the development of the structured credit market affected the cost of corporate debt? - comments

Credit

Anti-Money Laundering in the EU: Time to get serious. CEPS Task Force Report 28 Jan 2021.

Between 2 and 5% of global GDP is thought to be laundered every year, whereas only 1.1% is recovered. Anti-money laundering encompasses combating tax avoidance, the financing of terrorism, human (and human organ) trafficking, state-sponsored and corporate bribery, and the proceeds from drug-trafficking and other illegal activities. Banks and other ‘obliged entities’ complete thousands of suspicious transactions reports on a daily basis yet only a handful are followed up on by financial intelligence units (FIUs). This could be due to lack of capability, capacity or even political direction. Meanwhile, the breadth and means to launder money have also increased, facilitated by technological progress. Unfortunately, the current anti-money laundering regulations have brought little success. This report sets out the following key recommendations for a new approach to the fight against money laundering