Abstract Reviews the book "Dictionary of Finance and Investment Terms," by John Downes and Jordan E. Goodman.

Abstract Reviews the book "The Accounting Wars," by Mark Stevens.

Abstract Reviews the book "Lake Wobegon Days," by Garrison Keillor.

This paper examines the influence of risk aversion on the pricing policies of a market maker for securities. It is shown that a market maker's bid-ask spread can be decomposed into a portion for the known limit orders, a risk-neutral adjustment for expected market orders, and a risk adjustment for market order and inventory value uncertainty. It is demonstrated that a risk-averse market maker may set a smaller spread than a risk-neutral specialist. Finally, this paper demonstrates the pervasive role of inventory in affecting both the placement and size of the spread.

Abstract. Uncertainty or ambiguity about what specific probability to associate with a given event is a problem for auditors and is one that has been shown to influence the decisions of others. While some theories of probability assume this problem away, others have tried to address it in various ways. This paper provides a formal analysis of this question and presents a means of characterizing the ambiguity associated with the probability inference. The measure we present can capture a number of the previously specified approaches to this question while exhibiting some very intuitive conclusions and some well‐known mathematical properties. Résumé. L'incertitude ou l'ambiguïté relative à la probabilité spécifique à attribuer à un événement donné, est un problème pour les vérificateurs et un problème qui a été démontré comme influençant les décisions des autres. Alors que certaines théories de probabilité ne tiennent pas compte de ce problème, d'autres ont essayé de s'y intéresser de différentes façons. Cet article fournit une analyse formelle de cette question et présente un moyen de caractériser l'ambiguïté associée avec l'inférence de probabilité. La mesure que nous présentons reprend un certain nombre des approches déjà existantes sur cette question tout en exposant quelques conclusions très intuitives et quelques propriétés mathématiques bien connues.

This paper derives a closed-form valuation model in a two-country world in which the domestic investors are constrained to own at most a fraction, δ, of the number of shares outstanding of the foreign firms. When the “δ constraint” is binding, two different prices rule in the foreign securities market, reflecting the premium offered by the domestic investors over the price under no constraints and the discount demanded by the foreign investors. The premium is shown to be a multiple of the discount, the multiple being the ratio of the aggregate risk aversion of the domestic and foreign investors. Given the aggregate risk-aversion parameters, the equilibrium premium and discount are determined by the severity of the δ constraint and the “pure” foreign market risk.

ABSTRACT This paper derives a closed‐form valuation model in a two‐country world in which the domestic investors are constrained to own at most a fraction, δ , of the number of shares outstanding of the foreign firms. When the “ δ constraint” is binding, two different prices rule in the foreign securities market, reflecting the premium offered by the domestic investors over the price under no constraints and the discount demanded by the foreign investors. The premium is shown to be a multiple of the discount, the multiple being the ratio of the aggregate risk aversion of the domestic and foreign investors. Given the aggregate risk‐aversion parameters, the equilibrium premium and discount are determined by the severity of the δ constraint and the “pure” foreign market risk.

[This study examines empirically whether unfunded vested pension obligations that are not recorded in corporate balance sheets are viewed as a form of debt by the capital market participants when assessing firm risk. This is accomplished by using a model developed by Hamada [1972] which relates the systematic risk of a firm to its financial risk and business risk. The explanatory power of the model is improved when unfunded vested pension liabilities are included in the measurement of financial leverage. Furthermore, the effect of unfunded vested pension liabilities on market-perceived risk of the firm is not significantly (statistically) different from that of debt and other liabilities.]

Abstract Reviews the book "Dictionary of Accounting," by David L. Scott and George Fiebelkorn.

Abstract ABSTRACT: This study examines empirically whether unfunded vested pension obligations that are not recorded in corporate balance sheets are viewed as a form of debt by the capital market participants when assessing firm risk. This is accomplished by using a model developed by Hamada [1972] which relates the systematic risk of a firm to its financial risk and business risk. The explanatory power of the model is improved when unfunded vested pension liabilities are included in the measurement of financial leverage. Furthermore, the effect of unfunded vested pension liabilities on market-perceived risk of the firm is not significantly (statistically) different from that of debt and other liabilities.