We report evidence on shareholder wealth effects of 94 firms recapitalizing with dual classes of common stock with disparate voting rights. We find significant, negative abnormal stock price returns at the announcement of the dual-class recapitalization. When we consider recapitalizations separately announced since the NYSE imposed a moratorium is June 1984 on the delisting of companies with dual classes of equity, we find significant, negative abnormal returns as compared with insignificant returns in the earlier period. Those firms recapitalizing from June 1986 through May 1987 experienced the most significant negative returns observed.

In a repeated insurance model with differential learning and moral hazard, it is shown that the full-information competitive outcome is implementable when insurers employ a “good-faith” strategy.

[In this article we test the random walk hypothesis for weekly stock market returns by comparing variance estimators derived from data sampled at different frequencies. The random walk model is strongly rejected for the entire sample period (1962-1985) and for all subperiods for a variety of aggregate returns indexes and size-sorted portfolios. Although the rejections are due largely to the behavior of small stocks, they cannot be attributed completely to the effects of infrequent trading or time-varying volatilities. Moreover, the rejection of the random walk for weekly returns does not support a mean-reverting model of asset prices.]

This paper presents a novel interpretation of the fact that high nominal interest rates accompany low levels of real GNP. It constructs a model in which money and bonds are both held as a result of legal restrictions on the banking system. Open market operations may increase the equilibrium rate of interest and raise the cost of credit. This increase in the cost of credit causes firms to write labour contracts in which layoffs occur more frequently. The nature of optimal labour contracts is derived explicitly from assumptions about the information that is available to firms and to workers.

This article investigates the structure on preferences required to derive Ross's arbitrage pricing theory (APT). It is shown that only ordinal preferences are required. In particular, the APT does not require that agents possess preferences representable as risk-averse expected utility functions. This characteristic of the APT is not shared by the standard equilibrium-based capital asset pricing models.

Hideki Yamawaki, David A. Audretsch, Import Share under International Oligopoly with Differentiated Products: Japanese Imports in U.S. Manufacturing, The Review of Economics and Statistics, Vol. 70, No. 4 (Nov., 1988), pp. 569-579

Abstract Reviews the book "Towards a Theory and Practice of Cash Flow Accounting," by T.A. Lee.

Abstract Prior audit fee studies have examined the private sector audit market. This research extends prior research by developing a model of audit fees for municipalities. Many of the determinants used in this model are based on (or extensions of) determinants used in private sector audit fee models. Empirical tests using regression analysis indicate a significant portion of the variance in municipal audit fees is explained by the model. Using a framework adopted from Simunic [1980] for analyzing private sector audit markets, statistical results suggest that the municipal audit market is competitive.

[Prior audit fee studies have examined the private sector audit market. This research extends prior research by developing a model of audit fees for municipalities. Many of the determinants used in this model are based on (or extensions of) determinants used in private sector audit fee models. Empirical tests using regression analysis indicate a significant portion of the variance in municipal audit fees is explained by the model. Using a framework adopted from Simunic [1980] for analyzing private sector audit markets, statistical results suggest that the municipal audit market is competitive.]