This study applies an option pricing model to empirically derive pension put values for a sample of 176 individual pension plan sponsors insured by the Pension Benefit Guaranty Corporation (PBGC). This study finds that the pension put values for a group of 22 underfunded sponsors were significantly greater than the insurance premiums paid to the PBGC. On the other hand, for a group of 154 overfunded sponsors, the put values were also greater than the pension premiums paid to the PBGC, although the difference was not statistically significant. These findings suggest that underfunded plan sponsors are significantly undercharged by the PBGC, while overfunded plan sponsors are approximately fairly charged.

The article comments on a study about the relationship of pollution indices to financial indicators in stock investment decisions. The five financial indicators used were profitability, size, total risk, systematic risk, and price/earnings ratio. The study showed that the evidence presented rests on spurious relationships created through one or more intervening variables. An outline on constructing a model, based upon statistical relationships, is also presented. The relationship among size, pollution control and other financial characteristics is illustrated.

To find out whether attesters and users of corporate financial reports have any consensus about the value of information included in published corporate annual reports for equity investment decisions, Professor Gyan Chandra surveyed 600 Certified Public Accountants randomly selected from employees of big eight accounting firms and 400 randomly selected Certified Financial Analysts. This article offers a different interpretation of the data reported in Professor Chandra's work. Based upon differences in the mean responses of the questionnaire, Chandra concluded that disparity between accountants and security analysts exists on the value of selected accounting information items for equity investment decisions. Authors have suggested that the observed differences may not be an indication of a lack of consensus on the value of these information items for equity investment decisions. Rather, the observed differences in the survey results may be a result of differences in the way in which these two different subject groups responded to the questionnaire.

Capital market data were used to examine the divestiture effects pertaining to deregulation, the dropping of antitrust charges, and the reversing of the co-insurance effect associated with the recent breakup of AT&T. The empirical results of the study indicate that significant economic events took place during the breakup process, which led to transfers of wealth from various parties to the securityholders of AT&T. The results also indicate that the buffering effect of regulation was reduced as AT&T went through the total deregulation process. This is in accordance with Peltzman's prediction.

ABSTRACT Capital market data were used to examine the divestiture effects pertaining to deregulation, the dropping of antitrust charges, and the reversing of the co‐insurance effect associated with the recent breakup of AT&T. The empirical results of the study indicate that significant economic events took place during the breakup process, which led to transfers of wealth from various parties to the securityholders of AT&T. The results also indicate that the buffering effect of regulation was reduced as AT&T went through the total deregulation process. This is in accordance with Peltzman's prediction.

ABSTRACT The 1980 Depository Institution Deregulation and Monetary Control Act (DIDMCA) mandates that Regulation Q be phased out by 1986. With deregulation of interest rate ceilings, the cost of raising capital funds for commercial banks would become more volatile and more closely related with interest rates in the money and capital markets. Thus, value‐maximizing bank managers would need to be concerned not only with the internal risk, but also with the external risk in bank portfolio management decisions. Based upon the cash flow version of the capital asset pricing model, this paper analyzes the joint impact of interest rate deregulation and capital requirements on the portfolio behavior of a banking firm.

The 1980 Depository Institution Deregulation and Monetary Control Act (DIDMCA) mandates that Regulation Q be phased out by 1986. With deregulation of interest rate ceilings, the cost of raising capital funds for commercial banks would become more volatile and more closely related with interest rates in the money and capital markets. Thus, value-maximizing bank managers would need to be concerned not only with the internal risk, but also with the external risk in bank portfolio management decisions. Based upon the cash flow version of the capital asset pricing model, this paper analyzes the joint impact of interest rate deregulation and capital requirements on the portfolio behavior of a banking firm.

This paper examines the implications of the joint effects of insurance and taxes for the optimal corporate pension strategy. It is shown that neither the “mini-max” nor the “maxi-min” strategy advocated by previous authors is necessarily best in corporate pension management. In the presence of capital market imperfections, the analysis via a single-period contingent-claims model indicates that optimal corporate pension strategy in both asset-allocation and funding decisions can be a noncorner interior solution.