[During 1974-75, more than a fourth of the manufacturing and merchandising firms listed on the New York Stock Exchange and the American Stock Exchange adopted or extended their use of the last-in, first-out (LIFO) method of inventory accounting. Because a change to LIFO accounting can materially affect a firm's cash flows, the stock price behavior of firms adopting LIFO during fiscal year 1974 has been studied extensively. However, existing studies provide little evidence that stock price movements during the period were directly linked with LIFO adoption. In this article, we report the results of new tests for a stock price response to disclosures of 1974 LIFO decisions by both adopting and non-adopting firms. Our tests assume that, prior to disclosure, prices reflect available information about the likelihood of LIFO adoption. This implies (for both groups of firms) that the stock price change in response to disclosure of the LIFO decision depends on investors' revisions in their beliefs regarding the probability of adoption caused by the disclosure. We use this implication to design tests of the null hypothesis of no association between stock price movements and the disclosure of 1974 LIFO decisions. Our tests are based on a sample of 487 firms that could have adopted LIFO during fiscal 1974. For each firm, we first identify an interval that includes the disclosure of its LIFO decision. We then estimate the probability of LIFO adoption at the beginning of that interval on the basis of information that was available at the time. Finally, we regress disclosure-interval stock returns on revisions in the probability of adoption resulting from disclosure of the decision. Our results provide strong evidence of a price response for nonadopting firms and weaker evidence of a price response for adopting firms.]

While the U.S. has pursued a vigorous antitrust policy towards horizontal mergers over the past four decades, mergers in Canada have until recently been permitted to take place in a virtually unrestricted antitrust environment. The absence of an antitrust overhang in Canada presents an interesting opportunity to test the conjecture that the rigid market share and concentration criteria of the U.S. policy effectively deters a significant number of potentially collusive mergers. The effective deterrence hypothesis implies that the probability of a horizontal merger being anticompetitive is higher in Canada than in the U.S. However, parameters in cross‐sectional regressions reject the market power hypothesis on samples of both U.S. and Canadian mergers. Judging from the Canadian evidence, there simply isn't much to deter.

While the U.S. has pursued a vigorous antitrust policy towards horizontal mergers over the past four decades, mergers in Canada have until recently been permitted to take place in a virtually unrestricted antitrust environment. The absence of an antitrust overhang in Canada presents an interesting opportunity to test the conjecture that the rigid market share and concentration criteria of the U.S. policy effectively deters a significant number of potentially collusive mergers. The effective deterrence hypothesis implies that the probability of a horizontal merger being anticompetitive is higher in Canada than in the U.S. However, parameters in cross-sectional regressions reject the market power hypothesis on samples of both U.S. and Canadian mergers. Judging from the Canadian evidence, there simply isn't much to deter.

This paper exploits a newly developed data set to investigate recent changes in the international distribution of industrial pollution. In particular, the authors examine three issues: (1) the relationship between the toxic intensity of industrial production and the level of economic development, (2) the impact of OECD environmental regulation on global changes in toxic intensity, and (3) the relationship between trade policy and the toxic intensity of industrial production in LDC's. 10 refs.

The authors propose and implement a new test of the dividend signaling hypothesis. Dividend signaling models generally imply that an increase in dividend taxation should increase the share price response per dollar of dividends (or 'bang-for-the-buck'). Many other dividend-preference theories have the opposite implication. An analysis of recent variations in tax policy reveals a strong positive relation between dividend tax rates and the bang-for-the-buck. Additional evidence on the relation between the bang-for-the-buck and other variables that are related to the marginal cost of paying dividends provides further support for dividend signaling.

In this paper, the authors present an overlapping generations model with heterogeneous agents in which human capital investment through formal schooling is the engine of growth. The authors use simple functional forms for preferences, technologies, and income distribution to highlight the distinction between economies with public education and those with private education. The authors find that income inequality declines more quickly under public education. On the other hand, private education yields greater per capita incomes unless the initial income inequality is sufficiently high. The authors also find that societies will choose public education if a majority of agents have incomes below average.