Elizabeth S. Hansen, Municipal Finances in Perspective: A Look at Interjurisdictional Spending and Revenue Patterns, Journal of Accounting Research, Vol. 15, Studies on Measurement and Evaluation of the Economic Efficiency of Public and Private Nonprofit Institutions (1977), pp. 156-201

Cost information, Cost report, Timing, Expected value of information

In recent financial literature a large volume of the articles dealt with asset leasing. This author and his colleagues [6] and others [7] developed the conditions under which asset leasing cannot increase the overall firm's value over normal debt leverage. Many others [2, 3, 11] analyzed the “lease-buy” decision using a variety of models and assumptions. None, however, considered the effect of asset leasing on the firm's capitalization rate. While asset leasing per se would not affect the firm's unlevered cost of capital, it should affect its estimation. This paper developed the adjustment factor to obtain the firm's corresponding unlevered cost of capital with leasing leverage. Basically, Modigliani and Miller's methodology [9] was adjusted for the different tax situation with asset leasing. The effective benefit of leasing on the firm's average cost of funds was shown to be not nearly as effective as an equivalent amount of ordinary debt.

In equilibrium, each new capital asset must be priced properly relative to other assets. If an investor can also buy and sell assets in his portfolio costlessly and quickly, then the new asset will be accepted immediately and fully into the market and it will immediately behave as though it were a seasoned or previously available asset. However, it is often argued that recently issued bonds and seasoned or fully distributed bonds behave differently due to the frictions and risks associated with distributing a new security in the market. And it is also argued that recently issued bonds undergo a behavioral transformation as they become seasoned bonds. According to this argument there are significant empirical behavioral differences between recently issued bonds and seasoned bonds [4, 5, 7, 9, 13]. These differences disappear as the market gradually absorbs the new bond issue and the bond becomes “seasoned.”

The net monetary position of a firm, defined as the nominal value of its monetary assets minus the nominal value of its monetary liabilities, partly determines the wealth transferred to (or from) the firm's owners when unanticipated price level change occurs. Price level change (a random variable) is defined as unanticipated when assessments of (the moments of) its probability distribution are systematically incorrect or biased. During unanticipated inflation, which conventionally means an underestimate of the expected value of the distribution of price level change, the real dollar returns of net monetary debtor firms are enhanced—the unforeseen honoring of debt contracts in dollars of lower purchasing power is a wealth transfer to the firm's owners from the firm's creditors. Conversely, real returns of net monetary creditor firms suffer during unanticipated inflation and gain during unanticipated deflation.

T HE measurement of firm size plays a crucial role in applied microeconomics and industrial organization. Firm size has figured prominently in numerous studies of economies of scale in production, advertising, capital market, and cash balances, and in studies of concentration, diversification, profitability, regulation, technological change, and research and development. Even when firm size was not their main concern, many studies often found that size emerged as a robust empirical variable.' All these studies have based their findings on different alternative measures of firm size, often implying that great care in choosing between them is unnecessary since the measures are highly intercorrelated. In a note in this REVIEW, Smyth et al. (hereafter SBP) were the first to recognize that alternative measures of firm size are not interchangeable unless stricter conditions than correlation are met. They have further shown that empirical findings regarding economies of scale are not invariant with the size measure chosen, and that often different conclusions can be reached depending on the particular size measure used. The purpose of this paper is threefold: (I) to offer a general stochastic model that rigorously spells out the conditions for interchangeability among alternative measures of firm size, and of which SBP's deterministic model is a special case; (2) to conduct a statistical test of the interchangeability conditionis using a larger number of size measures, and a far larger sample than the one employed in SBP's empirical test; and (3) to empirically analyze the statistical properties of the most commonly used measures in order to help future investigators in selecting appropriate size measures suitable for their purposes. Section I reviews SBP's work, section II discusses the measurement problem, section III presents our theoretical model, and section IV concludes with some empirical evidence.

The problem of bond portfolio selection may be viewed as consisting of two parts. The first is concerned with the maturity profile of the total cash flows (the after-tax coupons and principal repayments) which the investor requires; in general there will be many portfolios of bonds which provide the desired cash flow profile. Accordingly, the second problem is the choice of a particular portfolio of bonds which provides these cash flows in some optimal fashion. If bonds are default free, future taxes are known, and differences in marketability and callability among issues can be ignored, then price is the only relevant criterion in choosing among alternative portfolios. This paper describes a simple linear programming model for this last problem of selecting the portfolio which provides a given pattern of cash flows at minimum cost. This provides a method for improving any initial portfolio, where such improvement is possible, by increasing its yield without reducing any future after-tax cash flows.

FOLLOWING ON SOME informal conjectures by Dummett and Farquharson [3] and Vickery [20] we now have independent proofs by Gibbard [7] and Satterthwaite [17 and 18] that no collective choice rule exists whose social choice functions are singlevalued, strategy-proof, nondictatorial and have a range containing at least three alternatives. Because strategy-proof ness seems desirable and because it is closely related to mainstream economic theory issues of evaluating resource allocation institutions with respect to incentive compatibility (cf. Hurwicz [9]), their theorem has excited considerable attention [5, 6, 10, 11, 12, 13, 14, 15, 16, 19, and 21]. In this paper, the requirement of singlevaluedness is dropped and explorations are made of the consequences this has on the Gibbard-Satterthwaite results. Let E be the set of all alternatives (which must, by assumption, be mutually incompatible) and N= {1, 2,.. ., n} be the set of individuals. A nonempty subset, v, of E (i.e., an element of 2E _-0}) is an agenda. RE is the set of all complete and transitive binary relations on E; RE is the n-fold Cartesian product of RE. An element, u, of RE is called a profile and if u = (R1, R2,... , Rn), we say that R, is the preference ordering for individual i in u. In the usual way, we use Ri to define strict preference, Pi, and indifference, Ii: xPiy if and only if xRiy and not yRix; xIiy if and only if xRiy and yRix. A social choice function (on V) is a function, C, on Vc2E _{0} into 2E _{0} satisfying C(v) c v. Here V is the set of admissible agenda. The set of all social choice functions on V is called ST. A collective choice rule (on V, U) is a function, F, on UcRE into c6. Here U is the set of admissible profiles. The first constraints on the social choice function in the Gibbard-Satterthwaite theorem are domain restrictions. They admit only one agenda, V= {E} and then require the collective choice rule to work for all societies, U = RE. The most important constraint they use is singlevaluedness: for each v in V, C(v) contains exactly one element. Of course, there is only one V, namely E, in the Gibbard-Satterthwaite theorem. The importance of this constraint stems from its use in all the rest of the problem; singlevaluedness is used in their method of formalizing both nondictatorship and strategy-proofness. Let us deal first with nondictatorship. Using singlevaluedness, let C(v) be the unique member of C(v). Then a collective choice rule, F, is nondictatorial if for no i, i = 1, ... , n, is it true that for all (R1,. . . , Rn) =uE U and for all x C(v) in the range of C = F(u), C(v)Pix. Finally, we turn to strategy-proofness. A collective choice rule is strategy-proof at (v, u) if it is not manipulable at (v, u). F is manipulable at (v, u) if, when u = (R1, R2, ... , Rn), there is a u'=