A rational analysis of analyst behavior predicts that analysts immediately and without bias incorporate information into their forecasts. Several studies document analysts' tendency to systematically ...underreact to information. Underreaction is inconsistent with rationality. Other studies indicate that analysts systematically overreact to new information or that they are systematically optimistic. This study discriminates between these three hypotheses by examining the interaction between the nature of information and the type of reaction by analysts. The evidence indicates that analysts underreact to negative information, but overreact to positive information. These results are consistent with systematic optimism in response to information.
This paper asks whether predatory behavior by corrupt politicians distorts the composition of government expenditure. Corruption is found to reduce government spending on education in a cross section ...of countries.
We examine the role of delivery of subsidized seeds and fertilizers in the form of agricultural minikits by local governments in three successive farm panels in West Bengal spanning 1982-1995. These ...programs significantly raised farm value added per acre y accounting for almost two-thirds of the observed growth. The estimates are robust to possible endogeneity of program placement, controls for farm and year effects, other programs of agricultural development, local weather, and price shocks. The effects of the kits delivery program overshadowed the effects of other rural development programs, including the tenancy registration program Operation Barga.
An unanswered question in the debate on public-sector inefficiency is whether reforms other than government divestiture can effectively substitute for privatization. Using a 1981-1995 panel data set ...of all public and private manufacturing establishments in Indonesia, we analyze whether public-sector inefficiency is primarily due to agency-type problems or to the environment in which public-sector enterprises (PSEs) operate, as measured by the soft budget constraint and the degree of internal and external competition. The results, obtained from fixed-effects specifications, provide support for both models. Ownership matters because, for a given level of government financing or competition, PSEs perform worse than their private-sector counterparts. The environment matters because only PSEs which received government financing or those shielded from import competition or foreign ownership performed worse than private enterprises. The results suggest that the efficiency of PSEs can be increased through privatization, through manipulation of the environment, or through a combination of both approaches.
Huber and Solt assess neoliberalism's successes and failures. They argue that Latin America's market reforms have yielded disappointing results in terms of economic stability and growth, social ...equity, and the quality of democracy.
This study analyses the comparison between a traditional statistical methodology for bankruptcy classification and prediction, i.e. linear discriminant analysis (LDA), and an artificial intelligence ...algorithm known as Genetic Algorithm (GA). The study was carried out at Centrale dei Bilanci, in Turin, Italy, analysing 1920 unsound and 1920 sound industrial Italian companies from 1982–1995. This paper follows our earlier examination of neural networks (NN) (see
Altman et al., 1994. Corporate distress diagnosis: Comparisons using discriminant analysis and neural network. Journal of Banking and Finance XVIII, 505–529). The experiments on GA were oriented along two different lines: the genetic generation of linear functions and the genetic generation of scores based on rules. The two types of experiments showed GA to be a very effective instrument for insolvency diagnosis, even if the results obtained with LDA analysis perhaps proved to be superior to those obtained from GA. Of particular interest, it should be noted that the results of GA were obtained in less time and with more limited contributions from the financial analyst than the LDA. Of additional interest is the relevance for credit risk management of financial institutions.
As health care costs increase, cost-control mechanisms become more widespread and it is crucial to understand their implications for the health care market. This paper examines the effect that ...managed care activity (based on the aim to control health care expenditure) has on the adoption of technologies by hospitals. We use a hazard rate model to investigate whether higher levels of managed care market share are associated with a decrease on medical technology adoption during the period 1982–1995. We analyze annual data on 5390 US hospitals regarding the adoption of 13 different technologies. Our results are threefold: first, we find that managed care has a negative effect on hospitals’ technology acquisition for each of the 13 medical technologies in our study, and its effect is stronger for those technologies diffusing in the 1990s, when the managed care sector is at its largest. If managed care enrollment had remained at its 1984 level, there would be 5.3%, 7.3% and 4.1% more hospitals with diagnostic radiology, radiation therapy and cardiac technologies, respectively. Second, we find that the rise in managed care leads to long-term reductions in medical cost growth. Finally, we take into account that profitability analysis is one of the main dimensions considered by hospitals when deciding about the adoption of new technologies. In order to determine whether managed care affects technologies differently if they have a different cost-reimbursement ratio (CRR), we have created a unique data set with information on the cost-reimbursement for each of the 13 technologies and we find that managed care enrollment has a considerably larger negative effect on the adoption of less profitable technologies.
We compare pricing and exit decisions of discounters across the business cycle. Cities containing high debt and/or low efficiency firms display higher prices during non-recession years. During ...recessions, prices increase in cities with less efficient incumbents, but decrease in cities with a mix of high and low debt firms. High debt firms are more likely to exit cities with lower prices, and high debt exiting firms are more likely to be efficient. Apparently, low debt firms strategically lower prices during recessions to force exit of efficient, financially constrained rivals. Weaker competitors face another cost. New entrants locate closer.
This article explores the claim that college‐educated workers are increasingly likely to be in “noncollege” occupations. We provide a conceptual framework that gives analytical content to the ...previously vague distinction between “college” and noncollege jobs. We show that, when there is heterogeneity in preferences, equally productive college workers can be in college and noncollege jobs. This framework is also used to show that skill‐biased technological change will lead to a decline in the proportion of college workers in noncollege jobs. This prediction is supported by the data.
In 1982, Dimensional Fund Advisors launched a mutual fund intended to capture the returns of small-cap stocks. The ‘9–10 Fund’ is based on the CRSP 9–10 Index, an index of small-cap stocks ...constituting the ninth and tenth deciles of NYSE market capitalization, although the 9–10 Fund incorporates investment rules and a trading strategy that are aimed at minimizing the potentially excessive trade costs associated with such illiquid stocks. As a result, the 9–10 Fund provided a 2.2% annual premium over the 9–10 Index for the 1982–1995 period. We show that both the investment rules and the trade strategy components of the Fund’s design contribute significantly to this return difference.
PDF
