Tim Knowles, Richard Moody and Morven G. McEachern
This paper aims to chart the wide range of food scares reported throughout the EU over the period 1986‐2006 and explores their impact on EU policy.
Abstract
Purpose
This paper aims to chart the wide range of food scares reported throughout the EU over the period 1986‐2006 and explores their impact on EU policy.
Design/methodology/approach
There is much extant research that solely investigates the occurrences of specific food scares, however; little emphasis is given to the responses of policy makers. This research aims to narrow this gap in the literature by reviewing the major food scares, which have occurred throughout the EU and the subsequent policy responses.
Findings
A number of food scares have dominated media reports over the last two decades, but this study reveals the increasing emergence of rare serotypes of foodborne pathogens, as well as a rising trend of EU‐wide contaminant and animal disease‐related food scares. Simultaneously, there is evidence of evolution from a product‐focused food policy to a risk‐based policy, which has developed into a tentative EU consumer‐based food policy. Inevitably, in a market of 25 member‐states the concept of food quality varies between countries and therein justifies the need for responsive policy development, which embraces the single market philosophy.
Research limitations/implications
A typology of EU food scares is advanced and discussed in detail, with comments being made on their impact. In addition, the paper highlights the complexity of a EU consumer, which has led to a need for research into the maximisation of the satisfaction of purchasers by reinsuring their individual “right to choose”.
Originality/value
This paper provides a unique insight into a wide range of European food scares (e.g. microbiological, contaminants, animal disease‐related) and EU policy makers' responses to such food scares.
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Don Capener, Richard Cebula and Fabrizio Rossi
To investigate the impact of the federal budget deficit (expressed as a per cent of the Gross Domestic Product, GDP) in the US on the ex ante real interest rate yield on Moody’s…
Abstract
Purpose
To investigate the impact of the federal budget deficit (expressed as a per cent of the Gross Domestic Product, GDP) in the US on the ex ante real interest rate yield on Moody’s Baa-rated corporate bonds and to provide evidence that is both contemporary and covers an extended time period, namely, 1960 through 2015.
Design/methodology/approach
The analysis constructs a loanable funds model that involves a variety of financial and economic variables, with the ex ante real interest rate yield on Moody’s Baa-rated long-term corporate bonds as the dependent variable. The dependent variable is contemporaneous with the federal budget deficit and two other interest rate measures. Accordingly, instrumental variables are identified for each of these contemporaneous explanatory variables. The model also consists of four additional (lagged) explanatory variables. The model is then estimated using auto-regressive, i.e., AR(1), two-stage least squares.
Findings
The principal finding is that the ex ante real interest rate yield on Moody’s Baa rated corporate bonds is an increasing function of the federal budget deficit, expressed as a per cent of GDP. In particular, if the federal budget deficit were to rise by one per centage point, say from 3 to 4 per cent of GDP, the ex ante real interest rate would rise by 58 basis points.
Research limitations/implications
There are other time-series techniques that could be applied to the topic, such as co-integration, although the AR(1) process is tailored for studying volatile series such as interest rates and stock prices.
Practical/implications
The greater the US federal budget deficit, the greater the real cost of funds to firms. Hence, the high budget deficits of recent years have led to the crowding out of investment in new plant, new equipment, and new technology. These impacts lower economic growth and restrict prosperity in the US over time. Federal budget deficits must be substantially reduced so as to protect the US economy.
Social/implications
Higher budget deficits act to reduce investment in ew plant, new equipment and new technology. This in turn reduces job growth and real GDP growth and compromises the health of the economy.
Originality/value
This is the first study to focus on the impact of the federal budget deficit on the ex ante real long term cost of funds to firms in decades. Nearly all related studies fail to focus on this variable. Since, in theory, this variable (represented by the ex ante real yield on Moody’s Baa rated long term corporate bonds) is a key factor in corporate investment decisions, the empirical findings have potentially very significant implications for US firms and for the economy as a whole in view of the extraordinarily high budget deficits of recent years.
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President Bill Clinton has had many opponents and enemies, most of whom come from the political right wing. Clinton supporters contend that these opponents, throughout the Clinton…
Abstract
President Bill Clinton has had many opponents and enemies, most of whom come from the political right wing. Clinton supporters contend that these opponents, throughout the Clinton presidency, systematically have sought to undermine this president with the goal of bringing down his presidency and running him out of office; and that they have sought non‐electoral means to remove him from office, including Travelgate, the death of Deputy White House Counsel Vincent Foster, the Filegate controversy, and the Monica Lewinsky matter. This bibliography identifies these and other means by presenting citations about these individuals and organizations that have opposed Clinton. The bibliography is divided into five sections: General; “The conspiracy stream of conspiracy commerce”, a White House‐produced “report” presenting its view of a right‐wing conspiracy against the Clinton presidency; Funding; Conservative organizations; and Publishing/media. Many of the annotations note the links among these key players.
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Richard J. Cebula, Fabrizio Rossi, Fiorentina Dajci and Maggie Foley
The purpose of this study is to provide new empirical evidence on the impact of a variety of financial market forces on the ex post real cost of funds to corporations, namely, the…
Abstract
Purpose
The purpose of this study is to provide new empirical evidence on the impact of a variety of financial market forces on the ex post real cost of funds to corporations, namely, the ex post real interest rate yield on AAA-rated long-term corporate bonds in the USA. The study is couched within an open-economy loanable funds model, and it adopts annual data for the period 1973-2013, so that the results are current while being applicable only for the post-Bretton Woods era. The auto-regressive two-stage least squares (2SLS) and generalized method of moments (GMM) estimations reveal that the ex post real interest rate yield on AAA-rated long-term corporate bonds in the USA was an increasing function of the ex post real interest rate yields on six-month Treasury bills, seven-year Treasury notes, high-grade municipal bonds and the Moody’s BAA-rated corporate bonds, while being a decreasing function of the monetary base as a per cent of gross domestic product (GDP) and net financial capital inflows as a per cent of GDP. Finally, additional estimates reveal that the higher the budget deficit as a per cent of GDP, the higher the ex post real interest rate on AAA-rated long-term corporate bonds.
Design/methodology/approach
After developing an initial open-economy loanable funds model, the empirical dimension of the study involves auto-regressive, two-stage least squares and GMM estimates. The model is then expanded to include the federal budget deficit, and new AR/2SLS and GMM estimates are provided.
Findings
The AR/2SLS and GMM (generalized method of moments) estimations reveal that the ex post real interest rate yield on AAA-rated long-term corporate bonds in the USA was an increasing function of the ex post real interest rate yields on six-month Treasury bills, seven-year Treasury notes, high-grade municipal bonds and the Moody’s BAA-rated corporate bonds, while being a decreasing function of the monetary base as a per cent of GDP and net financial capital inflows as a per cent of GDP. Finally, additional estimates reveal that the higher the budget deficit as a per cent of GDP, the higher the ex post real interest rate on AAA-rated long -term corporate bonds.
Originality/value
The author is unaware of a study that adopts this particular set of real interest rates along with net capital inflows and the monetary base as a per cent of GDP and net capital inflows. Also, the data run through 2013. There have been only studies of deficits and real interest rates in the past few years.
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Richard Cantor and Stanislas Rouyer
Although issuers may benefit generally from securitization, some asset securitizations transfer more credit risk than others. When a lender uses securitization to replace…
Abstract
Although issuers may benefit generally from securitization, some asset securitizations transfer more credit risk than others. When a lender uses securitization to replace on‐balance‐sheet financing, that lender transfers to investors some of the risks, and, in the form of credit enhancements, some of the offsetting, i.e., claims‐paying, economic resources (e.g., assets, cashflows), as well. Therefore, securitization only reduces an issuer's net (i.e., residual) exposure to credit losses when a securitization has transferred proportionately more credit risk than claims‐paying assets. The authors discuss the distinction between “gross” versus “net” transfers of credit risk. To illustrate this point, they provide conceptual examples of the net effect of an asset securitization on the residual credit risk retained by an issuer. In these examples, providing credit enhancement (e.g., overcollateralization, subordination) may implicitly lever or delever an issuer's balance sheet. The authors outline the general conditions under which this indirect economic recourse to the issuer, in effect a form of “self‐insurance,” may result in a net dilution of the claims of unsecured creditors.
Yaw A. Badu, Kenneth N. Daniels and Francis Amagoh
Explains the rating system for US municipal bonds and its effect on borrowing costs, reviews relevant research and provides a study of the factors affecting grading by rating…
Abstract
Explains the rating system for US municipal bonds and its effect on borrowing costs, reviews relevant research and provides a study of the factors affecting grading by rating agencies in Virginia using 1995 data. Explains the methodology and presents the results, which identify five significant determinants of favourable ratings. Shows that net interest costs are lower when other rates of interest are low, real estate taxes are high (though not excessive), total municipal debt levels are low and credit risks are low. Confirms that bond ratings capture additional information and that a drop in ratings will raise net interest costs substantially. Considers consistency with other research and the implications of the findings for participants in the municipal bond market.
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Rahmi Erdem Aktug, Nandu (Nandkumar) Nayar and Jesus M Salas
This paper aims to determine the equity and debt market reactions of firms to the news of their hiring a credit rating agency (CRA) analyst. Due to recent controversies related to…
Abstract
Purpose
This paper aims to determine the equity and debt market reactions of firms to the news of their hiring a credit rating agency (CRA) analyst. Due to recent controversies related to CRAs, the US Securities and Exchange Commission (SEC) requires disclosure of the hiring of an analyst if the analyst recently worked for a rating agency that previously provided a rating for the hiring firm. The authors use those filings to estimate the market value of a credit rating analyst to the hiring firm.
Design/methodology/approach
This paper examines the impact of analyst transfers from rating agencies to financial firms in the USA between 2006 and 2014.
Findings
The authors find that the hiring of such analysts suggests a value increase for the debt securities of the hiring firm but no such value phenomenon for the equity of the employer firm.
Research limitations/implications
Thus, markets apparently perceive that credit analysts bring valuable inside knowledge about potential clients and about the credit rating formation process to their employer.
Practical implications
This study confirms the need for additional disclosure from CRAs. This study could help the SEC as it discusses ways to require additional disclosure (those discussions are already taking place. New regulations will come out some time in the next couple of years).
Originality/value
This study is the first to examine the impact of such transfers on the prices of marketed securities of firms hiring such analysts.
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Steven H. Appelbaum, Dawn Henson and Kerry Knee
Examines varied empirical studies on downsizing which have revealed that, as a result of its aftermath, high percentages of companies have judged these efforts as unsuccessful…
Abstract
Examines varied empirical studies on downsizing which have revealed that, as a result of its aftermath, high percentages of companies have judged these efforts as unsuccessful. Corporate restructuring encompasses multiple forms of change, which are classified into three distinct categories: portfolio, financial and organizational. An analysis of the Freeman and Cameron theoretical framework on downsizing implementation processes is examined in terms of where the process occurs, during periods either of convergence and/or of reorientation, and the results associated with each approach. A case study of the Kansas Department of Health and Environment revealed that restructuring did not provide visible improvements in efficiency, economy and responsiveness. Cultural impact of this intervention revealed negative intergroup reactions, i.e. denial, dissatisfaction. An analysis of Richard Johnson’s model of the antecedents, processes and outcomes of downsizing revealed the impact upon strategy, productivity, human resources and finance. Interrelationships suggested diminished performances of firms which downsized without a lucid blueprint, adversely impacting upon these businesses. Finally, 30 recommendations are given for the human resource executive for effective downsizing, focusing upon: approach, involvement, leadership, communication, preparation, support, cost cutting, measurement, and implementation.