Relationship between franking credits and the market risk premium

In a dividend imputation tax system, equity investors have three potential sources of return: dividends, capital gains and franking (tax) credits. However, the standard procedures for estimating the market risk premium (MRP) for use in the capital asset pricing model, ignore the value of franking credits. Officer (1994) notes that if franking credits do affect the corporate cost of capital, their value must be added to the standard estimates of MRP. In the present paper, we explicitly derive the relationship between the value of franking credits (gamma) and the MRP. We show that the standard parameter estimates that have been adopted in practice (especially by Australian regulators) violate this deterministic mathematical relationship. We also show how information on dividend yields and effective tax rates bounds the values that can be reasonably used for gamma and the MRP. We make recommendations for how estimates of the MRP should be adjusted to reflect the value of franking credits in an internally consistent manner.

The risk premium for equity: implications for resource allocation, welfare and policy

Analysis of the equity premium puzzle has focused on private sector capital markets. The object of this paper is to consider the welfare and policy implications of each of the broad classes of explanations of the equity premium puzzle. As would be expected, the greater the deviation from the first-best outcome implied by a given explanation of the equity premium puzzle, the more interventionist are the implied policy conclusions. Nevertheless, even explanations of the equity premium puzzle consistent with a general consumption-based asset pricing model have important welfare and policy implications.

Noise trader risk and the welfare effects of privatization

Excessive volatility of asset prices like that generated in the 'noise trader' model of De Long et al. is one factor that plausibly might contribute to an explanation of the equity premium. We extend the De Long et al. model to allow for privatization of publicly-owned assets and assess the welfare effects of such privatization in the presence of excess volatility arising from noise traders' mistaken beliefs.

Choosing organics: A path analysis of factors underlying the selection of organic food among Australian consumers

Path analysis of attitudinal, motivational, demographic and behavioural factors influencing food choice among Australian consumers who had consumed at least some organic food in the preceding 12 months showed that concern with the naturalness of food and the sensory and emotional experience of eating were the major determinants of increasing levels of organic consumption. Increasing consumption was also related to other 'green consumption' behaviours such as recycling and to lower levels of concern with convenience in the purchase and preparation of food. Most of these factors were, in turn, strongly affected by gender and the level of responsibility taken by respondents for food provisioning within their households, a responsibility dominated by women. Education had a slightly negative effect on the levels of concern for sensory and emotional appeal due to lower levels of education among women. Income, age, political and ecological values and willingness to pay a premium for safe and environmentally friendly foods all had extremely minor effects. (C) 2004 Elsevier Ltd. All rights reserved.

Mobile message services and communications policy

Something of a design after-thought, mobile phone SMS (Short-Message Services) have been enthusiastically adopted by consumers worldwide, who have created a new text culture. SMS is now being deployed to provide a range of services and transactions, as well as playing a critical role in offering an interactive path for television broadcasting. In this paper we offer a case study of a lucrative, new industry developing internationally at the intersection of telecommunications, broadcasting, and information services—namely, premium rate SMS/MMS. To explore the issues at stake we focus on an Australian case study of policy responses to the development of premium rate mobile messaging services in the 2002-2005 period. In the first part, we give a brief history of premium rate telecommunications. Secondly, we characterise premium rate mobile message services and examine their emergence. Thirdly, we discuss the responses of Australian policy-makers and industry to these services. Fourthly, we place the Australian experience in international context, and indicate common issues. Finally, we draw some conclusions from the peregrinations of mobile message services for regulators grappling with communications policy frameworks.

Modulation of macrophage immune responses by Echinacea

Echinacea preparations are widely used herbal medicines for the prevention and treatment of colds and minor infections. There is little evidence for the individual components in Echinacea that contribute to immune regulatory activity. Activity of an ethanolic Echinacea extract and several constituents, including cichoric acid, have been examined using three in vitro measures of macrophage immune function - NF-kappa B, TNF-alpha and nitric oxide (NO). In cultured macrophages, all components except the monoene alkylamide (AA1) decreased lipopolysaccharide (LPS) stimulated NF-kappa B levels. 0.2 mu g/ml cichoric acid and 2.0 mu g/mL Echinacea Premium Liquid (EPL) and EPL alkylamide fraction (EPL AA) were found to significantly decrease TNF-alpha production under LPS stimulated conditions in macrophages. In macrophages, only the alkylamide mixture isolated from the ethanolic Echinacea extract decreased LPS stimulated NO production. In this study, the mixture of alkylamides in the Echinacea ethanolic liquid extract did not respond in the same manner in the assays as the individual alkylamides investigated. While cichoric acid has been shown to affect NF-kappa B, TNF-alpha and NO levels, it is unlikely to be relevant in the Echinacea alterations of the immune response in vivo due to its nonbioavailability - i.e. no demonstrated absorption across the intestinal barrier and no detectable levels in plasma. These results demonstrate that Echinacea is an effective modulator of macrophage immune responses in vitro.

The diagnostic interview for psychoses (DIP): development, reliability and applications

Background. We describe the development, reliability and applications of the Diagnostic Interview for Psychoses (DIP), a comprehensive interview schedule for psychotic disorders. Method. The DIP is intended for use by interviewers with a clinical background and was designed to occupy the middle ground between fully structured, lay-administered schedules, and semi-structured., psychiatrist-administered interviews. It encompasses four main domains: (a) demographic data; (b) social functioning and disability; (c) a diagnostic module comprising symptoms, signs and past history ratings; and (d) patterns of service utilization Lind patient-perceived need for services. It generates diagnoses according to several sets of criteria using the OPCRIT computerized diagnostic algorithm and can be administered either on-screen or in a hard-copy format. Results. The DIP proved easy to use and was well accepted in the field. For the diagnostic module, inter-rater reliability was assessed on 20 cases rated by 24 clinicians: good reliability was demonstrated for both ICD-10 and DSM-III-R diagnoses. Seven cases were interviewed 2-11 weeks apart to determine test-retest reliability, with pairwise agreement of 0.8-1.0 for most items. Diagnostic validity was assessed in 10 cases, interviewed with the DIP and using the SCAN as 'gold standard': in nine cases clinical diagnoses were in agreement. Conclusions. The DIP is suitable for use in large-scale epidemiological studies of psychotic disorders. as well as in smaller Studies where time is at a premium. While the diagnostic module stands on its own, the full DIP schedule, covering demography, social functioning and service utilization makes it a versatile multi-purpose tool.

Modelling context information with ORM

Context-aware applications rely on implicit forms of input, such as sensor-derived data, in order to reduce the need for explicit input from users. They are especially relevant for mobile and pervasive computing environments, in which user attention is at a premium. To support the development of context-aware applications, techniques for modelling context information are required. These must address a unique combination of requirements, including the ability to model information supplied by both sensors and people, to represent imperfect information, and to capture context histories. As the field of context-aware computing is relatively new, mature solutions for context modelling do not exist, and researchers rely on information modelling solutions developed for other purposes. In our research, we have been using a variant of Object-Role Modeling (ORM) to model context. In this paper, we reflect on our experiences and outline some research challenges in this area.

The impact of target board recommendations in Australian takeovers

This paper examines the impact of targe board recommendations on the probability of the bid being successful in the Australian takeovers context. Specifically, we model the success rate of the bid as a binary dependent variable and target board recommendations or the board hostility as our key independent variable by using logistic regression framework. Our model also includes bid structures and conditions variables (such as initial bid premium, bid conditions, toehold, and interlocking relationship) and bid events (such as panel and bid duration) as our control variables. Overall, we find board hostility has statistically significant negative effect on the success rate of the bid and almost all control variables (except for the initial bid premium) are statistically significant with the correct sign. That is, we find toehold, the percentage of share required to make the bid becomes successful, and the unconditional bid have positive impact on the success rate of the bid, at least as predictive determinants prior to the release of any hostile recommendation. Consistent with Craswell (2004), we also find the negative relation between interlocking relationship and the success rate of the bid. Our finding supports that from target investors’ point of view, interlock is consistent with the negative story of self interest by directors. Finally, like Walking (1985), we find that the initial bid premium does not have influence on the success rate of the bid. Hence our results reinstate Walking’s bid premium puzzle in Australian context.