The effects of corporate social performance on the cost of corporate debt and credit ratings

This study investigates the differential impact that various dimensions of corporate social performance have on the pricing of corporate debt as well as the assessment of the credit quality of specific bond issues. The empirical analysis, based on an extensive longitudinal data set, suggests that overall, good performance is rewarded and corporate social transgressions are penalized through lower and higher corporate bond yield spreads, respectively. Similar conclusions can be drawn when focusing on either the bond rating assigned to a specific debt issue or the probability of it being considered to be an asset of speculative grade.

Linear and non-linear transmission of equity return volatility: evidence from the US, Japan and Australia

This paper models the transmission of shocks between the US, Japanese and Australian equity markets. Tests for the existence of linear and non-linear transmission of volatility across the markets are performed using parametric and non-parametric techniques. In particular the size and sign of return innovations are important factors in determining the degree of spillovers in volatility. It is found that a multivariate asymmetric GARCH formulation can explain almost all of the non-linear causality between markets. These results have important implications for the construction of models and forecasts of international equity returns.

The extent to which potential benefits to EU farmers of adopting transgenic crops are reduced by cost of compliance with coexistence regulations

This article forecasts the extent to which the potential benefits of adopting transgenic crops may be reduced by costs of compliance with coexistence regulations applicable in various member states of the EU. A dynamic economic model is described and used to calculate the potential yield and gross margin of a set of crops grown in a selection of typical rotation scenarios. The model simulates varying levels of pest, weed, and drought pressures, with associated management strategies regarding pesticide and herbicide application, and irrigation. We report on the initial use of the model to calculate the net reduction in gross margin attributable to coexistence costs for insect-resistant (IR) and herbicide-tolerant (HT) maize grown continuously or in a rotation, HT soya grown in a rotation, HT oilseed rape grown in a rotation, and HT sugarbeet grown in a rotation. Conclusions are drawn about conditions favoring inclusion of a transgenic crop in a crop rotation, having regard to farmers’ attitude toward risk.

Poor survival on an artificial diet of two genotypes of the aphid Myzus persicae: a fitness cost of insecticide resistance?

A fully susceptible genotype (4106A) of Myzus persicae survived the longest on an artificial diet and, in several of the eight replicates, monitoring was terminated when the culture was still thriving. A genotype with elevated carboxylesterase FE4 at the R3 level (800F) had a mean survival of only 98.13 days, whereas 794J, which combines R3 E4 carboxylesterase with target-site resistance (knockdown resistance), survived for the even shorter mean time of 84.38 days. The poorer survival of the two genotypes with extremely elevated carboxylesterase-resistance was not the result of a reluctance to transfer to new diet at each diet change. Although available for only two replicates, a revertant clone of 794J (794Jrev), which has the same genotype as 794J but the amplified E4 genes are not expressed leading to a fully susceptible phenotype, did not appear to survive any better than this clone. This suggests that the poor survival on an artificial diet of the extreme-carboxylesterase genotypes is not the result of the cost of over-producing the enzyme. The frequency of insecticide-resistant genotypes is low in the population until insecticide is applied, indicating that they have reduced fitness, although this does not necessarily reflect a direct cost of expressing the resistance mechanism.

Do laws influence the cost of real estate brokerage services? A state fixed effects approach

A FTC-DOJ study argues that state laws and regulations may inhibit the unbundling of real estate brokerage services in response to new technology. Our data show that 18 states have changed laws in ways that promote unbundling since 2000. We model brokerage costs as measured by number of agents in a state-level annual panel vector autoregressive framework, a novel way of analyzing wasteful competition. Our findings support a positive relationship between brokerage costs and lagged house price and transactions. We find that change in full-service brokers responds negatively (by well over two percentage points per year) to legal changes facilitating unbundling

The effects of corporate and country sustainability characteristics on the cost of debt: an international investigation

We investigate the relationship between corporate and country sustainability on the cost of bank loans. We look into 470 loan agreements signed between 2005 and 2012 with borrowers based in 28 different countries across the world and operating in all major industries. Our principal findings reveal that country sustainability, relating to both social and environmental frameworks, has a statistically and economically impactful effect on direct financing of economic activity. An increase of one unit in a country's sustainability score is associated with an average decrease in the cost of debt by 64 basis points. Our international analysis shows that the environmental dimension of a country's institutional framework is approximately twice as impactful as the social dimension, when it comes to determining the cost of corporate loans. On the other hand, we find no conclusive evidence that firm-level sustainability influences the interest rates charged to borrowing firms by banks. Our main findings survive a battery of robustness tests and additional analyses concerning subsamples, alternative sustainability metrics and the effects of financial crisis.

Simulating the impact on health of internalising the cost of carbon in food prices combined with a tax on sugar-sweetened beverages

Rising greenhouse gas emissions (GHGEs) have implications for health and up to 30 % of emissions globally are thought to arise from agriculture. Synergies exist between diets low in GHGEs and health however some foods have the opposite relationship, such as sugar production being a relatively low source of GHGEs. In order to address this and to further characterise a healthy sustainable diet, we model the effect on UK non-communicable disease mortality and GHGEs of internalising the social cost of carbon into the price of food alongside a 20 % tax on sugar sweetened beverages (SSBs). Developing previously published work, we simulate four tax scenarios: (A) a GHGEs tax of £2.86/tonne of CO2 equivalents (tCO2e)/100 g product on all products with emissions greater than the mean across all food groups (0.36 kgCO2e/100 g); (B) scenario A but with subsidies on foods with emissions lower than 0.36 kgCO2e/100 g such that the effect is revenue neutral; (C) scenario A but with a 20 % sales tax on SSBs; (D) scenario B but with a 20 % sales tax on SSBs. An almost ideal demand system is used to estimate price elasticities and a comparative risk assessment model is used to estimate changes to non-communicable disease mortality. We estimate that scenario A would lead to 300 deaths delayed or averted, 18,900 ktCO2e fewer GHGEs, and £3.0 billion tax revenue; scenario B, 90 deaths delayed or averted and 17,100 ktCO2e fewer GHGEs; scenario C, 1,200 deaths delayed or averted, 18,500 ktCO2e fewer GHGEs, and £3.4 billion revenue; and scenario D, 2,000 deaths delayed or averted and 16,500 ktCO2e fewer GHGEs. Deaths averted are mainly due to increased fibre and reduced fat consumption; a SSB tax reduces SSB and sugar consumption. Incorporating the social cost of carbon into the price of food has the potential to improve health, reduce GHGEs, and raise revenue. The simple addition of a tax on SSBs can mitigate negative health consequences arising from sugar being low in GHGEs. Further conflicts remain, including increased consumption of unhealthy foods such as cakes and nutrients such as salt.

Commodity risks and the cross-section of equity returns

The article examines whether commodity risk is priced in the cross-section of global equity returns. We employ a long-only equally-weighted portfolio of commodity futures and a term structure portfolio that captures phases of backwardation and contango as mimicking portfolios for commodity risk. We find that equity-sorted portfolios with greater sensitivities to the excess returns of the backwardation and contango portfolio command higher average excess returns, suggesting that when measured appropriately, commodity risk is pervasive in stocks. Our conclusions are robust to the addition to the pricing model of financial, macroeconomic and business cycle-based risk factors.

Access, equity and the role of rights in health care

Modern health care rhetoric promotes choice and individual patient rights as dominant values. Yet we also accept that in any regime constrained by finite resources, difficult choices between patients are inevitable. How can we balance rights to liberty, on the one hand, with equity in the allocation of scarce resources on the other? For example, the duty of health authorities to allocate resources is a duty owed to the community as a whole, rather than to specific individuals. Macro-duties of this nature are founded on the notion of equity and fairness amongst individuals rather than personal liberty. They presume that if hard choices have to be made, they will be resolved according to fair and consistent principles which treat equal cases equally, and unequal cases unequally. In this paper, we argue for greater clarity and candour in the health care rights debate. With this in mind, we discuss (1) private and public rights, (2) negative and positive rights, (3) procedural and substantive rights, (4) sustainable health care rights and (5) the New Zealand booking system for prioritising access to elective services. This system aims to consider: individual need and ability to benefit alongside the resources made available to elective health services in an attempt to give the principles of equity practical effect. We describe a continuum on which the merits of those, sometimes competing, values-liberty and equity-can be evaluated and assessed.

Techno-economic modelling and cost functions of CO2 capture processes

The paper presents the techno-economic modelling of CO2 capture process in coal-fired power plants. An overall model is being developed to compare carbon capture and sequestration options at locations within the UK, and for studies of the sensitivity of the cost of disposal to changes in the major parameters of the most promising solutions identified. Technological options of CO2 capture have been studied and cost estimation relationships (CERs) for the chosen options calculated. Created models are related to the capital, operation and maintenance cost. A total annualised cost of plant electricity output and amount of CO2 avoided have been developed. The influence of interest rates and plant life has been analysed as well. The CERs are included as an integral part of the overall model.

Cost-benefit evaluation of routine influenza immunisation in people 65-74 years of age

OBJECTIVES: To determine the cost-effectiveness of influenza vaccination in people aged 65-74 years in the absence of co-morbidity. DESIGN: Primary research: randomised controlled trial. SETTING: Primary care. PARTICIPANTS: People without risk factors for influenza or contraindications to vaccination were identified from 20 general practitioner (GP) practices in Liverpool in September 1999 and invited to participate in the study. There were 5875/9727 (60.4%) people aged 65-74 years identified as potentially eligible and, of these, 729 (12%) were randomised. INTERVENTION: Participants were randomised to receive either influenza vaccine or placebo (ratio 3:1), with all individuals receiving pneumococcal vaccine unless administered in the previous 10 years. Of the 729 people randomised, 552 received vaccine and 177 received placebo; 726 individuals were administered pneumococcal vaccine. MAIN OUTCOME MEASURES AND METHODOLOGY OF ECONOMIC EVALUATION: GP attendance with influenza-like illness (ILI) or pneumonia (primary outcome measure); or any respiratory symptoms; hospitalisation with a respiratory illness; death; participant self-reported ILI; quality of life (QoL) measures at 2, 4 and 6 months post-study vaccination; adverse reactions 3 days after vaccination. A cost-effectiveness analysis was undertaken to identify the incremental cost associated with the avoidance of episodes of influenza in the vaccination population and an impact model was used to extrapolate the cost-effectiveness results obtained from the trial to assess their generalisability throughout the NHS. RESULTS: In England and Wales, weekly consultations for influenza and ILI remained at baseline levels (less than 50 per 100,000 population) until week 50/1999 and then increased rapidly, peaking during week 2/2000 with a rate of 231/100,000. This rate fell within the range of 'higher than expected seasonal activity' of 200-400/100,000. Rates then quickly declined, returning to baseline levels by week 5/2000. The predominant circulating strain during this period was influenza A (H3N2). Five (0.9%) people in the vaccine group were diagnosed by their GP with an ILI compared to two (1.1%) in the placebo group [relative risk (RR), 0.8; 95% confidence interval (CI) = 0.16 to 4.1]. No participants were diagnosed with pneumonia by their GP and there were no hospitalisations for respiratory illness in either group. Significantly fewer vaccinated individuals self-reported a single ILI (4.6% vs 8.9%, RR, 0.51; 95% CI for RR, 0.28 to 0.96). There was no significant difference in any of the QoL measurements over time between the two groups. Reported systemic side-effects showed no significant differences between groups. Local side-effects occurred with a significantly increased incidence in the vaccine group (11.3% vs 5.1%, p = 0.02). Each GP consultation avoided by vaccination was estimated from trial data to generate a net NHS cost of 174 pounds. CONCLUSIONS: No difference was seen between groups for the primary outcome measure, although the trial was underpowered to demonstrate a true difference. Vaccination had no significant effect on any of the QoL measures used, although vaccinated individuals were less likely to self-report ILI. The analysis did not suggest that influenza vaccination in healthy people aged 65-74 years would lead to lower NHS costs. Future research should look at ways to maximise vaccine uptake in people at greatest risk from influenza and also the level of vaccine protection afforded to people from different age and socio-economic populations.