Can company-fund manager meetings convey informational benefits? Exploring the rationalisation of equity investment decision making by UK fund managers

Conventional economic theory, applied to information released by listed companies, equates ‘useful’ with ‘price-sensitive’. Stock exchange rules accordingly prohibit the selec- tive, private communication of price-sensitive information. Yet, even in the absence of such communication, UK equity fund managers routinely meet privately with the senior execu- tives of the companies in which they invest. Moreover, they consider these brief, formal and formulaic meetings to be their most important sources of investment information. In this paper we ask how that can be. Drawing on interview and observation data with fund managers and CFOs, we find evidence for three, non-mutually exclusive explanations: that the characterisation of information in conventional economic theory is too restricted, that fund managers fail to act with the rationality that conventional economic theory assumes, and/or that the primary value of the meetings for fund managers is not related to their investment decision making but to the claims of superior knowledge made to clients in marketing their active fund management expertise. Our findings suggest a disconnect between economic theory and economic policy based on that theory, as well as a corre- sponding limitation in research studies that test information-usefulness by assuming it to be synonymous with price-sensitivity. We draw implications for further research into the role of tacit knowledge in equity investment decision-making, and also into the effects of the principal–agent relationship between fund managers and their clients.

Transport impacts on atmosphere and climate: shipping

Emissions of exhaust gases and particles from oceangoing ships are a significant and growing contributor to the total emissions from the transportation sector. We present an assessment of the contribution of gaseous and particulate emissions from oceangoing shipping to anthropogenic emissions and air quality. We also assess the degradation in human health and climate change created by these emissions. Regulating ship emissions requires comprehensive knowledge of current fuel consumption and emissions, understanding of their impact on atmospheric composition and climate, and projections of potential future evolutions and mitigation options. Nearly 70% of ship emissions occur within 400 km of coastlines, causing air quality problems through the formation of ground-level ozone, sulphur emissions and particulate matter in coastal areas and harbours with heavy traffic. Furthermore, ozone and aerosol precursor emissions as well as their derivative species from ships may be transported in the atmosphere over several hundreds of kilometres, and thus contribute to air quality problems further inland, even though they are emitted at sea. In addition, ship emissions impact climate. Recent studies indicate that the cooling due to altered clouds far outweighs the warming effects from greenhouse gases such as carbon dioxide (CO2) or ozone from shipping, overall causing a negative present-day radiative forcing (RF). Current efforts to reduce sulphur and other pollutants from shipping may modify this. However, given the short residence time of sulphate compared to CO2, the climate response from sulphate is of the order decades while that of CO2 is centuries. The climatic trade-off between positive and negative radiative forcing is still a topic of scientific research, but from what is currently known, a simple cancellation of global mean forcing components is potentially inappropriate and a more comprehensive assessment metric is required. The CO2 equivalent emissions using the global temperature change potential (GTP) metric indicate that after 50 years the net global mean effect of current emissions is close to zero through cancellation of warming by CO2 and cooling by sulphate and nitrogen oxides.

Enforcing service level agreements using an economically enhanced resource manager

Traditional resource management has had as its main objective the optimisation of throughput, based on parameters such as CPU, memory, and network bandwidth. With the appearance of Grid Markets, new variables that determine economic expenditure, benefit and opportunity must be taken into account. The SORMA project aims to allow resource owners and consumers to exploit market mechanisms to sell and buy resources across the Grid. SORMA’s motivation is to achieve efficient resource utilisation by maximising revenue for resource providers, and minimising the cost of resource consumption within a market environment. An overriding factor in Grid markets is the need to ensure that desired Quality of Service levels meet the expectations of market participants. This paper explains the proposed use of an Economically Enhanced Resource Manager (EERM) for resource provisioning based on economic models. In particular, this paper describes techniques used by the EERM to support revenue maximisation across multiple Service Level Agreements.

Enforcing service level agreements using an economically enhanced resource manager

Traditional resource management has had as its main objective the optimisation of throughput, based on pa- rameters such as CPU, memory, and network bandwidth. With the appearance of Grid Markets, new variables that determine economic expenditure, benefit and opportunity must be taken into account. The SORMA project aims to allow resource owners and consumers to exploit market mechanisms to sell and buy resources across the Grid. SORMA’s motivation is to achieve efficient resource utilisation by maximising revenue for resource providers, and minimising the cost of resource consumption within a market environment. An overriding factor in Grid markets is the need to ensure that desired Quality of Service levels meet the expectations of market participants. This paper explains the proposed use of an Economically Enhanced Resource Manager (EERM) for resource provisioning based on economic models. In particular, this paper describes techniques used by the EERM to support revenue maximisation across multiple Service Level Agreements.

Liquidity effects and FFA returns in the international shipping derivatives market

The study examines the impact of liquidity risk on freight derivatives returns. The Amihud liquidity ratio and bid–ask spreads are utilized to assess the existence of liquidity risk in the freight derivatives market. Other macroeconomic variables are used to control for market risk. Results indicate that liquidity risk is priced and both liquidity measures have a significant role in determining freight derivatives returns. Consistent with expectations, both liquidity measures are found to have positive and significant effects on the returns of freight derivatives. The results have important implications for modeling freight derivatives, and consequently, for trading and risk management purposes.