A-REIT rights issues

Purpose – This is the first REIT paper to seek to empirically examine potential influencing factors on the discounts and underwriting fees of Australian REIT rights issues.

Design/methodology/approach – Using a methodology similar to Owen and Suchard, and Armitage, a sample of 62 A-REIT rights issues during 2001-2009 is analyzed. A variety of potential factors influencing discounts and underwriting fees are explored.

Findings – Over A$20 billion was raised by A-REIT rights issues during 2001-2009 (this around three times that raised through A-REIT initial public offerings during the same period). The mean offer price was discounted around 9.5 percent from the current market price and underwriting fees averaged 2.9 percent of gross proceeds raised – both substantially less than for industrial rights issues. The standard deviation of daily returns for the past year appears to influence the percentage discount offered to subscribers. This volatility was particularly noticeable in 2008 and 2009, during the global financial crisis, where new issues were discounted substantially so as to raise equity to repay debt. This historical risk variable appears paramount in determining the discounts to subscribers and fees to underwriters.

Practical implications – A-REITs seeking to minimize the discounts offered to subscribers and to minimize their underwriting costs with rights issue equity capital raisings must first minimize their share price volatility.

Originality/value – This paper adds to the international costs of capital raising literature of REITs by examining such costs with A-REIT rights issues and is the first paper to examine factors influencing these costs.

Pricing innovations in consumption growth: a re-evaluation of the recursive utility model

We re-evaluate the cross-sectional asset pricing implications of the recursive utility function of Epstein and Zin, 1989 and Epstein and Zin, 1991, using innovations in future consumption growth in our tests. Our empirical specification helps explain the size, value and momentum effects. Specifically, we find that (і) the beta associated with news about consumption growth has a systematic pattern: beta decreases along the size dimension and increases along the book-to-market and momentum dimensions, (іі) innovation in consumption growth is significantly priced in asset returns using both the Fama and MacBeth (1973) and the stochastic discount factor approaches, and (ііі) the model performs better than both the CAPM and Fama–French model.

Neuropsychological changes following cognitive-behavioral treatment of obsessive-compulsive disorder (OCD)

Previous research has suggested that individuals with OCD show compromised performance on tests assessing visuospatial and executive processes. This study aimed to further examine such findings by investigating the relationship between OCD symptom improvement following cognitive-behavioral therapy and changes in neuropsychological performance in individuals with OCD (n = 26), compared to test-retest control participants (n = 10). Successful treatment of OCD led to improvements relative to the control group on neuropsychological tasks measuring spatial working memory. Neuroscientific models of OCD consider such findings to be consistent with possible cortical dysfunction in OCD. However, a significant limitation of the study is in its inability to discount alternative explanations for this finding, such as the influence of changes in beliefs. Implications are discussed.

Is it really good to annuitize?

Although rational consumers without bequest motives are better off investing exclusively with annuitized instruments in partial equilibrium, we demonstrate the welfare effect of annuitization is ambiguous in general equilibrium on account of pecuniary externalities. Absent institutional constraints like prices and budgets, the optimal consumption rule would have marginal utility increase at the preferential discount rate. In a rational competitive equilibrium where households fully annuitize, the growth rate of marginal utility will be the discount rate minus the interest rate, resulting in a consumption profile that is too flat. Accidental bequests transfer wealth from the old to the young, steepening the consumption profile and yielding a better equilibrium. If households are restricted to Keynesian consumption functions, the optimal irrational equilibrium with standard preferences can replicate observed consumption and macroeconomic behavior, and the equilibrium without annuities delivers higher utility than the equilibrium with annuities. Whereas preceding papers have merely hypothesized that households might engage in socially optimal, yet irrational behavior, the failure of households to annuitize is a real-world example of this. Policymakers should not take steps to encourage more annuitization by the public.

Stores healthy options project in remote indigenous communities (SHOP@RIC): a protocol of a randomised trial promoting healthy food and beverage purchases through price discounts and in-store nutrition education

Background
Indigenous Australians suffer a disproportionate burden of preventable chronic disease compared to their non-Indigenous counterparts – much of it diet-related. Increasing fruit and vegetable intakes and reducing sugar-sweetened soft-drink consumption can reduce the risk of preventable chronic disease. There is evidence from some general population studies that subsidising healthier foods can modify dietary behaviour. There is little such evidence relating specifically to socio-economically disadvantaged populations, even though dietary behaviour in such populations is arguably more likely to be susceptible to such interventions.

This study aims to assess the impact and cost-effectiveness of a price discount intervention with or without an in-store nutrition education intervention on purchases of fruit, vegetables, water and diet soft-drinks among remote Indigenous communities.

Methods/Design
We will utilise a randomised multiple baseline (stepped wedge) design involving 20 communities in remote Indigenous Australia. The study will be conducted in partnership with two store associations and twenty Indigenous store boards. Communities will be randomised to either i) a 20% price discount on fruit, vegetables, water and diet soft-drinks; or ii) a combined price discount and in-store nutrition education strategy. These interventions will be initiated, at one of five possible time-points, spaced two-months apart. Weekly point-of-sale data will be collected from each community store before, during, and for six months after the six-month intervention period to measure impact on purchasing of discounted food and drinks. Data on physical, social and economic factors influencing weekly store sales will be collected in order to identify important covariates. Intervention fidelity and mediators of behaviour change will also be assessed.

Discussion
This study will provide original evidence on the effectiveness and cost-effectiveness of price discounts with or without an in-store nutrition education intervention on food and drink purchasing among a socio-economically disadvantaged population in a real-life setting.

A Rational Approach To Sentencing White- Collar Offenders in Australia

There are no overarching (and few settled) principles governing the sentencing of white-collar offenders. This is especially the situation in relation to the relevance of public opprobrium to the sentencing calculus and the manner in which employment deprivations stemming from the penalty impact on the sentence. To the extent that there is general convergence in the approach to sentencing white-collar offenders, the approach is often not sound. This is the case in relation to the minor sentencing discount accorded for previous good character, and the prevailing orthodoxy which assumes that offences targeted at major institutions, such as banks, meaningfully impair community confidence in such institutions. Fundamental reform of the manner in which white-collar offenders are sentenced is necessary in order to make this area of law more coherent and doctrinally sound. These reforms include providing a significant and pre-determined discount for restitution, reducing the weight given to general deterrence in the sentencing calculus, and providing a greater discount for previous good character and employment deprivations suffered as a direct result of the sentence. Further, crimes against individuals should be regarded as being more serious than those committed against large corporations or the public revenue. The article focuses on the existing law in Australia, however, the reform proposals and doctrinal analysis could be applied to all jurisdictions.

Quantitatively evaluating the effects of price promotions using data mining

Price promotions (also called discount promotions), i.e. short-term temporary price reductions for selected items (Hermann 1989), are frequently used in sales promotions. The main objective of price promotions is to boost sales and increase profits. Quantitative evaluation of the effects of price promotions (QEEPP) is essential and important for sales managers to analyse historical price promotions and informative for devising more effective promotional strategies in the future. However, most previous studies only provide insights into the effects of discount promotions from some specific prospectives, and no approaches have been proposed for comprehensive evaluation of the effects of discount promotions. For example, Hinkle [1965] discovered that price promotions in the off-season are more favourable, and the effects of price promotions are stronger for new products. Peckham [1973] found that price promotions have no impact on long-term trend. Blattberg et al. [1978] identified that different segments respond to price promotions in different ways. Rockney [1991] discovered three basic types of effects: effects on discounted items, effects on substitutes and effects on complementary items.

The implications of jail time discounting for court sentences

Specific and marginal general deterrence are being increasingly discredited as useful sentencing objectives. One reason is that offenders discount jail time, sometimes quite substantially. As a consequence, there is a significant difference between the court's sentence and the effective penalty. The latter is the offender's perceived duration of the time in jail. Discount rates, which perhaps can be thought of as a measure of acclimatisation to the prison experience, potentially weaken considerably the likelihood of successfully attaining the objective of specific deterrence. In addition, since jail time discount rates increase as the sentence length increases, punishment burden increases less than proportionately. This means that successfully achieving marginal deterrence is even more problematical. Using New South Wales data for three different offences, mean estimates of jail time discount rates are obtained, and then used to adjust downwards court sentences and estimate their effective equivalents. Effective sentence elasticities are then computed to gauge the impact of sentence doubling. Very low values are obtained. The critical implications for sentencing suggested by this study are, first, that absolute general deterrence and specific deterrence are realistic sentencing objectives. Marginal deterrence, however, does not seem to be attainable, given the ubiquity of positive time preference. Secondly, subject to the proportionality constraint, relatively shorter sentences are likely to be more punitive than longer ones, and therefore more effective as specific deterrents.

Adefovir dipivoxil and pegylated interferon alpha for the treatment of chronic hepatitis B: an updated systematic review and economic evaluation

To update and extend a 2006 report on the clinical effectiveness and cost-effectiveness of adefovir dipivoxil (ADV) and pegylated interferon alpha (PEG-alpha) for the treatment of chronic hepatitis B (CHB). Thirteen bibliographic databases were searched including MEDLINE, EMBASE and the Cochrane Library. Searches were run from the beginning of 2005 to September 2007. For the clinical effectiveness review, randomised controlled trials (RCTs) comparing ADV, PEG-alpha-2a and PEG-alpha-2b with currently licensed treatments for CHB, including non-pegylated interferon alpha (IFN-alpha) and lamivudine (LAM), were included. Outcomes included biochemical, histological and virological response to treatment, drug resistance and adverse effects. A systematic review of economic evaluations of antiviral treatments for CHB was conducted. The economic Markov model used in the 2006 report was updated in terms of utility values, discount rates and costs. `

Long-term water supply planning in an Australian coastal city : Dams or desalination?

Water resource managers and planners are continually involved in defining and evaluating alternative policies to better meet changing water supply conditions and the expectations of society. To undertake such long-term water supply planning, this study developed a novel integrated system dynamics model to combine economic, social and scientific variables and considerations within the planning horizon. Extensive sensitivity analysis for these variables was considered in this long term water resource planning process. The analysis suggests that over a longer time horizon, desalination provides a more viable, cost effective and secure bulk water supply alternative when compared to building large rain-dependent dams.

First-time offender, productive offender, offender with dependents: why the profile of offenders (sometimes) matters in sentencing

Should a single mother of four young children who commits theft be sentenced to a lesser sanction than a woman who commits the same crime but has no dependents? Should a billionaire philanthropist be sentenced to a lesser penalty than the average citizen for assaulting a random bystander? Should a first-time thief receive a lighter sanction than a career thief for the same theft? The relevance of an offender’s profile to sentencing is unclear and is one of the most under-researched and least coherent areas of sentencing law. Intuitively, there is some appeal in treating offenders without a criminal record, those who have made a positive contribution to society, or who have dependents more leniently than other offenders. However, to allow these considerations to mitigate penalty potentially licenses offenders to commit crime and decouples the sanction from the severity of the offense, thereby undermining the proportionality principle. This article analyzes the relevance that an offender’s profile should have in sentencing. We conclude that a lack of prior convictions should generally reduce penalty because the empirical data shows that, in relation to most offenses, first-time offenders are less likely to reoffend than recidivist offenders. The situation is more complex in relation to offenders who have made worthy social contributions. They should not be given sentencing credit for past achievements given that past good acts have no relevance to the proper objectives of sentencing and it is normally not tenable, even in a crude sense, to make an informed assessment of an individual’s overall societal contribution. However, offenders should be accorded a sentencing reduction if they have financial or physical dependents and if imprisoning them is likely to cause harm to their dependents. Conferring asentencing discount to first-time offenders and those withdependents does not license them to commit crime or unjustifiablyencroach on the proportionality principle. Rather, it recognizes thedifferent layers of the legal system and the reality that sentencinglaw should not reflexively overwhelm broader maxims of justice,including the principle that innocent people should not suffer. Thisarticle argues that fundamental legislative reform is necessary toproperly reflect the role that the profile of offenders should have inthe sentencing regime.

Consumption smoothing in Latin America: an empirical assessment of present value models

The study aims to assess the empirical adherence of the permanent income theory and the consumption smoothing view in Latin America. Two present value models are considered, one describing household behavior and the other open economy macroeconomics. Following the methodology developed in Campbell and Schiller (1987), Bivariate Vector Autoregressions are estimated for the saving ratio and the real growth rate of income concerning the household behavior model and for the current account and the change in national cash ‡ow regarding the open economy model. The countries in the sample are considered separately in the estimation process (individual system estimation) as well as jointly (joint system estimation). Ordinary Least Squares (OLS) and Seemingly Unrelated Regressions (SURE) estimates of the coe¢cients are generated. Wald Tests are then conducted to verify if the VAR coe¢cient estimates are in conformity with those predicted by the theory. While the empirical results are sensitive to the estimation method and discount factors used, there is only weak evidence in favor of the permanent income theory and consumption smoothing view in the group of countries analyzed.

Forecasting accuracy and estimation uncertainty using VAR models with short- and long-term economic restrictions: a Monte-Carlo study

Using vector autoregressive (VAR) models and Monte-Carlo simulation methods we investigate the potential gains for forecasting accuracy and estimation uncertainty of two commonly used restrictions arising from economic relationships. The Örst reduces parameter space by imposing long-term restrictions on the behavior of economic variables as discussed by the literature on cointegration, and the second reduces parameter space by imposing short-term restrictions as discussed by the literature on serial-correlation common features (SCCF). Our simulations cover three important issues on model building, estimation, and forecasting. First, we examine the performance of standard and modiÖed information criteria in choosing lag length for cointegrated VARs with SCCF restrictions. Second, we provide a comparison of forecasting accuracy of Ötted VARs when only cointegration restrictions are imposed and when cointegration and SCCF restrictions are jointly imposed. Third, we propose a new estimation algorithm where short- and long-term restrictions interact to estimate the cointegrating and the cofeature spaces respectively. We have three basic results. First, ignoring SCCF restrictions has a high cost in terms of model selection, because standard information criteria chooses too frequently inconsistent models, with too small a lag length. Criteria selecting lag and rank simultaneously have a superior performance in this case. Second, this translates into a superior forecasting performance of the restricted VECM over the VECM, with important improvements in forecasting accuracy ñreaching more than 100% in extreme cases. Third, the new algorithm proposed here fares very well in terms of parameter estimation, even when we consider the estimation of long-term parameters, opening up the discussion of joint estimation of short- and long-term parameters in VAR models.

Estimando a aversão ao risco, a taxa de desconto intertemporal, e a substutibilidade intertemporal do consumo no Brasil usando três tipos de função utilidade

Nesse trabalho estima-se, usando o método generalizado dos momentos e dados brasileiros, os parâmetros estruturais do modelo CCAPM (consumption capital asset pricing model) a partir de três classes de funções utilidade distintas: função utilidade potência (CRRA), utilidade com hábito externo, e aversão ao desapontamento (Kreps-Porteus). Estes parâmetros estruturais estão associados à aversão ao risco, à elasticidade de substituição intertemporal no consumo e à taxa de desconto intertemporal da utilidade futura. Os resultados aqui obtidos são analisados e comparados com resultados anteriores para dados brasileiros e americanos. Adicionalmente, testa-se econometricamente todos os modelos estruturais estimados a partir do teste de restrições de sobre-identificação, para investigar, da forma mais abrangente possível, se há ou não equity premium puzzle para o Brasil. Os resultados surpreendem, dado que, em raríssimas ocasiões, se rejeita as restrições implícitas nesses modelos. Logo, conclui-se que não há equity premium puzzle para o Brasil.