A Simple Accounting-based Valuation Model for the Debt Tax Shield

This paper describes a simple way to integrate the debt tax shield into an accounting-based valuation model. The market value of equity is determined by forecasting residual operating income, which is calculated by charging operating income for the operating assets at a required return that accounts for the tax benefit that comes from borrowing to raise cash for the operations. The model assumes that the firm maintains a deterministic financial leverage ratio, which tends to converge quickly to typical steady-state levels over time. From a practical point of view, this characteristic is of particular help, because it allows a continuing value calculation at the end of a short forecast period.

Do Words Matter? The Impact of Communication on the PIIGS' CDS and Bond Yield Spreads during Europe's Sovereign Debt Crisis

The paper aims to shed light on the role of communication in the European debt crisis. It examines the effects of public statements by ECB Governing Council members, EU officials and national representatives on the PIIGS' CDS and bond yield spreads. The focus lies on dovish statements that signal strong determination in the rescue of indebted countries, and hawkish statements that indicate limited commitment to support the PIIGS and protect its creditors. The analysis of daily data for the period between January 1, 2009 and August 12, 2011 in an EGARCH framework suggests that communication by representatives of Germany, France, and the EU as well as ECB Governing Council members had an immediate impact on both types of securities. No effects.

The effect of figures in CCS communication

Illustrations are an essential part of most CCS communication materials. This article looks at the role of illustrations in communication and education in general, and in CCS communication in particular. First, literature on multimedia learning is reviewed and general guidelines for designing graphical displays deduced. This is followed by a discussion of relevant mental models and their possible implementa- tion in pictorial form. The authors then report on an interview study in which illustrations with various implementations of CCS mental models are compared. No major differences were found regarding under- standing of CCS between the different illustrations. Graphical displays alone are not powerful enough to implicitly correct typical misconceptions about CCS. Such misconceptions should be stated explicitly, along with their correction.