Economic viability of shale gas production in the Marcellus Shale; indicated by production rates, costs and current natural gas prices

The U.S. natural gas industry has changed because of the recent ability to produce natural gas from unconventional shale deposits. One of the largest and most important deposits is the Marcellus Shale. Hydraulic fracturing and horizontal drilling have allowed for the technical feasibility of production, but concerns exist regarding the economics of shale gas production. These concerns are related to limited production and economic data for shale gas wells, declines in the rates of production, falling natural gas prices, oversupply issues coupled with slow growth in U.S. natural gas demand, and rising production costs. An attempt to determine profitability was done through the economic analysis of an average shale gas well using data that is representative of natural gas production from 2009 to 2011 in the Marcellus Shale. Despite the adverse conditions facing the shale gas industry it is concluded from the results of this analysis that a shale gas well in the Marcellus Shale is profitable based on NPV, IRR and breakeven price calculations.

The Value of Negotiating Cost-Based Transfer Prices

This paper analyzes the potential of one-step transfer prices based on either variable or full costs for coordinating decentralized production and quality-improving investment decisions. Transfer prices based on variable costs fail to induce investments on the upstream stage. In contrast, transfer prices based on full costs provide strong investment incentives for the upstream divisions. However, they fail to coordinate the investment decisions. We show that negotiations prevent such coordination failure. In particular, we find that the firm benefits from a higher degree of decentralization so that total profit increases in the number of parameters being subject to negotiations.

The Effect of the Japan 2011 Disaster on Nuclear and Alternative Energy Stocks Worldwide: An Event Study

This event study investigates the impact of the Japanese nuclear disaster in Fukushima-Daiichi on the daily stock prices of French, German, Japanese, and U.S. nuclear utility and alternative energy firms. Hypotheses regarding the (cumulative) abnormal returns based on a three-factor model are analyzed through joint tests by multivariate regression models and bootstrapping. Our results show significant abnormal returns for Japanese nuclear utility firms during the one-week event window and the subsequent four-week post-event window. Furthermore, while French and German nuclear utility and alternative energy stocks exhibit significant abnormal returns during the event window, we cannot confirm abnormal returns for U.S. stocks.

Board Overlap, Seat Accumulation and Share Prices

We examine the board overlap among firms listed in Switzerland. Collusion, managerial entrenchment, and financial participation cannot explain it. The overlap appears to be induced by banks and by the accumulation of seats by the most popular directors. We also document that seat accumulation is negatively related to firm value, possibly because of the conflicts of interest that multiple directorships induce and the time constraints directors face. Contrary to popular beliefs, however, the directors of traded firms do not generally hold more than one mandate in other traded firms. They do hold multiple seats in non-traded firms.

Stock offerings in a different institutional setting: the Swiss case, 1973-1983

This paper analyzes the stock price effect of equity issues in Switzerland. There, insiders are not legally prevented from using their information for personal trades, and security offerings are with almost no exception rights issues. Unlike what we find for a comprehensive sample of U.S. rights issues and a sample of U.S. general cash offerings, a significant majority of firms experiences a positive monthly announcement effect. The average abnormal return itself, however, is not significant. Also, we find evidence inconsistent with infinitely price-elastic demand functions for common stock, as well as some evidence that offer prices convey new information.

Identity, incentives and the value of information

We examine the impact of identity preferences on the interrelation between incentives and performance measurement. In our model, a manager identifies with an organization and loses utility to the extent that his actions conflict with effort-standards issued by the principal. Contrary to prior arguments in the literature, we find conditions under which a manager who identifies strongly with the organization receives stronger incentives and faces more performance evaluation reports than a manager who does not identify with the organization. Our theory predicts that managers who experience events that boost their identification with the firm can decrease their effort in short-term value creation. We also find that firms are more likely to employ less precise but more congruent performance measures, such as stock prices, when contracting with managers who identify little with the organization. In contrast, they use more precise but less congruent measures, such as accounting earnings, when contracting with managers who identify strongly with the firm.

Multiasset Derivatives and Joint Distributions of Asset Prices

Several of multiasset derivatives like basket options or options on the weighted maximum of assets exhibit the property that their prices determine uniquely the underlying asset distribution. Related to that the question how to retrieve this distributions from the corresponding derivatives quotes will be discussed. On the contrary, the prices of exchange options do not uniquely determine the underlying distributions of asset prices and the extent of this non-uniqueness can be characterised. The discussion is related to a geometric interpretation of multiasset derivatives as support functions of convex sets. Following this, various symmetry properties for basket, maximum and exchange options are discussed alongside with their geometric interpretations and some decomposition results for more general payoff functions.

The Acceleration of Stock Options in Anticipation of FAS 123 (R)

The Financial Accounting Standards Board (FASB) mandated the expensing of stock options with FAS 123 (R). As of March 2006, 749 companies had accelerated the vesting of their employee stock options and avoided a reduction in their reported profits that otherwise would have occurred under the new standard. There are many different motives for the acceleration strategy, and the focus of this study is to determine whether shareholders viewed these motives as either positive or negative. A favorable return subsequent to an acceleration announcement would signify that shareholder's viewed management's motives as positive. An unfavorable return subsequent to an acceleration announcement would signify that shareholder's viewed management's motives as negative. The evidence from this study suggests that shareholders reacted favorably, on average, to acceleration announcements. However, these results lack statistical significance and are based on a small sample, thus, they should be interpreted with caution.

Endogenous Financing and the Long Run Impact of Money Growth on Output and Prices

Most monetary models make use of the quantity theory of money along with a Phillips curve. This implies a strong correlation between money growth and output in the short run (with little or no correlation between money and prices) and a strong long run correlation between money growth and inflation and inflation (with little or no correlation between money growth and output). The empirical evidence between money and inflation is very robust, but the long run money/output relationship is ambiguous at best. This paper attempts to explain this by looking at the impact of money growth on firm financing.