Asset Management

This article focuses on the formulation of a method to solve the joint consumption-portfolio problem. The formulation presented allows the author to distinguish between risk preferences and time preferences when determining optimal consumption and asset demand. Classic Fisherian two-period diagrammatics are generalized. Period-two risk preferences are assumed to be independent of first-period consumption. The set of consumption-portfolio optima is expanded consistently with utility maximization.

This paper assesses the ability of markets to convey information about firms to investors. The present system of disclosure rules has been restricted to historical data. Recently there have been proposals to bring predictive data—in particular, earnings forecasts—under the scope of a disclosure rule. Forecasts of future earnings are, at present, being provided by many corporate managements.

This paper develops optimal portfolio choice and market equilibrium when investors behave according to a generalized lexicographic safety-first rule. We show that the mutual fund separation property holds for the optimal portfolio choice of a risk-averse safety-first investor. We also derive an explicit valuation formula for the equilibrium value of assets.

Reprinted in Fred Lane, (ed.), <em>Current Issues in Public Administration</em> (New York: St. Martin's Press, 1978), pp. 288- 301.

This paper is presented within the context of two streams of research which can be identified in the current literature of empirical accounting research. Both of these research areas deal with changes in accounting methods. The first deals with the motivation for changes in accounting methods, and the second area, attempts are made to discover the consequences of accounting changes in terms of the reaction of capital markets to the output of the accounting process.

The purpose of this paper is to discover a theoretically sound model of asset valuation by reference to the basic underlying concept of Financial Position. It will be shown that several models of asset valuation can be developed from alternative assumptions or definitions of Financial Position, but that the application of certain metaphysical constraints brings about the rejection of some of these models.

To get back in balance, allocators have a number of options — everything from using secondary markets and making valuations more realistic to doing nothing.