Research Lab

Federal cutbacks in urban aid in the 1970s forced cities to finance redevelopment projects with their own resources. Freed from federal rules and regulations, cities responded with invention, devising new financial strategies that proved to be powerful alternatives to direct federal aid. The process that fostered the solutions—public-private dealmaking—transformed the nature of city development practice, raising with it troublesome issues of accountability. This article describes these financial strategies and the nature of public subsidies in the deals.

This study reports on the ex-post performance of survivor REITs and RECs over a 14.5-year period covering several business cycles. The results show that the systematic risk and risk-adjusted returns of REITs and RECs are quite different, especially during periods of low growth in real GNP. Relative to the overall stock market, survivor REITs, in particular, equity REITs, exhibited less volatility and higher returns than previous studies revealed.

The issue of providing segment disclosures has renewed significance because the Securities & Exchange Commission (SEC) has been considering the extension of segment disclosures, both line-of-business (LOB) and geographically segmented (GEOG), to all interim financial statements. To determine whether GEOG data provide incremental information about the earnings process, the specific contribution of sales and income GEOG data was evaluated by estimating their predictive ability. Two sets of GEOG predictions were used in the predictive accuracy tests.

In this study we consider managerial earnings forecasts as voluntary information releases and compare their properties with predictions from a screening or signaling scenario.

This paper performs a financial statement analysis that combines a large set of financial statement items into one summary measure which indicates the direction of one-year-ahead earnings changes. Positions are taken in stocks on the basis of this measure during the period 1973–1983, which involve canceling long and short positions with zero net investment. The two-year holding-period return to the long and short positions is in the order of 12.5%. After adjustment for "size effects" the return is about 7.0%. These returns cannot be explained by nominated firm risk characteristics.

Our cities are on the move again. Pioneering observers of the urban landscape Bernard Frieden and Lynn Sagalyn delve into the inner workings of the new public entrepreneurship and public private partnerships that have revitalized the downtowns of such cities as Boston, San Diego, Seattle, St. Paul, and Pasadena. They bring a unique combination of political and economic expertise to their analysis of this hot new marketplace, depicting a generation of mayors and administrators who differ in style from their predecessors and who have a more informed relationship with developers.

We examine two measures of monthly manufacturing production. The first is the index of industrial production; the second is constructed from the accounting identity that output equals sales plus the change in inventories. We show that the means, variances, and serial correlation coefficients of the log growth rates differ substantially between the two series, and the cross-correlations are in most cases less than 0.4.

This paper utilizes the concept of aggregative consistency defined in Rubinstein and Fishburn [1986], and the FASB's concept of representational faithfulness to evaluate foreign currency translation and accounting for changing prices as embodied in SFAS 70. The paper shows that SFAS 70 produces measurement errors and creates a foreign currency translation adjustment which does not reflect the effects of exchange rate changes. The conditions defined in the paper also facilitate an evaluation of the relative merits of restate/translate and translate/restate.

In this paper we show that information in prices that leads (future) earnings is contained in financial statements. While accrual accounting rules produce an earnings number which reflects the information in stock prices with a lag, they also produce a large array of additional numbers presented in the income statement, balance sheet, and statement of changes in financial position. We demonstrate that certain of these numbers can be summarized into one measure that predicts future earnings.