34 results for Boyle, Glenn, Scholarly text

  • The Dog That Doesn't Bark: Animal Interests in Economics

    Boyle, Glenn (2008)

    Scholarly text
    Victoria University of Wellington

    Although animal welfare issues have become increasingly important to the economic fortunes of many producers the interests of animals themselves are absent from standard economic analysis. By contrast scholars from other disciplines such as philosophy and law have examined animal issues in considerable detail. This paper outlines a simple way of formally incorporating the insights of these discipines within a traditional economics framework. If animals have economic standing then current practice makes excessive use of animals as production inputs and is thus economically inefficient. However efficiency would not in general entail zero use. Optimal usage depends on the costs to animals and the benefits to humans and thus reflects the usual cost-benefit tradeoff inherent in economics. Even if animals are accorded no economic standing externalities imposed on human producers leads to similar qualitative conclusions.

    View record details
  • Forest and Forest Land Valuation: How to Value Forests and Forest Land to Include Carbon Costs and Benefits

    de Braganca, Gabriel Fiuza; Boyle, Glenn; Evans, Lewis (2008)

    Scholarly text
    Victoria University of Wellington

    New Zealand has introduced legislation to implement the world's first 'all sectors all gases' emissions trading scheme (ETS) as a way of reducing the country's greenhouse gas emissions. The Scheme is to retrospectively introduce a price for carbon emissions in forestry from 1 January 2008 and will phase in other sectors over time (notably agriculture from 2013). This report develops a methodology for valuing the impact of this change on forest and forest land value.

    View record details
  • The Regulatory Cost of Capital II: What is the Market Risk Premium?

    Boyle, Glenn (2005)

    Scholarly text
    Victoria University of Wellington

    Professor Glenn Boyle presented The Regulatory Cost of Capital II: What is the Market Risk Premium? at the half-day Regulatory Cost of Capital II: What is the Market Risk Premium? seminar.

    View record details
  • The WACC: A Sceptic's View

    Boyle, Glenn (2004)

    Scholarly text
    Victoria University of Wellington

    Professor Glenn Boyle presented The WACC: A Sceptic's View at the ISCR Auckland seminar : Calculating the Cost of Capital: A Revisionists' Appraisal.

    View record details
  • Pay Peanuts and Get Monkeys? Evidence from NZ Universities

    Boyle, Glenn (2006)

    Scholarly text
    Victoria University of Wellington

    Data constraints mean that relatively little is known about the relationship between pay levels and worker quality but the recently introduced Performance Based Research Funding (PBRF) system makes the NZ tertiary sector a natural setting for examining this issue. In NZ universities academics are paid the same regardless of area of specialisation a feature that suggests university disciplines with the most valuable outside opportunities will be least able to recruit high-quality researchers and/or motivate their researchers to be productive. I use academic performance and remuneration data to address this fundamental question: does the payment of (relative) peanuts result in the hiring of monkeys? Glenn Boyle is the executive director of ISCR and a professor of finance at Victoria University of Wellington

    View record details
  • A Primer on Information Markets

    Boyle, Glenn; Videbeck, Steen (2005)

    Scholarly text
    Victoria University of Wellington

    In 1988 the US Commodity Futures Trading Commission gave permission for the University of Iowa to begin operating the Iowa Electronic Market (IEM) thus ushering in the world's first information market (sometimes called a prediction market). Similar markets have subsequently appeared at the University of British Columbia and Vienna University of Technology. Outside the education sector firms such as Trade Exchange Network (tradesports.com) and a joint venture between Goldman Sachs and Deutsche Bank (economicderivatives.com) have set up public information markets while other firms such as Hewlett-Packard Lilly and Siemens have used information markets for internal purposes. Information markets are similar to standard derivatives markets in that they provide a mechanism for trading financial claims to future contingencies. However they differ in that first they are more accessible to small investors and second they offer markets on a wider range of events including politics sports legal weather business and entertainment. The increasing popularity of information markets reflects several factors. The university-based markets were initially designed to serve primarily as teaching and research tools by providing students and staff with the opportunity to study a trading environment that is more realistic than the typical laboratory setting but without the scale complexity and noise of real-world markets. More recently based on the proven ability of markets to gather and assimilate dispersed information the potential forecasting power of information markets has generated most interest.In this paper we describe the structure of some existing information marketsoutline their key features explain what they can be used for and assess theirpredictive ability. Finally we consider the possible advantages of setting up of an information market in New Zealand.

    View record details
  • Risk, Expected Return and the Cost of Equity Capital

    Boyle, Glenn (2005)

    Scholarly text
    Victoria University of Wellington

    In applying the CAPM to cost of capital calculations practitioners treat the market risk premium as a free parameter to be estimated from data. However this process ignores equilibrium in the cash market and therefore the implications of the CAPM for the premium itself. Full equilibrium relates the premium to underlying fundamental parameters a finding that holds out the promise of identifying time-variation in the cost of capital. Unfortunately this yields extremely volatile cost of capital estimates thereby casting doubt on the risk-return tradeoff specified by the CAPM.

    View record details
  • Intra-Country Regulation of Share Markets: Does One Size Fit All?

    Boyle, Glenn; Meade, Richard (2005)

    Scholarly text
    Victoria University of Wellington

    A large body of evidence suggests that investor protection regulationassists the development of major stock exchanges but this leaves openthe question of whether or not the same level of regulation should beapplied to all centralised trading platforms. Allowing for regulatoryvariation permits a wider choice of investment opportunities for liquidity conscious investors lowers some firms' cost of capital and enhancesplatform competition while potentially negative spillover mechanismslack both theoretical credibility and empirical support. Overalluniformity in investor protection regulation seems designed to provide anexpensive solution to a doubtful problem.

    View record details
  • Deposit Insurance and the Stock Market: Evidence from Denmark

    Boyle, Glenn; Bartholdy, Jan; Stover, Roger (2004)

    Scholarly text
    Victoria University of Wellington

    Previous studies of the relationship between deposit insurance and bank market values have usually been limited to consideration of minor changes in bank regulations but the 1987 initiation of deposit insurance in Denmark permits examination of a potentially major policy shift. We find that the market values of large Danish banks exhibited a modest positive reaction to the announcement of insurance but that small risky banks responded negatively. These results partially contrast with those previously found for the United States an outcome that seems likely to reflect the interaction of deposit insurance with the particular characteristics of the pre-existing Danish regulatory system.

    View record details
  • Pay Peanuts and Get Monkeys? Evidence From Academia

    Boyle, Glenn (2006)

    Scholarly text
    Victoria University of Wellington

    This article can be found at: The Berkeley Electronic Press Using some unique data from the New Zealand academic system this paper examines the relationship between worker quality and labour market value in a remuneration system that ignores opportunity cost differences. Based on a research assessment exercise undertaken in 2003 I find that the greater the difference between the value of a discipline's outside opportunities and its New Zealand academic salary the weaker its research performance in New Zealand universities. The latter apparently get what they pay for: disciplines in which compensation is lowest relative to opportunity cost are least able to recruit high-quality researchers. Paying peanuts attracts mainly monkeys.

    View record details
  • My Kingdom for a Horse: Resolving Conflicts of Interest in Asset Management

    Boyle, Glenn; Guthrie, Graeme; Gorton, Luke (2006)

    Scholarly text
    Victoria University of Wellington

    Racehorse trainers operate asset management businesses in which the assets owned by outside clients compete with those owned by managers for the latter's time care and attention. Although this potentially leads to serious conflicts of interest we find no evidence of an agency problem: in a sample of 8000 racehorses and their associated stables client-owned horses perform no worse than trainer-owned horses on average. However this outcome is not uniform across stables: the average performance advantage of client-owned horses over their trainer-owned counterparts is positive in big stables where client-owners provide much of the trainer's income but is negative in small stables with relatively few outside clients. Agents with more to lose apparently behave better.

    View record details
  • Estimating the WACC in a Regulatory Setting: An Assessment of Dr Martin Lally's paper 'The Weighted Average Cost of Capital for Electricity Lines Businesses' of 8 September 2005

    Boyle, Glenn; Evans, Lewis; Guthrie, Graeme (2006)

    Scholarly text
    Victoria University of Wellington

    In September 2005 the New Zealand Commerce Commission (NZCC) released a document (TheWeighted Average Cost of Capital for Electricity Lines Businesses by Dr Martin Lally referred to as LINES hereafter) that estimates a weighted average cost of capital (WACC) for New Zealand electricity lines businesses and proposes a means for detecting future excess earnings. At about the same time the NZCC also began seeking submissions on another document (Draft Guide- lines: The Commerce Commission's Approach to Estimating the Cost of Capital 2005) that addresses the topic of an appropriate framework for the WACC in the New Zealand regulatory environment. Although no specific author is attributed to the latter its material content is drawn from LINES. In this paper we undertake a detailed analysis of the approach followed in LINES. We do so from the perspective of a referee who has been asked to provide a review of that report in order to assess its suitability for publication in an edited book or journal that adheres to conventional academic standards. Although LINES has not of course been submitted for publication orreview of this kind its contents and recommendations should nevertheless meet minimum standards of accuracy thoroughness and consistency. It is these criteria we use to assess LINES. Our report is motivated by a simple but important concern: although the cost of capital is a critical element of the revenue and price settings that materially determine the social net-benefit of income-control regulation there are presently no institutional arrangements in New Zealand that allow for reports such as LINES to be thoroughly reviewed and debated. On the basis of our review we conclude that such institutional arrangements are sorely needed. Our assessment of LINES comprises two parts. In Section I we provide an overview of what we consider to be the critical areas of concern in LINES. Section II then discusses specific errors in detail.

    View record details
  • Real Options and Transmission Investment: the New Zealand Grid Investment Test

    Boyle, Glenn; Guthrie, Graeme; Meade, Richard (2006)

    Scholarly text
    Victoria University of Wellington

    Responsibility for approving proposed transmission investment programmes in New Zealand has recently been placed in the hands of a newly-formed government regulator. In this paper we develop an analytical framework for conceptualising the investment test proposed by this regulator. Our framework reveals that the test involves a complex set of tradeoffs between economies of scale the time value of money and flexibility in the timing level and location of transmission investment assessment of which requires explicit recognition and valuation of real options.

    View record details
  • Techniques for Estimating the Fiscal Costs and Risks of Long-term Output-based Payments

    Boyle, Glenn; Irwin, Tim (2005)

    Scholarly text
    Victoria University of Wellington

    Long-term commitments to make output-based payments for infrastructure can encourage private investors to provide socially valuable services. Making good decisions about such commitments is difficult however unless the government understands the fiscal costs and risks of possible commitments. Considering voucher schemes shadow tolls availability payments and access connection and consumption subsidies this paper considers measures of the fiscal risks of such commitments including the excess-payment probability and cash-flow-at-risk. Then it illustrates techniques based on modern finance theory for valuing payment commitments by taking account of the timing of payments and their risk-characteristics. Although the paper is inevitably mathematical it focuses on practical applications and shows how the techniques can be implemented in spreadsheets.

    View record details
  • Can Ex Post Rates of Return Detect Monopoly Profits?

    Boyle, Glenn; Guthrie, Graeme (2002)

    Scholarly text
    Victoria University of Wellington

    We review the ability of the ex post internal rate of return (IRR) to detect monopoly profits. When market values are used as entry and exit values the ex post IRR simply reveals whether the firm did better or worse than the market expected at the entry date. It says nothing about monopoly profits. When replacement costs are used as entry and exit values the ex post IRR can in principle reveal something about monopoly profits. However since the ex post IRR is a noisy measure of ex ante monopoly profits it will be very difficult to reject the hypothesis given the sample periods typically available. The benchmarks typically used are market-determined and therefore only comparable to IRRs calculated using market values - a situation when the ex post IRR reveals nothing about monopoly profits anyway. Furthermore there is ample empirical and theoretical evidence that these benchmarks do not even represent fair rates of return.

    View record details
  • Emotion, Fear and Superstition in the New Zealand Stockmarket

    Boyle, Glenn; Hagan, Andrew; O'Connor, R. Seini (2004)

    Scholarly text
    Victoria University of Wellington

    We analyse the reaction of the New Zealand stock market to five economically-neutral events that psychology research indicates have varying degrees of influence on emotion and mood. Contrary to behavioural finance principles only one of these events is associated with mean or median returns that are statistically different from those on non-event days and even this disappears in the post-1984 period. However several events offer returns that differ from those on non-event days in an economically significant manner. Moreover the variance of returns for event days is typically much greater than the variance for non-event days. Contrary to what theory would suggest the market's propensity to react to economically-neutral events is largely independent of the mid-1980's market reforms.

    View record details
  • Executive Compensation in New Zealand: the Good, the Bad & the Ugly

    Boyle, Glenn; Roberts, Helen (2004)

    Scholarly text
    Victoria University of Wellington

    Professor Glenn Boyle and Helen Roberts presented Executive Compensation in New Zealand: the Good, the Bad & the Ugly. They report on some broad trends and features of New Zealand executive compensation in the period 1997-2002.

    View record details
  • One Size Fit All? Investor Protection Regulation in Financial Markets

    Boyle, Glenn; Meade, Richard (2005)

    Scholarly text
    Victoria University of Wellington

    Professor Glenn Boyle presented One Size Fit All? Investor Protection Regulation in Financial Markets at this seminar in May 2005.

    View record details
  • Payback Without Apology

    Boyle, Glenn; Guthrie, Graeme (2006)

    Scholarly text
    Victoria University of Wellington

    When interest rates are uncertain the net-present-value threshold required to justify an irreversible investment is increasing in the length of a project's payback period. Thus slowpayback projects should face a higher hurdle than fast-payback projects just as investment folklore suggests. This result suggests that the widely disparaged use of payback for capital budgeting purposes can be an intuitive response to correctly perceived costs and benefits.

    View record details
  • Valuing Employee Stock Options: Implications for the Implementation of NZ IFRS 2

    Boyle, Glenn; Clyne, Stefan; Roberts, Helen (2005)

    Scholarly text
    Victoria University of Wellington

    From 2007 New Zealand firms must report the cost of granting employee stock options (ESOs). Market-based option pricing models assume that options are continuously tradable and thus that option holders are indifferent to the specific risk of the firm. ESOs by contrast cannot be traded and so their cost depends on the risk aversion and under-diversification characteristics of the recipient. Using hypothetical ESOs we show that ESO cost is extremely sensitive to employee characteristics thereby casting doubt on the usefulness of any market-based model. Incorporating early exercise in the latter does nothing to resolve this problem because the optimal exercise policy is itself dependent on holder characteristics which are typically unobservable. Vesting restrictions help reduce the magnitude of error.

    View record details