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AbstractWe examine the composition of return volatility, serial correlation, and trading costs before and after decimalization on the New York Stock Exchange. We decompose the variance of price changes into components associated with public news, rounding errors, and market‐making frictions. We find that when stocks move from a fractional to a decimal trading system, the variance components due to market‐making frictions and rounding errors decline significantly, whereas the component due to public news remains unchanged. The serial correlation of price changes weakens substantially after decimalization. The uninformed component of bid‐ask spreads decreases significantly whereas the informed component has no significant change.

AbstractWe report further evidence of the difference in execution costs between Nasdaq and the NYSE before and after the 1997 market reforms. We find that informed trading costs are consistently higher on Nasdaq both before and after the reforms. In the pre‐reform period the Nasdaq‐NYSE disparity in bid‐ask spreads cannot be completely attributed to the difference in informed trading costs. However, in the post‐reform period the spread difference between these two markets becomes insignificant with the effect of informed trading costs controlled. Our findings are consistent with the contention that the reforms have largely reduced noninformation trading costs and dealers' rents.

ABSTRACTResearch Question/IssueWe investigate the impact of mandatory operating information disclosure rules on related‐party transactions (RPTs) in Chinese‐listed firms. To achieve this, we use the staggered implementation of China's Industry Disclosure Guidelines (CIDG) as an exogenous shock to firms' operating information. We then examine how this regulatory change influences controlling shareholders' expropriation behavior through RPTs.Research Findings/InsightsThe implementation of CIDG results in a reduction in suspicious RPTs, indicating that the mandatory disclosure of operating information effectively mitigates expropriation behavior by controlling shareholders. Additionally, we observe improvements in both the quantity and quality of disclosures after the CIDG, which enhances corporate governance by increasing investor attention and improving the efficiency of regulatory inquiries into RPTs. In our cross‐sectional analysis, the impact of the CIDG is more pronounced for firms with weaker internal controls, lower institutional holdings, and a weaker institutional environment as compared to their counterparts, suggesting a "substitution effect" between the CIDG and firms' internal and external governance mechanisms.Theoretical/Academic ImplicationsThis study contributes to addressing the challenge of curbing opportunistic RPTs in emerging markets. Our study contributes to previous research by emphasizing the crucial role of operating information. This information enhances outsiders' ability to comprehensively understand and utilize disclosed numbers, thereby compensating for a firm's weak corporate governance and restraining expropriation by controlling shareholders. We also provide evidence that corporate governance can be strengthened by improving operational transparency. Our study also contributes to the literature on the actual effect of information on managerial behavior.Practitioner/Policy ImplicationsThis study has several important policy implications. Providing sufficient operating information to minority shareholders and other monitors can empower them to oversee controlling shareholders' behavior effectively. Policymakers can enhance market discipline by reforming information disclosure rules and promoting industry‐level transparency, particularly in emerging markets that have insufficient investor protection against tunneling.

In this article, the authors report on the development of a short screening tool that deputies in the Los Angeles Sheriff's Department could use in the field to help forecast domestic violence incidents in particular households. The data come from more than 500 households to which sheriff's deputies were dispatched in fall 2003. Information on potential predictors was collected at the scene. Outcomes were measured during a 3-month follow-up. Data were analyzed with modern data-mining procedures in which true forecasts were evaluated. A screening instrument was developed based on a small fraction of the information collected. Making the screening instrument more complicated did not improve forecasting skill. Taking the relative costs of false positives and false negatives into account, the instrument correctly forecasted future calls for service about 60% of the time. Future calls involving domestic violence misdemeanors and felonies were correctly forecast about 50% of the time. The 50% figure is important because such calls require a law enforcement response and yet are a relatively small fraction of all domestic violence calls for service.

This paper documents the economic and financial recovery of East Asia based on its real GDP, export, currency value and stock performance since the 1997 financial crisis. A macroeconomic model is used to estimate the chain effect of international trade on Asian recovery. It is found that the U.S. economy had a significant impact on the recovery of this region through close international trade relationship. Two major factors appear to explain the recent rapid recovery: (1) strong U.S. economic growth and currency value, and (2) the current account surplus and net inflow in foreign direct investment of crisis-hit countries.