Competition and Regulation Times. March 2012. Issue 37.

Abstract

• Title: Valuing an SOE's Equity Abstract: Valuing a new security is always a difficult business. Historically, new firms' shares have been initially sold for far less than the price they subsequently trade at, as evidenced by the high profits accruing to participants in initial purchase offerings. While this first-day return is good news for the firm's initial shareholders, it's bad news for the firm because that money could have been accumulated as capital from their share sale. Toby Daglish notes that a government planning to sell a state-owned enterprise (SOE) is in a similar situation: pitch the price too low, and taxpayers will miss out on part of the windfall. Author: Toby Daglish
• Title: Cultivating Cultural Wellbeing Abstract: New Zealand's political capital prides itself as also being the nation's 'Arts and Culture Capital'. But what returns do its ratepayers - and those of other New Zealand local authorities - get from financial support provided to libraries, museums, art galleries, heritage resources, visual and performing arts, festivals and other community and cultural activities? Lisa Marriott sees little evidence that local government spending on cultural activities in New Zealand is correlated with local economic growth - which tends to suggest that such spending occurs because the funders think that consuming culture is 'better for us' than we individually consider it to be. Author: Lisa Marriott
• Title: Separating the Facts from the Fury Abstract: It happened just one week before Christmas last year: Christchurch City Council's announcement that its CEO Tony Marryatt would receive a 12.3% pay rise (worth $59,037) backdated to 1 July 2011. Ratepayer reaction was fast, furious, and public. Glenn Boyle takes a look at the facts, to see whether all the fuss was justified. Author: Glenn Boyle
• Title: Mates rates? What CEOs Get Paid Abstract: Can CEOs manipulate their pay through involvement in the pay-setting process? Contrary to what we intuitively assume, they may not. A study of New Zealand firms1 discovered that CEOs with the most direct involvement in the setting of their own remuneration are, on average, rewarded less generously than those who are kept at arm's length. Helen Roberts explains.Note: Fn1 on page 9 of this article should refer to: 'CEO Presence on the Compensation Committee: A Puzzle', G Boyle & Helen Roberts, Jan 2012. http://www.iscr.org.nz/f730,20191/20191_CEO_presence_on_the_Compensation_Committee-_A_Puzzle.pdf Author: Helen Roberts
• Title: Do Current Power and Future Risk Cause Future Power and Current Risk? Abstract: Little is known about the relationship between risk and market power in electricity markets. It's widely agreed that the expansion of forward markets decreases market power in concentrated electricity industries, and that this increases social welfare. However, such one-way causality tells only half the story. Gabriel Fiuza de Bragança finds that market-power indicators such as the Lerner Index may be telling us something different from what we thought they were. Author: Gabriel Fiuza de Bragança
• Title: Cloud Computing Not Always Nirvana Abstract: The devastating Christchurch earthquake in February last year has heightened awareness of the vulnerability of businesses whose computer applications are both mission-critical and housed on computers in the same premises from which the business operates. Is cloud computing the answer? Bronwyn Howell observes that this too has a downside. Author: Bronwyn Howell
• Title: Changes afoot at ISCR Abstract: ISCR's deputy chair, Anton Nannestad, pays tribute to outgoing chair Rob Cameron and says that the principles Rob espoused will continue to inform ISCR and guide its recently expanded research capability. Author: Anton Nannestad