This paper uses Australian data to analyze takeover bid premiums and longterm abnormal returns for mergers that occur during wave and non-wave periods. Findings reveal that bid premiums are slightly lower in wave periods, and bidding firms earn normal post-takeover returns (relative to a portfolio of firms matched on size and survival) if their bids were made in non-wave periods. However, bidders who announced their takeover bids during wave periods exhibit significant underperformance. For mergers that took place within waves, there is no difference in bid premiums nor is there a difference in the long-run returns of bidders involved during the first half and second half of the waves. We find that none of prominent theories of merger waves (managerial, misvaluation, and neoclassical) can fully account for Australian takeover waves and their effects. Instead, our results suggest that BanalEstanol et al.'s screening theory of merger activity, by combining the misvaluation and neoclassical theories, may provide a better explanation.

The stochastic approach is a new way of viewing index numbers in which uncertainty and statistical ideas play a central role. Rather than just providing a single number for the rate of inflation, the stochastic approach provides the whole probability distribution of inflation. This paper reviews the key elements of the approach and then discusses its early history, including some previously overlooked links with Fisher's work contained in his book The Making of Index Numbers. We then consider some more recent developments, including Diewert's well-known critique of the stochastic approach, and provide responses to his criticisms. We also provide a review of Theil's work on the stochastic approach, and present and extend Diewert's work on this topic within the context of the Country Product Dummy method which measures price levels internationally. The paper also contains some recent material on the value of information from the perspective of the stochastic approach, as well as illustrative applications.

The ASX Corporate Governance Council’s Principles of Good Corporate Governance and Best Practice Recommendations (Released March 2003) has been criticised as unduly prescriptive and potentially costly, particularly for small firms. Using a sample of 518 West Australia and Queensland based ASX listed companies, we show that small companies are less likely to comply with several of the ASX recommendations than large companies. We also show that some agency controls largely ignored in the recommendations, such as substantial shareholders, may substitute for some of the corporate governance mechanisms recommended by the ASX. We also consider the effect that the extent of director interlocking may have on compliance, and find that it is minimal. Overall, the results of this research provide a timely reminder that when it comes to corporate governance, one size does not fit all.

This article introduces a new tool for measuring relative pay within organizations. We call this innovation the 'Pay Parity (PP) matrix', and discuss its advantages and useful properties. The PP matrix allows us to conveniently measure, and draw inferences about, the nature of the whole remuneration schedule, such as its gradient and smoothness. We illustrate the application of the PP matrix by using data on the remuneration of academic executives in universities.