Implications of limited investor attention to customer–supplier information transfers

Abstract

We examine the (dis)incentive effects created by the respective tax systems to invest in human capital in Atlantic Canada and compare this to a select group of provinces from the rest of Canada. While findings show a steady decline in effective tax rates through the years, thereby creating an incentive effect to invest in post-secondary education, disproportionately higher rate gap differentials in the Atlantic Provinces, on average, combined with negative comparative statics reveal a somewhat different undertone. The counterproductive nature of the competing policies effectively nullifies any status quo argument for education or tax policy in the Atlantic Provinces, when compared to their brethren. The graduate retention rebate provides some solace to the narrative in helping to alleviate early tax burdens and equalize returns, but is difficult to claim effectiveness in assuaging any monetary windfall associated with migration. IntroductionThe goal of this paper is to assess the (dis)incentive effects created by the provincial tax systems for human capital investment in Atlantic Canada. Our test subjects are university graduates, but we note that such methodology could be applied to any level or subset of the population that possess human capital deemed scarce and productive, in the economic sense. We do not purport to suggest that university graduates are more important in the economic well being of an economy than, say, skilled trades or college graduates, e.g., and encourage one to think of our case as a subset of a larger sample of possibilities. Our presumption, like our goal, is simple; namely, an empirical investigation of incentivizing the tax system in Atlantic Canada remains an unexplored possibility for strategic policy implementation to retain and recruit scarce resources in the market for human capital. We use the impact on effective tax rates (ETRs) and rates of return as our policy litmus test and explore by empirical and simulation analysis the unilateral exploitation of a select number of provincial tax systems. Some may claim that this work puts the * Collins would like to acknowledge the support of the CRS-SSHRC institutional research grant at St. Francis Xavier University in helping to complete this research.proverbial cart before the horse, as it were, since to attract workers a province needs the requisite infrastructure and such may not be currently present at the appropriate level(s) to warrant an increase in the supply of skilled labour. To that end, we suggest that a more accurate assessment (or, at least, a plausible alternative) might be akin to a "chicken or the egg" argument; namely, which comes first? We leave this debate up to the interested reader for now, and focus on establishing the empirics of the analysis in an effort to add the requisite fodder for a more informed discussion.While previous research has examined the disincentive effects created by the tax system for, e.g., university and college graduates (see, for instance, Burbidge et al., 2012), the current study is diff...

The Information Content of Short Selling Around Close Supply Chain Relationships

“…Dependent suppliers and their large customers are presumed to be able to keep financial and operations information private until the formal earnings announcement to the general capital market, but not from sophisticated short sellers . Without short sellers, herd‐like behavior coupled with diversified investment strategies may prevent investigation of firm‐specific linked supply chain‐specific factors that lead to information asymmetry about future earnings (Zhu, ). H3 : The likelihood of a negative earnings surprise is preceded by high short interest for suppliers and customers, but more so for linked partners . …”

Externalities of Sales Information Along the Supply Chain

“…Information externalities occur when one company's disclosed information becomes relevant to the stakeholders of another company (e.g., Badertscher et al, 2013). Previous research has demonstrated the presence of externalities with earnings information between customer firms and their suppliers (e.g., Cho et al, 2020;Pandit et al, 2011;Zhu, 2014;Chen et al, 2021). However, whether sales information has similar externalities along the supply chain remains largely unexplored.…”