Michael I. Muoghalu

Hazardous Waste Lawsuits, Financial Disclosure, and Investors' Interests

Under the semi-strong form of the efficient capital market hypothesis, the stock price reaction to the public announcement of a new loss contingency provides the market’s assessment of the impact of the contingency. The financial statemcnt treatment of the loss contingency, guided by Statement of Financial Accounting Standards (SFAS) No. 5, provides a second assessment of the materiality of the contingency. In the absence of management holding private information, the two assessments should be the same, with the financial statement disclosure confirming the markct’s rcaction. However, high proprietary costs of disclosure, management deception, and the ambiguitics of SFAS No. 5 may affect disclosure decisions and contribute to differences between thc markct reaction and the financial statement treatment. This papers tests whether there is a systematic relationship between stock price reactions to publicly announced hazardous waste mismanagement lawsuits and the financial statement treatment of those suits.’ In the simplest form, thc research question is: will two firms facing hazardous waste lawsuits that produced similar market reactions be equally likely to disclose the suits? Hazardous waste lawsuits were selected as the loss contingency for the current study for two reasons. First, hazardous waste lawsuits have a large variation in both the size of the damages being sought and the size of firms being sued. Given the variation in both attributes, we expect both significant and insignificant market reactions across the sample. Second, evaluating hazardous waste lawsuits is a complex task that occurs infrequently (Rigsby, Lambert, and Alexander [ 1989]), mak-

The Political Economy of Multinational Conglomerates in Nigeria

Abstract The paper analyzes the operations of the multinational conglomerates so as to determine the impact of their operations on the Nigerian economy, and especially on the manufacturing sector. It also investigated the possible problems hindering their operations. In an attempt to accomplish these objectives, we employed both survey and investigative research methods using regression modeling and estimation. The analysis of the secondary evidence indicates that, generally, the investment activities of conglomerates are found to positively and significantly relate to the output performance of the manufacturing sector of the Nigerian economy. The primary data analysis confirms this finding. On the other hand, they are seen to exploit natural resources and the workforce to the detriment of the country, and by repatriating all available funds and profits to overseas economies, the economy is starved of needed funds. However, their positive contributions to the Nigerian economy were seen to outweigh their negative contributions. This is particularly true of the manufacturing sector. Two perennial problems confronting the conglomerates in their investment activities relate to environmental hostilities and communal disturbances/social upheavals. Other problems relate to political risks, instability and impasse, and unstable economic climate.

The Nigerian Financial Superstructure, Financial Intermediation, and Environmental Factors: Issues, Empirical Evidence, and Managerial Implications

ABSTRACT The paper empirically investigates the extent to which environmental factors affect the intermediation performance of the financial superstructure in Nigeria. A number of intermediation-environmental models were constructed and estimated against annual Nigerian data from 1970 to 2000. Among the various environments of financial intermediation, the socio-political environment, the regulatory environment, and the eco-financial environment exert very great influences on the operations of the financial superstructure. This is based on the evidence from the results, which revealed the socio-political index, regulatory index, and foreign exchange market variables as the most critical predictors of the financial intermediation-output-related index. Other factors such as inflation, taxation, financial market imperfection, and the growth rate of the economy appear not to exert statistically significant effects on the intermediation operations of the financial superstructure. Generally, the utility of the specified models was satisfied as indicated by the results of the global statistics.

Intermediation Behavior of the Financial Superstructure in Response to Environmental Stimuli: Theory, Issues and Further Empirical Evidence from Nigeria

ABSTRACT This paper is an empirical extension aimed at investigating the relationships between the indicators of the financial superstructure and its intermediation environments; and especially how the former responds to the effects of the latter. Intermediation-environmental models patterned after multivariate regression, causality, and partial adjustment models of both linear and log-linear formulations were estimated and analyzed. The results reveal that three environments: socio-political, regulatory, and international finance-exerted significant effects on the intermediation function of the superstructure. Previous intermediation successes ginger up current performance. In the long run, the effects of the environmental factors on the intermediation function of the superstructure, in whatever direction, more than quadruples. In any given year, the Nigerian financial superstructure attains only about 21.9% of desired (optimal) FIR. Given this, it would take about 4-1/2 years for it to adjust its intermediation operations (FIR), in light of the effects of environmental factors, to optimal levels in order to significantly impact the economy as desired. Some consistent behavioral traits were identified from the results to include: the precepts of potential maximization, profit maximization, accommodation principles, survival and cost-minimization principles, and the neutrality axiom.

The economic impact of superfund’s litigation on the value of the firm: An empirical analysis

The authors use a standard event-study methodology to evaluate the capital market reaction to superfund lawsuits brought against firms between 1980 and 1990. The results of the time series study indicate that the firms, on the average, suffered a statistically significant loss of 1.30 percent (

CAPITAL MARKET GROWTH AND INFORMATION TECHNOLOGY: EMPIRICAL EVIDENCE FROM NIGERIA

30.17 million) of their market value over the two-day event interval. The magnitude of the penalty varies among the industries examined, with the greatest impact falling on the pollution management industry. The lawsuit appears to have significant information effect, with the losses providing some indication that the lawsuits could impose costly constraints on the firms.