This study compares the impact that life cycle income and current income have on the number of vacation and pleasure trips taken and trip expenditures of families. Total household expenditure is used as a surrogate for permanent or life cycle income. A stratified sample was taken from the U.S. Department of Labor consumer survey data. The impact of additional variables such as age of consumer unit, reference person, and number of old and young people in the household is also evaluated. The percentage spent on trips increases as the total expenditure quintile rises, while the percentage spent on trips decreases as the income quintile increases. Total household expenditures is the strongest variable for forecasting trips and the spending on them.

Financial crises inflict significant human as well as economic hardship. This paper focuses on the human fallout of capital market stress. Financial stress-induced behavioral changes can manifest in higher suicide and murder-suicide rates. We find that these rates also correlate with the Gross Domestic Product (GDP) growth rate (negatively associated; a -0.25% drop [in the rate of change in annual suicides for a +1% change in the independent variable]), unemployment rate (positive link; 0.298% increase), inflation rate (positive link; 0.169% increase in suicide rate levels) and stock market returns adjusted for the risk-free T-Bill rate (negative link; -0.047% drop). Suicides tend to rise during periods of economic turmoil, such as the recent Great Recession of 2008. An analysis of Centers for Disease Control and Prevention (CDC) data of more than 2 million non-natural deaths in the US since 1980 reveals a positive correlation with unemployment levels. We find that suicides and murder-suicides associated with adverse market sentiment lag the initial stressor by up to two years, thus opening a policy window for government/public health intervention to reduce these negative outcomes. Both our models explain about 73 to 76% of the variance in suicide rates and rate of change in suicide rates, and deploy a total of four widely available independent variables (lagged and/or transformed). The results are invariant to the inclusion/exclusion of 2008 data over the 1980–2016 time series, the period of our study. The disconnect between rational decision making, induced by cognitive dissonance and severe financial stress can lead to suboptimal outcomes, not only in the area of investing, but in a direct loss of human capital. No economic system can afford such losses. Finance journal articles focus on monetary alpha, which is the return on a portfolio in excess of the benchmark; we think it is important to be aware of the loss of human capital as a consequence of market instability. This study makes one such an attempt.

This article examines the long-term stock market performance of debt-free firms with high and low levels of debt capacity to see whether they are different. We use Fama and French's (1993) three-factor and Carhart's (1997) four-factor models to examine the subsequent 1, 2, 3, 4 and 5-year stock returns of firms that stayed debt free for 3-and 5-year periods. We measure debt capacity as the expected asset liquidation value of a firm, which is proxied by the firm-level tangibility measure defined by Berger, Ofek, and Swary (1996). We find that regardless of the level of debt capacity, zero-debt firms generate positive abnormal returns in the long run after controlling for key risk factors. We also find support for the notion that preserving debt capacity in the form of higher tangibility reinforces the positive abnormal returns over and above the effect of a zero-leverage policy.

We examine the effects of including timberland, farmland and commercial real estate in a mixed asset portfolio with stocks, government bonds and T‐Bills. Using both smoothed and unsmoothed returns (as per Geltner [Geltner, D. (1993). Estimating market values from appraised values without assuming an efficient market. Journal of Real Estate Research, 8, 25–345.]) and both constrained and unconstrained allocation assumptions (as per Eichhorn, Gupta and Stubbs [Eichhorn, D., Gupta, F., & Stubbs, E. (1998). Using constraints to improve the robustness of asset allocation. Journal of Portfolio Management, Spring, 41–48.]), we employ Markowitz portfolio optimization and find widely varying allocation outcomes. However, timberland entered nearly all portfolios, accounting for large percentages in several scenarios, while farmland entered only low‐risk portfolios. At lower risk levels, commercial real estate dominates the real estate allocation but as acceptable risk levels rise, timberland supplants commercial real estate as the primary component of the portfolio's real estate allocation.

PurposeThe authors present the results of a survey on how Korean firms evaluate new projects and estimate their capital costs. The authors report how Korean firms’ capital budgeting practices compare to other developed countries and to best practices in the field of finance.Design/methodology/approachThe authors survey CFOs of major Korean firms on their capital budgeting practices. The authors then compare the results against the US and European firms and best practices of leading firms and financial advisors.FindingsThe authors find that the capital budgeting practices of Korean firms are as strong as or stronger than firms in developed markets. A majority of Korean firms use best practices techniques such as NPV, IRR and the CAPM for project evaluation and cost of equity estimation. Chaebol affiliation results in somewhat stronger capital budgeting practices. The authors also find that other factors, such as company size, leverage, CEO age and CEO education, impact capital budgeting practices.Originality/valueThis paper is the first article that comprehensively examines Korean firms' capital budgeting practices.