Cash holdings in family firms: CEO identity and implications for firm value

We investigate the cash holdings policy of family firms and examine potential value implications. Family firms hold more cash than other firms, with an average difference of 2.3% of total assets. This result is driven by firms managed by heir CEOs. While the cash holdings policy of first‐generation family firms is more sensitive to firm risk, consistent with founders’ increased risk aversion, that of later‐generation firms is more sensitive to information asymmetry and agency conflicts. Heir CEOs’ cash policies destroy value, as the marginal value of an additional Euro suffers from a 38.3‐cent discount, on average, relative to non‐family firms.     

Determinants of environmental innovations supporting small- and medium-sized enterprises sustainable development

Enterprises are increasingly required to improve their environmental performances. The adoption of environmental innovations (EIs) is believed a way to achieve this goal. So a flourishing debate about the determinants supporting investment in EIs arose. Researchers have thus far paid attention mainly to established manufacturing firms operating in traditional sectors. Hence, scientific literature recommends deepening the behavior of small- and medium-sized enterprises (SMEs) because of the role they play in the productive systems in many Western countries. With this in mind, this study investigates a probabilistic sample of 222 innovative SMEs using the partial least squares and importance–performance map analysis in order to identify the factors affecting their propensity to invest in EIs. Findings show that the propensity results are affected by the firms' environmental awareness, company staff, and capabilities, among the internal factors, whereas among the external ones, the propensity is affected by norms and regulations. An important role is also played by the hope to improve their economic and environmental performances. Monetary and fiscal incentives reveal not to be significant. Consequently, policies should firstly propose an appropriate mix of regulations and stimuli following two directions: a compliance direction to more stringent regulations and rules to be followed through the imposition of penalties and a cultural direction aiming at improving environmental awareness of SMEs about the desirability of pursuing EIs for both ethical and economic reasons, given the potential benefits associated with such innovations.     

An evaluation of the life cycle effects of minimum pensions on retirement behavior

In this paper we explore the effects of the minimum pension program on welfare and retirement in Spain. This is done with a stylized life cycle model which provides a convenient analytical characterization of optimal behavior. We use data from the Spanish Social Security to estimate the behavioral parameters of the model and then simulate the changes induced by the minimum pension in aggregate retirement patterns. The impact is substantial: there is a threefold increase in retirement at 60 (the age of first entitlement) with respect to the economy without minimum pensions, and total early retirement (before or at 60) is almost 50% larger. Copyright © 2007 John Wiley & Sons, Ltd.     

The economic value of patent portfolios

Patent holders may choose to protect innovations with single patents or to develop portfolios of multiple, related patents. We propose a decision‐making model in which patent holders allocate resources to either expanding the number of related patents or investing in higher value of patents in the portfolio. We estimate the derived value equation using portfolio value data from an inventor survey at the level of individual inventions rather than the firm as a whole. We find that investments in individual inventions exhibit diminishing returns, and that a good part of the value of a portfolio depends on adding new patented inventions. Also, while diminishing returns to individual inventions are stable across subsamples, the returns to portfolio size vary between complex and discrete industries, and between inventions that are science‐based or driven by customer information. When firms seek to strengthen appropriability, the returns to an increase of portfolio size are not different from the sample average. Thus, a higher number of inventions in a portfolio may reflect both stronger appropriability via patents and genuine creation of value.     

Demographic Change and Pension Reform in Spain: An Assessment in a Two‐Earner,OLG Model*

Recent pension reforms in Spain have been guided by two opposite goals: achieving financial stability and improving redistributive aspirations. In particular, reforms implemented in 1997/2001 entailed a mixture of both through: (i) changes in the pension formula; (ii) the extension of entitlement to early retirement to all cohorts; and (iii) increases in survival pensions. This paper builds an applied general equilibrium OLG model that captures the fundamental non‐stationarity of the Spanish reality (ageing population, education transition and increasing female attachment to the labour market) to assess the impact of those reforms. As a novel feature with respect to the literature, households in our model economy are made up of two potential earners who make saving and labour supply decisions. Our main conclusions from the analysis are at three different levels. First, the Spanish pension system is clearly unsustainable, with pension expenditure reaching a figure of about 18 per cent of GDP in 2050, and the reforms have clearly been     

Time and the Price Impact of a Trade

We use Hasbrouck's (1991) vector autoregressive model for prices and trades to empirically test and assess the role played by the waiting time between consecutive transactions in the process of price formation. We find that as the time duration between transactions decreases, the price impact of trades, the speed of price adjustment to trade-related information, and the positive autocorrelation of signed trades all increase. This suggests that times when markets are most active are times when there is an increased presence of informed traders; we interpret such markets as having reduced liquidity.     

Les Caisses Rurales Face à l'Union Monétaire: Une étude d'efficacité comparée

The authors analyze the economic efficiency of rural credit unions of large size compared to a group of credit unions. The methodology is based on the analysis of profitability, productivity and efficiency ratios and on the estimation of a Cobb–Douglas cost function. The evolution during the period 1989–1994 as well as the situation at the end of this period are examined. The same methodology is used to study the rural credit unions individually.     

Monte Carlo Simulation Techniques in a Decision Support System for Group Decision Making

This paper describes a group decision support system based on an additive multi-attribute utility model for identifying a consensus strategy in group decision-making problems where several decision-makers or groups of decision-makers elicit their own preferences separately. On the one hand, the system provides procedures to quantify the DMs or group of DMs preferences separately. This involves assessing the DMs or group of DMs component utilities that represent their preferences regarding the respective possible attribute values and objective weights that represent the relative importance of the criteria. On the other hand, we propose Monte Carlo simulation techniques for identifying a consensus strategy. An iterative process will be carried out, where, after the simulations have been performed, the imprecise component utilities and weights corresponding to the different DMs or groups of DMs are tightened to output more meaningful information in the next simulations to achieve a consensus strategy. Finally, an application to the evaluation of remedial strategies for restoring contaminated aquatic ecosystems illustrates the usefulness and flexibility of this decision support tool.