R&D and Innovation in Food Processing Firms in Transition Countries

We examine the implications of the liberalised economic conditions associated with the economic transformations in the transition countries of Central and Eastern Europe (CEE) and Commonwealth of Independent States (CIS) for R&D and innovation in the food processing sector. We use a dataset derived from the World Bank's Business Environment and Enterprise Performance Surveys (BEEPS) database to examine the relationships between R&D/innovation activities in food processing firms in transition countries and (i) privatisation, (ii) foreign direct investment, (iii) trade activities, (iv) market competition pressure, and (v) economies of scale. The empirical analysis is implemented through: (i) a double‐hurdle model for R&D participation and expenditures, and (ii) a bivariate probit model for product and process innovation. We find that these economic transformations generally promote R&D/innovation activities in the food processing sector. Our results suggest that broadened and deepened economic liberalisation policies would improve the innovation performance of the food processing sector in transition countries, and would enhance competitiveness in domestic and foreign markets. They also indicate that innovation policies may need to be tailored to market and industrial characteristics of different transition regions.     

Do sectoral training funds stimulate training?

Sectoral levelling funds are an arrangement aimed at alleviating a well‐known theoretical problem of underinvestment in worker training because of free‐rider behaviour of firms. In the Netherlands, collective agreements require firms to participate in such funds in a number of sectors. Using a comprehensive dataset of Dutch firms, we attempt to determine the extent to which these levelling funds have a stimulating effect on the level of training investments of firms. Surprisingly, no indications are found for the existence of such an effect. Training levels are not higher in sectors with a fund than in sectors without a fund. Several explanations are discussed to account for these findings.     

Deleveraging crises and deep recessions: a behavioural approach

Macroeconomic dynamics are characterized by alternating patterns of periods of relative stability and large swings. Standard microfounded macroeconomic models account for these patterns through exogenous and persistent shocks. In this article, we develop a fully decentralized and microfounded macroeconomic agent-based model, augmented with an opinion model, which produces endogenous waves of pessimism and optimism that feed back into firms’ leverage and households’ precautionary saving behaviour. A major emergent property of our model is precisely the complex successions of stable and unstable macroeconomic regimes. The model is further able to account for a wide spectrum of macro and micro empirical regularities. Within this framework, we analyse a series of macroeconomic phenomena of key relevance in the current macroeconomic debate, especially the occurrence of deleveraging crises and Fisherian debt-deflation recessions. Our analysis suggests that the relative dynamics of prices and wages and the resulting income distribution along a deflationary path are critical determinants of the severity of the recession and the chances of recovery.     

Discretionary Accounting Choices: A Debt covenants Based Signalling Approach

This paper seeks to explain the discretionary accounting choices made by managers in a world characterised by asymmetric information between managers and investors. It considers a firm whose capital structure consists of both debt and equity, a manager who protects the interests of the firm's existing shareholders, and a financial market. The manager is committed to engage in an investment opportunity and needs to raise some equity to finance it. He is furthermore endowed with some private information about his firm's future earnings. The paper shows how, under certain conditions, the manager may credibly communicate his private information to investors through his accounting choices. In this equilibrium, the selection of balance sheet strengthening and income increasing accounting choices signals unfavourable information while the use of balance-sheet weakening and income- decreasing accounting choices signals favourable private information. The latter firms should thus experience positive abnormal returns around the announcement dates of their accounting choices.     

New Scale and Scope for Industrial Policies in the 1990s

A central hypothesis of this paper is to consider that changes in the economic and political environment invite us to appraise the status that industrial policies can have in the making of contemporary macroeconomic policies. This perspective is first referred to the post-war debate on standard and radical Keynesianisms. The main trends in the fields of public interventions up to the 80s are recalled. It helps to stress the change of context in the 80s and 90s, especially regarding the forms of competition prevailing on product markets. All of which set opportunities to reshape industrial policies and all the more so given that macroeconomic policies are losing momentum. Despite their renewed legitimacy and efficiency, the question of the macroeconomic impact of these coordinated industrial policies remains open, still depending on the scale that central and local authorities are willing to give us to these new schemes.     

Information Disclosure to Employees and Rational Expectations: A Game-Theoretical Perspective

This paper analyses the voluntary disclosure strategies of a privately informed firm manager when the information is relevant to both a financial market for valuation purposes and a union for wage bargaining purposes. Disclosure of favourable information may adversely affect the terms under which the firm can secure the required flow of labour and may thus lead to a decrease in the firm's market value. The paper shows that both a full-disclosure and a nondisclosure equilibrium may exist, which contradicts an earlier analysis of the issue made by Pope and Peel (1981).     

The Agency Structure of Loan Syndicates

Leaders of loan syndicates often delegate some administrative tasks to banks known as co‐agents. One reason is that co‐agents are specialized banks that help split the costs of managing the syndicate. Another reason is that co‐agents monitor the leader on behalf of syndicate members to mitigate informational asymmetry problems. Large sample tests on the Dealscan database provide support for both arguments. Evidence of repeated contracting between the same banks explains the moderate magnitude of monitoring effects.     

Profiling the non-user: Rethinking policy initiatives stimulating ICT acceptance

Business strategies and policies that were successful in increasing internet penetration in the early days may no longer be appropriate. This is most probably so in countries where a bigger proportion of the population is already connected to the internet. As more people are online, it becomes more likely that the remaining fraction of non-users is either hard to convince, under-skilled or simply lacking the financial resources to afford a connection. In view of this, a new policy approach is proposed to increase ICT acceptance. The approach is based on strategies of segmentation and differentiation. This entails that policy initiatives are specifically targeted towards different groups in the population. This article demonstrates that being a non-user can be explained by a combination of access problems, lack of ICT skills or rather negative attitudes towards ICT or by the outweighing effect of one of them. It also provides a framework for setting up new policy measures.     

M&A Operations and Performance in Banking

This paper investigates whether M&A operations influence the performance of banks. Using a sample of 714 deals involving EU acquirers and targets located throughout the world over the period 1991–2005, we investigate whether M&A operations are associated with improved performance (using both standard accounting ratios and cost and alternative profit X-efficiency measures). Despite the extensive and ongoing consolidation process in the banking industry, we find that M&A operations are associated with a slight deterioration in return on equity, cash flow return and profit efficiency and with a marked improvement in cost efficiency. Hence, the improvements in cost efficiency appear to be transferred to bank clients. These changes in performance are directly attributable to the M&A operations, and would not have occurred in their absence. Moreover, these changes exhibit a particularly negative trend for cross-border deals to testify the importance of geographical relatedness in order to achieve better post-M&A performance. The environmental and bank-characteristics that make a deal successful or unsuccessful are finally identified.