Macrorelationship between average life expectancy and prevalence of obesity: Theory and evidence from global data

A large body of literature assesses the impact of obesity on health at the microlevel and finds that obesity is a risk to health and longevity of life. We develop a macrolevel analytical framework to investigate the impact of obesity prevalence on average life expectancy, the trade-off between health expenditure and obesity prevalence, and the differential effect of obesity prevalence by gender, and apply this framework to cross country national data using a panel data of 183 countries for the years 2007 to 2014.  The empirical analysis shows that the average life expectancy is a concave function of obesity prevalence, and an increase in obesity prevalence increases average expected life expectancy with low obesity levels.  While obesity is a significant problem in developed countries, its impact on average life expectancy is partially mitigated by health expenditure. Underweight and lack of health expenditure in developing countries are even more severe problems. The marginal benefit of health expenditure in a low obesity country (highly correlated with underweight) has a larger impact on life expectancy relative to that in a high obesity country. A part of the longer life expectancy of women is related to better average nutritional state and less vulnerability to obesity. The results are consistent over three macromeasures of the longevity of life—average life expectancy, adult mortality rate, and healthy life expectancy.     

Scale matters: The scale of environmental issues in corporate collective actions

Research Summary: Much of the research on corporate collective action to manage common pool resources is focused on coordinated actions, such as voluntary programs, rather than collaborative actions, such as technology sharing. In this article, we examine inductively the collective actions taken by a consortium of 12 oil sands companies to address three environmental issues of different scale. We identified a set of organizing rules that determined whether the relationship among industry members would be collaborative or competitive, and found that the organizing rules for collaborative collective action were more effective for smaller scale issues (i.e., tailings ponds and water) than the larger scale issue (i.e., greenhouse gas emissions). Our findings contribute to research on the competitive dynamics of collaborating with competitors and on industry self‐regulation. Managerial Summary: Many environmental issues, such as climate change, water quality, and contaminated land, are caused by the overexploitation of commonly shared natural resources. Firms will often overuse resources because their cost of use is less than the benefit that accrues. In Alberta’s oil sands, 12 of the major oil sands operators, all competitors, have agreed to collaborate by sharing technology, which goes against the received wisdom of competition. This multiparty collaboration among competitors, while still relatively rare, is becoming increasingly commonplace. In this article, we outline the rules that allow this collaboration to flourish. Our most important finding is that the rules are shaped by the scale of the issue being managed, not the size of the collaboration.     

Seeing the Need for ISO 14001

ABSTRACT    Many firms worldwide have adopted environmental management systems, and some have taken the extra step and had their systems certified for the international standard ISO 14001. While institutional pressures and market demand often motivate firms to adopt an EMS, the reasons why they certify for ISO 14001 are less clear. In this study, we interviewed members of the Canadian pulp and paper industry who had either an EMS or ISO 14001 certification to understand why they may have become ISO 14001 certified. We found that task visibility and environmental impact opacity lead to differences in a firm's approach to ISO 14001 certification in the absence of coercive pressures.     

Instrumental and Integrative Logics in Business Sustainability

Prior research on sustainability in business often assumes that decisions on social and environmental investments are made for instrumental reasons, which points to causal relationships between corporate financial performance and corporate social and environmental commitment. In other words, social or environmental commitment should predict higher financial performance. The theoretical premise of sustainability, however, is based on a systems perspective, which implies a tighter integration between corporate financial performance and corporate commitment to social and environmental issues. In this paper, we describe the important theoretical differences between an instrumental and integrative logic in managing business sustainability. We test the presence of each logic using data from 738 firms over 13 years and find evidence of integrative logic applied in business.     

Implications of mandatory labeling of GM food in India: Evidence from the supply side

We assess the supply-side economic implications of introducing a strict mandatory labeling policy for genetically modified (GM) food in India as proposed in 2006. We apply our analysis to the case of cottonseed oil and soybean oil, two products that would be the first affected by such regulation. We find that GM food labeling would generate adjustment and implementation costs and consumer benefits would not always be visible and would highly depend on the degree of enforcement.     

Risks for the Long Run: A Potential Resolution of Asset Pricing Puzzles

We model consumption and dividend growth rates as containing (1) a small long‐run predictable component, and (2) fluctuating economic uncertainty (consumption volatility). These dynamics, for which we provide empirical support, in conjunction with Epstein and Zin's (1989) preferences, can explain key asset markets phenomena. In our economy, financial markets dislike economic uncertainty and better long‐run growth prospects raise equity prices. The model can justify the equity premium, the risk‐free rate, and the volatility of the market return, risk‐free rate, and the price–dividend ratio. As in the data, dividend yields predict returns and the volatility of returns is time‐varying.     

Does a long‐term orientation create value? Evidence from a regression discontinuity

Research summary : In this paper, we theorize and empirically investigate how a long‐term orientation impacts firm value. To study this relationship, we exploit exogenous changes in executives' long‐term incentives. Specifically, we examine shareholder proposals on long‐term executive compensation that pass or fail by a small margin of votes. The passage of such “close call” proposals is akin to a random assignment of long‐term incentives and hence provides a clean causal estimate. We find that the adoption of such proposals leads to (1) an increase in firm value and operating performance—suggesting that a long‐term orientation is beneficial to companies—and (2) an increase in firms' investments in long‐term strategies such as innovation and stakeholder relationships. Overall, our results are consistent with a “time‐based” agency conflict between shareholders and managers. Managerial summary : This paper shows that corporate short‐termism is hampering business success. We show clear, causal evidence that imposing long‐term incentives on executives—in the form of long‐term executive compensation—improves business performance. Long‐term executive compensation includes restricted stocks, restricted stock options, and long‐term incentive plans. Firms that adopted shareholder resolutions on long‐term compensation experienced a significant increase in their stock price. This stock price increase foreshadowed an increase in operating profits that materialized after two years. We unpack the reasons for these improvements in performance, and find that firms that adopted these shareholder resolutions made more investments in R&D and stakeholder engagement, especially pertaining to employees and the natural environment. Copyright © 2016 John Wiley & Sons, Ltd.     

Interpretable asset markets?

In this paper we show that measures of economic uncertainty (conditional volatility of consumption) predict and are predicted by valuation ratios at long horizons. Further we document that asset valuations drop as economic uncertainty rises—that is, financial markets dislike economic uncertainty. Moreover, future earnings growth rates are sharply predicted by current price-earnings ratios. It seems that much of the variation in asset prices can be attributed to fluctuations in economic uncertainty and expected cash-flow growth. This empirical evidence is consistent with the implications of existing parametric general equilibrium models. Hence, the channels of fluctuating economic uncertainty and expected growth seem important for interpreting asset markets.     

What Determined Success During the Asian Economic Crisis?—The Importance of Experiential Knowledge and Group Affiliation

This study investigated the factors that determined the change in firm performance during the Asian economic crisis. Applying a process-oriented resource-based view and MNC network theory, we argued that host country experience, industry experience, subsidiary experience, and group affiliation would influence subsidiary performance during an economic crisis. By testing the hypotheses on a sample of 1128 Japanese subsidiaries in Thailand, Indonesia, Malaysia, and Korea, we found that, among different knowledge resources that the MNC accumulated in its internationalization process, subsidiary experiential knowledge was most significant in picking the winners from the losers during the crisis. Keiretsu affiliation and the parent firms industry experience were also significant, positive factors for firms remaining profitable or even better after the crisis. However, firm size and industry effects were not related to performance.