Corporate Social Responsibility as a Strategic Shield Against Costs of Earnings Management Practices

We highlight how Corporate Social Responsibility (CSR) can be strategically used against the negative perception from earnings management (EM). Using international data, we analyse the effect of CSR and EM on the cost of capital and corporate reputation. Results confirm that CSR strategy is positively valued by investors and other stakeholders. Contrary to EM, CSR has a positive effect on corporate reputation and lowers the cost of capital. In addition, we also find that the favourable effect of CSR on cost of capital is consistently more intense in firms that show signs of EM indicating that the market does not identify when CSR practices are used as a strategy to mask EM. We also demonstrate how institutional factors influence the above relationship.     

Scale-free distribution as an economic invariant: a theoretical approach

The presence of power laws (scale-free distributions) in widely different economic and social phenomena is well established. Here we focus on three specific cases viz. wealth distribution, firm size distribution and the city size distribution. We present a common framework to explain the origin of this feature in such seemingly unrelated contexts. It is shown that the equilibrium configurations of some general economic mechanisms are consistent with a power law in general and Zipf’s law in particular, in size distribution and it is an attractor under some conditions.     

Cointegration in Panel Data with Structural Breaks and Cross‐Section Dependence

The power of standard panel cointegration statistics may be affected by misspecification errors if structural breaks in the parameters generating the process are not considered. In addition, the presence of cross‐section dependence among the panel units can distort the empirical size of the statistics. We therefore design a testing procedure that allows for both structural breaks and cross‐section dependence when testing the null hypothesis of no cointegration. The paper proposes test statistics that can be used when one or both features are present. We illustrate our proposal by analysing the pass‐through of import prices on a sample of European countries. Copyright © 2013 John Wiley & Sons, Ltd.     

WHO WILL RETURN AND WHEN? AN ANALYSIS OF RURAL-TO-URBAN MIGRANTS IN INDIA*

An analysis of temporary migration in India is presented. In particular, the author examines, within a multivariate context, the importance of various socioeconomic factors that influence the future plans of rural-urban migrants and their intended timing of return to the rural area. The data are from a 1975-1976 survey of 1,615 migrant heads of households in Delhi.     

On the specification and estimation of macro rural-urban migration functions: with an application to Indian data

The authors suggest several extensions and modifications to the existing specifications of macro migration functions as suggested by Todar through a more careful investigation of the micro theory underlying migration decisions. They use a probabilistic migration model to examine internal migration in India and present evidence that migration tends first to rise and then to fall as rural income rises     

The output gap and expected security returns

This paper analyzes the impact of the output gap on market excess returns. The output gap is usually defined as the deviation of output from potential output that is indicated by the trend output. However, this study departs from the common approach of calculating the output gap based on a simple trend line. It uses a flexible data-driven weighting scheme, and it uses only the available information that corresponds to each forecasting origin to derive the output gap. Overall, the proposed output gap is a strong predictor of U.S. market excess returns.