All wired up but where to go?

Through a selective review of the fluctuating prospects of new media technologies in Europe, Isabel Bass questions assumptions about the transition to an ‘information age’.     

Game,set and match: the favourite-long shot bias in tennis betting exchanges

We test for the existence of Favourite-Longshot Bias (FLB) in tennis betting exchanges. Despite these being order-driven markets, with no direct participation from bookmakers, we have found very similar results to those obtained by Lahvi?ka (2014) for bookmakers’ betting markets: the bias is stronger in matches between lower-ranked players, in later round matches and in high profile tournaments. This suggests that bookmakers’ adjustments to respond to informed betting are not the main driver of FLB. The varying magnitude of the bias across different types of event in the main market also weakens arguments linking FLB to gamblers’ risk preferences, and suggests the need to consider the microstructure features of the market together with the cognitive biases highlighted in the behavioural finance literature.     

Tax on emissions or subsidy to renewables? Evaluating the effects on the economy and on the environment

We examine the relationship between the economy and the environment in a model where production uses nonpolluting renewable and polluting nonrenewable resources. There is policy intervention through a tax on emissions and a subsidy to renewables extraction/production. Results show that both instruments are able to decrease emissions intensity of output. However, when used together, the desired effect is higher. Empirically it is shown that the subsidy achieves higher renewables intensity and although present emissions per output are similar for both instruments, the subsidy achieves lower future levels.     

Welfare effects of unbundling under different regulatory regimes in natural gas markets

In this paper, we develop a theoretical model that enriches the literature on the pros and cons of ownership unbundling vis-à-vis lighter unbundling frameworks in the natural gas markets. For each regulatory framework, we compute equilibrium outcomes when an incumbent firm and a new entrant compete à la Cournot in the final gas market. We find that the entrant’s contracting conditions in the upstream market and the transmission tariff are key determinants of the market structure in the downstream gas market (both with ownership and with legal unbundling). We also study how the regulator must optimally set transmission tariffs in each of the two unbundling regimes. We conclude that welfare maximizing tariffs often require free access to the transmission network (in both regulatoy regimes). However, when the regulator aims at promoting the break-even of the regulated transmission system operator, the first-best tariff is unfeasible in both regimes. Hence, we study a more realistic set-up, in which the regulator’s action is constrained by the break-even of the regulated firm (the transmission system operator). In this set-up, we find that, for a given transmission tariff, final prices in the downstream market are always higher with ownership unbundling than with legal unbundling.     

Institutional Investor Protection Pressures versus Firm Incentives in the Disclosure of Integrated Reporting

Corporate disclosures aim to decrease the expectation gap between investors, decrease the advantage of informed investors and consequently reduce information asymmetry. However, the existence of higher numbers of companies’ reports makes the decision making of firms’ stakeholders difficult. To avoid these problems, companies have started to disclose integrated reports. Previous studies have observed that this voluntary corporate disclosure is a consequence of large firms’ incentives associated with preventing abnormal earnings. In this paper, we examine whether these internal factors have a lower/higher impact than institutional contracting pressures. Our results are evidence that firms’ incentives are the main determinants of the voluntary disclosure of integrated reports, and we observe that there is a substitutive role between institutional country pressures and firms’ transparency decisions. However, the contracting environment plays a complementary role when firms suffer from lower asymmetry problems.     

The effects of tone at the top and coordination with external auditors on internal auditors’ fraud risk assessments

Prior research suggests that internal auditors’ judgements are subject to management influence resulting in compromised risk assessments. This study investigates the effects of the tone at the top and coordination with external auditors on internal auditors’ fraud risk assessments. Results of an experiment involving 64 internal auditors indicate that when the tone at the top is poor, rather than favouring management, internal auditors report a higher risk of intentional misstatements and that coordination with external auditors can further reduce expectations of the incidence of intentional misstatements.     

Contagion effects of the subprime crisis in the European NYSE Euronext markets

This paper presents three tests of contagion of the US subprime crisis to the European stock markets of the NYSE Euronext group. Copula models are used to analyse dependence structures between the US and the other stock markets in the sample, in the pre-crisis and in the subprime crisis periods. The first test assesses the existence of contagion on the relevant stock markets’ indices, the second checks the homogeneity of contagion intensities, and the third compares contagion in financial and in industrial sectors’ indices. Results suggest that contagion exists, and is equally felt, in most stock markets and that investors anticipated a spreading of the financial crisis to the indices of industrial sectors, long before such dissemination was observable in the real economy.     

Fiscal rules of income transformation

Summary. The purpose of this paper is to characterize the class of fiscal rules of income transformation which are equity improving and, at the same time, preserve the ranking of existing distributions. Contrary to the related literature individual well-being depends not just on income but also on prices. We show that, when the environment is restricted such that a general transformation class still can be defined, the only “desirable” fiscal rule is the simple redistributive linear taxation schedule, of the same type that is the rule in practice in most economies. Received: May 8, 1997; revised version: September 15, 1997     

‘Exploratory landscape scenarios’ in the formulation of ‘landscape quality objectives’

The European Landscape Convention (ELC) calls for the definition of ‘landscape quality objectives’ (LQO) as “the formulation by the competent public authorities of the aspirations of the public with regard to the landscape features of their surroundings”. However, it is not yet defined how the integration of the visions of the public should be carried out. Notably in regions with poor participatory culture and in rural landscapes abandoned by people and consequently by their activities, dealing with the future does not seem a straightforward task. In these marginal rural landscapes the role of agriculture is being altered under the influence of the new rationale of the Common Agriculture Policy, so it may have to assume different functions in the future. Thus, this paper aims at showing how the development of ‘exploratory landscape scenarios’ can be a useful tool, firstly to find plausible landscape futures, and secondly to trigger discussions with the public regarding their aspirations for their landscape. The development procedure for ‘exploratory landscape scenarios’ builds on the ‘intuitive logics’ approach that focuses on the production of a variety of scenarios as starting point for discussion about the future rather than on finding an optimal one, which can limit the options unnecessarily from the beginning. The methodological approach is illustrated at a local scale by using the case study of Mértola in southeast Portugal. The results of the scenario exercise point out the adequateness of the methodology in the development of futures that are perceived as plausible by local stakeholders and, thereby, able to bring out their desires and threats towards the future of their landscape.     

Do independent,female and specialist directors promote eco-innovation and eco-design in agri-food firms?

Eco-innovation and eco-design strategies are associated with firms' innovation capabilities. Moreover, they may impact on access to public subsidies and on financial performance. In this respect, the agri-food industry is especially vulnerable, because in general, this sector has less experience of technological innovation, and managers are more likely to be averse to such projects. On the other hand, the board may promote a proactive environmental approach to defend the interests of investors and other stakeholders, taking the view that these strategies reduce the environmental impact of the firm's products and its production processes and are therefore beneficial. Our study aim is to identify the profile of directors who may be favourable to eco-design and eco-innovation strategies, focusing on the traits of independence, gender diversity and environmental specialisation. The results obtained, from a dependence model based on panel data supplied by 321 agri-food companies for the period 2002–2017 (unbalanced panel data with 4878 observations), show that independent directors play a crucial role in implementing eco-innovation and eco-design projects. However, neither the diversity nor the specialisation of directors is a significant factor in this regard.