Risk Aversion,the Disposition Effect,and Group Decision Making: An Experimental Analysis

This article reports a laboratory experiment comparing the behavior of individuals and groups in terms of their susceptibility to the disposition effect. A total of 174 students took part in six experimental sessions in which they made decisions individually, in pairs, or in three‐person groups. It was observed that the disposition effect was attenuated when the decisions were made in groups of two or three members. It was also noted that the attenuating effect of group decision making was the result of a reduction in the proportion of gains realized, indicating that the groups were less risk averse than individuals. Copyright © 2017 John Wiley & Sons, Ltd.     

Identifying vertically differentiated products

Rauch (1999) introduced a product classification scheme that has since been widely used to empirically identify differentiated goods. Using firm-level data on export unit values, we provide direct evidence that this classification is well suited for capturing quality differentiation.     

The reputation of underwriters: A test of the bonding hypothesis

In the spirit of the Bonding Hypothesis proposed by Stulz (1999) and Coffee (1999, 2002), I find that foreign firms that cross-list in the U.S. and undertake IPOs are more likely to employ reputable underwriters if the firms come from countries with poor shareholder protection. The additional monitoring provided by reputable underwriters may help overcome the skepticism of U.S. investors, and partially explains the higher valuation these firms obtain after the offering. There is, however, a price to pay for this bonding benefit. I find that issuers from countries with weaker shareholder protection tend to be more underpriced if they are sponsored by prestigious underwriters.     

Do stress tests matter? A study on the impact of the disclosure of stress test results on European financial stocks and CDS markets

During the recent sovereign debt crisis, the European Banking Authority conducted two stress tests on European banks in order to gauge their capital needs, core Tier-1 ratios and ratios of resilience to adverse shocks. We assess the informational content of the disclosure of the stress test outcomes. We conclude that the stress tests conveyed new information and that the outcomes were not anticipated by the stock market but were partially anticipated by the credit default swap (CDS) market. However, while the stock market reacted to the disclosure of the stress test outcomes, in the CDS market there is some evidence of a ‘reverse’ reaction. Moreover, the publication of the outcomes of the stress tests had a stronger impact on the stock prices of riskier financial institutions. A similar pattern is evident in the CDS market, albeit narrowed to one of the stress tests and amid the financial institutions with higher perceived credit risk.     

Improving the statistical power of financial event studies: The inverse variance weighted average-based test

Some claim that the event study methodology literature is “mature”. But the overlooked IVWA-based test is more powerful than conventional tests. Its implementation requires the same inputs as the traditional test. Its functional form yields the power improvement. Using CRSP monthly data for 1944–1971 and 1980–2006, simulations indicate that IVWA-based test correctly rejects the null hypothesis substantially more frequently than the traditional test. Its superiority seems more pronounced over 1980–2006. This casts doubts over previous event studies that failed to reject the null. They may have done so incorrectly due to lack of statistical power. Their reevaluation under IVWA-based test is advisable.     

NO DEEP POCKETS: SOME STYLIZED EMPIRICAL RESULTS ON FIRMS’ FINANCIAL CONSTRAINTS

Abstract This paper is a survey of recent empirical work on financial constraints faced by firms. It is organized as a series of stylized results which mirror what is generally understood about the severity of financial constraints and the effects that they have upon firms. The review of the literature shows that (a) financial constraints are a widespread key concern for firms, hindering their ability to carry out their optimal investment and growth trajectories and (b) the severity of such constraints depends on institutional and firm specific characteristics, as well as on the nature of investment projects.     

Climate Change and Financial Performance in Times of Crisis

Over the past years there has been a debate on the relationship between the environmental and financial performance of businesses, but researchers have not reached any agreement. This research attempts to explore this relationship, especially as in recent years there has been controversy about how this relationship has been affected by the global economic crisis. Taking into account that successfully limiting global climate change to safe levels in the long term is likely to require connecting climate change policies to sustainable development strategies, this paper focuses on the performance of environmental policies. We used a sample of 855 international companies in sectors of intensive greenhouse gas/CO₂ emissions. Specifically, we used data from the Forbes Global 2000 Index and Carbon Disclosure Project data from 2006 to 2009. The data analysis was performed using panel data methodology. The results obtained show that in times of economic crisis, the synergy between environmental and financial performance is higher, meaning that companies must continue to invest in sustainable projects in order to enhance relations with their stakeholders, leading to higher economic profits. Copyright © 2013 John Wiley & Sons, Ltd and ERP Environment     

新疆小微企业寻求新常态发展良方

中小微企业想要有长远的发展,就应该苦练内功,在选择正确经营方向的基础上,根据市场需求研制适销对路的产品,不断提升企业效益和市场竞争力;要建立完善公司治理机制,切实提升企业规范化水平.要按照本土化、专业化、精细化、信息化、国家化的方向或思路提高自身的市场适应能力.记者走访新疆几家发展中的中小微企业时发现,发展创新已被企业作为在新常态下开辟市场空间的良方.     

Are voters rationally ignorant? An empirical study of Portuguese local elections

The application of the rational choice postulate to a political context invariably leads to the conclusion that most voters are ill informed when making the decision on whom to vote for. In this paper, the authors conduct an empirical evaluation of the rational ignorance theory, based on the model developed by (Rogoff and Sibert Rev Econ Stud LV:1–16, (1988) and by considering that better informed voters reward political candidates who show better performances. The levels of performance are established through the construction of an empirical frontier using the Data Envelopment Analysis (DEA) methodology. According to our results, based on the 1997 Portuguese local elections, even though swing voters do not necessarily behave as rationally ignorant voters, a large majority of voters are rationally ignorant.