Risk-based forecasting and planning and management earnings forecasts

This study examines the association between a firm’s internal information environment and the accuracy of its externally disclosed management earnings forecasts. Internally, firms use forecasts to plan for uncertain futures. The risk management literature argues that integrating risk-related information into forecasts and plans can improve a firm’s ability to forecast financial outcomes. We investigate whether this internal information manifests itself in the accuracy of external earnings guidance. Using detailed survey data and publicly disclosed management earnings forecasts from a sample of publicly traded U.S. companies, we find that more sophisticated risk-based forecasting and planning processes are associated with smaller earnings forecast errors and narrower forecast widths. These associations hold across a variety of different planning horizons (ranging from annual budgeting to long-term strategic planning), providing empirical support for the theoretical link between internal information quality and the quality of external disclosures.     

A New Approach to the Study of Jobless Recoveries

This article is concerned with the measurement of jobless recoveries and the elements that may explain their emergence. We first introduce a measure that maps the various elements that define a jobless recovery into a single number that we label the jobless recovery depth. We then construct a database of 389 state‐level observations and study the cross‐sectional variations that emerge. We find that jobless recoveries in the United States are not a nation‐wide phenomena, but a local event confined within a cluster of states that expands slowly between 1975 and 2015. We find the state‐level evidence to be consistent with theories that link jobless recoveries to unusually long expansionary periods, less dynamic labor markets, and the advent of the great moderation. The evidence is not consistent with theories that link them to decreases in union power, increases in income inequality, or increases in health care costs.     

Nonparametric identification and estimation of random coefficients in multinomial choice models

We show how to nonparametrically identify the distribution of unobservables, such as random coefficients, that characterizes the heterogeneity among consumers in multinomial choice models. We provide general identification conditions for a class of nonlinear models and then verify these conditions using the primitives of the multinomial choice model. We require that the distribution of unobservables lie in the class of all distributions with finite support, which under our most general assumptions, resembles a product space where some of the product members are function spaces. We show how identification leads to the consistency of a nonparametric estimator.     

Research and Technology Outsourcing

The paper discusses the process of externalization and the contracting out of R&D and technical activity. The focus of the analysis is on the outsourcing of R&D and technical activity undertaken by firms and now outsourced to companies and organizations which supply the Contract Research and Technology (CRT) market. The analysis highlights that not only is it important to understand the factors in the demand for such services but also in changing dynamics of the nature of the research and technical services supplied and the way they are supplied. The paper then investigates the implications of these dynamic trends for the conduct of the R&D function, particularly towards research externalization and outsourcing, via the use of firms and organizations involved in contract research and technology.     

Mortgage product diversity: responding to consumer demand or protecting lender profit? An asymmetric panel analysis

This article explores determinants of mortgage product diversity for owner-occupied and investment loans in the Australian housing mortgage market. From 2001 to 2012, 65 lenders introduced 1220 mortgage products in Australia. We examine whether the product proliferation was a result of consumer demand or a response to pressure to lower lending rates. We find that consumer demand for mortgages does not have a significant relationship with the number of mortgage products, but that decreases in the policy interest rate are highly significant as an explanatory variable for product proliferation. Such behaviour is consistent with information obfuscation, reducing the ease with which consumers can compare lending rates. Further, the relationship between mortgage products offered and the policy interest rate is asymmetric: decreases in the cash rate are associated with increased mortgage products offered, but increases in the cash rate have a more muted effect on decreasing the number of products.     

Compound Voids and Unproductive Entrepreneurship: The Rise of the “English Fever” in China

China has emerged as an economic power due, in part, to government policies that opened China to the world and created a modern consumer culture. One of these policies is the advancement of English-language education, including private providers, which has spawned the “English Fever” phenomenon. We use the unique context of the private English-language education industry in China to illustrate the concept of “compound (institutional) voids” and their relationship to unproductive entrepreneurship. Our contribution is in untangling some of the complexities related to institutional relationships, and in describing how compound voids increase the likelihood of rent-seeking behavior.     

Sustainable development and entrepreneurship: Past contributions and future directions

This article discusses the emerging research concerned with sustainable development and entrepreneurship, which is the focus of this special issue of the Journal of Business Venturing. Entrepreneurship has been recognized as a major conduit for sustainable products and processes, and new ventures are being held up as a panacea for many social and environmental concerns. However, there remains considerable uncertainty regarding the nature of entrepreneurship's role and how it may unfold. We begin with an overview of sustainable development and the role of entrepreneurship and outline recent contributions exploring this role. We then summarize the papers presented in this special issue and conclude with suggestions for further research.     

Religion and politics: understanding the effects of conservative origins on contemporary patterns of sub-national relative human development

Understanding the effects of historical circumstance on contemporary development patterns is important in understanding the overall trajectories of societies. Using a spatially centered technique and various sources of historical and contemporary data, this link is tested by examining variations in historical levels of conservative values in the American South on contemporary patterns of development. This context provides an interesting case study involving a time and region marked by rapid social change. Results show that the spatial distribution of development levels is non-random and that historical levels of highly conservative values are associated with lower levels of contemporary development.