Institutional block-holdings of UK firms: do corporate governance mechanisms matter?

Using a sample of UK firms, we find that institutional block-holding is negatively associated with directors’ ownership and is positively associated with board composition, suggesting that institutional block-holders regard directors’ ownership and board composition as substitute and complementary control mechanisms, respectively. We also show that UK institutional block-holders prefer smaller firms and firms with a shorter listing history. The presence of institutional block-holders is associated with smaller boards and lower trading liquidity. Finally, our results indicate that the investment preference of UK institutional block-holders varies with the level of their shareholding.     

A note on “Modelling exchange rate returns: which flexible distribution to use?”

Corlu and Corlu [Quant. Finance, 2014, doi: 10.1080/14697688.2014.942231] provided a novel modelling of exchange rate data for nine currencies using five flexible distributions. They stated that the generalized lambda, skew t and normal inverse Gaussian distributions ‘do a good job’. Here, we reanalyse the data and show that a distribution simpler than all of these fits at least as well as these distributions. We also find that the normal inverse Gaussian distribution provides good fits for only one of the data-sets.     

Fiscal Sustainability in a New Keynesian Model

Recent work on optimal monetary and fiscal policy in New Keynesian models suggests that it is optimal to allow steady‐state debt to follow a random walk. In this paper we consider the nature of the time inconsistency involved in such a policy and its implication for discretionary policymaking. We show that governments are tempted, given inflationary expectations, to utilize their monetary and fiscal instruments in the initial period to change the ultimate debt burden they need to service. We demonstrate that this temptation is only eliminated if following shocks, the new steady‐state debt is equal to the original (efficient) debt level even though there is no explicit debt target in the government's objective function. Analytically and in a series of numerical simulations we show which instrument is used to stabilize the debt depends crucially on the degree of nominal inertia and the size of the debt stock. We also show that the welfare consequences of introducing debt are negligible for precommitment policies, but can be significant for discretionary policy. Finally, we assess the credibility of commitment policy by considering a quasi‐commitment policy, which allows for different probabilities of reneging on past promises.     

中国经济的失衡与均衡之路——政策搭配组合视角

本文针对近些年来以中国国际收支为代表的经济外部失衡及其所折射出的中国经济内部不平衡现象为研究视角,在M-F Model和Swan Model原有分析框架的基础上,根据研究目的,创新性地把二者进行了融合,构建了一个M-F-S Model。进而,以中国当前经济＂内＂、＂外＂失衡现象为分析起点,籍此模型推演了我们应采取的宏观经济政策组合、搭配解决方案与政策建议。     

Does player specialization predict player actions? Evidence from penalty kicks at FIFA World Cup and UEFA Euro Cup

Penalty kicks are analysed in the literature as ‘real life experiments’ for assessing the use of rational mixed strategies by professional players. However, each penalty kick cannot be considered a repetition of the same event because of the varying background conditions, in particular the heterogeneous ability of different players. Consequently, aggregate statistics over data sets composed of a large number of penalty kicks mediate the behaviour of the players in different games, and the properties of optimal mixed strategies cannot be tested directly because of aggregation bias. In this article, we model the heterogeneous ability of players. We then test the hypothesis that differently talented players randomize over different actions. To achieve this aim, we study a data set that collects penalties kicked during shoot-out series in the last editions of FIFA World Cup and UEFA Euro Cup (1994–2012) where kickers are categorized as specialists and non-specialists. The results support our theoretical predictions.     

An assessment of trends in technology use,innovative work practices and employees’ attitudes in Europe

Several studies of innovative work practices show a positive link with firm performance and employees’ task involvement, organizational commitment and citizenship behaviours. One of the recent changes faced by firms is the introduction of Information and Communication Technologies (ICTs). Although several empirical studies analyse the links between ICT use, innovative work practices and firm performance, employee-level analyses are scarce. Using data from the European Working Condition Survey (EWCS), this article investigates the relationships between use of the Internet and computers and positive attitudes among employees (social support, job satisfaction, extra effort) in the European context. Our empirical results are based on data for more than 9500 employees from 16 European countries in 2005, and more than 14 000 in 2010. Among the different effects of ICT use, based on the results for the 2005, 2010 and the pooled 2005–2010 sample, and in a within-cohorts change analysis, we find that Internet use is positively related to employees’ job satisfaction and extra effort. We find that computer use is not related to employees’ behaviours. We find also that most of the innovative work practices considered are positively related to employees’ positive attitudes.     

The effects of multilateral trading systems on risk and return in equity markets

The event study methodology of Brown and Warner (1985) is adopted and augmented to evaluate the effect of the launch of multilateral trading systems on risk and return in equity markets. The methodology is supplemented with various techniques, such as the nonparametric ranking test and kernel regression, to find out if announcements about the introduction of Chi-X Australia generated abnormal returns (ARs). Asset pricing models are fitted with interaction variables, while GARCH, threshold ARCH (TARCH), exponential GARCH (EGARCH) and power-ARCH (PARCH) are used to determine changes in systematic risk. We find evidence in favour of Fisher’s separation theorem and detect a new market anomaly, which we call the ‘Fisher market anomaly’. Our results show that Chi-X system testings affect ARs. Consistent with the adaptive expectations theory, we confirm that the first announcement about the launch of Chi-X affected systematic risk the most. In addition, we identify industry and firm effects in risk analysis.     

International income inequality, 2005–2011: what a difference 6 years can make

While much attention has recently been given to the rising inequality in high-income countries, particularly the US, inequality across countries has received less attention. Based on reports of the International Comparison Program, which provide the most accurate measures of PPP income at the country level, this study computes three highly recommended measures of intercountry income inequality for the years 2005 and 2011. A dramatic, and perhaps unprecedented, fall in intercountry inequality over the relatively short period of 6 years is noted. As a correlate of the fall in intercountry inequality, aggregate PPP GDP for six major high-income countries is compared with that for three large developing countries, and the dramatic increase over the 6-year period in the ratio of the total GDP of the three developing countries to that for the six high-income countries is noted, thus extending, from the most accurate data, the theme of the ‘rise of the South’ articulated in Human Development Report 2013.     

Impulse response analysis and Orcutt’s hypothesis in trade: evidence from developing countries

Orcutt’s hypothesis in international economics implies that trade flows respond to exchange rate changes faster than to changes in relative prices. Most previous studies used import and export demand models and tested the hypothesis by imposing and comparing lag lengths on the exchange rate and relative prices. One recent study, however, employed impulse response of trade flows to one SD shock to the nominal exchange rate and one SD shock to relative prices and tested the Orcutt’s hypothesis for several industrial countries. In this article we follow this study and test the hypothesis for six developing countries using impulse response analysis. Like the other study for industrial countries, we do not find much support for the hypothesis.     

Bentham and Owen on entrepreneurship and social reform

Abstract

Jeremy Bentham invested an important amount of money in New Lanark's cotton mills, which at that time were run by Robert Owen. However, apparently Bentham never took a serious interest in the organisation of such a successful entrepreneurship and new model society, although it seemed to fit in with Bentham's ideas of the entrepreneur (‘projector’) and also with Bentham's ideas on social reform, seeking the greatest happiness of the greatest number. This article explains how Bentham's share in New Lanark came about. It tries to ascertain whether the New Lanark experiment and Owen's ideas fit Bentham's managerial theory and ideas on social reform so as to understand why Bentham did not pay more attention to Robert Owen's practice.