CEO internal experience and voluntary disclosure quality: Evidence from management forecasts

Internally‐promoted CEOs should have a deep understanding of their firm's products, supply chain, operations, business climate, corporate culture, and how to navigate among employees to get the information they need. Thus, we argue that internally‐promoted CEOs are likely to produce higher quality disclosure than outsider CEOs. Using a sample of US firms from the S&P1500 index from 2001 to 2011, we hand‐collect whether a CEO is hired from inside the firm and, if so, the number of years they worked at the firm before becoming CEO. We then examine whether managers with more internal experience issue higher quality disclosures and offer three main findings. First, CEOs with more internal experience are more likely to issue voluntary earnings forecasts than those managers with less internal experience as well as those managers hired from outside the firm. Second, CEOs with more internal experience issue more accurate earnings forecasts than those managers with less internal experience as well as those managers hired from outside the firm. Finally, investors react more strongly to forecasts issued by insider CEOs than to those issued by outsider CEOs. In additional analysis, we find no evidence that these results extend to mandatory reporting quality (i.e., accruals quality, restatements, or internal control weaknesses), perhaps because mandatory disclosure is subjected to heavy oversight by the board of directors, auditors, and regulators. Overall, our findings suggest that when managers have work experience with the firm prior to becoming the CEO, the firm's voluntary disclosure is of higher quality.     

Government Expenditures and Revenues in Italy in a Long-run Perspective

The aim of this study is to investigate the sustainability of Italian public accounts using in a long-run perspective, using empirical tests on sustainability and solvency of the country’s fiscal policies. The results of unit root and stationarity tests show that government expenditures and revenues series are first-differences stationary. The empirical analysis considered both the entire period and two sub-periods (1862–1913, 1947–2013). Furthermore, we conduct tests on cointegration, which evidence that a clear long-run relationship between public expenditure and revenues emerges only for the years 1862–1913. In essence, the paper’s results reveal that Italy have sustainability problems in the republican age.

     

New development: China renews reform of central–local fiscal relations and provides for basic national public services

China’s reform on central–local fiscal reform has slowed down in recent years. The appointment of a new finance minister experienced in local government affairs is expected to renew the reform affirmed by the Chinese Communist Party (CCP) congress in late 2017. China has unprecedentedly identified a comprehensive list of 81 national basic public services as entitlements. Eighteen of them are subject to national and local standards, and co-financed by central and local governments. A new cost-sharing method for 10 of these services classifies sub-national jurisdictions into five tiers, in which the central government’s share declines from 80% to 10%. These measures, effective in 2019, aim at creating a ‘harmonious and moderately prosperous society’.     

Missing the Popular Vote: Pitfalls in US Democracy and Reform Proposals

Intereconomics - Only a few years ago, it was a widespread belief that globalisation would trigger processes of democratisation worldwide. However, even old and established democracies such as the...     

Business strategy and firm location decisions: testing traditional and modern methods

Business Economics - For nearly a century, economists have relied upon the neoclassical principle of a “profit-maximizing firm.” Two modern challenges to this principle have arisen: the...     

Reading a Duty to Provide Accessible Pre-Contractual Information for Consumers with Disabilities into EU Consumer Protection Law

Journal of Consumer Policy - This paper considers whether a duty to provide consumers with disabilities with pre-contractual information in an accessible format, or in an otherwise personalised...     

The Digital Transformation of Search and Recombination in the Innovation Function: Tensions and an Integrative Framework*

Search and recombination are important mechanisms in the creativity phase of innovation. Digital transformation and the resulting pervasive digitalization of the innovation function have often been associated with increasing possibilities for search and recombination. In this paper, by systematically integrating the search and recombination literature with the literature on digitalization, we demonstrate that digitalization may engender new idiosyncratic tensions in the organizational antecedents of search and recombination and, by implication, in their likely outcomes. We propose that, depending on the interactions among the idiosyncratic tensions identified herein, knowledge recombination might spur very different outcomes, including knowledge layering, knowledge integration, knowledge grafting, or even no recombination at all (which we label “search for the sake of search”). These outcomes may not always be the initially planned desired outcomes. Finally, we provide implications of our integrative framework pertaining to product development and to organizing for innovation.     

Forecasting the volatility of asset returns: The informational gains from option prices

A new class of forecasting models is proposed that extends the realized GARCH class of models through the inclusion of option prices to forecast the variance of asset returns. The VIX is used to approximate option prices, resulting in a set of cross-equation restrictions on the model’s parameters. The full model is characterized by a nonlinear system of three equations containing asset returns, the realized variance, and the VIX, with estimation of the parameters based on maximum likelihood methods. The forecasting properties of the new class of forecasting models, as well as a number of special cases, are investigated and applied to forecasting the daily S&P500 index realized variance using intra-day and daily data from September 2001 to November 2017. The forecasting results provide strong support for including the realized variance and the VIX to improve variance forecasts, with linear conditional variance models performing well for short-term one-day-ahead forecasts, whereas log-linear conditional variance models tend to perform better for intermediate five-day-ahead forecasts.     

Personality and Saving Behavior Among Older Adults

This study investigates how psychological characteristics influence saving behavior within a sample of 1,380 U.S. preretirees aged 50–70 from the Health and Retirement Study (HRS). Using the 3M Model of Motivation and Personality as a theoretical basis, structural equation model results revealed that financial self‐efficacy (FSE) directly explains saving behavior and is central to understanding the link between other psychological characteristics and the saving behavior of older adults. Through higher FSE, increased positive affect and reduced negative affect indirectly supported saving behavior. Moreover, the results revealed personality traits indirectly explained saving behavior. Conscientiousness and extroversion indirectly supported saving behavior; whereas openness to experience and neuroticism indirectly undermined saving behavior. This study connects broad personality traits with saving behavior, which provides information about how older adults' psychological composition is related to their saving practices.