Understanding Society: the income data

We introduce the income data of Understanding Society, the UK Household Longitudinal Study. First, we show that the data are widely used in academic and policy research. We then discuss the pros and cons of different types of data on household incomes. We go on to describe the income content of Understanding Society, emphasising key details of data collection and data processing – specifically the derivation of net household income totals. We perform a quality assessment that compares Understanding Society estimates of net household incomes to those from a reliable cross-sectional source – the Households Below Average Income series. We conclude that the Understanding Society income data are of high quality, and so are an excellent source for research on the income distribution or incomes more generally. We finish with a discussion of future directions for income data collection in the study.     

Informal institutions and managers’ earnings management choices: Evidence from IFRS-adopting countries

In this study, we investigate the role of informal institutions (religiosity and culture) in determining managers’ choices of earnings management methods (accruals vs. real activities), after controlling for formal institutions (investor protection, enforcement quality and equity market development). Using an ethical perspective, we find that managers tend to choose an earnings management strategy that meets the prevailing social (informal) norms of the environment where the firm is headquartered. Specifically, our analysis shows that firms domiciled in countries with strong religious adherence and high-power-distance cultures prefer to manage their earnings ‘upwards’ through real activities rather than accruals. Overall, our results suggest that informal institutions determine managers’ earnings management choices at least as strongly as formal institutions do. It would therefore be misleading to analyze managers’ choices in managing earnings solely from the formal rules perspective without considering the role of informal constraints or vice versa.     

Product market competition and productivity shocks

I investigate the interaction effects of competition and productivity shocks on stocks’ earnings and returns. I find that the sensitivities of earnings and returns to productivity shocks are negatively associated with competition intensity. I also find that the excess returns of productivity shocks-sorted portfolios are lower when competition intensity is high, even after controlling for known return predictors. Overall, the empirical evidence shows firms are less exposed to productivity shocks when competition is high. As such, this study provides a possible mechanism through which the structure of product markets affects stock returns.     

Factors influencing the propensity to export: A study of UK and Portuguese textile firms

The purpose of this paper is to determine which particular organisational and managerial factors contribute to the propensity to export in a declining sector. For this purpose the textile and clothing sector in Portugal and the United Kingdom is chosen for investigation. This study analyses firms’ resources and capabilities, as well as decision-makers’ objective and subjective characteristics in a sample of 167 Portuguese and 165 UK firms in the textile and clothing industry. The fundamental research questions are: which characteristics of the firm are associated with stronger export propensity, and is it possible to identify a profile of decision-makers associated with export propensity? For Portugal, the size of firm and the educational level of managers are the key determinants of export propensity. As to the UK, age and perception of costs are the key factors. In addition, we also investigated managers’ commitment to exporting, for which the important determinants of export propensity in the textile and clothing sector were found to be planning, advertising and promotion. When combining the two country data-sets, particular firm characteristics, namely, firm size, competitive advantage, and technology, and a specific objective characteristic, namely, the number of languages spoken, are the key factors associated with the propensity to export in this declining sector.     

Usage and understanding of food labels among Lebanese shoppers

Food labelling is a population‐based approach to health education that enables consumers to make better choices by providing information at the point of purchase. This study aimed to assess the food label usage and understanding and factors affecting them among Lebanese supermarket shoppers. A cross‐sectional study was conducted among 748 supermarket shoppers in Lebanon between December 2013 and February 2014 using a pre‐coded structured questionnaire. About 29.3 of the shoppers check the food labels every time they buy a food product and 15.7% never do it. Shoppers who do not read food labels identified the long time needed in reading them as top reason (34.9%), while 9.8% answered that they do not understand them. About 55.4%of the surveyed shoppers read the food labels at the supermarkets. About 44.4% of participants agreed that reading food labels is very important, while 30.3% read the food labels depending on the purchased product. Then 19.4% of participants complained that food labels contain too much information and 13.8% claimed that food labels are difficult to understand. About 60.3% think that food labels have helped people in changing their eating habits, while health and nutrition claims affected the product selection among 59.8% of participants. The food label knowledge score average was 63.1%. Older, obese shoppers having kids, suffering from chronic illness or allergies, following a specific diet and residing in big cities scored significantly (p < .05) higher. The low knowledge score necessitates the nutrition education on how to read and use the food labels. Groceries would be the perfect place to reach out mass consumers.     

Penalty and related estimation strategies in the spatial error model

Spatial autoregressive models are powerful tools in the analysis of data sets from diverse scientific areas of research such as econometrics, plant species richness, cancer mortality rates, image processing, analysis of the functional Magnetic Resonance Imaging (fMRI) data, and many more. An important class in the host of spatial autoregressive models is the class of spatial error models in which spatially lagged error terms are assumed. In this paper, we propose efficient shrinkage and penalty estimators for the regression coefficients of the spatial error model. We carry out asymptotic as well as simulation analyses to illustrate the gain in efficiency achieved by these new estimators. Furthermore, we apply the new methodology to housing prices data and provide a bootstrap approach to compute prediction errors of the new estimators.     

Abnormal inventory and performance in manufacturing companies: evidence from the trade credit channel

Review of Quantitative Finance and Accounting - This paper examines the value of abnormal inventory and the channels through which firms decrease abnormally high inventory or increase abnormally...     

Hedonic Analysis of Consumers' Valuation of Country of Origin of Meat in the United Kingdom

We estimate the implicit prices consumers are willing to pay for country of origin labels, using hedonic price methods and panel data for meat and meat products in the United Kingdom. Our results show that consumers place significant value on origin information across fresh and processed meat products, especially since the horsemeat incident in 2013. The findings also suggest that retailers have increased the use of voluntary labelling of processed meat products since the incident. Hence, further extension of existing mandatory labelling requirements to processed meat products may not be required at least in the short term.     

Analysis of capacity constraints on the backlog bullwhip effect in the two-tier supply chain: a Taguchi approach

This paper investigates the impact of capacity constraints and safety stock on the backlog bullwhip effect in a model of a two-tier supply chain. One of the most commonly applied methodologies to study the various aspects of the Beer Game model is the control theoretic technique. It is clear that these control theoretic models are linear and cannot deal with non-linearities, such as capacity constraints. Thereafter, simulation experiments together with Taguchi design of experiments are performed to study non-linear impacts of capacity constraints in a two-tier supply chain. This research gives supply chain operations’ managers and designers a practical way to develop a trade-off between capacity and safety stock at different echelons and to take better decisions about their capacity and safety stocks. Future work should investigate the total cost implications of capacity constraints and safety stocks in a multi-echelon supply chain.     

Resolving International Conflict Jordan and its Neighbours

This article puts on record the first of the 1996 Stockton Lectures at London Business School. It was delivered in February. This year, the Stockton Lectures address the issue of how the business community can help resolve international conflict. Continuously for decades, Jordan has been at the heart of an area of international conflict. Here His Majesty King Hussein, who has led his country since 1952, reflects both on the struggles of the past decades and on his grandfather's vision for peace. He then looks forward to the ways that business can help the people of Jordan to reap the peace dividend.