Do differences in national cultures affect cross-country conditional conservatism behavior under IFRS?

The purpose of this paper is to explore whether international differences in cultural dimensions of individualism and uncertainty avoidance affect how managers from different countries implement International Financial Reporting Standards (IFRS) and influence cross-country conditional conservatism behavior. We analyze the conditional conservatism behavior of publicly listed firms in 14-member countries of the European Union (EU) during the period 2006-2016. The results confirm the relationship between the individualism and uncertainty avoidance dimensions of national culture and conditional conservatism in the post-IFRS period. Particularly, conditional conservatism is higher in countries where individualism is lower and where uncertainty avoidance is higher.     

The Political Economy of Policy Vacuums: The European Commission on Demographic Change

ABSTRACT

Supranational organisations can only confront politico-economic issues that are recognised as important. Typically, issues gain recognition either when they provide an external shock to the system, shaking political actors into action, or when they are framed as important in policy networks concerned with developing the appropriate scientific approach. Ideally political and scientific actors align in creating pressures to recognise the issue as salient and to mobilise organisational responses. Issues differ in their capacity to be driven by both political and scientific pressures, creating crisis management, technocratic, and reform agenda outcomes. Here we explore a further variation, where pressures around an issue are insufficient, creating a policy vacuum. We examine one such policy vacuum in Europe: demographic change. This issue belongs to no particular Directorate-General in the European Commission, but is subject to policy frames from DG EMPL and DG ECFIN. Without sufficient political and scientific pressures, no particular policy position is occupied and advocated despite recognition of the issue’s importance. We discuss the role of policy vacuums and the need for their identification in political economy research.     

GMO-free regions in Europe: an analysis of diffusion patterns

Genetically modified organisms (GMOs) have been a controversial issue in the European Union (EU). A growing number of member states and regions within the member states oppose the EU’s agro-biotechnology policy, resulting in a complex multi-level structure of policy-making. This study is interested in the regional opposition to GMOs and scrutinises the determinants of membership in the European Network of GMO-free Regions. In terms of theory, this study builds on the literature of policy diffusion. For the analytical purpose, we distinguish among four diffusion mechanisms: learning from earlier adopters, economic competition among proximate regions, imitation of economically powerful regions and deviation from national law. Our research questions are the following: How has membership developed since the foundation of the network? Which mechanisms explain the diffusion patterns observed? The empirical findings show that membership in the network has grown substantially between 2003 and 2014, which supports the general expectation that there is a diffusion of GMO-free regions. Yet, most new member regions are located in the same member states as the regions that founded the network. In other words, what is observed is intra-country diffusion rather than inter-country diffusion. The empirical findings provide support for the importance of learning from earlier adopters for the growing of the European Network of GMO-free Regions.     

Legal evolution of the concept of ‘home base’ for the purpose of determining labour and social security law applicable to European aircrew members

This paper has a dual aim: (1) to outline the legal evolution of the ‘home base’ concept and (2) to map the role of this concept in determining the law applicable (both employment law and social security law) to employment contracts of European aircrew members. An in-depth analysis of the relevant portions of (1) Reg. (EEC) No 3922/91, (2) Reg. (EU) No 465/2012, (3) Reg. (EU) No 83/2014, (4) EASA's 2014 Certification Specifications, and (5) the European Court of Justice's preliminary ruling on joined cases C-168/16 and C-169/16 is conducted.What emerges is that (1) the ‘home base’ definition, due to its subjectivity, has traditionally been susceptible to multiple interpretations and (2) due to regulatory ambiguity, the use of ‘home base’ to identify the labour laws applicable to airline workers has for a long time been inconsistent, ranging from one extreme (being considered a key element for this purpose) to the other (being assigned a secondary role). It was only in the last few years that some improvements were made, with Reg. (EU) No 465/2012 first and the European Court of Justice's 2017 preliminary ruling then, clarifying that the ‘home base’ concept must be assigned a central role in the determination of the law (both social security law and employment law) applicable to employment contracts in the aviation industry.     

Empowerment and resident support for tourism in rural Central and Eastern Europe (CEE): the case of Pomerania,Poland

Despite empowerment being a crucial component of sustainable tourism, few scholars have quantitatively operationalized empowerment and looked at how it applies to rural societies within the post-communist European Union (EU) member states. Knowing the high priority of sustainable rural development goals within the EU, empowering residents within these post-communist societies has become a pertinent issue especially where those societies appear more reluctant to engaging in democratic ways of decision-making. In response to this gap, this study tests the cross-cultural validity of the Resident Empowerment through Tourism Scale, and then evaluates how empowerment predicts residents’ support for tourism within the municipality of Choczewo, Pomerania, Poland. Using a theoretical perspective that blends Social Exchange Theory with Weber's Theory of Formal and Substantive Rationality, these non-economic empowerment dimensions are coupled with a measure of resident perceptions of economically benefiting from tourism to see if rural residents in Choczewo, Poland, are more swayed by the economic or non-economic benefits of tourism. Results show that residents within this Central and Eastern Europe setting are more influenced by the pride and self-esteem boost associated with psychological empowerment and the perceptions of increased community cohesion (i.e. social empowerment) than the economic promises of tourism.     

Which commercial partners are important for the most recently admitted EU countries?

This paper describes the degree of trade integration inside the European Union (EU) after the fifth enlargement in 2004. To achieve this goal, we build a database of information on trade flows between the new EU countries (EU‐10) and 180 commercial partners in six different sectors from 1999 to 2011. Using the standard gravity model and estimating a difference‐in‐differences specification, we analyze how joining the EU affected the intensity and direction of the EU‐10's trade flows. Our results show that though trade exchanges between the EU‐10 and EU‐15 intensified after 2004, the impact of integration was much more significant to the EU‐10 group.     

The commercialisation of subsistence farms: Evidence from the new member states of the EU

For selected regions of five EU Member States (Bulgaria, Hungary, Poland, Romania and Slovenia), this paper examines the determinants of the commercialisation of (semi)subsistence farms. While subsistence farming has become an important feature of the EU, there is a lack of evidence on its spatial distribution, importance and reasons for persistence. The analysis utilises cross-regional survey data and qualitative interviews. Results suggest the absence of a subsistence poverty trap driven by either farmer perceptions or transactions costs although capital endowment appears to play a significant part. On the other hand the degree of market engagement depends on access costs, which vary with location, households’ productive assets, specialisation, and risk propensity. Implications for land use policy are discussed.     

An analytical approximation formula for European option pricing under a new stochastic volatility model with regime-switching

In this paper, an analytical approximation formula for pricing European options is obtained under a newly proposed hybrid model with the volatility of volatility in the Heston model following a Markov chain, the adoption of which is motivated by the empirical evidence of the existence of regime-switching in real markets. We first derive the coupled PDE (partial differential equation) system that governs the European option price, which is solved with the perturbation method. It should be noted that the newly derived formula is fast and easy to implement with only normal distribution function involved, and numerical experiments confirm that our formula could provide quite accurate option prices, especially for relatively short-tenor ones. Finally, empirical studies are carried out to show the superiority of our model based on S&P 500 returns and options with the time to expiry less than one month.     

Same as it ever was? Europe's national borders and the market for corporate control

National borders continue to be strong barriers for mergers and acquisitions in Europe. Using regional data, we construct a gravity model and find that the restraining impact of national borders decreased by more than 17 percent between 1991 and 2007. However, no significant change has occurred since the mid-1990s (i.e., four years before the introduction of the euro). In comparison, we run a corresponding analysis in the United States using the 10 federal regions as country equivalents. The resulting ‘quasi-border’ effect in the United States is weaker than that in the European Union. Yet its decline by 43 percent is much stronger in the same period. We conclude that European integration policy has had little effect on fostering M&A cross-border transactions.     

Exploring the relationship between truck load capacity and traffic accidents in the European Union

Applying econometric techniques to EU28 panel data and controlling for explanatory variables such as road types, we find that increased truck load capacity does not necessarily aggravate road traffic safety. Specifically, heavy trucks do not seem to be linked with greater numbers of traffic fatalities/accidents, medium trucks appear to be the worst performers in terms of fatalities, and light trucks seem to be the worst for accidents. In summary, our results clarify the complex relationship between truck load capacity and road safety, pointing to the existence of a negative correlation for accidents per capita and an inverse U-shaped curve for fatalities per capita.