“It's not Easy Being Green”: Exploring Green Creeds,Green Deeds,and Internal Environmental Locus of Control

The authors report on the development of a novel construct, internal environmental locus of control (INELOC), which captures consumers’ multifaceted attitudes pertaining to personal responsibility towards and ability to affect environmental outcomes. Using data gathered from a sample of consumers, the linkages between INELOC and a wide array of environmental behaviors were investigated. Exploratory and confirmatory factor analyses revealed four first‐order dimensions (“green consumer,” “activism,” “advocate,” and “recycling attitudes”) embedded within a second‐order INELOC factor. Structural equations modeling techniques showed that INELOC was a strong positive predictor of many behaviors. However, the nature of the attitude–behavior relationship varied considerably across behavioral contexts, implying that people do not consistently behave in a proenvironmental manner. © 2012 Wiley Periodicals, Inc.     

Professionals' supervisor–subordinate relationships,autonomy and commitment in Australia: a leader–member exchange theory perspective

This article used leader–member exchange theory as a lens for comparing the impact of the supervisor–subordinate relationship on two types of professionals' perceptions of autonomy, and in turn upon their affective commitment. The reason for examining autonomy is because a characteristic of being a professional is having autonomy; however, we argued that such perceptions are affected by the quality of the supervisor–subordinate relationship. The findings confirmed this argument, although the trend was stronger for engineers than for nurses. Using the ordinary least square procedure, the goodness of fit of the model identified that supervision and autonomy accounted for approximately a third of the variance for engineers' levels of affective commitment and a fifth of the variance for nurses. That is, the impact of supervision practices was stronger on autonomy and commitment for engineers than for nurses in Australia. Moreover, statistically, the two groups of professionals were similar in their perceptions of the quality of their supervisor–subordinate relationship as well as in their perceptions of autonomy, and the qualitative findings supported similar factors impacting upon their perceptions. The only significant difference between the two groups was in their levels of affective commitment. The implications of these results include the need for those managing professionals to consider ways of improving workplace supervisor–subordinate relationships because of the impact upon perceived autonomy as well as commitment to their organisation, and hence the retention of such professionals.     

The contractual and value relevance of reported earnings in a dividend-focused environment

This study investigates the relevance of reported earnings in the context of an institutional environment, i.e., Switzerland, in which investors focus on dividends. In conjunction with a dividend focus, the financial reporting environment faced by Swiss firms provides their managers with more accounting discretion than managers of Anglo-Saxon firms typically have. From a contractual perspective, dividendbased earnings management is expected since Swiss corporate law explicitly states that dividends, which must be voted on by stockholders, are to be based upon a firm's reported earnings. From a value perspective, thin trading conditions and a long-term investment horizon are expected to increase the importance of dividend payments and to influence the informativeness of reported earnings. Results indicate that Swiss managers do engage in dividend-based earnings management, that earnings quality signals are used by managers to voluntarily constrain their accounting choices and that the value relevance of earnings is conditional upon dividend payments.     

Forecasting the US term structure of interest rates using a macroeconomic smooth dynamic factor model

We extend the class of dynamic factor yield curve models in order to include macroeconomic factors. Our work benefits from recent developments in the dynamic factor literature related to the extraction of the common factors from a large panel of macroeconomic series and the estimation of the parameters in the model. We include these factors in a dynamic factor model for the yield curve, in which we model the salient structure of the yield curve by imposing smoothness restrictions on the yield factor loadings via cubic spline functions. We carry out a likelihood-based analysis in which we jointly consider a factor model for the yield curve, a factor model for the macroeconomic series, and their dynamic interactions with the latent dynamic factors. We illustrate the methodology by forecasting the U.S. term structure of interest rates. For this empirical study, we use a monthly time series panel of unsmoothed Fama–Bliss zero yields for treasuries of different maturities between 1970 and 2009, which we combine with a macro panel of 110 series over the same sample period. We show that the relationship between the macroeconomic factors and the yield curve data has an intuitive interpretation, and that there is interdependence between the yield and macroeconomic factors. Finally, we perform an extensive out-of-sample forecasting study. Our main conclusion is that macroeconomic variables can lead to more accurate yield curve forecasts.     

Strategic financial signalling

In an entry game, the entrant and financial markets are uninformed about the incumbent's costs. The entrant wishes to enter the market if and only if the incumbent has high costs. Therefore, a low cost incumbent would like to signal its cost to the entrant to deter its entry. Simultaneously, it would like to reveal its private information to financiers to obtain actuarially fair financial prices. We suggest that financial structure may act as a common signal in financial and output markets. In equilibrium, a low cost incumbent's highly leveraged financial stucture becomes an effective entry deterrent as it reveals private information to the entrant (and financiers).     

Multivariate risk aversion and uninsurable risks: Theory and applications

The objective of this paper is to develop conditions for global multivariate comparative risk aversion in the presence of uninsurable, or background, risks, and thus generalize Kihlstrom and Mirman [1974] and Karni [1979,1989]. We analyze von Neumann-Morgenstern (VNM) utility functionsas well as smooth preference functionals which are nonlinear in distribution but locally linear in probabilities. In each case we provide an economic application which illustrates how our theorems can be used. We analyze a risk sharing, a portfolio choice, and a labor supply problem for VNM utility functions, and the optimal allocation of effort to risky technologies in the presence of a random supply (or quality) of a public good for nonlinear preference functionals. We consider thecase where the random variables are mean-independent as well as the case where they are independent. In the labor supply application for VNM utility functions, we show that if the two risks are independent, the comparative statics effect of greater risk aversion on labor supply in the presence of a background non-wage income risk is determined by a monotonic relationship between labor supply and the wage rate under certainty. That is, we extend the applicability of the Diamond-Stiglitz [1974]-Kihlstrom-Mirman [1974]single-crossing property to the case where an independent background risk is present.     

Equilibrium Prices When the Sunspot Variable Is Continuous

We analyze sunspot-equilibrium prices in nonconvex economies with perfect markets and a continuous sunspot variable. Our primary result is that every sunspot equilibrium allocation can be supported by prices that, when adjusted for probabilities, are constant across states. This result extends to the case of a finite number of equally-probable states under a nonsatiation condition, but does not extend to general discrete state spaces. We use our primary result to establish the equivalence of the set of sunspot equilibrium allocations based on a continuous sunspot variable and the set of lottery equilibrium allocations. Journal of Economic Literature Classification Numbers: D51, D84, E32.     

Time-consistent linear taxation and redistribution in an overlapping-generations framework

We study time-consistent labour and capital income linear taxationusing an infinite-horizon overlapping-generations model of asmall open economy. Individuals have different productivitiesand the government intervenes for purely redistributive purposes.The study of time-consistent taxation requires the introductionof borrowing restrictions in the economy. We characterize thetime-consistent solution and consider alternative solutionsbased on a simple tax rule. We demonstrate the existence andthe uniqueness of the time-consistent solution using a log-linearutility function. We provide numerical comparisons between time-consistentand time-inconsistent linear taxation: the importance of beingable to make commitment decreases when the differences betweenindividuals increase.