Analytically comparing disaster resilience across multiple dimensions

It is important to compare the resilience of complex human systems to different types of disasters, in order to assess their inherent vulnerabilities and take appropriate actions to strengthen them. Resilient behavior can be complicated and multi-dimensional, however, and one must be able to characterize the different ways in which that resilience actually exhibits itself in practice. With this in mind, this paper discusses creating a multi-dimensional indicator for the resilience of a complex human system, and it explores an approach for visualizing and analyzing the relationships between each of the individual resilience dimensions. Because decision makers may differ on the relative contribution of the different dimensions to overall resilience, the paper further discusses the issue of weighting the different dimension values and the impacts that such a weighting scheme can have on the relative ranking of different scenarios. We illustrate the ability to characterize the complexity of multi-dimensional resilience by analyzing an empirical data set that measures the relative resilience of the New York metropolitan area to seven different natural disasters between 2010 and 2012.     

Enhanced network effects and stochastic modelling in generation expansion planning: Insights from an insular power system

Electricity generation capacity expansion is driven by both economic and socio-political realities. Policy makers determine public infrastructural decisions, such as climate and renewable targets, and transmission infrastructure, and the optimal generation capacity expansion follows. Policy makers therefore require planning models that can determine the optimal generation capacity mix in the long run under various scenarios, including policy choices. This work presents a planning model based on linearised alternating current optimal power flow which determines optimal generation capacity expansion and operation, in a least-cost manner, given global and local technical constraints, as well as policy decisions. We apply the model to a test case of the island of Ireland, which has two weakly interconnected systems, high renewable generation targets and low storage and interconnection. We determine the optimal generation expansion and operation out to 2030 considering the effects of increased multi-area interconnection, existing fossil fuel generation phase-out and increased renewable generation targets and carbon prices. Our results find that costs and emissions are driven primarily by the decommissioning of old inefficient generation units. High renewable targets, on the other hand, render increased carbon prices relatively ineffective in reducing system emissions. Furthermore, high renewable generation targets crowd out low-carbon power generation options such as carbon capture and storage (CCS). The strategic north-south interconnection has little effect on renewable energy source installations required to achieve renewable power generation targets but does impact on security of supply and the congestion level across the island.     

How does the availability and use of flexible leave influence the employer–employee relationship?

In this article, we develop, and empirically test, a moderated mediation model of the effects of flexible leave on employees' organizational attachment. Drawing on a social exchange framework and signaling theory, we explore how the material and non-material nature of exchange between the employer and employee shapes their relationship. First, we show that the relationship between the availability of flexible leave and organizational attachment is shaped by two competing mediators, perceived organizational support (POS) and perceived flexibility stigma. Second, we delineate between availability and use of the policy, to show how the effect of POS is enhanced and perceived flexibility stigma reduced, with use. Our findings demonstrate that the relationship between the availability of flexible leave and organizational attachment is complex, but is enhanced through use of flexible leave. We contribute toward HRM scholarship about the relationship between employees' experience of HR practices and their corresponding impact on employees' subsequent behavior.     

Financial statement comparability and bank risk-taking

This study examines the relationship between financial statement comparability and bank risk-taking. Our analysis of a sample of publicly listed U.S. banks over the 1994–2019 period shows that banks with more comparable financial statements are related to significantly less risk-taking. We also find that the negative relationship between comparability and risk-taking is more pronounced for firms with more severe moral hazard and agency problems. Our documented findings are robust across alternative measures of comparability and risk-taking and considering change analysis, after controlling for strength of corporate governance and using propensity score matching and two-stage least squares estimation to address endogeneity concerns. Our analysis also shows that the relationship between financial statement comparability and bank risk-taking is stronger for smaller banks than for larger banks. Overall, this study provides unique insights into the role of financial statement comparability in curbing risk-taking in the banking sector.     

A political economy perspective on horizontal FDI in a dynamic Cournot-oligopoly with endogenous entry

Entry in a homogeneous Cournot-oligopoly is excessive if and only if there is business-stealing (Amir et al., 2014). The excessive entry prediction has been derived primarily for closed economies and using a welfarist benchmark. We extend this framework and allow for (1) horizontal FDI in a multi-period setting and (2) interest group-based government behaviour. Opening the market to greenfield investments from abroad tends to aggravate the entry distortion. Moreover, market opening may reduce welfare if a more pronounced entry distortion dominates the gain in consumer surplus. Finally, a government, which places sufficiently little weight on the interests of consumers, will object to market opening, even if welfare rises.     

I (Could Have) Told You! Early warning indicators and crisis performance of the 12 “old” Euro-countries under the economic crisis 2008–09

The impact of the economic crisis 2008-09 was remarkably different in the 12 “old” member states in the Euro-zone. Five of them were hit especially badly; four of them even had to be bailed out by the rest in one way or another. This paper asks if one could have foretold, based solely on information available prior to 1999, which of the countries then about to enter the Euro-zone would run into economic trouble once a serious economic crisis occurred. The focus is on the (post)predictive power of three kinds of leading indicators: economic indicators, political indicators (indicating quality of governance), and indicators derived from the theory of optimal currency areas (OCA). Since there are more indicators than cases, PLS-regression is used to gauge the (post)predictive strength of the indicators examined. The results show that political indicators have quite some (post)predictive power in this case, whereas indicators derived from OCA-theory do not do too well. Economic indicators perform better than indicators derived from OCA-theory, but generally less well than the political indicators. Thus, the experience from the latest economic crisis in the Euro-zone suggests that more emphasis should be placed on the quality of governance record of a country when deciding if it should be deemed fit to become a member.     

Does corporate social responsibility reduce financial distress risk?

This paper examines how corporate social responsibility (CSR) affects the level of financial distress risk (FDR). Using a sample of 1201 US-listed firms during 1991–2012, our results indicate that firms with higher CSR levels have lower FDR, suggesting that a better CSR performance makes firms more creditworthy and have better access to financing, which is rewarded with less financial defaults. This finding is robust to using alternative proxies of FDR, to controlling for potential endogeneity, and is mainly driven by the community, diversity, employee relations, and environmental dimensions of CSR. Moreover, this relationship is more prevalent in firms with strong governance mechanisms and high product market competition. It is also more exacerbated for less distressed firms and during non-crisis periods. Overall, our findings suggest that the adoption of CSR practices comes with less distress and default risks, likely leading to a more attractive corporate environment, better financial stability and more crisis-resilient economies.     

Threshold effect of economic openness on bank risk-taking: Evidence from emerging markets

This paper investigates the non-linear effects of two aspects of economic openness, namely, trade openness and financial openness, on banking system stability. We use a panel of 42 emerging markets from 2000 to 2014 to test whether bank risk-taking behaviour varies with the level of openness. We find that a higher degree of trade openness promotes bank stability linearly. Conversely, the non-linear effect of financial openness on bank risk-taking is evident. When the financial system is not sufficiently open, the impact of financial openness on bank stability is insignificant. However, as the domestic financial market becomes more open, financial openness can help discipline the behaviour of banks, making them more stable. We also find evidence that these effects are transmitted through the market discipline channel. Our findings highlight the importance of strengthening the domestic regulatory framework and transparency as the economy becomes more integrated.     

Do mutual fund flows affect the French corporate bond market?

We study whether investors’ withdrawals from mutual funds affect corporate bond prices. As mutual funds have become major players in the financial markets, they are likely to exert downward pressures on asset prices when facing investors’ redemptions, particularly in the less liquid markets such as corporate bonds. We use a novel dataset on the French bond funds and show that both flows in and out of mutual funds lead to a significant effect on the corporate bond yields. This effect is asymmetric as redemptions provoke a change in yields of greater magnitude than inflows. Moreover, all corporate bonds are not equally affected by investors’ withdrawals from funds: The more a bond is detained by funds, the higher the impact of redemptions on its yield. These three results are robust to various changes in econometric specifications.