Abnormal returns before acquisition announcements: evidence from Europe

Acquisition announcements influence the stock price of target firms, providing an opportunity for insiders to obtain significant abnormal returns. We study the presence of positive abnormal returns before the announcement date, in target firms, quoted in Euronext markets (Belgium, France, The Netherlands and Portugal) from 2001 to 2007. We investigate whether the pre-announcement run-up of prices can be explained by rumours in the media and the percentage of capital previously owned by the bidding firm, among other factors. We examine cumulative abnormal returns in an event window of 60 days prior the acquisition announcement, with the event date adjusted for the previous disclosure of news about the acquisition, in the media. We compute a run-up index, and find that there are abnormal positive returns before the announcement date, confirming previous studies. We find that a significant part of the run-up is explained by: (i) market anticipation triggered by legitimate sources of information, namely, rumours in the media about the possibility of an acquisition bid and (ii) the percentage of capital previously owned in the target firm, by the bidding firm.     

Periodograms on fiscal illusion: discussing the cycle lengths of public finances in European countries

In this article, we study the duration of public finance cycles in 12 European countries since 1960. We applied periodogram techniques on the levels of fiscal illusion found for these established democracies and tested the statistical significance of the Fourier frequency peaks. Our empirical efforts revealed that most of the cycles in these countries could be characterized as long-term cycles (approximately 30 years), embodying subcycles of approximately 15 years. These findings show that in addition to the commonly studied electoral cycles or real business cycles, our democracies demonstrate extended public finance cycles that extend over various legislative tenures ruled by different political parties.     

The effects of monetary policy in a small open economy: the case of Portugal

In this article, I analyse the macroeconomic effects of monetary policy on the Portuguese economy. I show that a positive interest rate shock leads to: (i) a contraction of real GDP and a substantial increase of the unemployment rate; (ii) a quick fall in the commodity price and a gradual decrease of the price level and (iii) a downward correction of the stock price index. It also produces a ‘short-lived liquidity effect’ and helps explain the negative comovement between bonds and stocks. In addition, I find evidence suggesting the existence of a money demand function characterized by small output and interest rate elasticities. By its turn, the central bank’s policy rule follows closely the dynamics of the money markets. Finally, both the real GDP and the price level in Portugal would have been higher during almost the entire sample period if there were no monetary policy surprises.     

FISCAL POLICY AND ASSET PRICES

We analyse the impact of fiscal policy on asset prices using a panel vector auto‐regressive (PVAR) approach and quarterly data for ten industrialized countries. We find that positive fiscal shocks lead to a temporary fall in stock prices and a gradual and persistent decrease in housing prices. The empirical findings also point to: (i) a contractionary effect of fiscal policy on output in line with the existence of crowding‐out effects and the deterioration of credit conditions; (ii) a weakening of the effectiveness of fiscal policy in recent times; (iii) a more persistent response of asset prices for countries with a lower degree of openness; (iv) a larger impact of fiscal policy on asset prices for small countries; (v) a close link between the responsiveness of asset prices to fiscal policy and the government’s size; (vi) an increase of the sensitivity of asset prices to fiscal policy shocks following the process of financial deregulation and mortgage liberalization; and (vii) significant fiscal multiplier effects in the context of severe housing busts. Finally, the evidence suggests that changes in equity prices may help governments towards consolidation of public finances.     

Assessing performance in services: the travel agency industry

The aim of this article is to compare different approaches to the evaluation of economic performance in tourism. For the first time in tourism, this article simultaneously applies traditional productivity measures as well as parametric and non-parametric techniques to estimate efficiency and compares the results obtained. The empirical application is carried out on a sample of 567 travel agencies operating in Spain in 2004. The results reveal important differences depending on the methodology employed. Overall, none of the methodologies can be said to be better than the rest. These results highlight the importance of considering different approaches when evaluating performance in tourism.     

Convergence Rates to Output Growth in a Global World: The Roles of Openness and Government Size

In this article, we examine the effects of three openness measures on 54 industrial and emerging economies' output growth over the “globalization years” of 1986–2004. Controlling for standard determinants of the Solow growth model in panel data, we find positive effects of openness on real output growth. While we find support for higher convergence rates under the open economy, the convergence rates in this article for both samples are remarkably close to the 2% level documented in Mankiw et al. (1992) Mankiw, G., Romer, D. and Weil, D. 1992. A Contribution to the Empirics of Economic Growth. Quarterly Journal of Economics, 107(2): 407–437. [Crossref], [Web of Science ®] , [Google Scholar]. The inclusion of G/Y, however, reduces the speed of convergence more substantially in industrial economies.     

Different Approaches to the Evaluation of Performance in Retailing

Abstract

The aim of this article is to compare different approaches to the evaluation of economic performance in retailing. For the first time in retailing, this essay simultaneously applies traditional productivity measures as well as parametric and non-parametric techniques to estimate efficiency, and compares the results obtained. The empirical application is carried out on a sample of 491 retailers operating in Spain in 2004. The results reveal important differences depending on the methodology employed. Overall, none of the methodologies can be said to be better than the rest.     

Austerity measures in crisis countries — results and impact on mid-term development

Since the onset of the sovereign debt crisis, the crisis-stricken countries in Europe have been pushed to take drastic steps to consolidate their finances and reduce their budget deficits. Despite strong public opposition and largely damaging short-run effects, the countries have undertaken many of the internationally recommended/mandated reforms and spending cuts. In this Forum, authors from Greece, Ireland, Italy, Spain and Portugal report on the fiscal consolidation achieved in their respective countries — and the sacrifices that have made it possible. Furthermore, the authors detail what remains to be done to resolve the crisis.     

Efficient propagation of shocks and the optimal return on money

We study optimal allocations in an environment in which money is essential due to lack of commitment and anonymity of individuals. Because the economy features aggregate preference shocks, we apply a notion of implementability that allows for allocations with non-trivial business-cycle dynamics for the propagation of shocks. We show that history dependence is predicted by the theory of second best and becomes necessary for optimality when the degree of patience is neither too low nor too high. Our analysis concludes with a discussion of whether there is a role for the propagation of shocks in alternative economic environments.     

Influence of institutional environment on entrepreneurial intention: a comparative study of two countries university students

Institutional environment influences the perceptions of desirability and feasibility, society’s social and cultural environment, such as beliefs, values and attitudes, conditions behaviour and decisions made by individuals. This research evaluates the influence of institutional environment on entrepreneurial intention using a comparative analysis of different attitudes among university students in two countries: Portugal and Spain. In particular, this study aims to examine the perceptions of desirability, feasibility and intention toward the creation of one’s own business and how that variables influence the entrepreneurial intention as compared these two different institutional contexts. Results revealed difference among attitudes toward entrepreneurship in both countries. With respect to the perception of feasibility, the majority of students in Extremadura (Spain) consider that it is easier to create a business in nowadays than it was several decades ago. However, from the students of Beira Interior (Portugal) consider that it is more difficult. Furthermore, in Extremadura, the entrepreneurial intention is higher than in Beira Interior.