A new Cramer-Von Misses cointegration test with application to environmental Kuznets curve

This article introduces a new Cramer-Von Misses (CVM) cointegration test robust to nonlinearities. We characterize nonlinear cointegration in terms of a nonlinear moving-average filter (high pass filter) of a matrix based on permutation matrices on the discrepancy of empirical distributions. A Cramer-Von Misses (CVM) test statistic is proposed for testing the null hypothesis of two independent random walks against a broad range of cointegrating alternatives with monotonic nonlinearities and level shifts in the cointegration relationship. We derive the asymptotic distribution of this induced-order Cramer-Von Misses (CVM) cointegration test. This new non-parametric test statistic has two important properties: the invariance to monotonic transformations of the series and the robustness for the presence of several parameter shifts or structural changes. We analyse the small sample properties of this test by Monte Carlo simulations and evaluate the power of the test. Finally, this CVM test is applied to the analysis of long run environmental Kuznets curve which relates economic growth and pollution. In particular, we consider a nonlinear cointegration between gross domestic product (GDP) and CO2 emissions. Our new CVM test is able to find evidence of cointegration while classical single equation cointegration tests are not.     

The social dimension of firm performance: a data envelopment approach

A data envelopment model is proposed to quantify the social dimension of firm performance. Corporate social responsibility activities are treated as netputs to production. Production of good outputs and unintended by-products are combined in the overall measurement of firm performance. Our model is illustrated using a sample of global firms and suggests strikingly low social performance levels.     

The Pricing of Audit Services: Further Evidence from the Canadian Market

Since the seminal work of Simunic (1980), many studies have investigated audit pricing, competition in the audit industry, product differentiation and audit cost functions. This study expands on the work done to date by examining Canadian audit fees across time, audit firm and industry. The observations of audit fee data span the period of time during which the provincial codes of professional ethics with respect to fee tenders and advertising in general were relaxing in Canada. The results reported in this study support the existence of differentiated audit services in the Canadian audit market, and are consistent with DeAngelo's (1981) size interpretation of audit quality. Although no significant differences in the pricing of audit services across time are detected, the data provide evidence of significant pricing differences across (pre-merger) Big Eight audit firms in the small auditee market, suggesting that treating these audit firms as a homogeneous group in future research may not be appropriate. These inter-firm pricing differences do not appear to be due to the potential confounding effects of the auditee's industry. In contrast to previous studies, a significant positive association between internal and external audit costs is observed, suggesting a complementary, rather than a substitute, relationship.     

Shaping of Strategic Behavior: How Macro-Environmental Effects Pattern the Country-Level Participation of Non-US Firms in US Equity Markets

This paper examines the effects of macro-environmental variables on country-level patterns of participation by firms on the US NASDAQ stock exchange. NASDAQ’s popularity can be linked to the strength of its technological system, as well as the high frequency of listings of technology-oriented firms. Using concepts from organization theory, strategy and international business, we consider the impact of political, legal, cultural, and colonial heritage status on the strategic capital-seeking behavior of non-US companies in US markets. We empirically demonstrate that similarity in legal systems and a shared colonial heritage will influence the probability of a non-US country having firm participation on the NASDAQ. The results also indicate that the effects of institutional forces are not static processes     

The under-exploration issue in territorial networks: the moderating effect of the involvement of supporting organisations

The aim of this paper is to provide a better understanding of the effect of social networks on innovation through the analysis of territorial systems of firms. Although industrial districts enjoy a number of advantages, they also present some relevant limitations. We have labelled the difficulties that have been identified as the exploring concern. However, periphery actors, such as supporting organisations, playing the role of intermediary agents allow districts to escape from exploring restrictions, since they can monitor what is happening outside the district and, in consequence, the involvement of supporting organisations has a positive effect on innovation. The study reported in this paper is based on a sample of 154 manufacturing firms that belong to industrial districts in the Valencia Region (Spain). Findings support the positive association between local institution involvement and innovation of companies.     

An evaluation of the management of the Finnish employment service

This paper analyses the efficiency of the Finnish Employment Service's management in selecting unemployed individuals who are offered a job. The database used considers short-term unemployed individuals who face the same labour market conditions in 1996. Duration analysis with a Weibull model has been performed in order to study the determinants of the transition probability from unemployment into employment and the impact of receiving job offers through the Employment Service (ES). In order to carry this out, it has been taken into account that the reception of such job offers may be endogenous because the ES selects the individuals who will receive the offers. The empirical results suggest that the decisions made by the ES are adequate in the sense that they increase the benefit of society, compared with a random assignment of the vacancies offered through the ES. Moreover, the effects of the other determinants depend on whether the individual receives offers. The results also point out that individuals who receive no offers through the ES are more likely, as time passes by, to be discouraged in searching for a job than those who do.     

Price transmission and asymmetric adjustment in the Spanish dairy sector

Asymmetric threshold vector error correction models are applied to monthly price data to analyse price relationships and patterns of transmission among farm and retail markets for a variety of dairy products in Spain. The results suggest that asymmetries affect a conspicuous part of the raw milk processed in Spain. Implications for the organizational structure of Spanish dairy markets are offered.     

Effects of policy instruments on farm investments and production decisions in the Spanish COP sector

Our article assesses the impacts regarding on-farm investment and production decisions resulting from the Partially Decoupled (PD) payment scheme implemented during the 1990s and first half of the 2000s within the framework of the Common Agricultural Policy (CAP). The Spanish Cereal, Oilseed and Protein (COP) sector is taken as a case study regarding this effect due to its economic and political relevance in Spain. The empirical analysis is applied to farm-level data from 2000 to 2004 using the Farm Accountancy Data Network (FADN). We use a reduced-form application of the dual model of investment under uncertainty and estimate a system of censored and uncensored equations. PD payments are found to increase short-run production and generate a statically significant increase in the investment in farm assets. Results also show the importance of assessing the effects of PD payments in a dynamic framework as applied in this article.     

Code and Conduct: Predictors of Irsih Managers' Ethical Reasoning

We analyse Irish managers' perceptions about the degree of wrongness of ten types of unethical conduct. In-person interviews with 348 managing directors of Irish-owned businesses who report their perceptions of the degree of wrongness of ten business ethics problems (the dependent variables) yield the data for our study. Predictors of managers' ratings include the existence of a business code of ethics, perceived frequency of occurrence of the given acts, company size and sector, union membership, Irish business ownership and independence (the independent variables). Results indicate that approximately 75% of those sampled are independent Irish owned businesses but few (only 22% of this sample) have a formal business code. Regression analyses reveal that small firms with a code of ethics predict higher wrongness ratings for managers in regard to the practices of unfair pricing and delayed payments (unethical behavior involving firms) but managers also consider such acts the least wrong overall. Wrongness ratings on the eight remaining unethical acts are explained by the manufacturing sector. However, manufacturing firms in Ireland also have a high percentage of unionised workers indicating that unions influence managerial thinking about social and employee ethics (e.g., discrimination, insider trading). The traditional adversarial Industrial Relations model is useful in noting that unions are important in setting ethical standards for indigenous Irish-owned businesses. Given this reality, management in small, manufacturing firms should work with unions to create a more formal ethics code in order to guard against corruption and to remain competitive in the international marketplace. Those without strong unions might articulate their own organisational values.