Stochastic non-smooth envelopment of data for multi-dimensional output

The proposed method of Stochastic Non-smooth Envelopment of Data (StoNED) for measuring efficiency has to date mainly found application in the analysis of production systems which have exactly one output. Therefore, the objective of this paper is to examine the applicability of StoNED when a ray production function models a production technology with multi-dimensional input and output. In addition to a general analysis of properties required by a ray production function for StoNED to be applicable, we conduct a Monte Carlo simulation in order to evaluate the quality of the frontier and efficiencies estimated by StoNED. The results are compared with those derived via Stochastic Frontier Analysis (SFA) and Data Envelopment Analysis (DEA). We show that StoNED provides competitive estimates in regard to other methods and especially in regard to the real functional form and efficiency.     

Luxury products for the circular economy? A case study of Bang & Olufsen

This paper examines whether luxury products can support a circular economy. This is done through a literature review of luxury products and the links to circular economy, as well as a case study of Bang & Olufsen (B&O). The literature review revealed links between some of the core characteristics of luxury products and the circular economy. This included aspects such as the high quality, durability, service schemes, extended warranties, and large aftermarkets. The case study supports the links between the inner circles in the circular economy (maintenance, repair, and reuse) and some of the core characteristics of luxury products. B&O produces products with a long lifespan, has extended warranties, repair and service schemes, spare part availability for 8 years, an aftermarket, and leasing schemes. B&O also does reconditioning of components for its repair loop, conducts dismantling tests, marks plastic parts, and has a negative list that excludes certain hazardous components.     

MEASURING RICHNESS AND POVERTY: A MICRO DATA APPLICATION TO EUROPE AND GERMANY

In this paper, we define a new class of richness measures. In contrast to the often used headcount, these new measures are sensitive to changes in rich individuals' incomes and, therefore, allow for a more sophisticated analysis of richness. We demonstrate the application of these new measures in analyzing the development of poverty and richness over time in Germany. Moreover, we compare Germany to many other European countries and investigate the impact of tax reforms on poverty and richness. Using these examples, we show the importance of taking the intensity of changes into account and not only the number of people beyond a given richness line (headcount). We propose to use the new measures in addition to the headcount index for a more comprehensive analysis of richness.     

Der Einsatz interner Modelle beim mehrj?hrigen Enterprise Risk Management

Increasing natural catastrophes, recent dynamics in capital markets, and fundamental changes in regulatory requirements (e.g., Solvency II for European Union member countries) have placed increasing challenges in management of insurance companies. While in the Solvency II framework the time horizon is one year, the strategic risk-return profile of the insurer should be set according to multi-year calculations. The aim of this paper is to introduce a multi-year risk-capital concept. This multi-year approach can help management to answer the following essential question: ??How many future years with extreme catastrophes or adverse capital market developments can the company withstand at a certain confidence level without external capital supply??? In the context of multi-year enterprise risk management a capital allocation method is needed in order (1) to set risk limitations for different segments, for example different lines of business and different years, and (2) to quantify the effect of management strategies on risk-adjusted performance indicators, defined per segment. We define a capital allocation method in the multi-year context and illustrate the use of the multi-year risk-capital concept within a simulation study.     

Information Cascades in the Labor Market

A model of herding behavior in the labor market is presented where employers receive signals with limited precision about the workers types, and can observe previous employers decisions. Both the employer and the worker can influence the signal probabilities. In particular, the employer tries to increase the precision of the signal about the workers type whereas the worker wants to get a good signal, independent of her type. In a two-period model, we derive conditions for an equilibrium in which only down-cascades occur, i.e., the second employer does not hire a worker with a bad history even if he receives a favorable private signal about the workers type, but he follows his own signal if the workers history is good.     

Valuation Implications of Investment Opportunities and Earnings Permanence

This study investigates the value-relevance of accounting earnings in the presence of investment (growth) opportunities after making two theoretical and methodological research design refinements. First, we test for the incremental effect of growth on firms earnings response coefficients after controlling for the extent of transitory earnings under the assumption that the value-relevance of earnings with respect to growth should be stronger when earnings are more permanent. Second, we perform comprehensive factor analysis using market-based and accounting-based measures to construct a composite proxy for investment opportunities. We find that firms investment opportunities and the relative permanence of current earnings affect the value-relevance of those earnings. Additionally, we find that the interaction between permanent earnings and investment opportunities produces an even stronger price response to earnings.     

Do demographics have an impact on country of origin effects?

The article discusses the potential impact of consumers' age, socio‐economic group, and sex on the magnitude of country of origin effects for lager and sparkling wine and presents the results of an empirical study into the subject. It is found that older consumers show stronger country of origin effects, which may be due to a generally stronger reliance of older people on broader mental categories, in order to compensate for a decrease in working memory. Socio‐economic groups AB are found to show stronger country of origin effects for sparkling wine, whereas socio‐economic groups C1C2 show stronger country of origin effects for lager. This may be related to relative differences in consumption patterns and expertise for the studied products between the two groups. Sex is not found to have any impact on the magnitude of country of origin effects in this study.     

Temporary immigration visas

This paper deals with recent proposals concerning temporary immigration visas as a means to combat the problem of illegal immigration. We set up a simple two-period model of international migration between a poor South and a rich North with temporary visas issued for one period. Because of capital market imperfections, immigrants from the South face additional capital costs when financing the visa fee. In this model, we find that temporary visas can improve welfare in the North if capital costs of the immigrants are sufficiently low. For high capital costs, however, a welfare reduction cannot be ruled out. We extend the model to the case of heterogeneous immigrants and asymmetric information. In this setting, we show that the government in the North may have an incentive to issue temporary visas for those with low capital costs and to tolerate illegal immigration of the others.     

Tax-induced clientele effects in the market for British government securities: Placing bounds on security values in an incomplete market

This paper develops a new methods for measuring tax effects in bond markets and presents empirical results for British Government Securities. The basic idea is to construct a least cost portfolio which, for investors in a given tax bracket, dominates a given bond. A portfolio is said to dominate a bond if it provides cash flows which are at least as great in every period, and has a lower price. In effect our method calculates an upper bound on the value of a bond to investors in a given tax bracket. The results demonstrate (i) the existence of clientele effects and (ii) the absence of an ‘effective tax rate’.     

Social demands as strategic issues: Some conceptual problems

We argue that business firms are faced with new and changing social demands, and that it will be advantageous to the firm to treat the social demands as strategic issues. However, responding to these social demands strategically requires the application of new managerial concepts and techniques. In this paper we extend conceptually the lead-lag methodology of Ackerman and Bauer (1976), developed to deal with the evolutionary nature of social demands. Then we describe the problems of measurement, uncertainty and lack of common units of measures that have to be overcome before the responses to the social demands can be included in the strategic planning and budget process.