Sources of variation in firm profitability and growth

This article reports an analysis of the sources of variation in profitability and growth for manufacturing firms located in eleven European countries. A variance decomposition analysis determines the importance of the country, industry, corporate group and firm effects on profitability and growth. The analysis reveals evidence of differences between industries in the comparative advantage offered by different countries, reflecting a tendency for specialization and geographic concentration. However, as in several previous studies, the firm-level effects are the most important class of effect in explaining the variation in performance.     

The Credit Crunch and Insider Trading

This paper examines the behaviour and information content of insiders’ trades before and after the credit crunch and, in particular, examines the extent to which some insiders anticipated the market crash and took action to protect their positions. In part, the market crash was brought about by the excessive borrowing of financial institutions. Our results point to the view that a number of insiders, primarily directors, were aware that the excessive use of leverage by financial institutions would ultimately have a detrimental impact on the economy. These insiders acted by selling their shares prior to the market collapse and subsequently buying them back at a lower price. Supportive evidence for the above view is provided through both graphical evidence and regression analysis. In particular, we demonstrate a link between insider behaviour and the rapid decline in share values. Further evidence is also provided of a link between insider behaviour and future risk as measured by the CDS premium. In short, we argue that this selling was not motivated by liquidity or other contrarian strategies but was a result of understanding how higher levels of leverage and excessive trading in new risky derivatives could lead to higher levels of risk, an insight possessed only by a subset of insiders.     

Fatality rate of pedestrians and fatal crash involvement rate of drivers in pedestrian crashes: a case study of Iran

The aim of this study was to uncover patterns of pedestrian crashes. In the first stage, 34,178 pedestrian-involved crashes occurred in Iran during a four-year period were grouped into homogeneous clusters using a clustering analysis. Next, some in-cluster and inter-cluster crash patterns were analysed. The clustering analysis yielded six pedestrian crash groups. Car/van/pickup crashes on rural roads as well as heavy vehicle crashes were found to be less frequent but more likely to be fatal compared to other crash clusters. In addition, after controlling for crash frequency in each cluster, it was found that the fatality rate of each pedestrian age group as well as the fatal crash involvement rate of each driver age group varies across the six clusters. Results of present study has some policy implications including, promoting pedestrian safety training sessions for heavy vehicle drivers, imposing limitations over elderly heavy vehicle drivers, reinforcing penalties toward under 19 drivers and motorcyclists. In addition, road safety campaigns in rural areas may be promoted to inform people about the higher fatality rate of pedestrians on rural roads. The crash patterns uncovered in this study might also be useful for prioritizing future pedestrian safety research areas.     

European banking: An overview

Against a background of far-reaching structural change in the banking sector, this article reviews the recent academic literature on developments in European banking. European banking markets have become increasingly integrated in recent years, but barriers to full integration, especially in retail banking, still remain. European integration has possible implications for systemic risk, and poses various challenges for the current supervisory framework. The banks’ responses to the changing competitive environment include the pursuit of strategies of diversification, vertical product differentiation and consolidation. European integration has implications for competition in banking markets, for the nature of long-term borrower-lender relationships, and for the relationships between ownership structure, technological change and bank efficiency. The article concludes by reviewing recent literature on the credit channel in the monetary transmission mechanism, and interest rate pass-through.     

Do Competing Health Insurance Licensors Provide Pro-patient Effects?

This paper shows that competition among health insurance licensors has strong pro-patient effects, if inter-regulatory competition is allowed. The pro-patient effects of the competition among health insurance licensors do not depend on the need for the patients to form or exercise their political influence, such as, forming cooperatives or voting, as suggested by Backer's pressure group theory. When inter-jurisdictional transactions are allowed, endogenous policy making ensures that the health care licensors pursue public interests at no costs to patients.     

Reducing informal payments in the health care system: Evidence from a large patient satisfaction survey

Paucity of information on the informal market for health services hampers the governments’ efforts in performing their desirable roles in informing, regulating, mandating, financing and providing health services to their people. Analysis of data from a survey of almost 20,000 patients fills a void in understanding informal payments in the countries in transition. A probability model of informal payments shows that knowledge and information have significant impact on reducing frequency of informal payments. Thus, informing patients, which is the least expensive and intrusive role of the government, could significantly reduce out-of-pocket health care spending.     

Corruption: Theory and evidence from the Russian Federation

In this paper, we provide theory and evidence on the problem of corruption in the Russian Federation. Our theoretical model indicates that in the presence of official corruption, the numbers of tax inspection (collection) employees could be inversely related to per capita tax collection. Our empirical analysis supports our theoretical model, shedding light on one of the most intractable problems in the Russian Federation.     

Global idiosyncratic risk moments

We investigate a global cross-sectional relation between idiosyncratic risk moments and expected stock returns by suggesting three global idiosyncratic volatility, skewness, and kurtosis risk factors. We also suggest two global small minus big and high minus low risk proxies for estimating return residuals of the test assets from a global asset pricing model. To perform robustness checks, we suggest other four global risk factors of momentum, leverage, bid-ask spread, and liquidity. We find a significant negative relation between stock portfolio returns and the global moments, and the cross section of stock returns reflects a significant negative price of risk for global idiosyncratic skewness (?0.13%) and idiosyncratic volatility (?1.85%) and a positive and significant price of risk for global idiosyncratic kurtosis. We find that our suggested risk factors are key drivers of risk premia in stock market and are robust to various checks. These factors also can forecast the gross domestic product growth over the sample period.     

Insider trading and future stock returns in firms with concentrated ownership levels

We investigate the relationship between insider trading and stock returns in firms with concentrated ownership. To this end, we employ data from East Asian countries which span the period January 2003 to May 2012. Consistent with the previous literature, we find a significantly negative relation between the selling activity of insiders and stock returns. However, contrary to studies which focus on highly developed markets, we find that the buying activity of insiders is also inversely related to future stock returns. Our analysis shows that top directors with higher ownership levels drive this result, suggesting that the trading activity of insiders is not always associated with profit-making motives and can be explained by their level of ownership. Furthermore, we demonstrate that a trading strategy which focuses solely on purchases made by top directors with high ownership levels yields negative returns. The paper has important implications for outside investors who mimic the trading activity of insiders with the aim to realise profits.     

Culture and Whistleblowing An Empirical Study of Croatian and United States Managers Utilizing Hofstede's Cultural Dimensions

Leaders and managers of today's multinational corporations face a plethora of problems and issues directly attributable to the fact that they are operating in an international context. With work-sites, plants and/or customers based in another country, or even several countries, representing a vast spectrum of cultural differences, international trade and offshore operations, coupled with increased globalisation in respect to political, social and economic realities, contribute to new dilemmas that these leaders must deal with. Not the least of these being a Code of Ethics and ethical decision making.This paper examines the differences in culture between a group of managers from the United States and similar group from Croatia using Hofstede's theory of International Cultures. The study explores how these cultural dimensions may help in our understanding of the differences in reported whistleblowing. The authors then postulate four hypotheses regarding various aspects of whistleblowing. These Hypotheses were than tested using a survey administered to a sample of U.S.A. and Croatian managers. Finally, the paper discusses the findings and practical implications for contemporary managers in the international arena.