The Influence of Managerial Ownership on Bank Market Value,Performance, and Risk: Evidence from Banks Listed on the Stoxx Global Index

We follow agency theory to assess the influence of managerial ownership on the market value, performance, and risk of 123 listed banks in 23 countries included in the STOXX Global Index in 2007 and 2010. After controlling for bank characteristics, regulatory restrictions, and macroeconomic conditions, our findings show a positive relation between managerial ownership and both market value (Tobin's Q) and performance (ROA and ROE). Moreover, we find a negative relation between managerial ownership and risk (EDF, NPL/L, and Z‐SCORE). Bank market value and performance is a non‐linear, inverse U‐shaped function of managerial ownership. The negative relation between managerial ownership and bank risk is also non‐linear and U‐shaped. Our results remain robust to reverse causality. In their effort to immunize the global financial system from systemic risks, central banks and practitioners should find our results relevant for regulation purposes.     

On the cultural basis of gender differences in negotiation

We study how culture and social structure influence bargaining behavior across gender, by exploring the negotiation culture in matrilineal and patriarchal societies using data from a laboratory experiment and a natural field experiment. One interesting result is that in both the actual marketplace and in the laboratory bargaining game, women in the matrilineal society earn more than men, at odds with years of evidence observed in the western world. We find that this result is critically driven by which side of the market the person is occupying: female (male) sellers in the matrilineal (patriarchal) society extract more of the bargaining surplus than male (female) sellers. In the buyer role, however, we observe no significant differences across societies.     

Generational Accounting in Portugal

The social and economic developments in European countries have put pressure on their national budgets and threaten the sustainability of public policies. The traditional fiscal indicators, specifically, the deficit and the debt, which are still used today as guiding tools, have proved to be insufficient, due to their arbitrary nature and short-term focus. In this paper, we resort to an alternative fiscal indicator, known as ‘generational accounting’, which is able to incorporate the future changes in the demographic structure of the population, and their corresponding impact on public accounts. It is also able to evaluate how current fiscal policy affects, not only, current generations, but also future generations. We apply this methodology to assess the long-term fiscal situation of Portugal, and compare the results with those obtained in 1999. In this context, we also explore additional scenarios, as well as additional indicators, in order to provide some robustness to our findings. Our results show that, if the current fiscal policy is not significantly changed, future generations will face a much heavier fiscal burden than current generations.

     

Structural VAR Estimation with Exogeneity Restrictions

ABSTRACT Exogenous variables arise quite naturally in macroeconomic models of small open economies. In these models overidentification is also a common feature. In the presence of exogeneity restrictions and overidentification the usual two-steps approach to the estimation of structural VAR's is not equivalent to Maximum Likelihood (ML). We propose a simple modification of that usual approach which produces ML estimators.     

A bottom-up approach for forecasting GDP in a data-rich environment

In an increasingly data-rich environment, the use of factor models for forecasting purposes has gained prominence in the literature and among practitioners. Herein, we assess the forecasting behaviour of factor models to predict several GDP components and investigate the performance of a bottom-up approach to forecast GDP growth in Portugal, which was one of the hardest hit economies during the latest economic and financial crisis. We find supporting evidence of the usefulness of factor models and noteworthy forecasting gains when conducting a bottom-approach drawing on the main aggregates of GDP.     

Higher fuel and food prices: impacts and responses for Mozambique

Rising world prices for fuel and food represent a negative terms‐of‐trade shock for Mozambique. The impacts of these price rises are analyzed using various approaches. Detailed price data show that the world price increases are being transmitted to domestic prices. Short‐run net benefit ratio analysis indicates that urban households and households in the southern region are more vulnerable to food price increases. Rural households, particularly in the North and Center, often benefit from being in a net seller position. Longer‐term analysis using a computable general equilibrium (CGE) model of Mozambique indicates that the fuel price shock dominates rising food prices from both macroeconomic and poverty perspectives. Again, negative impacts are larger in urban areas. The importance of agricultural production response in general and export response in particular is highlighted. Policy analysis reveals difficult trade‐offs between short‐run mitigation and long‐run growth. Improved agricultural productivity has powerful positive impacts, but remains difficult to achieve and may not address the immediate impacts of higher prices.     

Housing, credit, and real activity cycles: Characteristics and comovement

This paper describes the characteristics and comovement of cycles in house prices, residential investment, credit, interest rates, and real activity in advanced economies during the past 25 years. Stylized facts and regularities are uncovered using a dynamic generalized factor model and spectral techniques. House price cycles are found to lead credit and real activity over the long term, while in the short to medium term the relationship varies across countries. Interest rates tend to lag other cycles at all time horizons. Although global factors are important, the US business cycle, housing cycle and interest rate cycle generally lead the respective cycles in other countries over all time horizons, while the US credit cycle leads mainly over the long term.     

Foreign direct investment and institutional reform: evidence and an application to Portugal

We examine the role of geographic, economic, and institutional factors in attracting Foreign Direct Investment (FDI) in Europe, using a cross-section of inward bilateral investments. We estimate and assess the expected benefits, the required reform efforts, and the efficiency of reform options corresponding to a convergence of Portuguese institutions to EU standards. We conclude that improving home institutions is likely to have a quantitatively very significant role in attracting FDI. Geographical and market size factors also play a role. Reforms promoting the independence of financial institutions and a leaner bureaucracy, lowering political risk and corruption, and improving the investment code may significantly affect the amount of bilateral inward FDI that is targeted to Portugal.     

Macau's Tourism Planning Approach and Its Shortcomings: A Case Study

This article examines the responsiveness of Macau's tourism planning approach in coping with the rapid urban changes and economic boom that have mainly resulted from the liberalization of the casino licensing system in 2002 and the implementation of the Individual Visitation Scheme in 2003. The results indicate that Macau's traditional top-down and progrowth driven tourism planning approach is not responsive enough to cope with these fast-changing circumstances. The shortcomings of this approach are identified, such as the lack of a clear vision of the city's position, the overconcentration of planning power in the hands of a few senior government officials, an absence of planning laws and detailed guidelines guiding developments, poor coordination among government departments, and a lack of planning expertise and knowledge. The article provides solutions for a more sustainable tourism planning approach, including diversifying Macau's economy away from its casino industry to avoid one particular economic sector holding too much bargaining power; formulating a comprehensive set of consistent and transparent planning missions, strategies, and detailed planning guidelines; creating a task force to foster coordination among government departments; and empower local citizens to participate in the tourism planning process.     

Overinvestment and fraud

We analyze the interactions between two managerial tasks: investing and revealing information. We assume that a manager can invest influencing the firm’s quality, then he reports this quality to investors. Whenever truthful reporting is not an equilibrium, the manager has incentives to overinvest relative to shareholders. Therefore, the potential for market manipulation is the key in understanding investment policy; it is the desire to manipulate prices that leads to inefficient investment. Also, more manipulation occurs when the manager is in control, so prices are less informative. Finally, we show that the manager is better off with an exogenous reporting policy.