Doing Away with the Sovereign: Neoliberalism and the Promotion of Market Discipline in European Economic Governance

ABSTRACT

This article proposes a critical reading of market discipline and its limitations as a mechanism in European economic governance. Consistent with neoliberal beliefs about market-based governance, the Economic and Monetary Union (EMU) is premised on the functioning of the government bond market as a fiscal-policy discipliner. However, the operation of market discipline requires that neither governments nor their private creditors can rely on an authority to bail them out. It, therefore, precludes the kinds of intervention by Eurozone’s supranational institutions witnessed during the euro crisis. In the post-crisis context, efforts to strengthen market discipline continue to be frustrated by the growing reliance of financial institutions on government bond markets as well as the European Central Bank’s (ECB) active participation in those markets. Having undermined the credibility of the market as an autonomous and apolitical mechanism of discipline, European economic governance struggles to come to terms with the rise of a supranational ‘economic sovereign’ in the Eurozone.     

Responsiveness of Auditors to the Audit Risk Standards: Unique Evidence from Big 4 Audit Firms

We examine the effect of changes in audit risk standards on the conduct of financial statement audits in a European setting. We investigate this by analysing the audit hours and audit fees for clients of Big 4 audit firms in Finland in 1996 and 2010. Our results show that audit firms became more sensitive to clients’ business risk due to the introduction of the new audit risk standards, with more audit hours allocated to owner-managed companies in 2010 than in 1996, and fewer audit hours allocated to low-risk clients in 2010 than in 1996. Also, the labour mix in the audit team changed for owner-managed companies, with a greater work load carried by junior auditors in 2010 than in 1996. Regarding the price of audit, we find an increase in audit fees for clients with high business risk, while audit fees remained at roughly the same level for low-risk clients. These findings should be of interest to the auditing profession and those involved in the development of auditing regulations.     

How retail entrepreneurs perceive the link between surveillance,feeling of security,and competitiveness of the retail store? A structural model approach

This study seeks to create a comprehensive understanding of the ways in which retail entrepreneurs perceive the link between surveillance and customers’ and employees’ sense of security at the store level. This study also analyzes the link between customers’ and employees’ sense of the security and store's competitiveness from the viewpoint of retail entrepreneurs. The present study utilizes elements of Crime Prevention through Environmental Design (CPTED) in its theoretical approach. The population for the study consisted of 946 grocery store K-retail entrepreneurs. The data collection was carried out through an Internet survey in February and March 2009. A total of 161 grocery store retailers filled in the questionnaire, yielding a response rate of 17%. Data were analyzed using structural equation modeling (SEM). The study revealed that formal surveillance has a negative impact on customers’ feelings of security from the retailers’ point of view. In contrast to formal surveillance, informal surveillance had positive impacts on customers’ and employees’ feelings of security. Retail entrepreneurs perceived that both customers’ and employees’ feeling of security had a positive impact on the store's competitiveness.     

BAYESIAN MODEL SELECTION AND FORECASTING IN NONCAUSAL AUTOREGRESSIVE MODELS

In this paper, we propose a Bayesian estimation and forecasting procedure for noncausal autoregressive (AR) models. Specifically, we derive the joint posterior density of the past and future errors and the parameters, yielding predictive densities as a by‐product. We show that the posterior model probabilities provide a convenient model selection criterion in discriminating between alternative causal and noncausal specifications. As an empirical application, we consider US inflation. The posterior probability of noncausality is found to be high—over 98%. Furthermore, the purely noncausal specifications yield more accurate inflation forecasts than alternative causal and noncausal AR models. Copyright © 2010 John Wiley & Sons, Ltd.     

Cryptographic protocols for Vickrey auctions

Although the sealed second-price or Vickrey auctions have some nice theoretical properties, they are fairly seldom utilized in practice. It has been suggested that they are vulnerable to bid-taker cheating and that the revelation of bids after the bidding makes the bidders reluctant to reveal their true valuations. We outline procedures based on modern mathematical cryptography that are instrumental in avoiding some of these difficulties and thereby will improve the properties of the Vickrey auctions.     

Entrepreneurship training for new ventures

Several studies in the field of international entrepreneurship have indicated the inadequacy of public policy support for new ventures and called for more tailored training programs. This paper introduces a training program created for new ventures in Central Finland and analyzes its benefits and shortcomings using a qualitative case study. The findings reveal that the training program provided useful knowledge on how to develop a business further and how to make it understandable and attractive to a funder. However, the findings also indicate that there is a need for cultural adaptation: the training program developed originally for U.S. new ventures was not fully adapted for the needs of Finnish entrepreneurs. The program mainly focused on risk taking, raising funds from capital markets in the U.S., and entering into the U.S market soon after the establishment. This was in contrast to the Finnish entrepreneurs’ strategies: they preferred to grow their business in a more controlled and profitable manner. Thus, although knowledge-intensive new ventures operate in global environments, the training provided for them should take into account the cultural differences and the local way of doing business.