Business cycle variation in the risk-return trade-off

In the United States and other Organisation for Economic Co-operation and Development (OECD) countries, the expected returns on stocks, adjusted for volatility, are much higher in recessions than in expansions. We consider feasible trading strategies that buy or sell shortly after business cycle turning points that are identifiable in real time and involve holding periods of up to 1 year. The observed business cycle changes in expected returns are not spuriously driven by changes in expected near-term dividend growth. Our findings imply that value-maximizing managers face much higher risk-adjusted costs of capital in their investment decisions during recessions than expansions.     

NO MARGINAL ARBITRAGE OF THE SECOND KIND FOR HIGH PRODUCTION REGIMES IN DISCRETE TIME PRODUCTION–INVESTMENT MODELS WITH PROPORTIONAL TRANSACTION COSTS

We consider a class of production–investment models in discrete time with proportional transaction costs. For linear production functions, we study a natural extension of the no‐arbitrage of the second kind condition introduced by Rásonyi. We show that this condition implies the closedness of the set of attainable claims and is equivalent to the existence of a strictly consistent price system under which the evaluation of future production profits is strictly negative. This allows us to discuss the closedness of the set of terminal wealth in models with nonlinear production, functions which may admit arbitrages of the second kind for low production regimes but not marginally for high production regimes.     

Firm-Level Determinants of the Financing Decisions of Small and Medium Enterprises: Evidence from Argentina

This article studies the determinants of the financing decisions of small and medium enterprises (SMEs), which we characterize through three cases: trade-off behavior, pecking order, and extreme aversion to debt. We test our hypotheses using a dataset of firms from Bahía Blanca (Argentina) for two years: 2006 and 2010. We find that firm characteristics related to information asymmetries, such as firm age, size, and legal form; and personal factors, such as owner’s age and education; and perception of emotional bankruptcy costs, are relevant variables in SME financing behavior. The recognition of extreme aversion to debt motivates reconsideration of the underleverage problem of SMEs.     

Issues in European business education in the mid-nineteenth century: a comparative perspective

This article explores the emergence of European business education in the mid-nineteenth century. Drawing on archival analysis the typological study which this article proposes, attempts to show that business education before 1870 seems to have been a geographically and institutionally broader expression than has been described up to now. It identifies four organisational models of business education and reveals that higher business education was not limited to the Higher Schools of Commerce alone. It concludes that the European states took, directly or not, an interest in business education well before the end of the nineteenth century.     

R&D validation planning: a methodology to link technical validations to benefits measurement

An important activity in many R&D departments is the internal development of new process technologies and practices to assist in the marketing, design and manufacturing activities of the enterprise. An integral part of this R&D development is the planning and management of validations of potential technology projects. These validations are necessary to determine the technical, financial and organizational feasibility of the projects and to develop data for benefits measurement for further funding of selected projects. This paper describes a methodology for validation planning of new process technologies and practices. The methodology allows for the explicit linkage of a validation to the identification of its financial and strategic benefits. These often diverse measures of worth are integrated using a proven multi-attribute justification approach within the planning methodology. The methodology and the multi-attribute approach also support the comparison of dissimilar projects having different benefits. The methodology acts as an organizational planning tool integrating the needs of the diverse constituencies involved in R&D planning. It also acts as a tool to aid engineers and scientists identify and present the benefits of the proposed technology.     

General stopping behaviors of naïve and noncommitted sophisticated agents,with application to probability distortion

We consider the problem of stopping a diffusion process with a payoff functional that renders the problem time‐inconsistent. We study stopping decisions of naïve agents who reoptimize continuously in time, as well as equilibrium strategies of sophisticated agents who anticipate but lack control over their future selves' behaviors. When the state process is one dimensional and the payoff functional satisfies some regularity conditions, we prove that any equilibrium can be obtained as a fixed point of an operator. This operator represents strategic reasoning that takes the future selves' behaviors into account. We then apply the general results to the case when the agents distort probability and the diffusion process is a geometric Brownian motion. The problem is inherently time‐inconsistent as the level of distortion of a same event changes over time. We show how the strategic reasoning may turn a naïve agent into a sophisticated one. Moreover, we derive stopping strategies of the two types of agent for various parameter specifications of the problem, illustrating rich behaviors beyond the extreme ones such as “never‐stopping” or “never‐starting.”     

A Study of Business Student Choice to Study Abroad: A Test of the Theory of Planned Behavior

Study abroad experiences are becoming increasingly common with business students. In this study, we build upon previous research into the motivations of students to study abroad by using Ajzen's Theory of Planned Behavior as a theoretical basis for indentifying the factors which might influence their intention to study abroad. A survey administered to 188 business students and subsequent analysis supported Ajzen's theory that attitude, perceived behavioral control, and subjective norms all were significant predictors of intention. This study also identified gender specific differences in the various factors.     

High-Technology Employment Growth in Major U.S. Metropolitan Areas

High technology employment has received little attention in shift-share analysis. The purpose of this paper is to utilize shift-share analysis to analyze high technology employment change in 37 metropolitan areas. We find that shift share analysis is a useful tool to study employment gains and losses in metropolitan areas. Most of the gains and losses in a metropolitan area can be explained by the regions competitiveness component.     

Banned from the sharing economy: an agent-based model of a peer-to-peer marketplace for consumer goods and services

The emergence of profit-based online platforms related to the Sharing Economy, such as BlaBlaCar and Airbnb, provides new means for end users to create an income from their possessions. With this opportunity, participants have to make strategic economic decisions despite limited formal expertise and information. Decentralization (using digital technologies) and reputation (using user reviews) are the core mechanisms chosen by these platforms to mitigate these limitations and to work efficiently as online matchmakers. We test the performance of these two mechanisms by studying the allocative efficiency (in terms of value and volume of transactions) of simulated marketplaces under different types of motivation from the participants and control from the platforms. As a result, we find an inverted-U relationship between the decision-making leeway available to the participants and the platform’s allocative efficiency. From the participants’ perspectives, too much freedom or too many barriers lead to market failures affecting specific participants: low-end consumers are banned from the marketplace while high-end providers experience lower levels of activity. As governance advice for these platforms, we show the limitations of promoting these platforms on the sole motive of monetary rewards.     

Time-consistent stopping under decreasing impatience

Under non-exponential discounting, we develop a dynamic theory for stopping problems in continuous time. Our framework covers discount functions that induce decreasing impatience. Due to the inherent time inconsistency, we look for equilibrium stopping policies, formulated as fixed points of an operator. Under appropriate conditions, fixed-point iterations converge to equilibrium stopping policies. This iterative approach corresponds to the hierarchy of strategic reasoning in game theory and provides “agent-specific” results: it assigns one specific equilibrium stopping policy to each agent according to her initial behavior. In particular, it leads to a precise mathematical connection between the naive behavior and the sophisticated one. Our theory is illustrated in a real options model.