Environmental liability and the capital structure of firms

This paper analyses the impact of environmental liability regimes on the capital structure of firms. We show that imposing environmental liability only on polluting firms, with limited liability, increases use of bank debt. Extending environmental liability to banks lowers bank borrowing relative to liability only on firms, with an ambiguous effect relative to no liability. Using US industry-level data we estimate a reduced-form model of bank borrowing by firms and show that the introduction of environmental liability only on firms increased bank borrowing by 15–20%, but when liability was extended to banks, borrowing returned to a level slightly higher than with no liability.     

Taking Actively Advantage of MNCs’ Presence

In this paper, not only do we posit that the presence of a multinational corporation may entail significant benefits for the host economy and local firms’ performance, but also that these benefits can be actively sought and dynamically reinforced by local firms through the development of intense, embedded customer–supplier relationships. Building on the relational view, we argue that this may happen through the commitment of resources to relation-specific investments. Our hypotheses find support in a sample of SMEs suppliers of ST Microelectronics, the fourth largest producer of microelectronic components in the world. We show that by making relation-specific investments, local firms can grow quantitatively and qualitatively, improve their innovativeness, and acquire new clients.     

Once NEET,always NEET? A synthetic panel approach to analyze the Moroccan labor market

In many regions of the world, the persistent, and growing, proportion of young people who are currently Not in Employment, Education or Training—a group increasingly referred to as NEET—is of global concern. This is no less true of Morocco: about 30% of the Moroccan population between age 15 and 24 are currently NEET. Drawing from various rounds of Moroccan Labor Force Surveys, this paper contributes to understanding the complex dynamics of labor markets in developing countries. First, it identifies the socioeconomic determinants of Morocco's NEETs. Second, employing a synthetic panel (SP) methodology in the context of labor market analysis, the paper describes how the condition of NEETs changes over time. One striking, and worrisome, pattern that emerges from the 2010 SP data is that, even after 8 years, a majority of the NEETs remained outside either the labor market or education, with very little chance of moving out of their situation. Their chronic stagnancy confirms the powerful effect that initial conditions have on determining young people's future outcomes. It also highlights the absence of corrective mechanisms and policy interventions within the Moroccan political economy landscape that could help to change NEETs' outcomes along the line.     

A meta-analysis of satisfaction with complaint handling in services

Academics as well as managers have long been interested in the role of satisfaction with complaint handling (SATCOM) in shaping customers’ attitudes and repurchasing decisions. This interest has generated a widespread belief that SATCOM is driven by the perception that the complaint handling process is just. To test how SATCOM is modulated by distributive, interactional, or procedural justice, we performed a meta-analysis of 60 independent studies of the antecedents and consequences of SATCOM. Results indicate that SATCOM is affected most by distributive justice, then by interactional justice, and only weakly by procedural justice. We also find that SATCOM mediates the effects of justice dimensions on word-of-mouth. However, contrary to common belief, SATCOM does not mediate the effects of justice dimensions on overall satisfaction and return intent. We draw on our results to suggest several avenues for further research.     

Customers’ emotions in service failure and recovery: a meta-analysis

Marketing Letters - Customers’ emotions have emerged as a dominant dimension in the complaint-handling domain. This research provides a quantitative synthesis of the role of emotions...     

Robotization and labour dislocation in the manufacturing sectors of OECD countries: a panel VAR approach

Robots are the most important innovation which has affected the production process in the last three decades. Thanks to the latest advances in technology, they have been able to perform an ever-increasing number of tasks, eventually replacing human work within the whole production process. However, because of the scarcity of suitable data, the extent of this potentially disrupting process is not fully assessed. This paper makes up for the lack of empirical evidence on the effect of robotization on labour dislocation using data collected by the International Federation of Robotics (IFR) on the number of robots installed in the different manufacturing industries of 16 OECD countries over the period 2011–2016. We show that at the industry level a 1% growth in the number of robots reduces the growth rate of worked hours by 0.16, as well as the selling prices and the real values of the compensations of employees. Moreover, we show that a given sector is more likely to be robotized when it is expanding both in terms of relative prices and employee compensations. We conclude that, at least in the selected countries, the introduction of robots plays a key role in slowing down human labour and compensation growth.     

Plant location and strategic environmental policy with inter-sectoral linkages

In recent debates on trade liberalisation the concern has often been expressed that with more competitive international trade governments will be worried that by setting tougher environmental policies than their trading rivals they will put domestic producers at a competitive disadvantage, and in the extreme case this could lead to firms relocating production in other countries. The response by governments to such concerns will be to weaken environmental policies (‘eco-dumping’). In competitive markets such concerns are ill founded, but there is a small amount of literature which has analysed whether governments will indeed have incentives for eco-dumping in the more relevant case of markets where there are significant scale economies; even here there is no presumption that the outcome will involve eco-dumping.In this paper we extend the analysis of strategic environmental policy and plant location decisions by analysing the location decision of firms in different sectors which are linked through an input-output structure of intermediate production. The reason why we introduce inter-sectoral linkages between firms is that they introduce an additional factor, relative to those already analysed in the literature, in the plant location decision, which is the incentive for firms in different sectors to agglomerate in a single location. This has a number of important effects. First, there is now the possibility of multiple equilibria in location decisions of firms. Following from this there is the possibility of catastrophic effects where a small increase in an environmental tax can trigger the collapse of an industrial base in a country; however there is also the possibility that a country which raises its environmental tax could attract more firms to locate in that country, because of the way the tax affects incentives for agglomeration. Finally, and again related to the previous effects, there is the possibility of a hysteresis effect where raising an environmental tax in one country can cause firms to relocate to another country, but subsequently lowering that tax will not induce firms to relocate back into the original country.We consider a simple model with two countries, two industries, an upstream and a downstream sector, and two firms per industry. The analysis proceeds through a three-stage game: in the first stage the governments of the two countries set their environmental policies; in the second stage the firms in both industries choose how many plants to locate and where; in the third stage firms choose their output levels, with the demand for the upstream firms being determined endogenously by the production decisions of the downstream firms. We assume that there are no limits to production capacity, so that firms do not build more than one plant in any country. However, firms may build plants in different countries because of positive transport costs. Although the model appears very simple, it cannot be solved analytically, so all the conclusions must be drawn from numerical simulations.     

Contagion across Eurozone’s sovereign spreads and the Core-Periphery divide

This paper investigates the causes of disproportionate increases of sovereign yields with respect to the interest rate on the 10 years German Bund within the Eurozone. Empirical evidence drawn from the Bank for International Settlements dataset on banks’ portfolios shows that rapid financial integration, following the launch of the monetary union, resulted in excess exposure of Core countries’ banks in the Peripheral countries’ financial assets. In order to endogenize the possibility of contagion effects, we conduct econometric estimates through a Global Vector Autoregressive model, where each country’s spread depends upon all Eurozone countries’ spreads. Results show that after the burst of the financial crisis the Core countries’ sovereign yields are essentially determined by the international risk aversion, whereas the spreads of Peripheral countries mainly depend on fundamentals, namely the public debt/GDP ratio and the Real Effective Exchange Rate values with respect to the Eurozone average. These results are supported by the estimate of an impulse response analysis. Macroeconomic failures in public finances and competitiveness seem to originate the exceptional increases in sovereign spreads of the Periphery, through a contagion effect which is limited to this group of Eurozone countries.     

Antecedents and consequences of Franchisee satisfaction in the U.S. restaurant industry

This study surveyed 3,177 franchisees from 58 restaurant brands with the purpose of examining the antecedents and consequences of franchisee satisfaction in the U.S. food service sector. Findings indicate that a high level of franchisee income and franchisor care and trust are associated with a high level of franchisee satisfaction. Education had a negative impact on franchisees' satisfaction, suggesting that the higher the level of franchisee education, the less franchisees were satisfied with the franchise. Furthermore, the higher the franchisees' satisfaction was, the stronger the franchisees' intention to remain in the franchise system was, and the higher the likelihood of recommending the franchise to others.