The American Inventors Protection Act: A Natural Experiment on Innovation Disclosure and the Cost of Debt

We examine the impact of innovation disclosure through patenting on firms' cost of debt, focusing on the American Inventors Protection Act (AIPA) as an exogenous shock in innovation disclosure regulation. Post‐AIPA, firms have an incentive to apply for patents only if commercial success is likely. Accordingly, we expect post‐AIPA patents to be a better proxy for successful innovation activity, and thus to have a stronger effect on reducing the cost of debt than pre‐AIPA patents. Indeed, we find that pre‐AIPA patents reduce the cost of debt only for the most innovative firms, while post‐AIPA, this effect holds for all firms.     

Eye-tracking evidence that happy faces impair verbal message comprehension: the case of health warnings in direct-to-consumer pharmaceutical television commercials

Risk warning or disclosure information in advertising is only effective in correcting consumers’ judgments if enough cognitive capacity is available to process that information. Hence, comprehension of verbal warnings in TV commercials may suffer if accompanied by positive visual elements. This research addresses this concern about cross-modality interference in the context of direct-to-consumer (DTC) pharmaceutical commercials in the United States by experimentally testing whether positive facial expressions reduce consumers’ understanding of the mandated health warning. A content analysis of a sample of DTC commercials reveals that positive facial expressions are more prevalent during the verbal warning act of the commercials than during the other acts. An eye-tracking experiment conducted with specially produced DTC commercials, which vary the valence of characters’ facial expressions during the health warning, provides evidence that happy faces reduce objective comprehension of the warning.     

Do Domestic Firms Benefit from Foreign Presence and Import Competition in Irish Services Sectors?

This paper examines whether domestic firms benefit from the pro‐competitive effects of imports from abroad and from the presence of foreign‐owned firms in the host country in three Irish market‐services sectors between 2001 and 2007. Grouping the three sectors together masks opposing effects in individual sectors. Where significant, the effect of foreign presence on domestic firms tends to be negative, this is mainly the case in wholesale and retail trade. Despite it being of lesser importance than foreign presence in these sectors, import competition from abroad is negatively associated with domestic firms' productivity in wholesale and retail trade, but positively in transport, storage and communication. There is no significant effect of foreign presence or import competition in real estate, rental and business activities. Using capital‐labour ratios as an input‐based indicator related to productivity suggests that domestic firms adapt to increased foreign competition by adjusting their inputs.     

The Performance of Trading Firms in the Services Sectors – Comparable Evidence from Four EU Countries

We examine trade complexity and the implications of adding additional dimensions of trade for firm performance among services producers. We use unique firm‐level data to compare these patterns across four EU countries. Overall, services firms are relatively less engaged in trade than manufacturing firms; they mostly trade goods and are more likely to import than to export. Trade in services is quite rare; services are more likely to be traded by firms already trading goods. Trading firms in the services sectors are significantly larger, more productive and pay higher wages than non‐traders. Two‐way traders outperform one‐way traders. Changes in trading status by either adding another dimension of trade (imports, exports) or another type of product (goods, services) are infrequent and are associated with significant preswitching premia. In contrast, learning effects from switching trading status are uncommon. This points to significant fixed cost of being engaged in trade and confirms some previous findings that trading services firms have similar traits as their manufacturing counterparts. Apart from greater trade participation in smaller countries, we do not observe systematic differences in terms of trade or switching premia between the four countries that might be attributable to differences in country characteristics.     

Determinants of Voluntary Disclosure of Sales in Small Private Companies in Belgium

Small businesses are the backbone of the economy in many countries. In Europe, for example, small companies represent more than 90 per cent of all companies (e.g., Lukacs, 2005 ). Although these companies represent such an important portion of the economy, few studies have examined their voluntary disclosure decisions. Because small companies have certain unique characteristics compared with their larger counterparts, the general applicability of past voluntary disclosure studies to small companies is questionable. Drawing on agency and proprietary cost theory, this study investigates whether ownership, competition, and accountant factors influence the decision to disclose financially sensitive information on a voluntary basis. Our results (using an e‐mail questionnaire to small private companies in Belgium, n = 1,068) indicate that nearly 40 per cent of the responding companies are not aware of their disclosure behavior. For companies that are aware of their disclosure behavior, the logistic regression analysis demonstrates that factors relating to the separation of ownership and control, namely the type of ownership and number of shareholders, are among the most important determinants in the voluntary disclosure decision of small private companies. Companies with at least one legal entity as an owner of a company are less likely to disclose, while companies with more shareholders are more likely to disclose. We also provide evidence that perceived competition and the default setting of the accounting software used have a significant influence on the voluntary disclosure behavior.     

When do structural holes in employees' networks improve their radical creativity? A moderated mediation model

Previous research has found a relationship between structural holes of knowledge networks, tie strength of knowledge networks, and creativity. Our study extends these findings by proposing that characteristics of R&D employees' team knowledge networks influence their acquired diversified knowledge from the team, which is critical to creativity. Our results based on 558 members of 92 R&D teams demonstrated that, in order to benefit from their broker position in acquiring diversified knowledge, R&D employees should maintain their tie strength toward the team members with whom they are connected.     

Willingness to Pay for Green Products in Air Travel: Ready for Take‐Off?

We examine the willingness to pay (WTP) for green products in air travel. Green products in aviation are supplementary services, which are sold on top of the travel service (e.g. carbon offsets, organic on‐board food). We identify a set of potential green products in aviation and report the preferences for additional airline services of 811 Swiss air travellers using an adaptive choice‐based conjoint survey. We find that 20% of those passengers who are interested in purchasing supplementary services show a considerable WTP for green products. The green segment differs from the regular segment only in terms of behavioural features, not in terms of demographic or socio‐economic characteristics. Copyright © 2015 John Wiley & Sons, Ltd and ERP Environment     

Payments for environmental services to promote “climate‐smart agriculture”? Potential and challenges

Payments for environmental services (PES) have gained wide popularity as approaches to promote environmentally friendly land use or agricultural production practices. Yet academics have also voiced concerns against seeing PES as a panacea. This article discusses whether PES is an appropriate and promising approach to promote so‐called “climate‐smart agriculture” (CSA) practices, which we define as agricultural production practices that contribute to CO₂ emission reductions and/or removals and provide benefits to farmers via increased productivity and profits and reduced vulnerability to climate change. PES appears most promising for the promotion of CSA practices in small‐scale farming contexts with low incomes. Effective design, however, requires solid estimates of cost and benefit flows from CSA adoption over time, accounting for differences in socioeconomic and ecological conditions, and addressing the risk of leakage. Funding for such PES will likely have to come from public sources, and seems most promising where synergies with other objectives such as agricultural development, food security, and climate adaptation or other environmental services exist. The potential of alternative approaches for CSA support such as taxation with rebates for CSA practices, CSA‐related investment support such as microcredits, and hybrid approaches such as conditional microcredit should be further investigated.