Environmental Policy,Sustainable Development,Governance Mechanisms and Environmental Performance

We investigate the effects of environmental policy (Climate Change Act – CCA), sustainable development frameworks (Global Reporting Initiative – GRI; UN Global Compact – UNGC) and corporate governance (CG) mechanisms on environmental performance (carbon reduction initiatives – CRIs; actual carbon performance – GHG emissions) of UK listed firms. We use the generalized method of moments (GMM) estimation technique to analyse data consisting of 2245 UK firm‐year observations over the 2002–2014 period. First, we find that the CCA has a positive effect on CRIs, and this effect is stronger in better‐governed firms. Second, we find that the GRI‐based framework is positively associated with CRIs. Third, we find that firms with poor CG structures have lower actual carbon performance compared with their better‐governed counterparts. Overall, our evidence suggests that firms can symbolically conform to environmental policy (CCA) and sustainable development frameworks (GRI, UNGC) by engaging in CRIs without necessarily improving actual environmental performance (GHG emissions) substantively. Copyright © 2017 John Wiley & Sons, Ltd and ERP Environment     

Segmenting the Belgian charitable sector: The impact of environmental factors on households' generosity

Research on charitable giving has known a renewed interest over the last years. Despite a recent evolution, the literature remains predominantly Anglo‐Saxon, and studies are consequently conducted in societies marked by a strong charitable giving culture. In that respect, donors are generally considered as isolated individuals, and the impact of social and environmental factors such as public policies, institutional specificities, and punctual events is often underestimated. Moreover, research on generosity often suffers from the absence of reliable data, free of desirability bias. Based on fiscal data of tax returns and gift tax returns provided by the official Belgian statistics bureau, this research investigates individual donating behaviors while considering the influence of environmental determinants on generosity. More specifically, we empirically assess the generosity of Belgian households over a period of 8 years marked by natural disasters, massive calls for public generosity, and changes in tax policies. Among other things, we qualify the results of previous research on the role of age and open the debate on the role of household composition as a variable for segmenting donors. Finally, we propose leads for future research in order to stimulate further academic effort on the topic.     

MANAGERIAL INCENTIVES AND CORPORATE DIVERSIFICATION STRATEGIES

Because the break-up of conglomerates typically produces substantial increases in shareholder wealth, many commentators have argued that the conglomerate form of organization is inefficient. This article reports the findings of a number of recent academic studies, including the authors' own, that examine the causes and consequences of corporate diversification. Although theoretical arguments suggest that corporate diversification can have benefits as well as costs, several studies have documented that diversified firms trade at a significant discount from their single-segment peers. Estimates of this discount range from 10–15% of firm value, and are larger for “unrelated” diversification than for “related” diversification. If corporate diversification has generally been a value-reducing managerial strategy, why do firms remain diversified? One possibility, which the authors label the “agency cost” hypothesis, is that top executives without substantial equity stakes may have incentives to maintain a diversification strategy even if doing so reduces shareholder wealth. But, as top managers' ownership stakes increase, they bear a greater fraction of the costs associated with value-reducing policies and are therefore less likely to take actions that reduce shareholder wealth. Also, to the extent that outside blockholders monitor managerial behavior, the agency cost hypothesis predicts that diversification will be less prevalent in firms with large outside blockholders. Consistent with this argument, the authors find that companies in which managers own a significant fraction of the firm's shares, and in which blockholders own a large fraction of shares, are significantly less likely to be diversified. If agency problems lead managers to maintain value-reducing diversification strategies, what is it that leads some of these same firms to refocus? The agency cost hypothesis predicts that managers will reduce diversification only if pressured to do so by internal or external mechanisms that reduce agency problems. Consistent with this argument, the authors find that decreases in diversification appear to be precipitated by market disciplinary forces such as block purchases, acquisition attempts, and management turnover.     

Backtesting Value-at-Risk: A Duration-Based Approach

Financial risk model evaluation or backtesting is a key partof the internal model's approach to market risk management aslaid out by the Basle Committee on Banking Supervision. However,existing backtesting methods have relatively low power in realisticsmall sample settings. Our contribution is the exploration ofnew tools for backtesting based on the duration of days betweenthe violations of the Value-at-Risk. Our Monte Carlo resultsshow that in realistic situations, the new duration-based testshave considerably better power properties than the previouslysuggested tests.     

Debt and household finance: evidence from the Financial Diaries

The Financial Diaries data-set is a unique, new set of year-long daily income, expense and financial transactions for households from three different areas of South Africa. These data show that over-indebted households (those that spend 20 per cent or more of their gross monthly income on debt) do not fit one homogeneous profile. Formal debt tends to be responsible for over-indebtedness in the urban areas, while in the rural areas the cause tends to be informal debt. In the urban areas high indebtedness is more prevalent among medium-income and high-income households, whereas in the rural areas it occurs at all income levels. High indebtedness in grant-dependent rural households tends to be persistent, whereas in wage-dependent urban households it is often short-lived. These findings present a new financial picture of poor rural populations that is unlikely to be touched by recent policy measures to address over-indebtedness.     

Beyond Self-Regulation: Towards A Critique of Self-Regulation As A Control Strategy For Hazardous Activities*

After highlighting some of the key issues and positions in the debate around appropriate preventive regulation, the paper presents a number of observations directed at the proponents of greater self-regulation. These observations confront directly a number of familiar, but often unchallenged, arguments for self-regulation. More centrally we address claims concerning, the extent to which the chemicals industries have a good and improving ‘safety’ record; and whether the sector consists of companies both motivated and capable in the context of effective crisis and disaster management. Lastly, the paper sets out some ‘new directions’ for the nature and role of regulation in the effective prevention of crises. Thus the paper indicates a number of regulatory developments which are distinct from any shift towards greater self-regulation, but which would result in more effective crisis and disaster prevention in the UK chemicals industries and, indeed, beyond that specific sector.     

TECHNOLOGY AND SPAN OF CONTROL: WOODWARD REVISITED

This study of production operations in 95 New Jersey manufacturing firms explains the widely replicated curvilinear relationship between first line supervisory span of control and Woodward's technological complexity scale. Revisiting Woodward led to the initial proposition that the relationship was a by-product of the differing degree of task variability among the major types of production operations. A subsequent literature review of administrative requirements suggested the importance of size, complexity and automaticity on supervisory span of control. Our data indicate that variations in the span of control of production operations classified according to Woodward's scale are attributable to the underlying effects of size and task complexity. Technology, whether operationalized as Woodward's production types or automaticity of machinery explained little variation in the span of control of first line supervisors.     

The value of youth: equalizing age differentials in marriages

"The objective of this paper is to present a model of constrained utility-maximizing behaviour which is able to explain several features of marriage. The model predicts that individuals meet in the marriage market and trade characteristics, in which they are relatively well endowed, to obtain characteristics in which they are less well endowed. The model implies a positive age differential in favour of the husband due to biological differences. This differential is shown to be attentuated by differences in earnings capacity and human capital investments. The model also has implications for dynamic aspects of marriage and provides an explanation for the secular increase in females' age of first marriage and difficulty experienced by females in the post thirty-year age group in finding suitable partners. An examination of unit record data on residents of metropolitan California from the 1980 United States Census reveals systematic patterns in the data are consistent with the theory."     

Optimal mechanisms for siting noxious facilities

We study Bayesian mechanism design in the context of the siting of noxious facilities. Under incomplete information, we characterize optimal mechanisms facilitating the siting and cost sharing of the facility. These mechanisms are allocatively and Pareto efficient. However, it appears that transfers occur when the good is not provided. This result is due to the weakening of the incentive notion to Bayesian–Nash equilibrium and to the balanced budget condition. This phenomenon disappears if the setting is perfectly symmetric.