What Are the Lessons from Post‐Communist Transitions?

This paper provides a review of the literature on post‐communist transitions. It outlines the debate between the proponents of rapid reforms and the advocates of neo‐institutionalism. Providing evidence from the transitional countries, it suggests an alternative approach, explicitly acknowledging the impact of two categories of constraints on reforms.     

Are Related‐Party Sales Value‐Adding or Value‐Destroying? Evidence from China

Prior literature provides mixed and relatively little evidence on the economic consequences of related‐party transactions. We examine a hitherto underexplored issue of whether transactions among firms within the same business group increase or reduce firm value. Using a large sample of Chinese listed firms, we find that related‐party sales increase firm value. However, this value enhancement disappears for firms with (i) large percentage of parent directors, (ii) high government ownership, or (iii) tax avoidance incentives that often couple with management's rent extraction activities. Although we find that intragroup sales improve firm value in general, we also find that corporate insiders use intragroup sales to deprive value from minority shareholders. Overall, our findings highlight the interplay between ownership structure and tax avoidance incentives in determining the economic consequences of related‐party transactions.     

How well do fundraisers communicate with their donors?

Fundraising charities invest substantial resources in producing and distributing an ever-growing range of publications. As part of a major research study into how donors view the results of these endeavours the authors set out to evaluate how the major charities respond to general enquiries from the public, and to see how charities plan the publications they produce.     

Are loyalty shares an effective antidote against short‐termism? Empirical evidence from Italy

Corporate short‐termism is arguably one of the main causes of economic, social, and environmental unsustainability. This paper studies the effectiveness of loyalty shares—shares granting extra dividends or voting rights to shareholders holding them for a specified period of time—in limiting short‐termism. Although there are arguments both supporting (antidote view) and opposing (poison view) loyalty shares' effectiveness, empirical evidence on the theme is scant. By employing earnings management as a proxy for corporate short‐termism and by relying on a hand‐collected database of Italian firms, we find that loyalty shares can serve as an effective antidote against short‐termism. This study contributes to academic literature on corporate governance and accounting and informs the debate among policymakers on loyalty shares' effectiveness.     

Are poultry farmers willing to insure their farms? Empirical evidence from Ghana

The inherent risks in poultry business require that farmers insure their farms to relief them when they occur. This paper investigated the willingness of poultry farmers to insure their farms, using probit model. Primary data were collected from 180 farmers in two regions of Ghana. The factors that are more likely to influence poultry farmers' decision to insure their farms are credit access, diversification of income, tying insurance to technology, subsidizing insurance premium, and designing insurance to suit risk. Poultry insurance should be designed to suit risk faced by farmers, subsidized by government, and bundled with credit for uptake.     

Are (active) entrepreneurs a different breed?

We present data from an incentivized online experiment and responses from a set of validated psychological questionnaires to measure entrepreneurs' risk and time preferences and to identify entrepreneurs' personality characteristics. The analyses of the data suggest that intrinsic motivation positively relates to the likelihood of owning a business (i.e., being an active entrepreneur). We also found that subjects who scored higher on drive were relatively more risk seeking while those who scored higher on pessimism were more patient. The results of our study highlight the importance of studying personality traits to better understand what drives people to own a business.     

The Low‐Pay No‐Pay Cycle: Are There Systematic Differences across Demographic Groups?

We investigate transitions between unemployment, low‐paid employment and higher‐paid employment using dynamic panel data methods applied to household panel data. We find state dependence in both unemployment and low‐paid employment and evidence of a low‐pay no‐pay cycle. However, we also find significant differences in effects across population subgroups. Typically, the young and better‐educated face lower penalties from unemployment and low‐paid employment. Further, low‐paid employment is preferable to unemployment for women regardless of their demographic characteristics, but for men who have only completed secondary schooling, low‐paid employment actually decreases the chances of entering higher‐paid employment by more than does unemployment.     

Are patent fees effective at weeding out low‐quality patents?

The paper investigates whether patent fees are an effective mechanism to deter the filing of low‐quality patent applications. The study analyzes the effect on patent quality of the Patent Law Amendment Act of 1982, which resulted in a substantial increase in patenting fees at the U.S. Patent and Trademark Office. Results from a series of difference‐in‐differences regressions suggest that the increase in fees led to a weeding out of low‐quality patents. About 10% of patents in the lowest quality decile were filtered out, with the effect concentrated in the patents of firms whose overall patent portfolio was medium to large (more than 20 patents). The study has strong policy implications in the current context of concerns about declines in patent quality.     

Is There Catch‐Up Growth? Evidence from Three Continents

The ability to correct deficiencies in early childhood malnutrition, what is known as catch‐up growth, has widespread consequences for economic and social development. While clinical evidence of catch‐up has been observed, less clear is the ability to correct for chronic malnutrition found in impoverished environments in the absence of extensive and focused interventions. This paper investigates whether nutritional status at early age affects nutritional status a few years later among children, using panel data from China, South Africa and Nicaragua. The key research question is the extent to which state dependence in linear growth exists among young children, and what family and community level factors mediate state dependency. The answer to this question is crucial for public policy due to the long‐term economic consequences of poor childhood nutrition. Results show strong but not perfect persistence in nutritional status across all countries, indicating that catch‐up growth is possible though unobserved household behaviours tend to worsen the possibility of catch‐up growth. Public policy that can influence these behaviours, especially when children are under 24 months old, can significantly alter nutrition outcomes in South Africa and Nicaragua.     

Do entrepreneurs from institutionally distinct countries apply different decision logic when internationalizing their companies? A multiple-case analysis

Literature on entrepreneurs’ decision logic has either focused on effectuation or causation, lacking comparison and analysis of logics when founders come from different institutional environments. This paper presents an exploratory study examining the behaviors, beliefs, and decisions of entrepreneurs (all typical drivers for new market entries), considering those institutional differences. Research was based on the comparison of two case studies of young software companies, one from Brazil and one from Germany, each founded by two entrepreneurs with similar academic and professional backgrounds. Results indicate that apparently, business environment affects founders’ decision logics with much more strength than the institutional environment.     

Are Short‐lived Jobs Stepping Stones to Long‐Lasting Jobs?*

This article assesses whether short‐lived jobs (lasting one quarter or less and involuntarily ending in unemployment) are stepping stones to long‐lasting jobs (enduring 1 year or more) for Belgian long‐term unemployed school‐leavers. We proceed in two steps. First, we estimate labour market trajectories in a multi‐spell duration model that incorporates lagged duration and lagged occurrence dependence. Second, in a simulation we find that (fe)male school‐leavers accepting a short‐lived job are, within 2 years, 13.4 (9.5) percentage points more likely to find a long‐lasting job than in the counterfactual in which they reject short‐lived jobs.     

Are Economics Conferences Gender-Neutral? Evidence from Ireland*

We study gender inequality in conference acceptance using data from the Irish Economic Association annual conference from 2016 to 2022, exploiting the introduction of anonymized submission in 2021 to study the effect of blinding. While no gender gap is observed in organizers' acceptance decisions, there is an indication of gender difference favouring the in-group at the reviewer stage. In particular, male reviewers persistently give higher scores to papers with an increasing share of male authors. Evidence suggests that the difference stems from unconscious stereotyping against lesser known female authors. Anonymization eliminates the gender gap of male reviewers, but introduces a gender gap in favour of male authors for female reviewers. We explore differential selection as an alternative explanation, finding that reviewer experience postblinding could potentially account for our results.     

Who Is Eligible? Should Affirmative Action be Group‐ or Class‐Based?

We explore the consequences for eligibility of members of subaltern groups for affirmative action (AA), when AA policies are based on social class criteria rather than on group affiliation (race, ethnicity, or gender), by means of a general model with simplifying assumptions. The model is developed first for the case where everyone eligible for AA becomes a beneficiary, and then for the case where beneficiaries are only those eligibles who are able to meet minimum qualification requirements for the positions at issue—an ability that is (reasonably) assumed to be correlated with socioeconomic status. The model demonstrates that class‐based affirmative action cannot provide as many subaltern‐group beneficiaries as group‐based affirmative action, especially when access to the desired positions hinges on performance qualifications. Data on AA‐targeted subaltern groups in rural India and in the United States are used to illustrate the conclusions of the model.     

Why does eco‐innovation differ in service firms? Some insights from Spain

Although environmental innovation studies have traditionally focused on manufacturing firms, the distinctive features of eco‐innovation activities carried out by service firms require special attention. Using the Spanish Commumity Innovation Survey (CIS), this paper determines which are the main drivers of undertaking eco‐innovation and investigates the similarities and differences between service and manufacturing firms within the five sub‐groups of services (supplier dominated, scale intensive physical networks, scale intensive information networks, science‐based, and others). The results confirm that the main eco‐innovation triggers are similar—technological push factor orientation (internal R&D and persistence) and firm size—while the impact of market pull factors and public environmental legislation differ within the services sub‐groups. In addition, we find a high degree of heterogeneity within service firms. In contrast to traditional service firms, those in the groups involving R&D activities, information networks, and scale‐intensive physical networks exhibit intensive eco‐innovation performance and show a high level of green indicators.     

Do Liberalising Reforms Harm the Environment? Evidence from the Post‐Communist Transition

Whether or not economic freedom and capitalism are associated with better or worse environmental performance gives rise to a heated political debate. This article sheds empirical light on the debate by examining the association between economic and political freedom on the one hand and environmental performance on the other. Estimating the effects of economic freedom and democracy on four environmental measures since 1993 across 27 formerly communist countries shows that liberalising the size of the public sector is associated with less environmental damage, although only in autocracies. The consequences of regulatory activity, market openness and the rule of law are more mixed.     

Are self-employment training programs effective? Evidence from Project GATE

We examine the efficacy of providing self-employment training to unemployed and other individuals interested in self-employment using data from Project GATE. This experimental design program offered self-employment training services to a random sample of individuals who expressed a strong interest in self-employment. We find that Project GATE was effective in helping unemployed participants to start their own business, leading to significant impacts in self-employment and overall employment soon after program entry. The program also helped unemployed participants remain self-employed and avoid unemployment even five years after program entry. However, the program was not effective in improving the labor market outcomes of participants who were not unemployed.     

Product Differentiation through Exclusivity: Is there a One‐Market‐Power‐Rent Theorem?

In systems industries, combinations of components are consumed together to generate user benefits. Arrangements among component providers sometimes limit consumers’ ability to mix‐and‐match components, and such exclusive arrangements have been highly controversial. We examine the competitive and welfare effects of exclusive arrangements among system components in a model of relatively differentiated applications that run on relatively undifferentiated platforms. We show that there is no “One‐Market‐Power‐Rent Theorem.” Specifically, exclusive deals with providers of differentiated applications can raise platforms’ margins without reducing applications’ margins, so that overall industry profits rise. Hence, for a given set of components and prices, exclusive arrangements can reduce consumer welfare by limiting consumer choice and raising equilibrium prices. In some cases, however, exclusivity can raise consumer welfare by increasing the equilibrium number of platforms, which leads to lower prices relative to the monopoly outcome that would prevail absent exclusivity.     

Do High‐Frequency Data Improve High‐Dimensional Portfolio Allocations?

This paper addresses the debate about the usefulness of high‐frequency (HF) data in large‐scale portfolio allocation. We construct global minimum variance portfolios based on the constituents of the S&P 500. HF‐based covariance matrix predictions are obtained by applying a blocked realized kernel estimator, different smoothing windows, various regularization methods and two forecasting models. We show that HF‐based predictions yield a significantly lower portfolio volatility than methods employing daily returns. Particularly during the 2008 financial crisis, these performance gains hold over longer horizons than previous studies have shown, translating into substantial utility gains for an investor with pronounced risk aversion. Copyright © 2013 John Wiley & Sons, Ltd.     

Are long‐term incentive plans an effective and efficient way of motivating senior executives?

Research on senior executive reward has typically explored the connection between pay, performance and the alignment of interests of executives and shareholders. This article examines the relationship between reward and motivation, drawing on the psychological, behavioural economics and decision‐making literatures. Based on an empirical study of FTSE 350 senior executives, the research examines whether long‐term incentive plans are an effective and efficient way of motivating executives, taking into account risk, time discounting, uncertainty and fairness. The article concludes that the way executives frame choices, perceive value, assess probability, evaluate temporal effects and respond to uncertainty means that long‐term incentive plans (LTIPs) are generally not efficient and are often not effective in meeting their objectives. It proposes that, in its current form, agency theory does not provide a sound basis for modelling senior executive reward, and suggests five areas for development.