Accounting for Employee Stock Options: What Can We Learn from the Market's Perceptions?

The scope of this is paper is to provide new empirical evidence on the value relevance of employee stock options (ESOs) in Europe. We show, empirically, that the market participants when pricing a firm's equity place approximately the same valuation weights on the ESO‐deferred compensation expense (the so called “ESO asset”) and the compensation option liability (the so called “ESO liability”). Our empirical findings support the theoretical work of Ohlson and Penman who suggest that the deferred compensation expense be treated as a contra‐liability. The second contribution of our work rests on the nature of the ESO expense. We show that the distinction between persistent and non‐persistent ESO expenses is of critical importance for the market participants. Accordingly, an improved accounting disclosure should assist the investors in assessing the long‐term goals of the ESO plans at the firm level.     

What Can We Learn From Great Business Leaders?

There are many leadership lessons that can be extracted from the lives of great business leaders like John D. Rockefeller, Henry Ford, Alfred Sloan, Sam Walton, Jack Welch, A. G. Lafley, Steve Jobs, and Bill Gates. Although different in personality and style, these leaders showed talent at a very young age, persevered in achieving their goals, surrounded themselves with the best people they could, worked hard and with great discipline, had great confidence in themselves, and were creative and innovative in managing their businesses.     

Forecasting Macroeconomic Labour Market Flows: What Can We Learn from Micro‐level Analysis?

Forecasting labour market flows is important for budgeting and decision‐making in government departments and public administration. Macroeconomic forecasts are normally obtained from time series data. In this article, we follow another approach that uses individual‐level statistical analysis to predict the number of exits out of unemployment insurance claims. We present a comparative study of econometric, actuarial and statistical methodologies that base on different data structures. The results with records of the German unemployment insurance suggest that prediction based on individual‐level statistical duration analysis constitutes an interesting alternative to aggregate data‐based forecasting. In particular, forecasts of up to six months ahead are surprisingly precise and are found to be more precise than considered time series forecasts.     

The dynamics of US inflation: Can monetary policy explain the changes?

We investigate the relationship between monetary policy and inflation dynamics in the US using a medium scale structural model. The specification is estimated with Bayesian techniques and fits the data reasonably well. Policy shocks account for a part of the decline in inflation volatility; they have been less effective in triggering inflation responses over time and qualitatively account for the rise and fall in the level of inflation. A number of structural parameter variations contribute to these patterns.     

Sovereign Risk: Are the EU's New Member States Different?*

This article examines whether rating agencies and investors perceive the sovereign risk of the new member states (NMS) of the European Union (EU) as different from that of other emerging markets. The results suggest the NMS have enjoyed favourable treatment since somewhere between 2002 and 2004, amounting to an advantage of 1.8 notches in ratings and 100 basis points in foreign currency spreads. We argue that, although several explanations of this effect are possible, it is most likely because of higher policy credibility bestowed by EU membership.     

Women Entrepreneurs: Can We Remove the Barriers?

Entrepreneurial activity among women continues to attract attention world wide. However, despite obvious gains, women lag behind men in business ownership and economic independence on every continent. This paper will review the research on entrepreneurship as a career choice for women, the motivations and career paths followed by women entrepreneurs, the attitudes and behaviors associated with successful ventures, the problems that persist and policies that conspire to keep women’s businesses few and small. A discussion of legislation and practices that have helped and hindered women’s entrepreneurship will follow, with suggestions for reframing the issues and reforming policies.     

The Effect of Import Competition on Firm Productivity and Innovation: Does the Distance to Technology Frontier Matter?

How does foreign competition affect growth and innovation in China? Using our unique measures of proximity of Chinese firms and industries to the world technology frontier, we find that despite vast sectoral heterogeneity, Chinese manufacturing industries have undergone rapid technological upgrading over the period of 2000–06. The distance to the world production frontier of firms and industries plays an important role in shaping the nexus between the competition pressure from foreign imports and domestic firms' growth and innovation behaviour. Our results support the theoretical predictions of Aghion et al. (2005, The Quarterly Journal of Economics, pp. 701–728) that import competition stimulates the domestic firms' productivity growth and R&D expenditure if firms and their industries are close to the world frontier, but discourages such incentives for laggard firms and industries. The two forces highlighted by the model operate for imports under the ordinary‐trade regime, for collective and private firms, and for imports originated from high‐income countries. Our findings are robust after controlling the influence of foreign investment, the reverse causality of regressors and the short‐term business cycle fluctuations.     

The role of interpersonal affect in performance appraisal: evidence from two samples – the US and India

The interpersonal affect, a li ke–dislike relationship between a supervisor and his/her subordinate, has traditionally been conceptualized as a source of bias in performance appraisals. However, some researchers have argued that the interpersonal affect may not be a bias, especially where it develops as a result of past performance. In this field study, using data from 190 supervisors in the US, and 113 supervisors in India, we delineate the relationship between interpersonal affect and performance ratings. In both samples, interpersonal affect and performance level were found to have significant effects on performance ratings. Results from the US sample indicated that raters are able to separate their liking for a subordinate from actual performance when a ssigning performance ratings, suggesting that the interpersonal affect does not operate as a bias in the appraisal process. Results from the Indian sample, however, suggest that supervisors inflate ratings of low performers, suggesting that local cultural norms may be operating as a moderator.     

The effect of oil supply shocks on US economic activity: What have we learned?

Estimated responses of real oil prices and US gross domestic product (GDP) to oil supply disruptions vary widely. We show that most variation is attributable to differences in identification assumptions and in the model specification. Models that allow for a large short-run price elasticity of oil supply imply a larger response of oil prices and a larger, longer lived contraction in US real GDP. We find that, if we condition on a range of supply elasticity values supported by microeconomic estimates, the differences in the oil price responses diminishes. We also examine the role of lag length, of using pre-1973 data, alternative measures of real economic activity and using the median response function instead of the modal structural model.     

Climate cooperation from Kyoto to Paris: What can be learnt from the CDM experience?

The mitigation of greenhouse gas concentration has become a first-order issue for decision making in environmental sustainability. Countries can meet their mitigation commitments and environmental objectives through multiple instruments. A key role is played by cooperative mechanisms, such as the Clean Development Mechanism (CDM), under the Kyoto Protocol, and a similar mechanism established by the Paris Agreement (Art. 6), whose implementation rules are still under negotiation. However, another form of cooperation was already established under the different framework of the Official Development Assistance (ODA), potentially sharing abatement purposes. This paper aims to compare the mitigation actions implemented either as CDM or ODA projects. We conduct a multi-criteria econometric analysis, based on an originally created, harmonised dataset that merges renewable energy CDM projects and comparable ODA projects to investigate the role of the institutional framework in influencing the effectiveness of reducing emissions worldwide. Results show that the Kyoto Protocol had a positive impact in terms of cost-effectiveness for renewable energy projects and that it stimulated policy actions for environmental sustainability. Accordingly, in view of the implementation of Article 6 of the Paris Agreement, it is extremely important both to look to the past to draw lessons from Kyoto's successes and failures and to apply multi-criteria decision-making approaches for the design of environmental policies.     

Local Industrial Conditions and Entrepreneurship: How Much of the Spatial Distribution Can We Explain?

Why are some places more entrepreneurial than others? We use Census Bureau data to study local determinants of manufacturing startups across cities and industries. Demographics have limited explanatory power. Overall levels of local customers and suppliers are only modestly important, but new entrants seem particularly drawn to areas with many smaller suppliers, as suggested by Chinitz (1961) . Abundant workers in relevant occupations also strongly predict entry. These forces plus city and industry fixed effects explain between 60% and 80% of manufacturing entry. We use spatial distributions of natural cost advantages to address partially endogeneity concerns.     

A new US definition of ‘Minority Business’: lessons from the first four years

The purpose of this paper is to discuss current definitional issues regarding minority business in the USA and the policy-oriented implications of these issues with regard to European ethnic minority enterprise.

After an introductory discussion of the concept of ‘minority business’ and related terminology, this paper then examines a major change in the definition of such businesses made by the National Minority Supplier Development Council (NMSDC), the principal link between large US corporations and the minority business community. In line with US government minority assistance programme requirements, a ‘minority business’ previously had to be at least 51% minority-owned. Under the new NMSDC policy, a firm can have as little as 30% minority ownership and still be eligible for corporate minority-targeted contracts. This paper explains this re-definition and discusses the experiences of the first four years of this new policy and the lessons and implications for the USA. The discussion is then extended to the European context – the rise of immigration and the related increase in ethnic minority business enterprises, the current nature of public policy toward such enterprises in terms of programmes and legislation, and the implications of the US experience for Europe. Finally, future issues with regard to European ethnic minority enterprise are raised, along with areas for future research focus.     

The effect of mergers on firms’ costs: evidence from the HMO industry

We examine the effect of mergers on firms’ costs, using a national data set that contains information on both pre- and post-merger costs for firms in the Health Maintenance Organization (HMO) industry. By utilizing data on all HMOs that operated in the United States from 1985 to 1997, we observe enough mergers to obtain estimates of both short-run and relatively permanent merger effects. On average, we do not find evidence that mergers allowed HMOs to realize greater economies of scale or that mergers improved efficiency by shifting the cost function. On the other hand, mergers between HMOs that produce Medicare and other products are likely to create dis-economies of scope that increase costs.     

IR and HR perspectives on workplace conflict: What can each learn from the other?

This paper presents an analysis of industrial relations (IR) and human resource (HR) perspectives on conflict in the employment relationship. While both perspectives recognize the existence of employment relationship conflict, IR's premises about such conflict are that it stems from an employer–employee power imbalance, is enduring, often requires institutional interventions in the forms of unionism and legislation to correct the power imbalance, and can be constructive even when the conflict is dealt with in adversarial, nonproblem-solving fashion. HR's premises about employment relationship conflict, by contrast, are that such conflict stems from poor management, can be partially reduced by organizational and workplace innovations that build an employer–employee unity of interests, can be still further reduced through cooperative, mutual gains-oriented problem-solving techniques, and, as a consequence of improved management, will fade from the employment scene. These premises are then examined in relation to case and empirical evidence on grievance procedures, employment discrimination, and employee involvement/participation programs. The analysis finds some support for, but also important limitations on, each of these key perspectives. Recommendations are offered to enable members of the IR and HR communities to incorporate into their respective domains key lessons from each other's dominant perspective on employment relationship conflict.     

The cooperation strategies for the performance improvement in the cruise sea–land logistics: evidence from Italy

Quality & Quantity - This paper aims to measure the terminal’s performance in the cruise sea–land logistics using the methodology of stochastic frontier analysis. A 10-year study...