Degrees of tax indexation and nominal interest rates: Effects of inflation on incentives to save and invest

This paper examines the effects of inflation expectations on nominal interest rates, and incentives to save and invest under partial and complete tax indexation schemes. One would expect that a partially indexed structure would be better than a non-indexed system. However, this is not the case—it reduces the adverse effects of inflation on the incentives to save, but accentuates them on the incentives to invest. Moreover, a change from a non-indexed tax structure to a fully-indexed structure will, ceteris paribus, lead to lower equilibrium interest rates, whereas a switch to a partially indexed system will imply higher rates.

The motives of off-the-books entrepreneurs: necessity- or opportunity-driven?

In recent years, it has become common to represent entrepreneurs as either necessity- or opportunity-driven. Drawing upon face-to-face interviews in England with 70 entrepreneurs trading wholly or partially off-the-books, this paper evaluates critically this dichotomous representation. The finding is that squeezing the motives of off-the-books entrepreneurs into one side or the other of this dichotomy not only over-simplifies their rationales since both necessity and opportunity motives are often involved but also obfuscates how their motives change over time. The outcome is a call to replace this either/or depiction with a richer and more nuanced both/and understanding of off-the-books entrepreneurs that recognises their diverse and dynamic motives.

Market reactions to announcements to expense options

The joint hypotheses of informationally efficient markets, transparent financial statements, and adequate accounting disclosure suggest that announcements of changes in the accounting treatment of employee stock options from footnote disclosure to expense recognition should not trigger stock price reactions because free-cash-flows will not change. Event study results from a sample of 241 firms that announce such changes reveal statistically significant negative price changes followed by positive price changes about equal in magnitude. We propose the learning, sophisticated investor, neglected firm, and firm size hypotheses to explain the observed announcement-period stock price reaction.

Debreu’s coefficient of resource utilization, the Solow residual, and TFP: the connection by Leontief preferences

Debreu’s coefficient of resource utilization is freed from individual data requirements. The procedure is shown to be equivalent to the imposition of Leontief preferences. The rate of growth of the modified Debreu coefficient and the Solow residual are shown to add up to TFP growth. This decomposition is the neoclassical counterpart to the frontier analytic decomposition of productivity growth into technical change and efficiency change. The terms can now be broken down by sector as well as by factor input.

Legitimating behaviors and firm emergence: a resource dependence perspective

This study makes an attempt to understand some of the reasons why some nascent firms make the transition to new operational firms (a process called “firm emergence”) while others do not. Because of liabilities-of-newness, nascent firms face the daunting task of acquiring legitimacy from their immediate audience in order to emerge as new operational firm. This study claims and finds empirical evidence that through certain legitimating behaviors nascent firms can acquire legitimacy from their immediate audience and thus succeed in becoming new operational firms. The study will put forward more general propositions for future testing, and will draw implications for practitioners and entrepreneurship scholars.

Bias of distance functions estimates and Primont and Primont’s homotheticity test

The question of whether a technology exhibits particular properties such as radial input or output homotheticity is a crucial one for a producer since it should strongly impact on its reactions to market changes. Primont and Primont (Econ Lett 45:191–195, 1994) established that it can be tested using only weak assumptions. They further used their results to test for input homotheticity of an educational production technology (Primont and Primont, Can J Econ 29:587–591, 1996). In this paper, it is shown that if not implemented properly, the test can lead to biased results. Some ways to obtain unbiased results are also suggested.

Entrepreneurship as a non-profit-seeking activity

It is typically assumed that people engage in entrepreneurship because there are profits to be made. In contrast to this view, this paper argues that entrepreneurship is more adequately characterized as a non-profit-seeking activity. Evidence from a broad range of authors and academic fields is discussed showing that entrepreneurship does quite generally not pay in monetary terms. Being an entrepreneur seems to be rather rewarding because it entails substantial non-monetary benefits, like greater autonomy, broader skill utilization, and the possibility to pursue one’s own ideas. It is shown how incorporating these non-monetary benefits into economic models of entrepreneurship can lead to a better understanding of the phenomenon.

Stochastic productivity measurement

Stochastic productivity indicators are defined, and superlative measures of these indicators are derived. It is shown that, in the presence of complete markets or a common-expectations equilibrium, differences in the market values of firms are superlative indicators of cross-sectional productivity differences. Exactness results are used to decompose nonstochastic productivity indicators into a measure of true productivity change and a measure of ‘luck’. The decomposition is illustrated empirically.

How clusters can encourage entrepreneurship and venture creation. Reasons and advantages

The aim of this article is to define what is meant by clusters, their characteristics or determinants and the advantages they generate, focusing on the role they play in boosting entrepreneurship and new venture creation. In clusters, a balance is reached between cooperation and competition which becomes evident in the higher productivity of the companies because of their increased access to inputs, information, technology and institutions; or in greater innovation and venture creation. The cluster incentivizes the entry of new companies or start-ups. The hope is, then, that the new companies will revitalize specific regions where competitiveness has fallen and that entrepreneurship will contribute to economic development and improved country-wide competitiveness.

The productivity performance of Irish dairy farms 1984–2000: a multiple output distance function approach

This study measures productivity growth on Irish dairy farms over the period 1984–2000. A total factor productivity index is constructed for the dairy system and is decomposed into technical change, efficiency change, and changes in scale efficiency. This is achieved by estimating a stochastic output distance function model of the production technology in use on Irish dairy farms. Overall, productivity on Irish dairy farms grew by 1.2% per annum over the sample period.

Productivity and efficiency of state-owned enterprises in China

The purpose of this paper is to evaluate the variations in SOE efficiency and productivity from the perspectives of macroeconomic fluctuations and systematic reform in China during 1986–2003. We use Data Envelopment Analysis to measure SOE efficiency. Subsequently, we use the Malmquist Index of Productivity change to measure productivity growth. The empirical results show that SOE efficiency and productivity exhibited obvious improvements during periods of strong systematic reform and a prosperous economy. The systematic reform after 1998 had a clear-cut impact on SOE performance.

The contributions of productivity, price changes and firm size to profitability

Sources of profit change for Telstra, Australia’s largest telecommunications firm, are examined. A new method allows for changes, in a firm’s profits to be broken down into separate effects due to productivity change, price changes, and growth in the firm’s size. This in turn allows us to calculate the distribution of the benefits of productivity improvements between consumers, labor, and shareholders. The results show that around half the benefits from Telstra’s productivity improvements from 1984 to 1994 were passed on to consumers in the form of real price reductions.

Franchising and intellectual capital: A franchisee’s perspective

Various studies have focused on the reasons for franchising. Most studies have concentrated principally on the franchisors’ motivations for franchising, with only a few exploring franchising as a route to self-employment. This paper seeks to provide a conceptual framework which examines the value of franchising to franchisees, employing an intellectual capital perspective. It is suggested that the (perceived) value of the franchise system is unlikely to remain static over time, and that the perceived benefits of franchise systems will vary according to both system and franchisee attributes.

Application of a double bootstrap to investigation of determinants of technical efficiency of farms in Central Europe

The paper provides one of the first applications of the double bootstrap procedure (Simar and Wilson 2007) in a two-stage estimation of the effect of environmental variables on non-parametric estimates of technical efficiency. This procedure enables consistent inference within models explaining efficiency scores, while simultaneously producing standard errors and confidence intervals for these efficiency scores. The application is to 88 livestock and 256 crop farms in the Czech Republic, split into individual and corporate.

Joint estimation of technical efficiency and production risk for multi-output banks under a panel data cost frontier model

This article generalizes production risk from a single output production function to a multiple output cost frontier, which is able to examine input-oriented technical efficiencies and production risk simultaneously in the context of a panel data. Furthermore, the joint confidence interval estimates for technical efficiencies are constructed by means of multiple comparisons with the best approach. Whether taking production risk into account or not offers quite dissimilar implications in terms of the average technical efficiency measure and the identification of multiple efficient banks achieving the optimal cost frontier. It is suggested that inferences drawn on the basis of the confidence intervals of technical efficiency provide much more fruitful and insightful information than the point estimation alone. Bank specific risk parameters are found to be highly and positively correlated with fixed-effect estimates, implying that the more risk-averse a bank is, the more technically efficient it will be.

A Model for Predicting Outcomes of Sexual Harassment Complaints by Race and Gender

Organizational scholars have studied the impact of sex on sexual harassment outcomes but left unexplored the influences of race. Thus, we use social identity theory to explore the role of race stereotypes and their influences on sexual harassment outcomes. We posit that stereotypes of African-American women tend to be much more negative than those of white women and this serves to marginalize their position both as victims of sexual harassment as well as complainants.

The aggregation of capital over vintages in a model of embodied technical progress

The paper considers how to measure capital in a model where technical progress is embodied in new units of capital. This embodiment model also assumes that once new units of capital are installed, it cannot be “unbolted” and sold on the second hand market. A significant difference between this Solow–Harper model and the traditional capital services model due to Jorgenson and his coworkers is that rising real wage rates will generally induce early retirement of assets; i.e., this model can provide an explanation for obsolescence. The paper studies how to aggregate over vintages and how to measure depreciation in the context of this embodiment model. These problems are more complicated than the corresponding problems in the traditional capital services model because the age of retirement of an asset is endogenous in the embodiment model. The paper uses duality theory to simplify the exposition.

Predicting capacity utilization: Federal Reserve vs time-series models

This study evaluates the Federal Reserve forecasts of manufacturing capacity utilization employing, as benchmarks, the forecasts from a univariate model which utilizes past information in capacity utilization, and from a bivariate model which utilizes past information in both capacity utilization and the federal funds rate. In addition to accurately predicting the directional change in capacity utilization, the Federal Reserve forecasts are “weakly” rational and generally superior to the bivariate forecasts. In light of another finding that monetary policy is non-neutral, we argue the Federal Reserve forecasts of capacity utilization have positively contributed to the Fed’s success in maintaining a low inflationary environment.

Entrenched management,capital structure changes and firm value

The relationship between managerial share ownership and the firm’s change in leverage around a security issuance is examined. We find that entrenched managers are not more likely to issue equity, however they do affect lower leverage by choosing debt issuances which are smaller and equity issuances that are larger than those chosen by managers that are not entrenched. The magnitude of the decline in leverage that occurs from before the issuance to after the issuance is positively related to managerial share ownership. In addition, this relationship is confined to only the “entrenchment” range of managerial share ownership. The market reacts negatively to an issuance announcement when managerial share ownership is high.

The relative decline of a Musgrave ‘Merit Good:’ the case of public support of flagship public universities

Fifty years ago, Richard Musgrave put forward the notion of a “merit good”—one that despite its virtue would be undersupplied and under consumed in a free market economy driven by traditional notions of consumer sovereignty. Higher education is considered by many to be a merit good because they believe it generates highly desirable spin-off effects. If higher education has been a merit good, then that status appears to be disappearing. Declining state funding for higher education, increasing tuition rates and highly successful fund-raising by independent institutions have diminished public flagship universities, at least relatively. Consequently, their rankings have declined.