The Validity of Gibrat’s Law: Evidence from Ecuadorian Service SMEs

The objective of this research is to analyze the relationship between size and growth through the validation of Gibrat's law. A sample of 17,082 Ecuadorian companies in the service sector is used for the period 2010–2015. The estimation method used is that of quantile regression for panel data; the results suggest that small companies grow faster than their larger counterparts. The results show that the growth, measured through sales and employment, of SMEs in the service sector in Ecuador is not independent of firm size and therefore does not correspond to a random process.     

Stephanie Kelton: The Deficit Myth: Modern Monetary Theory and the Birth of the People’s Economy

Business Economics -     

The Contingent Value of Entrepreneurs’ Political Capital: Evidence from China

ABSTRACT

Who benefit from a transitioning economy, entrepreneurs who are politically connected or disconnected? Market transition theory and power conversion theory offer two divergent answers. Our study seeks to contribute to this debate by examining the contingent value of entrepreneurs’ political capital. We draw from social network theories and investigate whether and how entrepreneurs’ social networks influence the relationship between their political capital and social mobility. Using the data on Chinese entrepreneurs, we find that the impact of political capital on entrepreneurs’ social mobility is contingent on their network centrality. Practical implications and suggestions for future research are also discussed.     

Are there demonstration-related spillovers from FDI?: Evidence from Switzerland

This paper examines whether there are signs of demonstration-related spillovers from foreign direct investment (FDI). It hypothesizes that the size and the extent of such benefits vary according to the level of the absorptive capacity of local firms. Using detailed firm data from Swiss manufacturing and services/construction, we find strong evidence for demonstration-related spillovers when (a) local firms are not far behind the technological frontier of the industry with a technological gap slightly greater than one, and (b) local firms demonstrate high investment in the absorptive capacity. The results are found to be more consistent in manufacturing than services/construction.     

Stock Market’s Reaction to Disclosure of Environmental Violations: Evidence from China

The stock market’s reaction to information disclosure of environmental violation events (EVEs) is investigated multi-dimensionally for Chinese listed companies, including variables such as pollution types, information disclosure sources, information disclosure levels, modernization levels of the region where the company locates, ultimate ownership of the company, and ownership held by the largest shareholder. Using the method of event study, daily abnormal return (AR) and accumulative abnormal return (CAR) are calculated under different event window for examining the extent to which the stock market responds to the EVEs. Furthermore, statistical significance of the difference in stock market reaction is compared between event firms with different characteristics. The relationship between CAR and its impact factors is examined by multivariate analysis. The findings reveal that the average reduction in market value is estimated to be much lower than the estimated changes in market value for similar events in other countries, demonstrating that the negative environmental events of Chinese listed companies currently have weak impact on the stock market.     

The Ethnographer’s Apprentice: Trying Consumer Culture from the Outside In

Anthropologists have long wrestled with their impact upon the people they study. Historically, the discipline has served and subverted colonial agendas, but views itself traditionally as an advocate for the disempowered and as an instrument of public policy. Marketing is now among the pre-eminent institutions of cultural stability and change at work on the planet. Currently, ethnography is assuming a growing importance in the marketer’s effort to influence the accommodation and resistance of consumers to the neocolonial forces of globalization. The ethical consequences of market-oriented ethnography are explored in this essay. John F. Sherry, Jr., Herrick Professor and Chairman of the Department of Marketing at the University of Notre Dame, is an anthropologist who studies the sociocultural and symbolic dimensions of consumption, and the cultural ecology of marketing. His work appears in numerous journals, book chapters, professional manuals and proceedings. Sherry has edited Contemporary Marketing and Consumer Behavior: An Anthropological Sourcebook, as well as Servicescapes: The Concept of Place in Contemporary Markets; he is co-editor of Advances in Consumer Research (Vol. 19), Time, Space and the Market: Retroscapes Rising, and Consumer Culture Theory.     

‘The Impact of Personal and Organizational Moral Philosophies on Marketing Exchange Relationships: A Simulation Using the Prisoner’s Dilemma Game’

The purpose of this research is to examine the impact of individual and firm moral philosophies on marketing exchange relationships. Personal moral philosophies range from the extreme forms of true altruists and true egoists, along with three hybrids that represent middle ground (i.e., realistic altruists, tit-for-tats, and realistic egoists). Organizational postures are defined as Ethical Paradigm, Unethical Paradigm, and Neutral Paradigm, which result in changes to personal moral philosophies and company and industry performance. The study context is a simulation of an exchange environment using a variation of the prisoners’ dilemma game. A literature review is provided in the opening section, followed by details on the simulation, discussion of the results, and the implications for theory and practice.     

International Export Orientation and Firm’s Performance: Evidence from Enterprise Survey Data of India

This study aims at analyzing the performance of firms by international export orientation vis-à-vis domestic orientation, based on World Enterprise Survey Data of 9,281 firms of India. Simple statistical techniques such as chi-squared test, ANOVA, and regression model have been used to analyze the data with the help of SPSS version 20.0. Chi-square statistics indicate that there is significant difference in enterprise characteristics by business orientationdomestic versus export-oriented businesses. Result of the ANOVA indicates a significant difference in business performance between export versus domestic orientation of firms in terms of sales and employment growth rates. Export-oriented enterprises perceive comparatively fewer obstacles than domestic enterprises. Regression analysis indicates that enterprise characteristics, performance indicators, and business obstacles have influence on export orientation of the firms. This study provides insights on differences in firms’ performance across business orientations and factors affecting the internationalization of business. This study can be helpful in designing policies for promoting export-oriented enterprises in a focused manner.     

Can Female Directors Enhance the Value of Private Firms? Evidence from China’s Listed Companies

Female directors have become common in private companies. Using data from private listed companies in China’s A-share stock market from 2000 to 2009, this paper analyzes whether the existence of female directors can enhance firm value. Results show that female directors have a significantly positive impact on firm value. Moreover, female directors promote enterprise value less significantly in regions with better institutional environment, which implies that there is a substitution relationship between female directors and institutional environment. Furthermore, we use 2SLS (two-stage least squares) and LEVOP (lag the explanatory variables one period) to control endogeneity, and the research conclusion remains robust. Our study provides additional empirical evidence for economic consequence of female directors, and expands research on the relationship between board structure and firm value.     

Determinants of related-party transactions: Evidence from China’s listed companies during 2002–2006

This study attempts to shed light on the relationship between related-party (RP) transactions and internal governance factors of China’s listed companies. An analysis of a sample of 69 049 RP transactions during 2002–2006 reveals strong evidence that the likelihood of RP transactions is higher for companies with high concentration of ownership, but lower for companies with strong bargaining power of the second and third largest shareholders. There is also clear evidence showing that large compensation for outside directors is associated with greater size of RP transactions, whereas increased average compensation for the three top executives tends to decrease the number of RP transactions. Our results also reveal that the pluralism arraignment, i.e. the same person holding both positions of the board chairman and the chief executive, increases the size of RP transactions significantly. This finding suggests that pluralism reduces the balance of power in corporate governance.      

Price Discovery and Trading after Hours: New Evidence from the World’s Largest Carbon Exchange

We investigate the impact of after-hours trading on magnitude and timing of price discovery over the close-to-close period on the world’s largest carbon trading platform, the European Climate Exchange (ECX). Low-volume trading in carbon financial instruments can lead to relatively high levels of price discovery, but the generated pricing has low efficiency levels. This is associated with high levels of informed trades and low levels of liquidity trades. Our results show higher trading volume per minute and greater price efficiency for after hours when compared with regular trading hours. As a result of a higher proportion of informed trades, adverse selection costs for trades after hours are significantly larger than those for trades during the regular trading day.     

The entrepreneur’s mode of entry: the effect of social and financial capital

This article uses a French database of firms set up in 1998 to investigate the determinants of takeovers versus startups as a mode of entry. It focuses on two determinants that previous research has not fully analyzed: social capital and financial capital. Our findings suggest social capital affects the mode of entry. They show that entrepreneurs with social capital are more likely to create new firms from scratch than to take over existing firms. We confirm the effect of financial capital on the mode of entry. Bank loans are more often associated with takeovers than with startups and low initial wealth is more often associated with startups than with takeovers. These results show that finance affects the mode of entry.     

The Impact of Islamic Feminism in Empowering Women’s Entrepreneurship in Conflict Zones: Evidence from Afghanistan,Iraq and Palestine

Journal of Business Ethics - The impact of Islam upon women’s entrepreneurship in conflict zones is woefully absent from the entrepreneurship literature. This is due to the absence of...     

Women on the Board and Managers’ Pay: Evidence from Spain

The current literature shows great interest in the issue of gender diversity on boards of directors. Some studies have hypothesized a direct relationship between diversity and the value of the firm, but not many examine the intermediate mechanisms that may exert an influence on such relationships. We employ two stages of GMM estimation methodology to exhibit evidences of the relationship between gender diversity and compensation of top managers in the Spanish context. Results show that gender diversity positively affects the effectiveness of boards—in terms of composition, structure, size and functioning—influencing a proper design of top managers compensation linked to company performance. Evidences suggest that legislative actions aimed at increasing the presence of women on boards of directors are justified not only for ethical reasons, but also for reasons of economic efficiency.     

Researcher’s guilt: confessions from the darker side of ethnographic consumer research

A reflexive approach to qualitative research seeks to uncover structures of inequality in the research encounter. On the surface, it would seem that ethnographic methods provide the conditions to alleviate this methodological instrumentalism. By employing a confessional account, this paper demonstrates how the paradox of asymmetrical rapport prevents ethnographic work from reaching its collaborative potential. Drawing from insights in an ethnographic enquiry in an arts charity, the author narrates the guilty experiences that arise when researchers reproduce a culture of commodifying informants. This is exemplified through impression management tactics that generate an illusion of mutuality, alternating with more authentic instances of co-participation. The implications of this self-perceived moral violation are discussed for the researched, the researcher and ethnographies of consumption more broadly. The paper contributes to the methodological literature by explaining the potential of confessional accounts as a tool to operationalise reflexive, reciprocal practice, counteracting the demands of a knowledge economy.     

Perceptions of Accountants’ Ethics: Evidence from Their Portrayal in Cinema

This article examines popular representations of accountants’ ethics by studying their depiction in cinema. As a medium that both reflects and shapes public opinion, films provide a useful resource for exploring the portrayal of the profession’s ethics. We employ a values theoretical framework to analyze 110 movie accountants on their basic ethical character, ethical behavior, and values. We use factor analysis to reduce 22 personal characteristics to five factors encompassing two terminal and three instrumental value sets, which we relate to ethical behavior. Findings indicate that in popular cinema, the ethical behavior of accountants is positively associated with intrinsic terminal values, but negatively related to competency (instrumental) values.     

The influence of the CEO’s business education on the performance of hybrid organizations: the case of the global microfinance industry

Microfinance institutions (MFIs) are typical examples of hybrid organisations, meaning organisations pursuing both a financial and social logic. This study examines the question of whether financial and social performance improves when an MFI’s chief executive officer (CEO) has a business education. We apply the random effects instrumental variable regression method to examine the influence of the CEO’s business education on the MFI’s financial and social performance. Our panel dataset that includes 353 MFIs from across the globe indicates that ‘only’ 55% of the MFIs have a CEO with a business education. The empirical results indicate that MFIs with CEOs who have a business education perform significantly better, financially and socially, than MFIs managed by CEOs with other types of educational backgrounds. The findings suggest that CEOs with a business education seem better at managing the much-debated tradeoff between providing small loans and producing healthy financial results.     

The Investment Development Path: Evidence from Poland and Other Countries of the Visegrád Group

This article discusses Polish foreign direct investment against that of the other Central and Eastern European countries belonging to the so-called Visegrád Group. The article is a continuation of this author’s previous work, now revised and taking into account a longer perspective of the analysis, theoretical recommendations modifying and widening the scope of the Investment Development Path model, the results of analytical studies published by other authors as well as the results of two research projects conducted by a Nicolaus Copernicus University team between 2006–2009 and 2010–2013. This article’s fundamental aim is to define the current stage of Poland’s economic development according to the Investment Development Path trajectory. The author concludes that Poland is in its third stage of development according to the Investment Development Path model, although still in an early phase of that stage.     

The Effects of Management’s Preannouncement Strategies on Investors’ Judgments of the Trustworthiness of Management

This paper examines the role of management’s earnings preannouncements on judgments about its trustworthiness by nonprofessional investors. We predict that management’s preannouncement decision and the resulting direction (e.g., favorable vs. unfavorable) of the earnings surprise influence investors’ ethical judgments about management’s trustworthiness; these judgments, in turn, are associated with investors’ other investment related judgments. We test our predictions in an experiment in which MBA students make investment-related judgments under four different preannouncement strategies. Consistent with our predictions, the results of our study show that managers’ preannouncement decisions are significantly associated with investors’ evaluations of management’s trustworthiness. Specifically, holding the size of the earnings surprise constant, we find that judgments of management’s trustworthiness are damaged more following (a) a negative as opposed to a positive earnings surprise, and (b) the release of a preannouncement compared to when management does not issue a preannouncement. Also consistent with our predictions, we find that evaluations of management’s trustworthiness are significantly and positively associated with judgments of the attractiveness of the firm’s equity as an investment. Based on our findings, we encourage further research to explore whether managers understand the trust implications associated with their preannouncement decisions and the extent to which this understanding influences their disclosure decisions. Anna M. Cianci is an Assistant Professor in the Accounting Department at Drexel University. She received her Ph.D. from Duke University in Accounting. Her primary research interests are judgement and decision making issues in financial accounting and auditing. Steve Kaplan is a Professor of Accounting at Arizona State University, where he has been a member of the faculty since 1981. He received his Ph.D. from the University of Illinois. He␣has published widely in journals such as The Accounting Review, Journal of Accounting Research, Journal of Accounting and Public Policy, Business Ethics Quarterly and Journal of Business Ethics. He is the Previous editor of Behavioral Research in Accounting, a section journal of the American Accounting Association. His primary research interests are behavioral issues, judgment and decision making, and ethics