Is privatization related to corruption? An empirical analysis of European countries

This study analyses the relationship between privatization and corruption in Europe over the period 1995 to 2013, taking into account the problems surrounding the issue of causality. There have been researches into the role of privatization in reducing corruption, but decisions about privatization itself are made by politicians, and so corruption could also affect decision making about privatizations. The empirical findings suggest that perceived corruption decreases as the number of privatization transactions increases, but the effect is contrary when privatizations are a more important in terms of annual revenues. Furthermore, our results indicate that overall, privatizations carried out since the early 1980s have not been effective in reducing corruption in Europe. Indeed, privatizations reforms are more carried out in the less corrupt countries.     

Do employees reciprocate to intra-firm trainings? An analysis of absenteeism and turnover rates

This article contributes to the debate on the link between reciprocal motives of employees and HRM practices by studying the behavioral effects of intra-firm trainings on absence behavior and turnover probability. We apply the gift-exchange framework and offer a behavioral perspective that helps to explain why firms invest in trainings that provide mainly general skills. We argue that employees may reciprocate the gift of firm-sponsored training with higher levels of costly effort or commitment. We employ a stringent methodological approach based on panel data of a large multinational firm and find that, in contrast to human capital predictions, general trainings lead to a decrease in turnover rates. Most notably, we find the strongest effect for employees with the lowest levels of firm tenure. This is a quite novel result as this group should face the lowest separation costs, for instance, due to the accumulation of firm-specific human capital. Hence, intra-firm trainings are an important retention device, especially for newly or recently hired employees. Furthermore, a short-term decrease in absenteeism indicates a temporary, reciprocal reaction by employees.     

How do experienced traders respond to inflows of inexperienced traders? An experimental analysis

We conducted asset market experiments where one experienced subject interacts with five inexperienced subjects to investigate how experienced subjects change their price forecasts and trading behavior when faced with strategic uncertainty caused by inflows of inexperienced subjects. Only half the experienced subjects initially forecasted prices deviating more from the fundamental values in the market with five inexperienced subjects than in the final round of the experiment in which they had previously participated. Furthermore, the majority of our experienced subjects did not change their trading behavior. Many experienced subjects act as price stabilizers when the inflow of inexperienced subjects is not associated with other changes in market conditions.     

An analysis of natural disasters’ effects – A global comparative study of ‘Blessing in Disguise’

This paper addresses the intriguing issue of whether natural disasters do not only generate negative impacts on society, but, in the long run – under favourable and effective policy and behavioural responses – also positive outcomes. This challenging and novel resilience question is formulated here as the ‘Blessing in Disguise’ hypothesis. There is quite some speculation in the literature on possible long-term and systemic effects of disasters, but there is little empirical evidence supported by solid quantitative analysis on expected positive outcomes. The challenging aim of the present study – to examine under what conditions natural hazards may lead to positive socio-economic outcomes in the long run (‘Blessing in Disguise’) – is empirically addressed from a resilience perspective. It integrates in one quantitative research framework (the ‘Pentagon model’), a Stimulus-Response approach and a Capability-Theory inspired framing of territorial opportunities in coping with natural disasters, and uses a mix of statistical and econometric analyses, such as multiple linear regression analysis, cluster analysis, and a Stimulus-Response adjusted Difference-in-Difference model. Our findings, based on a global comparative study, show that a ‘Blessing in Disguise’ scenario is frequently a valid proposition that may manifest itself differently in different geographic, social-economic, political and institutional contexts. Although there is not a single pattern of development specific in all cases, it is clear that positive recovery trends can be observed both at the state level, and also at the regional level. The analysed data show regularly incremental changes after recent natural disasters (especially in the long term) at country level, but more thorough positive changes can be identified at the regional scale. In conclusion, the management of disasters requires proper response capacities and appears to create a window of opportunity for improved capabilities, but it is only a conditional possibility that may be transformed into a sustainable form of new development.     

Does downsizing improve organisational performance? An analysis of Spanish manufacturing firms

The objective of this study is to examine the effect of downsizing on corporate performance, considering a sample of manufacturing firms drawn from the Spanish Survey of Business Strategies for the 1993–2005 period. No significant difference in post-downsizing performance arises between companies that downsize and those that do not. Likewise, we find that substantial workforce reductions through collective layoffs do not lead to improved performance levels either. Downsizing may not, therefore, be a way for managers to enhance performance. This is particularly true of Spain, where the labour market is characterised by the ring-fencing of employees' rights and substantial severance costs.     

Does organization capital matter? An analysis of the performance implications of CEO power

Chief executive officer (CEO) power reflects the ability of the CEO to influence the firm's decision-making. Whether the CEO of the firm could manage the firm’s investment assets to support maximizing the efficiency of resource allocation is an important issue. As previous studies found, organization capital is a key intangible asset that improves the firm’s production efficiency and affects long-term performance. This study explores how CEO power affects organization capital investments and how it further affects the efficiency of firm resource allocation. We use the following three variables to measure CEO power: CEO founder, CEO-only insider and CEO duality. Our results indicate that the level of CEO power can influence a firm’s value by controlling the organization capital. When the firm’s CEO is also the founder, the CEO will attempt to increase investments in organization capital to create growth opportunities for the firm, which will therefore increase the firm's value. Specifically, when the company is in financial distress, the powerful CEO's increasing in organizational capital investment will expose the company to greater risk of loss of intangible assets. This result may further increase the company's price volatility.     

Do Codes of Conduct and Ethical Leadership Influence Public Employees’ Attitudes and Behaviours? An experimental analysis

Corruption, political scandals, and the spreading adoption of management practices in the public sector contribute to a decline in public trust. Worldwide initiatives promoting good governance can be observed. At an organizational level, management of ethics has gained in importance as codes of conduct and ethical leadership are promoted. However, public management research has hardly analysed the impacts of these measures. To address this research gap, we conduct a between-subjects experiment among public administration employees. Our results reveal that only ethical leadership has a positive effect on employees’ organization-related attitudes. Our findings suggest avenues for further research.     

An empirical analysis of mean reversion of the S&P 500’s P/E ratios

Numerous authors have suggested that the price-earnings (P/E) ratio can be used to predict the future movement of stock prices. Such arguments are based on the belief that P/E ratios are mean-reverting. However, are the S&P P/E ratios really mean reverting? A review of the literature finds arguments on both sides, but the issue of mean reversion has not been tested adequately. Using unit roots and multiple structural breaks, we explicitly show that the P/E ratio is stationary around multiple breaks, which means that it will eventually revert to some long-run means. This result supports evidence that high P/E ratios relative to the current long-run mean will be followed by slow growth in stock prices and/or high earnings growth.     

Why are Some Agencies Perceived as more Committed to Diversity than Others? An analysis of public-sector diversity climates

Positive diversity climates are associated with an array of benefits for public organizations. However, it is not clear why some agencies are perceived as more committed to diversity than others. This paper hypothesizes about how group and management characteristics, social identities, and procedural justice may shape perceptions of diversity climate. It then tests these expectations using cross-sectional data drawn from the US federal workforce. It shows that employees’ social identities and perceptions of procedural justice were strong predictors of perceptions of diversity climate. There was less evidence that the representativeness of management and personnel diversity were related to diversity climate.     

Does a ‘financial transaction tax’ drive out information mirages? An experimental analysis

Motivated by the debate over the economic implications of financial transaction taxes, the present study involved a thorough investigation of the impact of such taxes on a financial market of the type described by Camerer and Weigelt (J Bus 64:463–493, 1991), whereby noise traders are unaware of whether privileged information is fluctuating in the market. Two treatment conditions were opposed to a baseline condition in which no tax was levied. The two treatment conditions imposed a transaction tax equal to 0.5% and 1% of each transaction’s market value, respectively. The findings show that: (1) the introduction of a tax did not affect the occurrence of a mirage, (2) the introduction of a tax did not improve market efficiency and (3) the introduction of a tax did not reduce the number of transactions.

     

Will truth out?—An advisor’s quest to appear competent

We study a dynamic career-concerns environment with an agent who has incentives to appear competent. It is well known that dynamic career concerns create incentives for an agent to be conservative and to tailor his reports towards a commonly held prior opinion. The existing models, however, have focused on short time horizons. We show that, for long time horizons, there exist countervailing incentives for the agent to report his true opinion. In particular, if the agent is sufficiently patient, the time horizon is sufficiently long given the agent’s patience, and the quality of the competent expert is high enough given the time horizon and the discount factor, the beneficial long-term incentives overwhelm any harmful myopic ones, and the incentive problem vanishes.     

The evolution of auditing： An analysis of the historical development

This paper aims to analyze the development of auditing. It is found that auditing has evolved through a number of stages. In the mid 1800s to early 1900s, the audit practice was considered as ＂traditional conformance role of auditing＂. However, for the past 30 years, the auditor has been playing an ＂enhancing role＂. Today, auditors are expected not only to enhance the credibility of the financial statement, but also to provide value-added services. Nevertheless, following extensive reform in various countries as a result of the collapse of big corporations, it is expected that the role of auditors will converge. It is evident that the paradigm about auditing has shifted over the years and it is likely to continue shifting in the future.     

Households’ attitudes toward earthquake protection: An empirical analysis of the impact of fiscal support in Japan

Faced with an aging society and major earthquake risk in the near future, promoting the improvement of existing houses is one of the most important issues in Japan. In this paper, we formulate two types of demand models for home safety: a model for barrier-free conversion and a model for seismic retrofit based on a logit model. We explore statistically the factors that affect the demand for each improvement using prefectural data in Japan. We also analyze statistically the significance and impact of financial support programs for improving existing houses, which the Japanese government has implemented at the prefectural and municipal level. The results clarify the differences between the determinants of each type of improvement and show that the support program for barrier-free conversion has a positive and statistically significant effect on households’ preference. However, neither the seismic test nor the seismic retrofit program conducted by prefectures has a positive impact on preference, whereas those by municipalities do affect preference.     

Too similar to combine? On negative weights in forecast combination

This paper provides the first thorough investigation of the negative weights that can emerge when combining forecasts. The usual practice in the literature is to consider only convex combinations and ignore or trim negative weights, i.e., set them to zero. This default strategy has its merits, but it is not optimal. We study the problem from various angles, and the main conclusion is that negative weights emerge when highly correlated forecasts with similar variances are combined. In this situation, the estimated weights have large variances, and trimming reduces the variance of the weights and improves the combined forecast. The threshold of zero is arbitrary and can be improved. We propose an optimal trimming threshold, i.e., an additional tuning parameter to improve forecasting performance. The effects of optimal trimming are demonstrated in simulations. In the empirical example using the European Central Bank Survey of Professional Forecasters, we find that the new strategy performs exceptionally well and can deliver improvements of more than 10% for inflation, up to 20% for GDP growth, and more than 20% for unemployment forecasts relative to the equal-weight benchmark.     

Board of directors’ effects on financial distress evidence of family owned businesses in Lebanon

The objective of this paper is to determine the managerial governance characteristics related to financial distress companies. The boards failed to accomplish their monitoring duties, which seemed to be one of the main reasons behind the actual financial distress and bankruptcy that swept the companies across the planet. Through the analysis of a sample of 178 Lebanese non listed and owned family firms, the results showed that the boards (that have a higher proportion of outside directors) are less inclined to face a financial distress than the boards with a lower proportion. Besides, a different conclusion proves that the board’s size and financial distress are directly linked. The paper highlights the extent to which financial distress is associated with corporate governance from a Euro Mediterranean country. It would be a source of education to Lebanese investors who excessively go for short-term returns and of help for regulatory authorities in the framework of making policies on corporate governance reformation.     

Too dynamic to fail: empirical support for an autocatalytic model of Minsky’s financial instability hypothesis

Solomon and Golo (Account Econ Law 3(3):167–260, 2013) have recently proposed an autocatalytic (self-reinforcing) feedback model which couples a macroscopic system parameter (the interest rate), a microscopic parameter that measures the distribution of the states of the individual agents (the number of firms in financial difficulty) and a peer-to-peer network effect (contagion across supply chain financing). In this model, each financial agent is characterized by its resilience to the interest rate. Above a certain rate the interest due on the firm’s financial costs exceeds its earnings and the firm becomes susceptible to failure (ponzi). For the interest rate levels under a certain threshold level, the firm loans are smaller then its earnings and the firm becomes ‘hedge.’ In this paper, we fit the historical data (2002–2009) on interest rate data into our model, in order to predict the number of the ponzi firms. We compare the prediction with the data taken from a large panel of Italian firms over a period of 9 years. We then use trade credit linkages to discuss the connection between the ponzi density and the network percolation. We find that the ‘top-down’–‘bottom-up’ positive feedback loop accounts for most of the Minsky crisis accelerator dynamics. The peer-to-peer ponzi companies contagion becomes significant only in the last stage of the crisis when the ponzi density is above a critical value. Moreover the ponzi contagion is limited only to the companies that were not dynamic enough to substitute their distressed clients with new ones. In this respect the data support a view in which the success of the economy depends on substituting the static ‘supply-network’ picture with an interacting dynamic agents one.     

Opening up the firm: What explains participation and effort in voluntary carbon disclosure by global businesses? An analysis of internal firm factors and dynamics

A voluntary climate initiative that has emerged over the past two decades as an institutional arrangement for corporations around the globe to signal and demonstrate their proactive climate leadership is the CDP (formerly known as the Carbon Disclosure Project). Unlike the extant literature that has emphasized stakeholder and regulatory pressures, this paper argues that voluntary carbon disclosure is both beneficial and costly for corporations with respect to the existence of supportive management structures, explicit CSR practices, and the existence of complementary assets. Moreover, there is variation between European firms and other global businesses because of Europe's distinctive national business systems framework in conjunction with global supply chain imperatives. Empirically, this study employs a novel discrete‐continuous modeling approach to distinguish between a corporation's decision to disclose and the linked but subsequent decision of how much to disclose climate change information. Results indicate that the main drivers of participation in voluntary carbon disclosure by the Global 500 firms is the existence of senior managers and executive‐level officers and the adoption of ESG principles by global businesses. Conditional on participation, European Union‐based and other global businesses that articulate a corporate vision for environmental sustainability, adopt ESG principles, and invest in complementary assets disclose climate change strategies and emissions at higher levels than companies without these internal firm capabilities. This study has implications for national climate policy and global climate change governance more generally, both of which increasingly focus on concrete climate solutions by corporations.     

Is local authority procurement ‘lean’? An exploration to determine if ‘lean’ can provide a useful explanation of practice

This article makes a contribution to the research debate examining relationships between public and private sector procurement practice by exploring the influence of ‘lean’ upon procurement practices in English local authorities. A survey found that whilst some characteristics, such as a reducing supply base, resembled those of lean thinking, they could also be associated with a partnership approach. Other evidence highlighted gaps between practice and lean, leading to the conclusion that lean is not currently an influence. However, many procurement officers are aware of the concept and are willing to embrace the idea. There is a need to monitor and examine progress further.