Demand or productivity: what determines firm growth?

We disentangle the contribution of unobserved heterogeneity in demand and productivity to firm growth using Italian data containing unique information on firm‐level prices. Demand and total factor productivity (TFP) shocks are equally important in shaping firm growth. However, the pass‐through of shocks to growth is highly incomplete, more so for productivity shocks. We argue that incompleteness and asymmetry of the pass‐through can be explained by frictions that, unlike those studied by the literature on factor misallocation, have differential effects according to the nature of the shock. We propose hurdles to firms' ability to reorganize as an example of these types of frictions.     

The Role of Performance Reporting System Characteristics for the Coordination of High-Cost Areas in Hospitals

This paper explores the role of a performance reporting regime’s characteristics for two non-financial performance measures that are commonly used in the management of operating theaters (OTs) in German hospitals. The performance measures are the on-time first case of the day starts and the percentage of deviations from the short-term OT plan. The characteristics studied are reporting detail, reporting method and reporting frequency. We find that the degree of detail that the reporting system provides on the causes of negative performance exerts a significant positive effect on both performance measures. The reporting method and frequency do not affect performance. We also study the effect of existing processual, organizational and governance-related problems on performance. We find that these problems exert a significant negative effect on performance but that performance can be improved by detailed reporting.     

Rock around the clock: An agent-based model of low- and high-frequency trading

We build an agent-based model to study how the interplay between low- and high-frequency trading affects asset price dynamics. Our main goal is to investigate whether high-frequency trading exacerbates market volatility and generates flash crashes. In the model, low-frequency agents adopt trading rules based on chronological time and can switch between fundamentalist and chartist strategies. By contrast, high-frequency traders activation is event-driven and depends on price fluctuations. High-frequency traders use directional strategies to exploit market information produced by low-frequency traders. Monte-Carlo simulations reveal that the model replicates the main stylized facts of financial markets. Furthermore, we find that the presence of high-frequency traders increases market volatility and plays a fundamental role in the generation of flash crashes. The emergence of flash crashes is explained by two salient characteristics of high-frequency traders, i.e., their ability to i. generate high bid-ask spreads and ii. synchronize on the sell side of the limit order book. Finally, we find that higher rates of order cancellation by high-frequency traders increase the incidence of flash crashes but reduce their duration.     

CALL FOR PAPERS

Organized Uncertainty: Designing a World of Risk Management. Michael Power. Oxford University Press, 2007. xviii and 248pp. ISBN 978–0–9–925394–4. £24.99.

Intellectual Capital Reporting: Lessons from Hong Kong and Australia. J. Guthrie, R. Petty and F. Ricceri. The Institute of Chartered Accountants of Scotland, 2007, vii and 118pp. ISBN 978–1–904574–27–9. £15

The Routledge Companion to Fair Value and Financial Reporting. P. Walton (ed.). Routledge, 2007. xviii and 404 pp. ISBN 978–0–415–42356–4. £95.

UK Reporting of Intellectual Capital. Jeffrey Unerman, James Guthrie and Ludmila Striukova. ICAEW Centre for Business Performance, 2007. 68 pp. ISBN 978 1 84152 507 5. £20.     

Managerial Perceptions of Country-of-Origin: An Empirical Study of New Zealand Food Manufacturers

This study investigates food manufacturers’ motives for featuring country-of-origin (CoO) symbols, statements, and other indicators on their product packaging and labeling. Unlike the majority of CoO studies that employ survey and experimental methods, a qualitative approach is taken. Sixteen in-depth interviews with key informants of packaged food companies in New Zealand revealed five categories of themes as reasons why manufacturers indicate and often emphasize CoO associations—cognitive function, affective function, conative function, tangible benefits, and intangible benefits. Overall, the findings reveal that managers perceive that CoO associations deliver them benefits, but they do not measure the outcomes of these investments.     

Information asymmetries and craft guilds in pre‐modern markets: evidence from Italian proto‐industry

This article analyses the relationship between guilds and information asymmetries using a large database of quality disputes from early modern Italy. It finds that a high‐quality urban textile industry was able to solve externalities using a range of ex ante and ex post monitoring mechanisms based on private market relationships and fair sanctions which effectively reduced adverse selection and information asymmetries. Instead, when guilds did use their quality regulations, the effect of the guild on information asymmetries and the industry as a whole was generally negative, by providing mechanisms that could be manipulated by entrenched interest groups for rent‐seeking purposes.     

Collaborative Tourism Planning: A Case Study of Cusco,Peru

This research examines issues concerning the collaborative approach towards tourism planning, with a focus on Cusco, Peru. The research begins with a review of key themes related to collaborative tourism planning, and then explores four issues in relation to collaborative tourism planning in Cusco. These are the vision of tourism development among tourism stakeholders; collaboration and coordination between the multiple parties involved in tourism; input from the tourism industry and other interest groups in tourism planning; and constraints to and facilitators of collaboration and coordination. The research indicates that despite an awareness of the benefits of collaboration in tourism planning generally, collaboration is not yet a major part of the tourism development process in Cusco. The main reasons for the lack of collaboration are outlined using the views of the main stakeholders, as well as suggestions for ways in which future collaboration can be developed.     

Informing the US Energy Policy Debate with Threshold 21

There has been growing concern about the recent emergence of the critical challenges of energy availability and the impacts of climate change. Both are inextricably linked and dealing with them is fundamental to the progress of America and humanity. There are, however, a number of different views expressed, reflecting different assumptions, special interests, and partisan objectives. Decision-makers and the public need easy-to-use and transparent tools to better visualize, analyze, and understand the broader and longer-term implications of the varying underlying assumptions, policies, and strategies, including both their positive and negative impacts — both direct and indirect — and how to manage them.Threshold 21 (T21) the simulation model presented in this paper aims to become such a tool. The Millennium Institute has developed it over the last 24 years.The T21-USA model results indicate that a continuation of current policies and trends will lead the US to become increasingly dependent on foreign energy resources and more vulnerable to price fluctuations. Furthermore, alternative scenarios simulating improved CAFE and Renewable Portfolio Standards (RPS) show that major reductions in the US' resource consumption and pollution generation could be possible while stimulating the economy over the medium and longer term. Nevertheless, the model shows that unintended consequences, such as the Jevons Paradox, have to be taken into consideration when defining national energy policies.     

From inspection to auditing: Audit and markets as linked ecologies

This paper studies the roles that images and ideas of market creation played in the re-articulation of relations between government, audit expertise and professional organisation in post-Soviet Russia. It examines the change from state-led inspection to market-oriented auditing between 1985 and 2005, and analyses this in terms of the notion of “linked ecologies”. The paper queries the relationship between audit and neoliberal modes of governing. It argues that we should be careful not to see audit as an unproblematic expression of neoliberalism. Investigating the dynamics and conflicts accompanying attempts to establish auditing as a site for governmental reform, this paper examines the manifold ways in which the meaning of markets and the roles of auditing in them can be unsettled, reinvented and transformed. The paper analyses how auditing was made marketable, and investigates how projects of post-Soviet audit development came to be carried forward, shifted and changed through new “enterprising selves” and their newly founded audit and consulting firms. The paper concludes with a more general discussion of the implication of these findings for our understanding of the dynamics of professionalisation, and the changing of relations between politics and expertise.