Market Integration in the Golden Periphery. The Lisbon/London Exchange, 1854–1891

Portugal was the first independent nation to follow Britain in joining the gold standard. Although beset by persistent current account deficits and heavily dependent on foreign capital inflows, it enjoyed a relatively stable tenure of 37 years on gold. This paper shows how it was possible to secure currency stability, despite a lower credibility for the peg and a higher incidence of gold point violations than in core countries. The explanation lies in the central role played by institutional actors, such as the Bank of Portugal and/or the government, whose interventions in the exchange market kept the parity within the band.     

Quality of Corporate Governance and Cost of Equity in Brazil

Common sense suggests that the adoption of better corporate governance practices, which enable greater transparency, more protection against capital expropriation, and greater rights for investors, should have the effect of reducing the risk perceived by shareholders and so lead to lower required returns. This article investigates the existence of an inverse relationship between the quality of corporate governance and the cost of equity capital for Brazilian companies. The authors begin by constructing a broad index of corporate governance quality that combines four key aspects of corporate governance: (1) transparency and disclosure; (2) structure of the board of directors; (3) ownership and control structure; and (4) shareholder rights. To estimate the cost of equity, the CAPM was applied by using ex ante market premiums calculated with a simple discounted‐dividend method. On the basis of a sample of 67 Brazilian companies traded at the São Paulo Stock Exchange (Bovespa) during the period 1998–2008, the study concludes that there is a significant inverse relationship between the cost of equity and a number of proxies for effective governance, particularly those representing transparency and disclosure. Closer inspection of the reductions in cost of capital associated with improvements in the specific governance quality index components suggests that companies would benefit the most from prompt submission of information to regulators and full disclosure of executive pay.     

Factors influencing the preparedness of large unlisted companies to implement adapted International Financial Reporting Standards in Portugal

The Sistema de Normalização Contabilística [SNC] is the Portuguese title for the corpus of International Financial Reporting Standards [IFRS] that have been adapted for use in Portugal by unlisted companies. Based on an analytical framework that draws on aspects of new institutional theory, we surveyed 116 large unlisted Portuguese companies in September 2009 to identify factors associated with their preparedness to implement the SNC. Generally, their degree of preparedness was low. Institutional factors that influenced the degree of preparedness positively included the participation of a parent company in conversion procedure decisions, the presence of exclusively Portuguese shareholders, the conduct of export activities, and mimetic behaviors. The results reveal that important insights can be obtained from complementing a study of isomorphic influences with the concepts of resistance and institutional logic. Though coercive and mimetic institutional factors influenced levels of preparedness positively, the preparedness process was undermined by resistance within the Portuguese accounting profession and by the embeddedness of code-law practices in the prevailing logic.     

Financial Constraints for Innovation in Brazil

This paper analyzes the presence of financial constraints for investment in innovation in Brazil. Dynamic investment models are estimated for a panel dataset of 206 Brazilian non-financial firms in the period 1995–2006. Results show that innovation of Brazilian firms is subject to financial constraints in line with previous international evidence. Innovation of Brazilian firms is adversely affected by leverage and also depends on internally generated funds. The models presented incorporate relevant firm characteristics for financial constraints. Our findings suggest the need for further advances at micro- and macroeconomic levels in Brazil to mitigate the observed financial constraints.     

Is the Annual Earnings Response Coefficient Statistically Significant in Brazil?

The aim of this paper is to analyze the significance of firm-specific and pooled earnings response coefficients in the Brazilian market. The lag structure of earnings-return relations is also analyzed. The sample consists of 61 Brazilian public firms that represent all firms with a minimum of seven continual data from 1995 to 2008. The analysis is based on linear regressions of two different proxies of earnings and two different proxies of return. The results show that, for firm-regressions, few companies presented a significant relationship between earnings and stock returns, and for some firms a negative coefficient was found. In the pooled regressions a positive and statistically significant coefficient was found, and the tests suggest that variance in cross-sectional observation is more relevant in explaining the earnings response coefficient than the time-series variance.     

An Archaeology of Adam Smith's Epistemic Context

Abstract

Adam Smith played a key role in Foucault's archaeology of political economy. This archaeology, which Foucault accomplished in The Order of Things, is the focus of this article. Foucault may have disagreed with the writings of the classical political economists but he widens our perspective through new possibilities of understanding. It is very illuminating to understand Smith's thinking as following a discursive practice that economic thought shared with the knowledge of living beings (natural history) and language (grammar). Foucault's archaeology highlights some ontological and epistemological conditions that shed light on some of the pillars of Smith's thinking: the centrality of exchange, the division of labour and the labour theory of value. The proximity between Newton and Smith is also examined in ontological and epistemological terms which can be understood through an investigation of that interdiscursivity practice. Beyond testing Foucault's considerations, our aim is to demonstrate their potential for the current scholarship of Smith's works. Foucault's archaeology of knowledge offers a range of elements that warrants greater analysis by historians of economic thought.     

Further investigation of the uncertain trend in US GDP

The presence of deterministic or stochastic trend in US GDP has been a continuing debate in the literature of macroeconomics. Ben-David and Papell (1995 Ben-David, D and Papell, DH. 1995. The great wars, the great crash, and steady growth: some new evidence about an old stylized. Journal of Monetary Economics, 36: 453–75. [Crossref], [Web of Science ®] , [Google Scholar]) found evidence in favour of trend stationarity using the secular sample of Maddison (1991 Maddison, A. 1991. Dynamics Forces in Capitalist Development: A Long-Run Comparative View, Oxford: Oxford University Press.  [Google Scholar]). More recently, Murray and Nelson (2000 Murray, CJ and Nelson, CR. 2000. The uncertain trend in U.S. GDP. Journal of Monetary Economics, 46: 79–95. [Crossref], [Web of Science ®] , [Google Scholar]) correctly criticized this finding arguing that the Maddision data are plagued with additive outliers (AO), which bias inference towards stationarity. Hence, they propose to set the secular sample aside and conduct inference using a more homogeneous but shorter time-span post-WWII sample. In this article we re-visit the Maddison data by employing a test that is robust against AO's. Our results suggest the US GDP can be modelled as trend stationary process     

ENDOGENOUS TECHNOLOGICAL INNOVATION,CAPITAL ACCUMULATION AND DISTRIBUTIONAL DYNAMICS

This paper develops a post‐Keynesian dynamic model of accumulation, growth and distribution in which endogenous technological innovation plays a significant role. Firms’ rate of labour‐saving technological innovation is made to depend non‐linearly on the distributive (wage and profit) shares, with the latter determining both the incentives to innovate and the availability of funding to carry it out. As it turns out, the direction and the intensity of the effect of a change in distribution on the rates of accumulation and growth depend on the prevailing distribution, with a similar dependence applying—alongside the relative bargaining power of capitalists and workers—to the dynamic stability properties of the system. Hence, the model does not rely on full capacity utilization being reached for a change in the accumulation and growth regime to take place.