Should countries block foreign takeovers of R&D champions and promote greenfield entry?

Abstract In R&D intensive industries, governments promote greenfield foreign investments, while being sceptical towards foreign acquisitions of domestic high‐quality firms. We develop a theoretical model that shows that foreign acquisitions are conducive to high‐quality targets because of strategic effects on the sales price. However, foreign firms ‘cherry pick’ high‐quality targets to expand R&D rather than to downsize. Otherwise, rivals expand R&D, making the acquisition unprofitable. Thus, our model predicts that acquired affiliates invest more in R&D than greenfield affiliates. Using affiliate data, we find evidence that acquired affiliates have a higher level of sequential R&D intensity than greenfield affiliates.     

Portfolio greenness and the financial performance of REITs

This paper investigates the effects of the energy efficiency and sustainability of commercial properties on the operating and stock performance of a sample of US REITs, providing insight into the net benefits of green buildings. We match data on LEED- and Energy Star-certified buildings with detailed information on REIT portfolios and calculate the share of green properties for each REIT over the 2000–2011 period. We estimate a two-stage regression model and document that the greenness of REITs is positively related to three measures of operating performance – return on assets, return on equity and the ratio of funds from operations to total revenue. We also document that there is no significant relationship between the greenness of property portfolios and abnormal stock returns, suggesting that stock prices already reflect the higher cash flows deriving from investments in more efficient properties. However, REITs with a higher fraction of green properties display significantly lower market betas.     

Globalization and imperfect labor market sorting

This paper focuses on the ability of the labor market to efficiently match heterogeneous workers to jobs within a given industry and the role that globalization plays in that process. Using matched worker–firm data from Sweden, we find strong evidence that openness improves the matching between workers and firms in industries with greater comparative advantage. This suggests that there may be significant gains from globalization that have not been identified in the past — globalization may improve the efficiency of the matching process in the labor market. These results remain unchanged after adding controls for technical change at the industry level or measures of domestic anti-competitive regulations and product market competition. Our results are also robust to alternative measures of the degree of matching, openness, and the trade status of an industry.     

Determinants of idea sharing in crowdsourcing: evidence from the automotive industry

Drawing on external ideas through crowdsourcing has become common practice for firms that seek to improve and extend their product portfolios. As these initiatives often address the users of products, it is essential for firms to recognize those attributes that determine these individuals' willingness to share their ideas. This study takes the example of the automotive industry to examine how three attributes of car drivers determine their sharing behavior – that is, altruism, psychological ownership of ideas, and trust in car manufacturers. Our findings suggest that trust and altruism strengthen idea sharing, while psychological ownership weakens it. Furthermore, we find that car drivers' perception of sharing‐related risk acts as an important boundary condition for these relationships.     

An Empirical Assessment of the Swedish Bullionist Controversy*

In the 18th century, a fierce political debate broke out in Sweden about the causes of an extraordinary depreciation of the currency. More specifically, the deteriorating value of the Swedish currency was blamed arbitrarily on monetary causes (e.g., the overissuing of banknotes) and on non-monetary causes (such as balance-of-payments deficits). This paper provides a comprehensive empirical assessment of this so-called “Swedish Bullionist Controversy”. The results of vector autoregressions suggest that increasing amounts of paper money did give rise to inflation and a depreciation of the exchange rate. Conversely, non-monetary factors were probably less important for these developments.     

IQ and Audit Quality: Do Smarter Auditors Deliver Better Audits?

This study examines the role of an individual auditor's cognitive ability in delivering high‐quality audits. Our results from analyzing archival data from Sweden show that audit partners' IQ scores obtained from psychological tests are positively associated with going‐concern audit reporting accuracy and audit fee premiums. We also find some, albeit weak, evidence that audit partners' IQ scores are negatively associated with the income‐increasing abnormal accruals of the client. These results suggest that, although audit services are standardized through various control mechanisms and audits are conducted by teams rather than by individual auditors, the cognitive ability of audit partners responsible for an audit remains important in delivering high‐quality audit services.     

International heterogeneity in the associations of new business models and broadband Internet with music revenue and piracy

Broadband Internet has fundamentally changed business models in many industries. In the music industry, for instance, old business models were challenged by illegal competitors, and broadband Internet has enabled value creation through new business models. The changes that established business models experienced in the wake of broadband Internet, however, differed vastly across national markets, and these differences are not well understood. We build a conceptual framework and study the extent to which differences in economic and cultural factors are associated with different market outcomes in the wake of the proliferation of broadband Internet. Thus, we compile two unique data sets from the music industry, comprising (1) revenue data for 36 countries and 22 years and (2) piracy data for 47 countries and >2 years. We use a Bayesian multilevel model to explore between-country heterogeneity in the associations between these variables and broadband Internet adoption and business model innovations. Our results show that the negative association between broadband Internet penetration and music revenue is weaker in high-income countries, where income restrictions are less likely to drive demand towards illegitimate piracy services. In terms of cultural factors, we find that a market's response to the introduction of broadband Internet is less negative in countries scoring high on Hofstede's individualism and uncertainty avoidance dimensions. Furthermore, we find that overall revenues only recover after the latest generation of streaming services (e.g., Spotify) has been introduced, and the adoption of these services is associated with lower levels of online music piracy.     

Forecasting the past: the case of US interest rate forecasts

This study evaluates 10-year US government bond yield forecasts and three-month US Treasury bill rate forecasts for the period between October 1989 and December 2004. In total, 136 forecast time series with approximately 13,800 forecast data were scrutinized, making this the most extensive analysis of interest rate forecasts to date. Not one of the forecast time series proved to be unbiased. In the majority of cases, information from the past was not efficiently integrated into the forecasts. The sign accuracy is significantly better than random walk forecasts in only a very few of the forecast time series. The modified Diebold–Mariano test for forecast encompassing reveals that the information content of most of the forecast time series is lower than that of the naïve forecasts, the simple ARIMA models, the implicit forward rates, or average interest rate expectations. The forecasting process is dominated by the present and past market situation.     

Commitment to Sustainability in Small and Medium‐Sized Enterprises: The Influence of Strategic Orientations and Management Values

Ecosystem degradation and social sustainability have become important issues in the corporate sphere during the last few decades. However, research discussing corporate social responsibility and related concepts has often focused on larger companies, sometimes neglecting the specifics of small and medium‐sized enterprises (SMEs). The main purpose of this study is to examine the relationships between two common strategic orientations, market orientation (MO) and entrepreneurial orientation (EO), in relation to sustainability commitment, sustainability practices and management values in SMEs. Questionnaire responses from 450 Swedish SMEs were analyzed, confirming the influence of MO, EO and sustainability practices on commitment to sustainability, implying that firms committed to sustainability see both market and entrepreneurial advantages of sustainability. The results also show that different parts of MO and EO differ in importance for commitment to sustainability among SMEs. Implications concern the importance for firms and policymakers to work with sustainability issues using both internal and external perspectives. © 2015 The Authors. Business Strategy and the Environment published by ERP Environment and John Wiley & Sons Ltd