Tax and the Crisis*

Did taxation play any role in precipitating the financial crisis? Are there lessons to be drawn for future tax reform priorities? This paper reviews the main channels by which tax effects might have been felt and which may require forceful attention. These include in particular the large tax biases favouring debt finance and, in some countries, investment in housing. The complexities of national tax codes, and the international interaction between them, have, moreover, encouraged the use of complicated financial instruments and international tax planning, reducing transparency. Tax distortions did not cause the crisis – in the sense that there are no obvious tax changes likely to have triggered it – but they may well have contributed by leading to higher leverage and more complexity than would otherwise have been the case. Most of these distortions have long been a source of concern, but dealing with them may be more important than previously supposed.     

KfW/ZEW CO2 Panel: Vermeiden oder kaufen – Deutsche Unternehmen im Emissionshandel

The European Emission Trading Scheme (EU-ETS) is the first large-scale and inter-regional trading scheme for greenhouse gas emissions. It is seen as the central instrument of European climate policy. After a first testing-phase (2005–2007), the second trading period of the EU-ETS had started in 2008, with stronger incentives for investment in low-carbon technologies and carbon dioxide abatement. However, there is hardly any evidence how emissions trading fares in practice. The KfW/ZEW CO₂ Barometer shows that trading of emission permits is actively used by 75 percent of German companies, but the price-signals that stem from the EU-ETS were relatively weak so far—too weak to set strong incentives for carbon dioxide emission reductions on the company-level. Also in the case of the ‘clean development mechanism’ (CDM) which was introduced to promote emission reductions in developing counties, there is need for further development.     

Compensatory consumption and consumer compromises: a state-of-the-art review

ABSTRACT

Compensatory consumption has been an increasingly researched yet widely debated area of consumer behaviour over the last 20 years. Extant research formulates the term as overwhelmingly negative, largely due to the simplistic and fragmented conceptualisations assumed in prior work. The purpose of the current paper is to present a comprehensive review of the umbrella term of compensatory consumption, incorporating a continuum of behaviours and accounting for the pre- and post-consumption periods including both positive and negative viewpoints. In addition, expanding upon the theory of need satisfaction, the current paper introduces a novel conceptual distinction between compensation and compromise. Finally, a proposed theoretical framework is presented that differentiates between compensatory and compromisory consumption based on the extent of consumer consciousness, rationality and rationalisation. Future research directions are offered.     

Properties and estimation of asymmetric exponential power distribution

The new distribution class, Asymmetric Exponential Power Distribution (AEPD), proposed in this paper generalizes the class of Skewed Exponential Power Distributions (SEPD) in a way that in addition to skewness introduces different decay rates of density in the left and right tails. Our parametrization provides an interpretable role for each parameter. We derive moments and moment-based measures: skewness, kurtosis, expected shortfall. It is demonstrated that a maximum entropy property holds for the AEPD distributions. We establish consistency, asymptotic normality and efficiency of the maximum likelihood estimators over a large part of the parameter space by dealing with the problems created by non-smooth likelihood function and derive explicit analytical expressions of the asymptotic covariance matrix; where the results apply to the SEPD class they enlarge on the current literature. Also we give a convenient stochastic representation of the distribution; our Monte Carlo study illustrates the theoretical results. We also provide some empirical evidence for the usefulness of employing AEPD errors in GARCH type models for predicting downside market risk of financial assets.     

Does monitoring decrease work effort?: The complementarity between agency and crowding-out theories

Agency theory assumes that tighter monitoring by the principal should motivate agents to increase their effort, whereas the “crowding-out” literature suggests that the opposite may occur. These two assertions are not necessarily contradictory provided that the nature of the employment relationship is taken into account [Frey, B., 1993. Does monitoring increase work effort? The rivalry between trust and loyalty. Econ. Inquiry 31, 663–670]. Results from controlled laboratory experiments show that many principals engage in costly monitoring, and most agents react to the disciplining effect of monitoring by increasing effort. However, we also find some evidence that effort is crowded out when monitoring is above a certain threshold. We identify that both interpersonal principal–agent links and concerns for the distribution of output payoff are important for the emergence of this crowding-out effect.     

A solicitor's perspective on charitable gifts in wills

• In the climate of public spending cuts, charities are increasingly expected to fill the gap. Yet charities themselves face huge challenges. Not just increasing demand for their services but falling income and low investment returns. Encouraging philanthropy has never been more important, and that includes legacy giving. Following the announcement last year of the Government's major inheritance tax incentive to encourage us to give more to charity on our death, the time is right for a major report on current trends in charitable legacy giving. Late last year, Mishcon de Reya undertook the most detailed analysis ever by a firm of solicitors of its clients' wills. In a study of over 1000 wills, we did not just look at how many people leave a legacy to charity. We considered the value of the legacy, the type of legacy, the likelihood of the charity ever receiving it, whether clients prefer to give to multiple charities, and the most popular charitable sectors. This article will give a quick overview of our research followed by a more detailed look at the three types of legacy to charity: cash—‘for example, I leave £10,000 to charity’,—specific items—‘for example, I leave a painting to charity’—and residuary gifts—‘for example, I give half my estate to charity’. The article will then briefly touch on the charity sectors most favoured by our clients before giving a brief summary of Mishcon de Reya's key findings in conclusion.

Copyright © 2012 John Wiley & Sons, Ltd.     

Ethical Leadership for the Professions: Fostering a Moral Community

This paper examines the professions as examples of “moral community” and explores how professional leaders possessed of moral intelligence can make a contribution to enhance the ethical fabric of their communities. The paper offers a model of ethical leadership in the professional business sector that will improve our understanding of how ethical behavior in the professions confers legitimacy and sustainability necessary to achieving the professions’ goals, and how a leadership approach to ethics can serve as an effective tool for the dissemination of moral values in the organization. Dr. Linda M. Sama is Director of the Center for International Business Development and Associate Professor of Management at Pace University’s Lubin School of Business. She earned her Ph.D. in Strategic management from the City University of New York and her MBA in International Finance from McGill University. She was awarded the 1999 Lasdon Dissertation Award for her doctoral dissertation on corporate social response strategies and the Abraham Briloff Award of Best Paper in Business Ethics at the City University of New York in 1998. Dr. Sama made a transition to academe after a lengthy career in industry, where she acted as Director of Market Planning and Logistics for a major international subsidiary of Transamerica Corporation. She teaches primarily in the areas of International Business, Strategic Managements and Business Ethics, and has taught at Baruch College and the University of Texas at El Paso (UTEP) prior to coming to Pace in the fall of 2001. At UTEP, she was designated as the Skno International Business Ethics Scholar from 1999–2001. She has published numerous articles and book chapters that address issues of corporate social responsibility, business and the natural environment, integrative social contracts theory, and business ethics dilemmas in the new economy. Her research appears in journals such as The Journal of Business Ethics, Business Ethics Quarterly, Business and Society Review, The Journal of Cross-Cultural Management, and the International Journal of Value-Based Management. She has also published research for the U.S. Department of Transportation related to the effects of NAFTA on U.S. – Mexico border logistics and has consulted to business clients on Strategic Planning, Global Leadership and Business Ethics. Dr. Victoria Shoaf is an Associate Professor and Assistant Chair of the Department of Accounting and Taxation at St. John’s University. She received her Ph.D. in Business, with a specialization in Accounting, from Baruch College of the City University of New York in 1997; she was awarded the 1997 Lasdon Dissertation Award. Prior to joining St. John’s University on a full-time basis, Dr.Shoaf worked for over fifteen years in the retail industry with merchandising firms. Her expertise is in establishing effective accounting systems and controls, including operational functions such as order entry and fulfillment, inventory control, point-of-sale data transfers and sales audit, as well as financial accounting functions. She has held controllership positions at Laura Ashley, Inc., Greeff Fabrics, Inc., and Tie Rack, Inc. While working in industry and while completing her doctoral degree, Dr. Shoaf taught accounting courses as an adjunct instructor at Pace University and at Baruch College. She received a commendation from the dean at Pace University for teaching excellence, and she was awarded a Graduate Teaching Fellowship at Baruch College. She currently serves on several professional committees, and she has provided consulting services in accounting education and training programs for several large employers.     

Spatial determinants of productivity growth on agri‐food Spanish firms: a comparison between cooperatives and investor‐owned firms

This study analyses the effect of the spatial factor, location, and interaction effects among peer companies, on the productivity growth of agri‐food companies in Spain. With this aim, we build a productivity growth index and apply a multiequational Seemingly Unrelated Regression on a sample of 344 Spanish cooperatives and investor‐owned firms for the period 2010–2012. Our findings show that agri‐food firms are influenced by spatial factors finding interesting differences between cooperatives and investor‐owned firms. With regard to the geographical location, cooperatives in the western of Spain show higher productivity growth rates, whereas investor‐owned firms in the northeast of Spain present better results. The interaction effect among closer peer companies is also a relevant factor to determine the productivity growth in agri‐food companies. This factor is more relevant for cooperatives than for investor‐owned firms.     

Editorial: Special Issue on the Impact of Business Ethics on Public Life

Even though management scholars have offered several views on the process of corporate sustainability, these efforts have focused mainly on the technical aspects of sustainability while omitting the fundamental role played by individual moral competences. Therefore, previous work offers an incomplete and somewhat reductionist view of corporate sustainability. In this article, we develop a holistic framework of corporate sustainability in which both the moral and technical aspects of sustainability are considered. We do so by integrating the ethical, normative perspective of the Catholic social teaching (CST) with the competitive view of the natural resource-based view. This framework highlights the importance of CST principles and ideas in developing executive moral competences such as moral sensitivity and awareness, and moral cognition and motivation. Moral competences, in turn, influence the organizational selection of environmental strategies, giving leaders the intrinsic motivation to promote both a longer-term stance on corporate sustainability efforts and a relentless search for greener business models. Such strategies move the firm closer towards achieving environmental sustainability. Hence, by bridging the individual, normative-ethical with the organizational, implementational levels of corporate sustainability, our framework provides a more realistic, coherent, and complete perspective on the complex process of achieving corporate sustainability.