Factors affecting the stock price performance of share issued privatizations

Shareholders in many share issued privatizations (SIPs) have enjoyed substantial increases in the value of their investments. This study examines the factors that influence the long-run stock price performance of an international sample of SIPs, focusing on three-year buy and hold returns. After controlling for market-wide changes in stock prices, one finds that the relative size of the company has a negative effect on stock price performance, retained government ownership has a positive effect, the presence of a golden share has a negative effect, initial underpricing has a positive effect, and the timing of the privatization has no effect. Performance also depends on the industry and home country.     

Convergence to Purchasing Power Parity at the Commencement of the Euro*

We investigate convergence towards purchasing power parity (PPP) within the eurozone and between the eurozone and its main partners using panel data methods. We find strong rejections of the unit‐root hypothesis, and therefore evidence of PPP, in the eurozone for different numéraire currencies, as well as in the eurozone plus the United States with the dollar as the numéraire currency, starting between 1996 and 1999. The process of convergence towards PPP, however, begins earlier, following the currency crises of 1992 and 1993, adoption of the Maastricht Treaty, and official completion of the Single Market.     

Exact Skewness–Kurtosis Tests for Multivariate Normality and Goodness‐of‐Fit in Multivariate Regressions with Application to Asset Pricing Models*

We study the problem of testing the error distribution in a multivariate linear regression (MLR) model. The tests are functions of appropriately standardized multivariate least squares residuals whose distribution is invariant to the unknown cross‐equation error covariance matrix. Empirical multivariate skewness and kurtosis criteria are then compared with a simulation‐based estimate of their expected value under the hypothesized distribution. Special cases considered include testing multivariate normal and stable error distributions. In the Gaussian case, finite‐sample versions of the standard multivariate skewness and kurtosis tests are derived. To do this, we exploit simple, double and multi‐stage Monte Carlo test methods. For non‐Gaussian distribution families involving nuisance parameters, confidence sets are derived for the nuisance parameters and the error distribution. The tests are applied to an asset pricing model with observable risk‐free rates, using monthly returns on New York Stock Exchange (NYSE) portfolios over 5‐year subperiods from 1926 to 1995.     

When more is not better: Complementarities,costs and contingencies in stakeholder management

Instrumental stakeholder theory has largely emphasized the positive effects of investing in stakeholder cooperative relationships in an additive, linear fashion in the sense that the more investments the better. Yet investing in stakeholders can be very costly and the effects of these investments in firm performance are subject to complex internal complementarities and external contingencies. In this article we rely on set‐theoretic methods and a large international dataset of 1,060 multinational companies to explore theoretically and empirically some of the complementarities, costs and contingencies likely to arise in stakeholder management. Copyright © 2014 John Wiley & Sons, Ltd.     

New international evidence on the cyclical behaviour of output: Kuznets swings reconsidered

Spectral analysis is a particularly valuable method for seeking dependences expressed as lags between different magnitudes. Its use in this article was first determined by the search for maximum objectivity in the observation of time series. The possibility of applying it to a large number of series was then examined. This twin requirement resulted from a desire to avoid the criticism generally levelled at statistical studies concerning cyclical movements of the economy. Spectral analysis is based on the theory of stochastic processes. It starts with the core hypothesis that a given time series consists of a large number of sinusoidal components with different frequencies (univariate spectral analysis). It makes it possible to divide a particular category of records into a set of oscillations of different frequencies and then to show the links between the components with the same frequency in the various series examined (cross-spectral or bivariate spectral analysis). It has had limited applications in cliometrics to date. It is used here to determine the frequency of GDP series of several OECD countries. A reminder of the method Sect. 2 is followed by successive examination of the various series chosen, the treatment of these series and the results of spectral analysis Sect. 3. It is then possible as a conclusion to show the prospects of this type of approach and to synthesise a completely new major result for understanding economic dynamics in nineteenth and twentieth centuries, that is to say the existence of a single intermediate cycle with 15–20-year frequency that calls into question or even partially contradicts previous work on economic cycles.      

Economic impact of a regulation imposing full-face protectors on adult recreational hockey players

Abstract

In 1988, the Government of Quebec adopted a regulation imposing the use of a full-face protector ( FFP) on the 100,000 adult recreational ice hockey players of the province. After one year of enforcement, the FFP use rate increased from 25% to 88%. Compliancy rates then dropped steadily to reach 76% by 1993. Based on those rates and on epidemiological data on facial injuries, health care costs and efficiency of FFPs in preventing such injuries, it was estimated that the regulation resulted so far in a net saving of $1.9 million in health care costs alone. The savings/cost ratio for the regulation is 1.87:1. If the regulation had imposed a visor instead of a full-face protector, the net savings in health care costs for the same period would have been only $96,277, for a savings/cost ratio of 1.04:1. If no regulation had been adopted at all, it is estimated that voluntary use of FFPs would have resulted in $665,912 of savings while voluntary use of visors would have resulted in a saving of $497,023. It is concluded that a governmental regulation imposing the use of FFPs on adult recreational players was economically justifiable     

Pleasure in decision‐making situations: politics and gambling

This work investigates whether pleasure influences political and gambling decisions. Participants received two questionnaires. On Questionnaire 1, they rated the pleasure/displeasure of a series of items: social and political issues in Experiment 1, winning bets in Experiment 2, and losing bets in Experiment 3. On Questionnaire 2, they indicated the items that they would actually choose in real life. Their choices were then compared with their hedonic ratings on Questionnaire 1. Results showed that participants tended to choose those items they had most highly rated for pleasure on Questionnaire 1. In all cases, the selected outcomes were higher than chance, and thus tended to maximize pleasure, but were significantly lower than the maximum possible, indicating the presence of non‐hedonic criteria. The tendency to maximize pleasure was independent of age, gender, political opinions, and gambling propensity in real life. The results of all three experiments support the hypothesis that decisions are made predominantly, though not exclusively, in the hedonic dimension of conscious experience. A fourth experiment was set to answer a methodological question: a delay of 77 ± 3 days was placed between Questionnaires 1 and 2. The results were similar to those of Experiments 1–3, thus answering the concern.     

Social status and country‐of‐origin preferences

This paper explores consumers' attitudes towards products of foreign origin according to consumer social status, particularly when purchases come from countries that have a low‐cost/low quality image. The research question is: for an identical good (same manufacturer, same brand), do consumers belonging to lower social classes ask for a larger price discount than higher social status consumers when they are offered the opportunity to switch from a country of manufacture whose quality image is well established, to a country of manufacture, the image of which is more uncertain (e.g. South Korea)? A structural equations model is used to highlight the fact that social status has only an indirect influence on the discounts for shifting to lower‐image countries. The relatively weak image of Korean products (at least against Germany and Japan) tends to result in higher price rebates asked for the Korean manufacturing origin. But lower social status consumers evaluate Korea more positively as a country‐of‐origin. The normative recommendation for the advertising strategy of “cheap” origins' goods in highly developed markets would be to put emphasis on quality rather than price, especially when modest consumers and lower classes are explicitly targeted.     

The Marshallian Industrial District,an organizational and institutional answer to uncertainty

The object of this paper is to clarify the Marshallian ideas of agents, markets and evolution that make up his concept of the industrial district. The industrial district is interpreted as an organizational and institutional answer to uncertainty. Its longevity depends on the strategies of the local economic actors, the fruition of external economies and its adaptation to a particular trade and technological environment. These propositions are illustrated with regard to contemporary industrial history.     

THE IMPACT OF POLITICAL CONNECTIONS ON FIRMS’ OPERATING PERFORMANCE AND FINANCING DECISIONS

We investigate the impact that the political connections of publicly traded firms have on their performance and financing decisions. Using a long‐term event study covering a sample of 234 politically connected firms headquartered in 12 developed and 11 developing countries from 1989 to 2003, we find that firms increase their performance and indebtedness after the establishment of a political connection. We also find that the political connection is more strongly associated with changes in leverage and operating performance for firms with closer ties to political power. Overall, our study confirms that politically connected firms gain easier access to credit and reap benefits in terms of performance from their ties with politicians.