Common and Private Values of the Firm in Tax Competition

We develop a simple model of interregional tax competition to explore how the balance between common and region-specific aspects of a project's value affects the magnitudes of tax breaks offered by governments, when the firm possesses private information on the region-specific values. We examine cases in which the tax applies to both the common and private values and to each component separately. The model predicts that when the common and observable part of the value of a project increases relative to the variance of the region-specific private values, the stringency of competition reduces the equilibrium tax rate. Conversely, if the competing regions are sufficiently different, bidding is less aggressive. One interpretation of the results is that firms that are observed to be large get better tax breaks. The intuition is closely related to the Bertrand model of differentiated product market competition.     

The impact of national brand introductions on hard-discounter image and share-of-wallet

Hard-discounters (HDs) such as Aldi and Lidl are increasingly introducing national brands (NBs) into their private label (PL) dominated assortments. While there is evidence that this enhances sales in the categories where such NBs are added, little is known about how it affects consumers' overall perceptions of the HD and consequently its share of the customers' wallet. Using a unique data set that combines longitudinal information on a HD's perceptions, with that chain's assortment composition, we investigate the impact of NB introductions on the chain's overall value and assortment image, and spending share.We show that introductions of NBs, in particular category leaders, may significantly contribute to a more favorable perception of the HD store. For positive value-image effects to materialize, HDs must offer these NBs at low-enough prices to maintain a reasonable price gap with the current private label offer. For the NB entry to enhance the HD's assortment perception, it must come with a sufficiently deep product line.However, there are limits to this approach. Introductions gradually lose effect as the share of NBs at the HD goes up. More importantly, ill-selected NB additions may backfire on the HD. Listing NBs that are not category-leaders, at prices too far above its private labels, deteriorates the HD's favorable value positioning — cutting into its core competitive advantage, and leading to notable reductions in share-of-wallet. We discuss the academic and managerial implications of these findings.     

Transaction Cost Theory and International Business

I discuss the cross-fertilization between transaction cost theory (TCT) and international business (IB), showing how TCT provides a powerful lens to study the institutions that organize international interdependencies, and especially multinational enterprises (MNEs). I then discuss some of the insights that IB can provide for the further development of TCT. I argue that a full explanation of why MNEs exist must rely on information asymmetry as well as asset specificity, and that the study of modes of foreign market entry leads to alternative viewpoints on equity joint ventures and hybrids. I conclude by stressing the need for a simultaneous consideration of market transaction costs and internal organization costs when examining governance choices.     

REGULATION OF POLLUTION IN THE LABORATORY: RANDOM INSPECTIONS,AMBIENT INSPECTIONS,AND COMMITMENT PROBLEMS

We compare experimentally a traditional random inspection policy and a variant where the agency may carry out a preliminary inspection of the level of ambient pollution before implementing any individual inspection. Since the agency may have an incentive to announce high inspection probabilities and then secretly renege on its announcement to avoid implementing costly inspections, we are also interested in the agency's commitment power. We find that overall, ambient inspections increase efficiency but the effect is weaker than expected when the agency has no commitment power; and polluters' reactions to the lack of commitment power of the agency vary depending on whether the agency uses ambient inspections or not.     

How Various Segments of Visitors Perceive l’Accueil in the Places Where They Eat,Sleep, and Play

‘Accueil’ is a French word that means feeling welcome somewhere and being introduced into a process that takes the visitor from being an outsider (a stranger) to being an insider (one of us). Accueil also means feeling the host’s genuine pleasure in welcoming his or her guests through words, attitudes, and actions. Based on a survey (n = 1,003) done for the Quebec Department of Tourism¹, we look at how different segments of visitors perceived the ‘accueil’ they received while traveling in the province of Quebec. The results are analysed for lodging, restaurants and attractions. We found that accueil is perceived differently depending on the age of the visitor, the group size and its composition. To a lesser extend, it is also influenced by gender and social status. The characteristics of the trip (distance, purpose and length) have little impact on accueil.     

Wage structure effects of international trade in a small open economy: the case of Belgium

This paper investigates the impact of international trade on wage dispersion in a small open economy, Belgium. It is one of the few to: (i) use detailed, matched employer-employee data to compute industry wage premia and disaggregated industry-level panel data to examine the impact of changes in international trade on changes in wage differentials, (ii) simultaneously analyse both imports and exports, and (iii) examine the impact of imports according to the country of origin. Looking at the export side, we find (on the basis of the system generalized method of moments estimator) a positive effect of exports on industry wage premia. The results also show that import penetration has a significant and negative impact on industry wage differentials. However, the detrimental effect of imports on wages is found to be significantly greater when imports originate from low- and middle-income countries than from high-income countries.     

Remittances and misery index in Turkey: is there a link?

This study tests the long run relationship between remittances and misery index in Turkey over the 1975–2011 period, using bounds testing approach. The results indicate that remittances and misery index are co-integrated. The misery index appears to have positive impact on remittance inflows in both short and long run, supporting altruism theory in remittance sending behaviour in Turkey.     

The heteroskedasticity-consistent covariance estimator in accounting

The main purpose of this paper is to compare the White (1980) heteroskedasticity-consistent (HC) covariance matrix estimator with alternative estimators. Many regression packages compute the White (1980) heteroskedasticity-consistent (HC) covariance matrix estimator. The common procedure in Accounting and Finance research to deal with the heteroskedasticity problem is based on this estimator, despite its worse finite-samples properties when compared with other consistent estimators. In this paper we compare several HC covariance matrix estimators based on a sample of 3706 European listed companies from Austria, Finland, France, Germany, Greece, Ireland, Italy, Netherlands, Norway, Portugal, Spain, Sweden and the United Kingdom. We conclude that HC standard errors increase when finite-samples more appropriate estimators are considered and in the most part of countries the Ohlson (1995) model coefficients estimates became statistically insignificant. This can be explained by the high leverage points in the design matrix. To the best of our knowledge it is the first time that these alternative estimators are compared with the one of White (1980) in accounting research.     

Stock exchange markets for new ventures

In Canada, a venture stock market lists microcap firms at a pre-revenue stage, and competes with both formal and informal venture capital (VC). This market provides a higher rate of return and seven times as many new listings to the main exchange as traditional VC. After they graduate to the main market, new listings on the main exchange succeed even if they are not venture-backed. Our results contradict the premise that because it lacks skills, tools and value-added capabilities, a public venture market is unable to compete with a private one.