Resurrecting the size effect: Evidence from a panel nonlinear cointegration model for the G7 stock markets

Firm size is known to be an important factor affecting stock returns. This study proposes a panel threshold cointegration model to investigate the impact of the size effect on stock returns for the panel of G7 countries: Canada, France, Germany, Italy, Japan, the U.K., and the U.S. over the period 1991:1–2012:12. The empirical analysis is based upon the nonlinear cointegration framework using the asymmetric ARDL cointegration methodology (Shin et al., 2011). This methodological approach permits a much richer degree of flexibility in the dynamic adjustment process toward equilibrium, than in the classical linear model. Our findings indicate the presence of asymmetric adjustment around a unique long-run equilibrium. In particular, the empirical analysis provides evidence of asymmetric effects between stock returns and the size effect, while controlling for the book-to-market ratio and the price-to-earnings ratio.     

Market exit of firms: Does corruption act as grease or sand?

This paper examines whether corruption acts to “grease” or “sand” firms' exit. Corruption could facilitate exit when it is a tax that distorts markets, or it might retard exit when it empowers firms to obtain undue favors. Results, using panel data across US states and considering market exit and firms' death rates as dependent variables, show that greater corruption acts as grease rather than sand in that it facilitates firms' exit/death. In other findings, larger states, greater regulations, and more unemployment contributed to exit, as did some demographic aspects. Higher state minimum wages resulted in firms' death but not exit.     

Competition and Appraisal Inflation

The Journal of Real Estate Finance and Economics - In mortgage debt contracts, real property serves as collateral and the terms of mortgage financing are largely conditional on the certification of...     

CEO age and tax planning

This study investigates the association between CEO age and corporate tax planning. Using a sample of 11,537 firm‐year observations from the fiscal year 1997–2013, I find CEO age exerts an economically significant influence on firms’ tax policies, incremental to economic determinants identified in prior research. Specifically, CEO age is positively related to cash and GAAP effective tax rates, and negatively related to permanent book‐tax difference, suggesting that older CEOs are less likely to take actions to lower tax burden. The results hold across different model specifications and robustness tests to address potential bias arising from endogeneity, sample selection issue, and the confounding effect of CEO tenure.     

The effect of ASU 2014–08 on the use of discontinued operations to manage earnings

Review of Accounting Studies - Accounting regulations require firms to separately disclose the profits and losses from discontinued operations. These discontinued operations are typically excluded...     

Working capital (mis)management – impact of executive age

Several recent studies have used the upper echelons theory to explain the impact of personal traits of top executives on various corporate policies. In this, first of its kind, study we find that older executives invest more in working capital; take longer to convert inventories to cash; and pay their suppliers sooner. These findings are consistent with the argument that risk aversion increases with executive age. Our findings indicate that executive age has significant bearing on working capital management policies. This study also initiates new avenues in research relating behavioral aspect of executives with short‐term financial management.     

Does Public Service Motivation Mediate the Relationship between Goal Clarity and both Organizational Commitment and Extra-Role Behaviours?

Research has not considered how goal clarity can affect work attitudes through public service motivation (PSM). As a result, a model was developed to examine the relationship between goal clarity, PSM, and two employee work attitudes and behaviours (i.e., organizational commitment and extra-role behaviours). Several important findings emerged from the model. First, goal clarity was positively associated with PSM. Second, goal clarity was positively associated with both organizational commitment and extra-role behaviours. Finally, PSM was found to partially mediate the relationship between goal clarity and both organizational commitment and extra-role behaviours. The implications these findings have for theory and practice are discussed.     

FINANCING URBAN INFRASTRUCTURE: KNOWNS,UNKNOWNS, AND A WAY FORWARD

Improved urban infrastructure is widely believed to be essential in facilitating economic growth and in improving the lives of urban dwellers, both in developed and in developing countries. This paper focuses on several dimensions of urban infrastructure finance: finance for major infrastructure improvements in major economic centers, finance for expansion of basic municipal services in secondary cities and towns, and intergovernmental systems for financing investments with impacts beyond jurisdictional limits. It reviews what is “known” about current practices in these areas, using international evidence and case studies and summarizing international best practices. It also indicates areas in which knowledge gaps remain. Despite these “unknowns,” there are avenues by which our understanding of infrastructure schemes can be enhanced, and some suggestions for a research agenda on financing urban infrastructure are offered in the concluding section.     

Central bank haircut policy

We present a model of central bank collateralized lending to study the optimal choice of the haircut policy. We show that a lending facility provides a bundle of two types of insurance: insurance against liquidity risk as well as insurance against downside risk of the collateral. Setting a haircut therefore involves balancing the trade-off between relaxing the liquidity constraints of agents on one hand, and increasing potential inflation risk and distorting the portfolio choices of agents on the other. We argue that the optimal haircut is higher when the central bank is unable to lend exclusively to agents who actually need liquidity. Finally, for a temporary surprise drop in the haircut, the central bank can be more aggressive than when setting a permanent level of the haircut.     

British union renewal: does salvation really lie beyond the workplace?

The paper examines a union initiative to recruit among migrant workers through the provision of individual services outside of the workplace. While the initiative is shown to have initially generated new members, questions are raised about the viability of such an approach in the absence of mutually supportive access to workplace representation.