Corporate tax cuts,merger activity,and shareholder wealth

We study the impact of the Domestic Production Activities Deduction (DPAD) on mergers and acquisitions. DPAD reduces corporate tax rates on income from work or goods made in the U.S. Results indicate that the quantity and quality of acquisition bids by DPAD-advantaged firms conform to the predictions of the neoclassical theory of the firm and the theory of financial constraints. Specifically, bids, particularly those cash-financed, increase substantially in industries with large DPAD-related tax cuts and for firms with financial constraints. Moreover, DPAD improves acquisition quality where acquirers and targets are likely to generate incremental DPAD tax benefits through their merger.     

Quantifying and explaining parameter heterogeneity in the capital regulation-bank risk nexus

By examining the impact of capital regulation on bank risk-taking using a local estimation technique, this paper attempts to quantify for the first time the heterogeneous response of banks towards this type of regulation in banking sectors of western-type economies. Subsequently, using this information, we examine the sources of heterogeneity. The findings suggest that the impact of capital regulation on bank risk is very heterogeneous across banks and the sources of this heterogeneity can be traced into both bank and industry characteristics, as well as into macroeconomic conditions. An important implication of the findings is that common capital regulatory umbrellas are not sufficient to promote financial stability, especially if they are not accompanied by supervisory effectiveness. On the basis of our findings, we contend that more focus should be placed on the actions needed to restrain excessive risk-taking of banks.     

Bayesian inference in threshold stochastic frontier models

In this paper, we generalize the stochastic frontier model to allow for heterogeneous technologies and inefficiencies in a structured way that allows for l     

Measuring Uncertainty for New Zealand Using Data‐Rich Approach

This paper develops two state‐of‐the‐art uncertainty indices for New Zealand by exploiting two separate data‐rich environments. The first index follows the methodology outlined in Jurado, Ludvigson and Ng (2015) to construct an estimate of uncertainty based on a large New Zealand macro dataset. The second index is constructed based on freely accessible and real time Google Trends data to provide a real‐time and freely‐accessible measure of uncertainty as in Castelnuovo and Tran (2017) and Shields and Tran (2018). Both indices do a reasonable job measuring uncertainty in New Zealand. VAR evidence documents significant impacts of uncertainty shocks on GDP in New Zealand.     

Building a computable general equilibrium tax model for Italy

In this paper, we develop a multi-sectoral computable general equilibrium tax model for Italy allowing for a number of fiscal tools. We illustrate the methodology for modelling and accommodating the full range of direct and indirect taxes into the national general equilibrium model. In particular, we build a commodity tax matrix by commodity, source, user and tax type; and a production tax matrix by industry and tax type. We also put a special emphasis on the institutional sector accounts, incorporating a detailed system of equations. Our model provides a powerful tool for acquiring new insights in fiscal policy analysis, through the assessment of tailored tax reforms, which can consist of either changes in tax rates and tax bases for indirect and direct taxes. Finally, to validate the model we perform an equalizing Value-Added-Tax rates reform. We find that a budget-neutral uniform tax rate reform would be GDP and welfare improving. However, results across agents and sectors vary.     

The dynamic impact of macroeconomic factors on initial public offerings: evidence from time-series analysis

This article examines the explanatory power and the dynamic impact of macroeconomic conditions on Initial Public Offering (IPO) activities in US during the period from 1970 to 2005. Applying time-series econometric techniques, we find the existence of long-run equilibrium relationships between IPO activities and selected macroeconomic variables. Stock market performance and volatility are shown to play the most important role in the timing of IPOs. The Fed funds rate and the 10 year US Treasury Bond (TB) yield play a comparable role in determining the amount of proceeds raised in the IPOs. There also exist different short-run dynamic adjustment mechanisms between IPOs and macroeconomic factors towards the long run equilibrium path and they are mostly completed within the period of 6 months to 1 year. The results have some useful implications for forecasting IPO activities.     

Medium,message and advertising effectiveness in the Greek processed meats industry

This paper examines the effectiveness of advertising in the fast-growing Greek processed meats sector using an unbalanced panel data set of 34 firms during the period 1983–1997. In analysing the relationship between firms' sales and advertising this study differentiates between the type/content of the advertising message and the medium used to communicate it. Advertising expenditures are disaggregated into company and product campaigns in television, radio, and print media. Empirical results strongly reject the hypothesis of homogeneous consumer response to all kinds of advertising that is implicit in studies that aggregate advertising expenditures. The results also indicate an inefficient allocation of advertising resources by the firms of the sector; advertising in the least utilized print media was determined to be by far the most effective strategy during the study period.     

Reconciling microeconomic and macroeconomic estimates of price stickiness

This paper attempts to reconcile the high estimates of price stickiness from macroeconomic estimates of a New-Keynesian Phillips curve (NKPC) with the lower values obtained from surveys of firms’ pricing behaviour. This microeconomic evidence also suggests that the frequency with which firms adjust their prices varies across sectors. Building on the insights of Carvalho (2006), we present Monte Carlo evidence that suggests that in the presence of this heterogeneity estimates of the NKPC obtained using conventional methods, such as GMM, are likely to considerably overstate the degree of aggregate price stickiness. Furthermore, if roundabout production is a characteristic of the economy the NKPC will falsely suggest that a sizeable fraction of prices are indexed to past inflation. These problems arise because of a type of misspecification and a lack of suitable instruments.     

Improved estimators in some linear errors-in-variables models in finite samples

The paper uses a Monte Carlo study to demonstrate the dominance under mean squared errors or quadratic loss of a new improved estimator for some linear errors-in-variables models in finite samples. The new estimator is non-linear and biased in a conventional sense and has a smaller risk than the least squares and the Stein estimators. Standard errors for this estimator can be conveniently obtained by bootstrapping methods.     

Market orientation: an option for universities to adopt?

• The primary objectives of this exploratory paper are to test the concept of market orientation adapted from related literature in the education context and to examine the effects of market orientation as a second‐order factor on university student satisfaction. The revised scale, validated through exploratory factor analysis and confirmatory factor analysis, constitutes a good fit. Specifically, the new scale is statistically and positively related with student satisfaction, indicating that market orientation is an important factor that leads to higher student satisfaction. The findings show that the degree to which students are satisfied with their choice of university depends significantly on how market oriented the university is. In other words, the effective application of market orientation strategy relates to student satisfaction and to the decisions they make when selecting a university. To that end, market orientation is an option for universities to adopt. The empirical results add to the meager and emerging literature on marketing and branding of universities and will be of interest of university administrators and marketing and branding managers of universities. The paper concludes by discussing conclusions, implications, limitations, and future research.

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