Influence of perceived risk on entrepreneurial desirability and feasibility: multidimensional approach for nascent entrepreneurs

This study examines the influence of perceived risk on entrepreneurial desirability and feasibility as determining factors in the intention to start a self-owned business. Specifically, a multidimensional approach is taken to examine the different types of risks associated with entrepreneurship: economic, social, time, health and personal risks. The results obtained from a sample of 376 new entrepreneurs in Mexico confirm the fact that the perceived desirability and feasibility have a significant and positive effect on the intentions to start their own company. On one hand, the empirical evidence obtained shows a heterogenic effect of the risk dimensions associated with entrepreneurship on the perceived desirability and feasibility in their behaviour. Therefore, it was found that the economic risk associated with entrepreneurship has a negative effect on the feasibility to start a business, but does not significantly influence the desirability of that behaviour. On the other hand, a significant effect from the risk related to health is not seen on desirability and feasibility, but the negative influence of personal risk is empirically supported for both variables. Finally, the results obtained related to social and time risk are contradictory. Social risk negatively influences entrepreneurship desirability, but a positive effect is observed on the feasibility to create a business. For its part, the empirical evidence obtained does not support any effect of the time risk on the perceived feasibility of starting a business, but there is a positive on entrepreneurship desirability. These results, which are contrary to the traditional concept of risk as a barrier to entrepreneurship, are justified by the vocational nature of this behaviour and by the social sacrifices that are sometimes necessary to be able to make a business work.     

A tool for analysing the interdependence of indoor environmental quality and reported symptoms of the hospitals’ personnel

The working environment and the working conditions can influence the well-being of hospital employees and consequently their performance at work. The present questionnaire-based study (737 valid questionnaires) developed and evaluated a quantitative structural equation model (SEM) that examines the interdependence between the indoor environmental quality (IEQ), the working conditions, the atopic constituents and the reported health complains of employees in three Greek hospitals. The results of the SEM reveal that IEQ could partially explain the employees’ symptoms in the hospitals. The working conditions proved to be a key factor in the relationship between IEQ and symptoms. Multi-group analysis has shown that this interdependence is affected by the building characteristics, by the gender, the smoking habits and the specialty of each participant, but not by their age.     

Oil price shocks and volatility spillovers in the Nigerian sovereign bond market

This paper investigates volatility spillover in the Nigerian sovereign bond market arising from oil price shocks, using Vector Autoregressive Moving Average ‐ Asymmetric Generalized Autoregressive Conditional Heteroscedasticity (VARMA‐AGARCH) model. The paper covers the period March 22, 2011 to April 14, 2016 and makes use of the daily data of the Nigerian Sovereign Bond, Brent oil and West Texas Intermediate (WTI), respectively. We endogenously and sequentially detect structural break points using the test of Bai and Perron (2003) framework. In order to accurately estimate the model, we modify it by incorporating the break points into the VARMA‐AGARCH model, a process which if ignored would lead to model misspecification. The results obtained demonstrate a significant cross‐market volatility transmission between oil and sovereign bond market with ample sensitivity to structural breaks. The study also computes optimum weight portfolio and hedge ratio both with and without structural breaks and results equally indicate sensitivity to structural breaks.     

The Effects of Regulating Hidden Add‐On Costs

We examine the welfare effects of price and disclosure regulation in a model where firms can shroud add‐on costs, such as penalty fees for consumer financial products. Such regulation can increase or decrease welfare even when there are no direct costs. There are, however, strong complementarities between price controls and disclosure mandates: conditional on disclosure being mandated, price controls always (weakly) increase welfare, and conditional on prices being sufficiently constrained, disclosure mandates always (weakly) increase welfare.     

The relationship between corporate governance and foreign ownership of the banks in developing countries

The aim of this paper is to determine the effect of corporate governance on foreign ownership of the banks. Within this context, annual data of 65 developing countries for the periods between 2004 and 2013 was analyzed. In addition to this situation, 7 explanatory variables were used in this study in order to achieve this objective. As a result of the analysis, it was identified that there is a strong relationship between operations of foreign banks and governance levels of the countries. In this regard, it was determined that the factors of corruption, political stability, rule of law and flexibility in legal regulations affect foreign bank operations. Moreover, it was also analyzed that foreign bank operations are stronger in the countries that have low poverty, high political stability and efficient legal infrastructure. On the other hand, it was defined that strict legal regulation affects foreign bank operations negatively which shows that foreign banks prefer to enter into the countries that have flexible legal regulations. This study gives essential information to developing countries about the factors that affect the decisions of foreign banks in order to enter into a developing country. Therefore, by considering the results of this study, the authorities of these countries can have a chance to take necessary actions so as to attract foreign banks.     

Mandatory audit firm rotation: Fresh look versus poor knowledge

Our aim in this paper is to investigate the effects of mandatory audit firm rotation (MAR) on companies’ investment decision and auditor choice in a capital market setting. We compare a MAR regime with a non-MAR regime in a setting in which auditors’ independence and companies’ opinion shopping are real concerns. To capture auditor independence and opinion shopping, we model auditor biases (a conservative bias or an aggressive bias) and client firms’ incentives to engage auditors with desired biases. We find that when firms engage in opinion shopping, MAR improves investment efficiency for some firms but impairs investment efficiency for other firms. More generally, we contribute to the literature by demonstrating the real effects of auditing on corporate resource allocation decisions.     

Predatory mortgage lending

Regulators express growing concern over predatory loans, which we take to mean loans that borrowers should decline. Using a model of consumer credit in which such lending is possible, we identify the circumstances in which it arises both with and without competition. We find that predatory lending is associated with highly collateralized loans, inefficient refinancing of subprime loans, lending without due regard to ability to pay, prepayment penalties, balloon payments, and poorly informed borrowers. Under most circumstances competition among lenders attenuates predatory lending. We use our model to analyze the effects of legislative interventions.     

Does Corporate Transparency Contribute to Efficient Resource Allocation?

This paper examines whether a country's corporate transparency environment, which includes the quality of accounting information, contributes to efficient resource allocation. Based on a cross-country study of 37 manufacturing industries in 37 countries, we provide three pieces of related evidence. First, we find the contemporaneous correlations in industry growth rates across country pairs are higher when there is a greater level of corporate transparency in the country pairs, after controlling for country-level economic and financial development. Second, we find the influence of transparency on these correlations is stronger when country pairs are at similar levels of economic development (GDP). Finally, when we control for the level of transparency explained by a country's institutions in place, we find that residual transparency (unexplained by country-level factors) is associated with industry-specific growth rates. Taken together, the results are consistent with corporate transparency facilitating the allocation of resources across industry sectors.     

Information-based trade in the Shanghai stock market

We show that the probability of information-based trade (PIN) played a significant role in explaining monthly returns on Shanghai A shares over the period 2001 to 2006. In particular, PIN, as approximated by order imbalance as a proportion of total transactions, appears to explain returns even after controlling for risk in the much-cited Fama and French [Fama, E. F. & French, K. R. (1992). The Cross-Section of Expected Stock Returns. Journal of Finance, XLVII, 427–465.] three-factor model. However, we also find that some of the PIN effect appears to be indistinguishable from a turnover effect.     

Bonds versus stocks: Investors’ age and risk taking

It has become increasingly popular to advise investors to relocate their funds from a primarily stock portfolio to a primarily bond portfolio as they get older. However, the well-known decision rules such as mean–variance or stochastic dominance rules are unable to explain this common practice. Almost stochastic dominance (ASD) and almost mean–variance (AMV) approaches are used to examine the dominance of stock and bond portfolios. ASD and AMV rules unambiguously support the popular practice of advising higher stock to bond ratio for long investment horizons. Hence, we provide an explanation to the practitioners’ recommendation within the expected utility paradigm.