Productive efficiency and firm exit in the food sector

This work examines the effects of productive efficiency on the survival of firms in the Greek food sector. Technical and scale efficiency scores are computed within a data envelopment analysis (DEA) framework and are used as explanatory variables in a parametric (Weibull) survival model. High technical efficiency increases the median survival time and lowers the hazard rate of exit. As the scale efficiency of a firm operating either at increasing or decreasing returns to scale approaches one (1), its theoretically maximum value, the expected median survival time, is maximized for all types of exits. Developments in biotechnology, the evolution of alternative food supply networks, innovations in the food sector and competition policy are likely to affect technical and scale efficiency of food manufacturing firms. Results unraveling the effects of technical and scale efficiency on the survival of firms in the food sector are of particular relevance to food policy makers.     

Innovation diffusion with generation substitution effects

Markets of high technology products and services, such as telecommunications, are described by fast technological changes and rapid generational substitutions. Since the conventional modeling approaches that are based on diffusion models do not usually incorporate this important aspect into their formulations, the accuracy of the provided forecasts is consequently affected. The work presented in this paper is concerned with the development of a methodology for describing innovation diffusion, in the context of generation substitution. For this purpose, a dynamic diffusion model is developed and evaluated, based on the assumption that the saturation level of the market does not remain constant throughout the diffusion process but is affected by the diffusion of its descendant generation, as soon as the latter is introduced into the market. In contradiction to the conventional diffusion models, which assume static saturation levels, the proposed approach incorporates the effects of generation substitution and develops a diffusion model with a dynamic ceiling. The importance of such an approach is especially significant for markets characterized by rapid technological and generational changes. Evaluation of the proposed methodology was performed over 2G and 3G historical data and for a number of European countries, providing quite accurate estimation and forecasting results, along with important information regarding the rate of generation substitution.     

The short-term impact of director trading in UK closed-end funds

Most closed-end funds are transparent entities that hold securities that are actively traded in liquid markets. In such a setting, the argument that director transactions mitigate information asymmetry has very limited applicability. Our results provide support for the theory of Barber and Odean [2008. “All that Glitters: The Effect of Attention and News on the Buying Behavior of Individual and Institutional Investors.” Review of Financial Studies 21: 785–818]: retail investor decision-making is influenced by attention-grabbing events. Director purchases are one such attention-grabbing event and are associated with significant positive price returns – the magnitudes of which are linked to the size of the purchase, the size of the fund, and the investment mandate. Trading volumes increase at the time of the purchase but most of the initial price responses and trading volumes dissipate over the following 15 days.     

Economic efficiency of Greek retail SMEs in a period of high fluctuations in economic activity: a DEA approach

This study aims to analyse the economic efficiency of Greek small and medium retail enterprises before and after the crisis that started in 2008. Based on the Accounting Equation, we use Data Envelopment Analysis (DEA) to estimate variable returns of scale efficiency scores and to conclude on specific characteristics that efficient companies have, for example, on capital structure. Our results from the DEA application show a high degree of inefficiency. We found that SMEs on the islands are more efficient than those on the mainland and that SMEs in the cities are the least efficient. Size seems to be important, more so on the islands and on the mainland than in the cities. We conclude that companies should act more conservatively in terms of operating cost when the first signs of a recession appear. In addition, during a recession period, companies that have evidences that their operations will continue positively should strengthen their operations by raising more own capital. Finally, our study clarifies four issues: the efficiency of retail companies in a period of growth and a period of recession, focusing on SMEs that operate in different regions, connecting Accounting Equation and DEA and adding acid ratio as an output in our model.     

Investments in next generation access infrastructures under regulatory uncertainty

This article studies the impact of regulatory uncertainty on an incumbent’s incentives to undertake the socially optimal investments in NGA networks. Thus, a regulatory non-commitment setting in which the regulator sets the access price after the deployment of the NGA network is used. In particular, it is assumed that the regulator sets the access price at the marginal cost of providing the access with some probability and gives an access markup, which equals the average cost of the investments, with the complementary probability. It is found that when the slope of the marginal investment cost function is not particularly steep in relation to the impact of investments on demand, the incumbent underinvests compared to the socially optimal investment level. On the contrary, in a more realistic case when the impact of investments on demand is low in relation to the slope of the marginal investment cost function, the incumbent may overinvest or underinvest depending on the probability of incorporating an access markup into the access price.     

Firm efficiency and stock returns

In this paper, we investigate the role of firm efficiency in asset pricing using a sample of US publicly listed companies for the period 1988–2007. We employ non-parametric data envelopment analysis (DEA) on various input/output combinations, focusing on sales and market value as output measures in the construction of the frontier technologies. Using these performance measures, we examine whether efficient firms perform differently from inefficient firms following standard financial analysis procedures. First, we employ performance attribution regressions, by forming portfolios based on efficiency scores and tracking the performance of the various portfolios over time. Second, we perform cross-sectional/panel regressions to determine whether firm efficiency indeed has explanatory power for the cross-section of stock returns. Our results suggest that firm efficiency plays an important role in asset pricing and that efficient firms significantly outperform inefficient firms even after controlling for known risk factors.     

Empirical size and power of some diagnostic tests applied to a distributed lag model

We produce Monte Carlo evidence on the size and power of the RESET, a heteroscedasticity test, and a test for autocorrelation applied to realistic distributed-lag models. We find that the autocorrelation test has the correct size and high power to detect not only autocorrelation (given a correct model), but also the erroneous omission of several lags of an explanatory variable, whereas the RESET and heteroscedasticity tests are oversized in the presence of positive disturbance autocorrelation, especially when the regressors are also positively autocorrelated, and have no power to detect such misspecification errors. In large samples, size distortion may be avoided by using autocorrelation-robust methods.

On Regional Unemployment: An Empirical Examination of the Determinants of Geographical Differentials in the UK

In this paper we consider the determinants of regional disparities in unemployment rates for the UK regions at NUTS‐II level. We use a mixture panel data model to describe unemployment differentials between heterogeneous groups of regions. The results indicate the existence of two clusters of regions in the UK economy, characterized by high and low unemployment rates, respectively. A major source of heterogeneity appears to be caused by the varying effect (between the two clusters) of the share of employment in the service sector, and we trace its origin to the fact that the high unemployment cluster is characterized by a higher degree of urbanization.     

Composition versus decomposition in two-stage network DEA: a reverse approach

A two-stage production process assumes that the first stage transforms external inputs to a number of intermediate measures, which then are used as inputs to the second stage that produces the final outputs. The fundamental approaches to two-stage network data envelopment analysis are the multiplicative and the additive efficiency-decomposition approaches. Both they assume a series relationship between the two stages but they differ in the definition of the overall system efficiency as well as in the way they conceptualize the decomposition of the overall efficiency to the efficiencies of the individual stages. In this paper, we first show that the efficiency estimates obtained by the additive decomposition method are biased, by unduly favouring one stage against the other, while those obtained by the multiplicative method are not unique. Then, we present a novel approach to estimate unique and unbiased efficiency scores for the individual stages, which are then composed to obtain the efficiency of the overall system, by selecting the aggregation method a posteriori. Within the particularity of two-stage processes emerging from the conflicting role of the intermediate measures, we develop an envelopment model to locate the efficient frontier whose derivation from our primal multiplier efficiency assessment model is effectively justified. The results derived from our approach are compared with those obtained by the aforementioned basic methods on experimental data as well as on test data drawn from the literature. Similarities and dissimilarities in the results are rigorously justified.