Does freezing a defined benefit pension plan affect firm risk?

This paper examines the impact of a defined benefit (DB) pension plan freeze on the sponsoring firm's risk and risk-taking activities. Using a sample of firms declaring a hard freeze on their DB plans between 2002 and 2007, we observe an increase in total risk (proxied by the standard deviation of EBITDA and asset beta), equity risk (standard deviation of returns), and credit risk following a DB-plan freeze. The increase in credit risk is reflected in a decline in credit ratings and an increase in bond yields for freezing firms. When we examine investment strategies, we observe a shift in investment from capital expenditures before the freeze to more-risky R&D projects after the freeze, and an increase in leverage. These strategies (increased focus on R&D and higher leverage) increase the operating and financial risk the firm faces. Overall, we observe an increase in risk-taking following DB plan freezes, consistent with theories that DB plans act as “inside debt” that aligns managers’ interests with bondholders’.     

The research university,entrepreneurship and regional development: Research propositions and current evidence

The objective of this paper is to set a framework for examining the conditions under which a research university becomes more than a latent asset [Power, D., and A. Malmberg. 2008. The contribution of universities to innovation and economic development: In what sense a regional problem? Cambridge Journal of Regions, Economy and Society 1, no. 2: 233–46.] in regional economies. The framework is comprised of four propositions used to identify drivers of change, evidence of change and evidence of impact. As an exemplar, we examine the University of Oxford's growing engagement in its local region. This paper shows that the convergence between the interests of the university and the local high-tech economy is particularly associated with broader technological trends and with the University's capacity to draw on national funding programmes designed to stimulate ‘third-stream’ activities, including entrepreneurship courses and regional networking activities.     

Signaling,Financial Slack and Corporate Acquisitions

This paper shows that under certain conditions a firm's decision concerning the optimal medium of exchange to use in acquiring another firm is related to the decision of which source of capital should be used to finance long-term projects. An example of this type of interaction occurs when the firm's only source of financing a positive net present value project is an equity issue. In a Myers and Majluf (1984) world of asymmetric information the value maximizing strategy for the firm is to forego the public equity offering and instead use a stock offer to acquire a firm possessing financial slack. The process is modeled using an extension of the Myers and Majluf (1984) model and demonstrates how the acquisition alternative allows managers to separate the signals regarding the investment and financing decisions. Including net pension assets into our measure of financial slack, we provide empirical supports for the ability of the extended model to explain observed merger activity.     

SUBSTITUTION BETWEEN WOOLS OF DIFFERENT FIBRE DIAMETER1

The extent to which wools with different fibre characteristics can be substituted in textile production and consumption holds implications for Australia's international and domestic marketing policies. An analysis of price-induced substitution between Australian wools of different fibre diameters was conducted. Fibre diameter was used to parameterise cross-price relationships in order to estimate a system of demand equations for wools by diameter class. The results indicate that direct substitution takes place within a very limited range of fibre diameters. The use of product characteristics to parameterise price relationships may be extended to other graded commodities.     

WHAT AUSTRIAN BUSINESS CYCLE THEORY DOES AND DOES NOT CLAIM AS TRUE

Contemporary economic commentators have a habit of dismissing Austrian business cycle theory on the grounds that the implications for policy responses are unconvincing. Often the ‘Austrian’ position is misunderstood. But even if we wish to draw on other schools of thought to understand depressions, this does not affect the importance of Austrian insights to explain the boom.     

Balancing corporate culture: Grid-group and Austrian economics

The aim of this paper is twofold: firstly to discuss the foundations of Grid-Group “Cultural Theory” and highlight the compatibility with Austrian economics, and secondly to apply this framework to the context of organisational culture. My claim is that “Corporate Cultural Theory” provides a rigorous and grounded social anthropological framework to take Austrian economics beyond its traditional uses and improve upon competing explanations of corporate culture.     

Sense‐giving in health care: the relationship between the HR roles of line managers and employee commitment

In this article, we examine line manager prioritisation of HR roles and the consequences for employee commitment in a health‐care setting. Our analysis is based on a quantitative, multi‐actor study (509 employees and 67 line managers) in four Dutch hospitals. Using sense‐giving as a theoretical lens, we demonstrate that, in addition to the effects of high commitment HRM, prioritising the Employee Champion role alone and the Employee Champion and Strategic Partner roles in combination is associated with higher employee commitment. We argue that through performing roles that are evocative of deep‐seated values, such as excellent patient care and concern for others, line managers can have a positive effect on staff attitudes. In a sector often beleaguered by staff turnover, exhaustion and burnout, we offer an important, empirically based framework that has the potential to improve employee commitment and, from there, enhance performance.     

Are hyperinflation paths learnable?

Earlier studies of the seigniorage inflation model have found that the high-inflation steady state is not stable under learning. We reconsider this issue and analyze the full set of solutions for the linearized model. Our main focus is on stationary hyperinflationary paths near the high-inflation steady state. These paths are shown to be stable under least-squares learning if agents can utilize contemporaneous data. In an economy with a mixture of agents, some of whom only have access to lagged data, stable hyperinflationary paths emerge only if the proportion of agents with access to contemporaneous data is sufficiently high.     

Product Market Reform and Innovation in the EU*

European Union countries have implemented widespread reforms to product markets to stimulate competition, innovation, and economic growth. We provide empirical evidence that the reforms carried out under the EU Single Market Programme (SMP) were associated with increased product market competition, as measured by a reduction in average profitability, and with a subsequent increase in innovation intensity and productivity growth for manufacturing sectors. Our analysis exploits exogenous variation in the expected impact of the SMP across countries and industries to identify the effects of reforms on average profitability, and the effects of profitability on innovation and productivity growth.