Participation and returns in rural nonfarm activities: evidence from the Kyrgyz Republic

This article uses two representative household budget surveys from the Kyrgyz Republic to analyze factors influencing participation and returns from different types of nonfarm activities in 2005 and 2006. We use the double hurdle and Heckman models, which allow us to demonstrate that a number of variables has different effects on participation and income from nonfarm activities. For example, residing in remote areas and lack of capital are found to stimulate participation in nonfarm activities, but decrease nonfarm income. Results are robust, but using the Heckman model seems to produce more accurate results for returns to education and gender under the presence of selection bias. Overall, nonfarm activities are found to be most important for the poor, who are pushed out of agriculture due to limited and poor land resources. This indicates that equipping poor households to enable them to move towards better remunerative nonfarm activities should be a priority for Kyrgyz rural policy makers.     

European Soil Data Centre: Response to European policy support and public data requirements

In the context of the European Union's Soil Thematic Strategy, policy makers require easy access to soil data and information of various types and scales to assess the state of soils at European level. To satisfy this need, the European Commission and the European Environment Agency (EEA) decided to establish the European Soil Data Centre (ESDAC), located at the European Commission's Joint Research Centre.The ESDAC is one of ten environmental data centres that have been established during the last 4 years in support of policy development, implementation and monitoring by the European Commission's Directorate General for Environment. The ESDAC, located at http://esdac.jrc.ec.europa.eu, has become the focal point for soil data and information at European Union level by hosting a series of soil products and web-based tools that allow access to the data. The ESDAC acts as the primary data contact point for the Commission and EEA to fulfill their information needs. The establishment and the evaluation of harmonised databases should facilitate improved soil protection measures.     

Welfare Effects of Reducing Home Bias in Government Procurements: A Dynamic Contest Model

This paper models an international contest for government procurement as a dynamic game between a domestic firm and a foreign firm. We show that trade liberalization, in the form of a reduction in bias against the foreign firm, improves both domestic and global welfare if (i) either the foreign firm's profit is sufficiently large or (ii) the initial degree of home bias is sufficiently small. If the initial home bias is large, a small reduction in the bias may reduce welfare.     

Financial guarantors’ executive compensation,charter value and risk-taking

Financial guarantees have been extensively used recently as part of rescue packages to bail out troubled institutions and governments around the world. We propose a new incentive compensation model for studying agency conflict between the shareholders and the manager of a typical financial guarantor. In our model, the manager chooses the guarantor's risk level, with disutility to reduce risk (i.e., reducing the risk of the guarantor incurs a direct cost to the manager). Moral hazard causes the manager to select a level of risk that is higher than the level chosen in an otherwise first-best environment with no conflict of interest between the shareholders and the manager. However, in our proposed framework, charter value plays a self-disciplining role on the manager's appetite for risk, therefore it helps mitigate the extent of the deviation from first best with agency conflict found previously (e.g., 0055, 0015 and 0020). This suggests that researchers should study charter value, managerial compensation and risk decisions within a unified framework and not separately, as all studies have done in the past.     

Optimal portfolios with minimum capital requirements

We propose a novel approach to active risk management based on the recent Basel II regulations to obtain optimal portfolios with minimum capital requirements. In order to avoid regulatory penalties due to an excessive number of Value-at-Risk (VaR) violations, capital requirements are minimized subject to a given number of violations over the previous trading year. Capital requirements are based on the recent Basel II amendments to account for the ‘stressed’ VaR, that is, the downside risk of the portfolio under extreme adverse market conditions. An empirical application for two portfolios involving different types of assets and alternative stress scenarios demonstrates that the proposed approach delivers an improved balance between capital requirement levels and the number of VaR exceedances. Furthermore, the risk-adjusted performance of the proposed approach is superior to that of minimum-VaR and minimum-stressed VaR portfolios.     

Trade credit and company performance during the 2008 financial crisis

We investigate whether the 2008 financial crisis had an impact on companies’ trade credit, and whether changes in trade credit mitigated the crisis’s impact on firm profitability. We document that the availability of trade credit decreased, and that this decline is more pronounced, the higher the companies’ pre‐crisis reliance on short‐term debt. We further report evidence that the redistribution hypothesis holds during crisis periods. Finally, we show that the crisis had a negative impact on company performance, but that this impact was lower (greater) for firms that report an increase in trade receivables (payables) in crisis compared to pre‐crisis periods.     

Offshoring and firm innovation: The moderating role of top management team attributes

This study attempts to increase the understanding of how offshoring influences the introduction of new products and services. Focusing on the offshoring of those business functions that provide direct knowledge inputs for innovation (i.e., production, R&D, and engineering), we propose that offshoring has an inverted U‐shaped influence on firm innovativeness. Additionally, we provide an upper echelon contingency perspective by considering the moderating role of two top management team (TMT) attributes (i.e., informational diversity and shared vision). Using a cross‐industry sample with lagged data, we find that offshoring has an inverted U‐shaped influence on firm innovativeness and that this relationship is steeper in firms with high TMT informational diversity and in firms with low TMT shared vision. Copyright © 2012 John Wiley & Sons, Ltd.     

Stakeholder Pressures as Determinants of CSR Strategic Choice: Why do Firms Choose Symbolic Versus Substantive Self-Regulatory Codes of Conduct?

To encourage corporations to contribute positively to the environment in which they operate, voluntary self-regulatory codes (SRC) have been enacted and refined over the past 15?years. Two of the most prominent are the United Nations Global Compact and the Global Reporting Initiative. In this paper, we explore the impact of different stakeholders?? pressures on the selection of strategic choices to join SRCs. Our results show that corporations react differently to different sets of stakeholder pressures and that the SRC selection depends on the type and intensiveness of the stakeholder pressures as well as the resources at hand to respond to those pressures. Our contribution offers a more specific and finely variegated analysis of firm-stakeholder interactions.     

Identifying financially illiterate groups: An international comparison

Targeted policy interventions are more effective than one‐size‐fits‐all initiatives. This paper proposes the use of k‐means cluster analysis to identify vulnerable groups with respect to financial literacy. Using a rich sample of 12 countries, we distinguish 4 groups with varying financial literacy levels, and examine their socio‐economic characteristics. The results suggest that individuals in the most vulnerable financially illiterate groups are on average, single, less‐educated and unemployed with low incomes. This contrasts with those in the strongest group: individuals with the highest financial knowledge, financial behaviour and financial attitudes scores are on average highly educated males who live together with a partner. They earn a high income and hold several financial products. Integrating these insights into national strategies which promote financial literacy will not only lead to more effective but also to more efficient policy initiatives by focusing on the particular weaknesses of certain subgroups and using the appropriate transmission channels.     

When less information is good enough: experiments with global stag hunt games

There is mixed evidence on whether subjects coordinate on the efficient equilibrium in experimental stag hunt games under complete information. A design that generates an anomalously high level of coordination, Rankin et al. (Games Econo Behav 32(2):315–337, 2000), varies payoffs each period in repeated play rather than holding them constant. These payoff “perturbations” are eerily similar to those used to motivate the theory of global games, except the theory operates under incomplete information. Interestingly, that equilibrium selection concept is known to coincide with risk dominance, rather than payoff dominance. Thus, in theory, a small change in experimental design should produce a different equilibrium outcome. We examine this prediction in two treatments. In one, we use public signals to match Rankin et al. (2000)’s design; in the other, we use private signals to match the canonical example of global games theory. We find little difference between treatments, in both cases, subject play approaches payoff dominance. Our literature review reveals this result may have more to do with the idiosyncrasies of our complete information framework than the superiority of payoff dominance as an equilibrium selection principle.