Contractual relationships in family firms： An agency theory interpretation from a managerial perspective

This study examines the contractual relationships from a managerial point of view by a sample of 55 family firms in an industrial zone in Turkey. The results show that the type of contract （i.e., behavior or outcome-based） is not affected by a professional manager＇s tenure, position and his/her education level. It is also presented that the type of contract does empirically not have a relationship with information asymmetry and risk taking/uncertainty in a family firm setting. Furthermore, its relationship to goal conflict and job complexity is weak and negative, which necessarily means that any increase in goal conflict or job complexity requires an outcome-based contract to be written between an owner and a professional manager. Yet, only goal conflict is significant in explaining the type of contract. From the managerial perspective, these findings imply that the agency theory is not suitable for relatively small family firms.     

The effect of flight distance on fuel mileage and CO2 per passenger kilometer

In this study, the effect of distance on fuel mileage (fuel burn per nautical mile) and CO₂ intensity, based on a large amount of actual flight data, is discussed for narrow-body commercial aircraft performing domestic flights for flight distances of between ～200 and ～800 NM, in Turkey. For twenty-nine domestic routes, the average CO₂ intensity is calculated to be 88 gr/pa-km, with an 80% load factor, ranging from between 112 gr/pa-km (207 gr/pa-NM) for the shortest route and 78 gr/pa-km (145 gr/pa-NM) for the longest route. An overall runway-to-runway analysis reveals that the average flight fuel consumption increases by 5.1 kg for each additional nautical mile. The discussion is extended to cover wind effect, through westbound and eastbound flights, on fuel consumption. The average fuel mileage of the eastbound flights, above 30 kft, is found to be 11.2% lower than those for the westbound flights. A sensitivity analysis is also carried out to reveal the effects of three main flight performance parameters, namely, cruise altitude, cruise speed and aircraft mass on the cruise CO₂ intensity.     

Financial liberalization and banking efficiency: evidence from Turkey

This paper examines the banking efficiency in a pre- and post-liberalization environment by drawing on the Turkish experience by using DEA. The paper also investigates the scale effect on efficiency. Our findings suggest that liberalization programs were followed by an observable decline in efficiency. Another finding of the study is that the Turkish banking system had a serious scale problem during the study period. The second part of our analysis relied on econometric methods and found that one major reason for such system-wide efficiency decline has been the growing macroeconomic instability of the Turkish economy in general and financial sector in particular.

Accounting Choice and Earnings Quality: The Case of Software Development

In this study I explore how accounting choice affects earnings quality in the software development industry. SFAS No. 86, which requires capitalization of software development costs (SDC), is the only exception in the US to SFAS No. 2, which requires immediate expensing of all research and development (R&D) expenditures. Aboody and Lev (1998) suggest that capitalized SDC are value-relevant. Thus, expensing of these costs might introduce noise into earnings. However, it has been suggested that future benefits associated with SDC are highly uncertain (Software Publishers Association). Consequently, capitalization might introduce noise into earnings by capitalizing unproductive expenditures. Hence, it is not clear how managers' choice between capitalization and expensing will affect earnings quality. I first find that there is a decline in the quality of earnings in the software industry after the adoption of SFAS No. 86, whereas no such decline is observed in other high-tech industries. Second, I find that, within the software industry, the quality of earnings for expensers is greater than for capitalizers. Finally, I find that, among the capitalizers, those with a large increase in software capital have lower earnings quality than others. Overall, the results suggest that capitalization of software costs does not improve earnings quality.     

Natural gas prices and stock prices: Evidence from EU-15 countries

This study investigates the long-run relationship between natural gas prices and stock prices by using the Johansen and Juselius cointegration test and error–correction based Granger causality models for the EU-15 countries. We employ quarterly data covering the period from 1990:1 to 2008:1. Empirical findings suggest that there is a unique long-term equilibrium relationship between natural gas prices, industrial production and stock prices in Austria, Denmark, Finland, Germany and Luxembourg. However, no relationship is found between these variables in the other ten EU-15 countries. Although we detect a significant long-run relationship between stock prices and natural gas prices, Granger causality test results imply an indirect Granger causal relationship between these two variables. In addition, we investigate the Granger causal relationship between stock returns, industrial production growth and natural gas price increase for Austria, Denmark, Finland, Germany and Luxembourg. As a result, increase in natural gas prices seem to impact industrial production growth at the first place. In turn, industrial production growth appears to affect stock returns.     

Public debt and financial development: A theoretical exploration

In countries where the government is the major recipient of bank lending, public debt is likely to harm financial development. Moreover, the lower the financial depth, the greater the adverse effects of public borrowing on financial development and macroeconomic outcomes.     

Bank regulation and supervision and its welfare implications

This study provides a general equilibrium model to explore the welfare implications of bank regulation and supervision (RS). The model supports the basic expectations regarding the positive effects of RS on the growth rate, output, credit, investment, wages and profits; and its negative effects on the interest rate. In addition, RS is observed to lead to a convergence effect. Furthermore, it is observed that the decision of banks to monitor and charge differentiated interest rates to firms depends on the distribution of firm-specific moral hazard rates; bank monitoring increases profits as the distribution of producer type improves.     

Group robust stability in matching markets

We introduce the notion of group robust stability which requires robustness against a combined manipulation, first misreporting preferences and then rematching, by any group of students in the school choice type of matching markets. Our first result shows that there is no group robustly stable mechanism even under acyclic priority structures. Next, we define a weak version of group robust stability, called weak group robust stability. Our main theorem, then, proves that there is a weakly group robustly stable mechanism if and only if the priority structure of schools is acyclic, and in that case, it coincides with the student-optimal stable mechanism.     

Unit root and cointegration tests: timeseries versus panel estimates for international health expenditure models

Classical regression estimates of the determinants of the OECD health expenditures are useful for policy formulation and evaluation. However, if the underlying timeseries data are not collectively stationary in levels, the estimated parameters are faulty and can misguide health policy. Until very recently, the crucial stationarity tests were ignored in a large number of studies on international comparisons. Stationarity (ADF, Phillips-Perron, IPS heterogeneous panel) and cointegration (Engle-Granger bivariate, Johansen's multivariate) tests are conducted here using 1960–1997 health expenditures data (1998 CD ROM) of 19 OECD countries. It is found that extending the time series data length affects the order of integration and number of cointegrating vectors. However, it is arguable whether the order of integration decreases or increases as more observations are added for testing. The failure of the Johansen and Engle-Granger cointegration tests for most of the OECD countries cautions policy makers against reliance on earlier research findings that were based on unstable relationships among variables in the regression models. (This is not the case for the UK, Greece and Ireland; policy implications have been derived for the UK.) Consequently, data calibrated in growth rates may be more appropriate for investigating the long run relationships collectively in a panel of OECD health expenditure model specifications.