The effects of environmental,social and governance disclosure on the cost of capital in small and medium enterprises: The role of family business status

Environmental, social, and governance (ESG) disclosure has become a critical component of corporate reporting. However, the effectiveness of this type of disclosure remains poorly explored among small and medium enterprises (SMEs), despite the fact that these businesses represent the majority of firms around the world. By leveraging on a dataset of Italian listed SMEs, we fill this gap to shed new light on the effects of nonfinancial disclosure on the cost of capital. The study reveals that, in stark contrast with the evidence on large companies, environmental disclosure for SMEs is bound to provoke an increase in the cost of capital. Yet this pattern is capsized when the company is a family SME, as it benefits from environmental disclosure, as large companies do.     

Forecasting Financial Crises in Emerging Market Economies

This article identifies six fundamental indicators that might predict a financial crisis similar to the one that affected the emerging markets of Southeast Asia. Our empirical analysis shows that the 1997 Asian crisis could have been predicted. Probit estimation reveals that a small number of common indicators can forecast a financial crisis well. The estimation gives estimates that are robust to either cross-section or panel data. We suggest an aggregate indicator that combines all the individual indicators and calculates the optimal thresholds for the indicators. This aggregate indicator has similar predictive properties and reduces the calculations to determine the probability of crisis.     

Institutions Meet Mind: The Way out of a Deadlock

The crucial importance of institutional analysis in economics and the social sciences in general is well understood. Yet, institutional economists have only a limited understanding of individual behavior in institutional settings, the emergence and spread of innovative behavior, and of how individual behavior influences the creation of norms, and vice versa. This paper elaborates on the work of Douglas North, who emphasized the importance of the connection between the evolution of the mind and the evolution of institutions, and highlights the need to investigate the cognitive mechanisms of individuals. We focus, therefore, on the field of modern cognitive science and discuss some of its findings. This approach should be given priority in the development of institutional analysis. Research results in the cognitive sciences, and in particular cognitivism and connectionism, are of vital interest here. In this context, the work of the Austrian school, especially Hayek's The Sensory Order, is extremely relevant and seems to foreshadow future developments. It thus deserves reappraisal.     

Anti-Malthus: Conflict and the evolution of societies

The Malthusian theory of evolution disregards a pervasive fact about human societies: they expand through conflict. When this is taken account of the long-run favors not a large population at the level of subsistence, nor yet institutions that maximize welfare or per capita output, but rather institutions that generate large amount of free resources and direct these towards state power. Free resources are the output available to society after deducting the payments necessary for subsistence and for the incentives needed to induce production, and the other claims to production such as transfer payments and resources absorbed by elites. We develop the evolutionary underpinnings of this model, and examine the implications for the evolution of societies in several applications. Since free resources are increasing both in per capita income and population, evolution will favor large rich societies. We will show how technological improvement can increase or decrease per capita output as well as increasing population.     

Agrobiodiversity,farm profits and land fragmentation: Evidence from Bulgaria

This paper presents an empirical analysis of the role of land fragmentation, crop biodiversity and their interplay with farm profitability. Original primary data are drawn from a survey conducted in the Plodiv region of Bulgaria. The econometric results stress the ambiguous role of land fragmentation on farm profitability. On one hand, land fragmentation reduces farm profitability. On the other hand, land fragmentation fosters crop diversification. We also find that crop biodiversity plays a beneficial role in farm profitability. Policies that aim to increase land consolidation and reduce fragmentation may overlook the positive link between diversity and plot heterogeneity. Policies that encourage land consolidation should, therefore, consider the crucial role that this has on other variables such as farm biodiversity.     

Subjective Diversity and Social Learning: A Cognitive Perspective for Understanding Institutional Behavior

This paper deals with a controversial problem in the economics of institutions: how do regularities emerge and evolve out of the social interaction of various agents? Referring to arguments developed in a previous work (Rizzello and Turvani 2000) in which the Austrian Economics' views about the spontaneous emergence of institutions is connected to and enriched by recent findings in the cognitive sciences, the authors here extend the institutional-cognitive approach by incorporating the social cognitive theory of Albert Bandura. Accordingly, rather than being described as ‘instruments’ for social coordination, institutions are depicted as ‘structures’ emerging from the subjective process of generation of knowledge within a social context. Institutional behavior, its emergence and evolution is thus anchored to the mechanisms creating subjective diversity and those producing social learning.     

Limited factor substitutability,economic dualism,and non-saving constraints on growth

Limited substitutability has previously been defined as responsiveness of factor proportions within a certain factor-price range only, or as fixed coefficients in some sectors combined with variable proportions in others. This article explores a third definition: substitutability between some factors, combined with complementarity between those and other factors. The notion of economic dualism is thereby expanded to encompass a possible surplus not only of labor, but of any resource. The conclusion is that a non-saving constraint does not require fixed coefficients across the board, the economic dualism may therefore emerge even when commodity and factor markets are competitive.     

TRADE ASSOCIATIONS: WHY NOT CARTELS?

The relevance of special interests lobbying in modern democracies can hardly be questioned. But if large trade associations can overcome the free riding problem and form effective lobbies, why do they not also threaten market competition by forming equally effective cartels? We argue that the key to understanding the difference lies in supply elasticity. The group discipline, which works in the case of lobbying, can be effective in sustaining a cartel only if increasing output is sufficiently costly—otherwise the incentive to deviate is too great. The theory helps organizing a number of stylized facts within a common framework.