HARMONISING NATIONAL INPUT—OUTPUT TABLES FOR CONSUMPTION-BASED ACCOUNTING — EXPERIENCES FROM EXIOPOL

Environmentally extended, multi-regional, input–output (MRIO) databases have emerged to fulfil the need for mapping the impacts of globalisation, following resource-intensive supply chains crossing country borders. EXIOBASE is one such data set designed for use in analysis relevant to resource use and European Union policy. It provides the most detailed harmonised sector classification in any MRIO and integrates data from a wide range of sources. We review the necessary steps in order to harmonise source data in MRIO databases, and describe methods to increase the product and industry detail of aggregate supply and use tables (SUTs) in order to provide a homogenous classification across countries that allows resource-specific modelling. We cover mathematical programming approaches used to reconcile data sets, and investigate some implications of reverse engineering symmetric input–output tables and disaggregating the SUTs. We focus particularly on the footprint multiplier at the product level, where policy formation is targeted.     

The Impact of Litigation Risk on Auditor Pricing Behavior: Evidence From Reverse Mergers

We use reverse mergers to examine the impact of litigation risk on audit fees. In a reverse merger, a private company merges with a public company, and the private company's management takes over the resulting publicly traded firm. Reverse mergers create a unique test setting to provide estimates on the litigation risk premium because, while the litigation risk for formerly private firms whose equity becomes publicly traded increases, the remaining auditee‐ and auditor‐related characteristics remain virtually unchanged. We document a litigation risk premium of approximately 27 percent. Moreover, we document that equity dispersion impacts the audit fee pricing of litigation risk and this relation is dramatically magnified in the publicly traded realm. Finally, we find that institutional investors demand higher audit effort in the form of higher audit fees in both the private‐ and public‐equity settings.     

Standards and innovation: US public/private partnerships to support technology-based economic growth

This paper examines how strategic alliances to create and use standards affect economic growth and development. The explanation of the link from standards to economic growth and development is through the effects of standards on the incentives to perform industrial research and development (R&D). We examine product standards, metrology traceable to national and international standards, and regulatory standards to address negative externalities. The paper develops a theoretical explanation for the link from standards to growth, survey/interview-guides to gather information from industrial R&D experts about the explanation, and case-study evidence about the explanation. We discuss the standard-setting process and explain that it entails strategic alliances among firms and with government involvement. Case studies of R&D projects in firms and in a national laboratory support the belief that standards implemented via strategic alliances leverage economic growth and development.     

Consumer ethnocentrism in a developing economy: A preliminary investigation

The attitudes of consumers from a developing economy toward ethnocentrism were assessed in this exploratory study of 123 respondents from Nigeria. The results indicate that consumers hold varying views of ethnocentric behavior. While recognizing the possibility of negative economic consequences for the importing nation, consumers are reluctant to endorse strong measures against imports. This is especially true for products that may be difficult to produce locally or those that offer a distinctly higher level of quality. Contrastingly, consumers appear to support public activity that encourages a spirit of international business cooperation. An exporting nation's social, political, and religious philosophies appear to have minimal impact upon the demand for its products. © 1995 John Wiley & Sons, Inc.     

Downsizing decisions: The joint influence of equity incentives and behavioral biases

Although new investment can be viewed as a decision to pursue projects from a wide number of growth opportunities with easily discernible (and presumably preferable) risk profiles, downsizing (e.g., through layoffs, plant closings, asset divestitures, etc.) is a dichotomous choice to either abandon or continue an existing project where the relative risk between these options is not clear. Our evidence suggests that vega in the pre-downsizing period is associated with risky investment that necessitates future downsizing. We further find that contemporaneous vega is associated with a greater likelihood of downsizing. On the other hand, our evidence suggests that delta is a significant impediment to downsizing. We examine the influence of behavioral factors in the decision-making process and find downsizing decisions are discouraged by managerial overconfidence but encouraged by managers’ aversion to ambiguity. Finally, we investigate whether equity incentives and behavioral factors lead to better downsizing decisions. We find that downsizing firms with high ambiguity perform better after downsizing relative to their matched pair with lower ambiguity.     

High Commodity Prices and the EU's Single Payment Scheme: Some Consequences of Double‐Dipping

When negotiating agricultural policies, decisions are generally based on historical net farm income figures, which are derived from the then current price and production data. In 2003, when the Single Payment Scheme (SPS) was introduced in the EU, agricultural commodity prices were “low.” As a result the SPS is very generous when viewed in light of today's “high” agricultural commodities prices: farmers are double‐dipping. We provide an empirical assessment of the implications for compensatory payments under the SPS in combination with high commodity prices for two major EU crops: wheat and barley. Yearly compensatory payments for these two crops alone exceed $10 billion. The lesson of this result for agricultural policy reform is that the payments under the SPS should have been made more flexible and tied to future (farm gate) prices, i.e., so payouts would usually vary with changing market conditions, while still being decoupled from production decisions. Au moment de négocier des politiques agricoles, les décisions sont généralement fondées sur les données historiques sur le revenu agricole net, lesquelles sont dérivées des prix et des données de production d'alors. En 2003, année où l'UE a mis en place le régime de paiement unique (RPU), les prix des produits agricoles étaient ≪faibles≫. Actuellement, le RPU est très généreux en raison des prix ≪élevés≫ des produits agricoles: les producteurs cumulent les avantages. Nous présentons une estimation empirique des répercussions sur les paiements compensatoires du RPU combinées aux prix élevés des produits de base pour deux grandes cultures de l'UE, à savoir le blé et l'orge. Pour ces deux cultures seulement, les paiements compensatoires annuels dépassent les dix milliards de dollars. La leçon est que les paiements versés dans le cadre du RPU auraient dûêtre plus souples et liés aux prix (à la ferme) futurs, de sorte que les versements varieraient généralement en fonction des conditions changeantes du marché tout en demeurant indépendants de la production.     

Tourism Services Exports and Economic Growth in Barbados

This article investigated the relationship between tourism and economic growth in Barbados from 1974–2004 using the techniques of multivariate cointegration, causality testing, and innovation accounting. Findings reveal the existence of a long-run relationship between tourist activity and economic growth. However, the nature of the directional relationship and the importance of the real exchange rate as an important determinant appear to be dependent on how output is specified and the statistical techniques employed. Still, our results provide justification for the Government of Barbados' objective of investing in its tourism industry as a means of stimulating growth over the long term. As there is an indication that forward and backward linkages are not as fully developed as they could be, and initiatives should also be put in place to foster stronger linkages between the tourism industry and other sectors, such as agriculture, food and beverage, and transportation. It is recommended, though, that policymakers do not over-rely on tourism for economic growth and that they pay greater attention to other industries given the tourism industry's capricious nature.     

Segregating genetically modified and nongenetically modified corn in a marketing channel

The adoption of GM corn in the United States depends on many factors including segregation costs, which have minor impacts on aggregate welfare. Because the demand for nonGM corn is small relative to its supply, no premium for nonGM corn can be generated in excess of the segregation costs. An outward shift in the supply of corn resulting from the adoption of GM varieties has a greater impact on aggregate welfare than do the segregation costs required to satisfy the GM-free demand. A 10% increase in the aggregate supply of GM corn increases aggregate welfare by more than US $250 million. However, nonadopters of GM corn lose while adopters can gain or lose depending on the nature of the aggregate demand curve for US corn.