Diversification of geographic risk in retail bank networks: evidence from bank expansion after the Riegle‐Neal Act

The 1994 Riegle‐Neal Act (RN) removed restrictions on branch‐network expansion for banks in the United States. An important motivation was to facilitate geographic risk diversification (GRD). Using a factor model to measure banks' geographic risk, we show that RN expanded GRD possibilities in small states, but only some large banks took advantage. Using our measure of geographic risk and an empirical model of branch‐network choice, we identify preferences toward GRD separately from other factors possibly limiting network expansion. Counterfactuals show that risk negatively affected bank value but was counterbalanced by economies of density/scale, reallocation/merging costs, and local market power concerns.     

Discretionary Loan Loss Provisions and Systemic Risk in the Banking Industry

This study examines the relation between earnings management through discretionary loan loss provisions (LLPs) and systemic risk in the U. S. banking sector using a large sample of commercial banks from 1996 to 2009. We find that earnings management increases a bank's contribution to systemic crash risk and systemic distress risk, consistent with the notion that earnings management increases information opacity, facilitates bad news hoarding, co‐moves with macroeconomic conditions, and exhibits cross‐sectional correlation and herding in earnings management. However, the effect of earnings management through discretionary LLPs on systemic risk disappears during the crisis period, consistent with weakened earnings management in crisis times. We also find that the same effect strengthens with bank uncertainty and homogenous loans, and weakens in the post‐SOX period, and when banks are audited by Big 4 auditors.     

Lenin as Scientific Manager Under Monopoly Capitalism, State Capitalism, and Socialism: A Response to Scoville

I argue that Lenin's views on scientific management did not shift as drastically as Scoville (2001 ) claims from 1913 to 1918. The seeds of Lenin's 1918 views on Taylorism actually were contained in an article he wrote in 1914, three years before the October Revolution. In addition, I argue that Lenin did not uncritically embrace the implementation of scientific management in the construction of socialism in the Soviet Republic, as argued by Scoville. I present evidence that Lenin viewed Taylorism as only a temporary measure to be used in the transitory stage of state capitalism that he believed characterized the Soviet Republic in 1918. Finally, because Scoville does not differentiate between the transitory stage of state capitalism and socialism in the Soviet Republic's early years, he states that Lenin advocated the use of scientific management under socialism. I argue that there is insufficient evidence to support this position.     

The effects of performance report layout on managers’ subjective evaluation judgments

Managers tend to provide subjective performance evaluations that are relatively high (leniency) and not very dispersed (compression). This paper reports on an experiment that investigates whether the layout of performance reports affects the leniency and compression of managers’ subjective evaluations. Relying on psychology theory, we predict that subjective ratings will be higher and more compressed if performance reports contain alphabetically listed indicators rather than categorically listed indicators (as in a balanced scorecard). Moreover, we predict that ratings will be higher and more compressed if performance reports present indicator target and actual values in tables than when this information is presented in graphs. The results from the experiment provide support for the hypothesis that performance ratings are higher if measures are listed in alphabetical order as opposed to presented in a four-category balanced scorecard format. However, there is no support for the other hypotheses. We discuss the implications of the study for accounting research and practice.     

A framework of the risk assessment for the supply chain of hazardous materials

This paper shows a framework of risk assessment models and analyzes the Mexican context of the supply chain for hazardous materials. A new set of risk assessment models is developed for each main activity of the closed-loop supply chain for hazardous materials. This model can be used to evaluate suppliers, transportation routes, outsourcing options and the material itself. A proportional risk-assessment technique is used to define risk cost calculation for the hazardous materials management using the National Fire Protection Agency classification. Hazardous materials represent a logistics challenge because of the risk involved at their handling. From 2006 to 2009 a total of 1,200 accidents were reported at different points of the supply chain. The investigated models require a previous analysis of the activities in order to calculate factors, such as the accident rate and possible affected population, among others; that could affect the cost in case of an accident. Analyzing the risk, cost values can be used by decision makers to determine which activities should be outsourced in order to avoid the risk itself or to fulfill laws and regulations.     

Empirical models of firms and industries

We review important developments in empirical industrial organization (IO) over the last three decades. The paper is organized around six topics: collusion, demand, productivity, industry dynamics, interfirm contracts and auctions. We present models that are workhorses in empirical IO and describe applications. For each topic, we discuss at least one empirical application using Canadian data.     

An empirical study of broadband diffusion in rural America

In this study we examine the factors that will encourage broadband adoption in rural areas. Using data on rural Incumbent Local Exchange Carriers (ILECs) we find that low density, high cost markets decrease the ability of the telecommunication service providers to offer DSL, but other factors also play a role. Demand for broadband has become more inelastic over time, marginal increases in speed alone have lost their appeal to customers, and the inclusion of video in a broadband package improves broadband take rates and willingness to pay. Small income elasticities reinforce our finding that broadband has become a necessity. Our analysis shows that price subsidies may not be effective in providing a large boost in demand, but policies that lower the cost of providing video may stimulate broadband adoption indirectly if the savings lead to more affordable bundled communications multimedia packages that users want.     

The BRICS’s Bank,Institutional Framework,and Other Current Limitations

Abstract:

Based on Polanyi’s concepts of embeddedness, disembeddedness, and the double movement, the aim of this article is to show that the new development bank (NDB) established by Brazil, Russia, India, China, and South Africa (grouped as BRICS) lacks an institutional context to spur growth and development, similar to the growth that occurred during the Bretton Woods era. First, I examine some of the BRICS’s strengths, such as growth rates, share of world GDP (gross domestic product), and the level international reserves as a percent of the world total. Second, I outline the BRICS’s and other Third World countries’ need for financing. I maintain that the main flaw in the BRICS’s bank is that it follows market rationality in obtaining and granting resources, and that China (the most important member of the BRICS) is still dependent on the G7’s economies. Finally, I remark that as long as the NDB follows market fundamentals, it will be less likely to achieve growth.     

Rearranging Edgeworth–Cornish–Fisher expansions

This paper applies a regularization procedure called increasing rearrangement to monotonize Edgeworth and Cornish–Fisher expansions and any other related approximations of distribution and quantile functions of sample statistics. In addition to satisfying monotonicity, required of distribution and quantile functions, the procedure often delivers strikingly better approximations to the distribution and quantile functions of the sample mean than the original Edgeworth–Cornish–Fisher expansions.