Political budget cycles in new versus established democracies

Like other recent studies, we find a political deficit cycle in a large cross-section of countries, but show that this result is driven by the experience of “new democracies”. The political budget cycle in new democracies accounts for the finding of a budget cycle in larger samples that include these countries and disappears when they are removed from the larger sample. The political deficit cycle in new democracies accounts for findings in both developed and less developed economies, for the stronger cycle in weaker democracies, and for differences in the political cycle across governmental and electoral systems. Our findings may reconcile two contradictory views of pre-electoral manipulation, one that it is a useful instrument to gain voter support and a widespread empirical phenomenon, the other that voters punish rather than reward fiscal manipulation.     

Finding common seasonal patterns among time series: An MDS approach

This paper provides an approach to the analysis of time series seasonal pattern similarities based on a special MDS approach — the non-metric SSA-I (Smallest Space Analysis) technique. Indices of dissimilarity for time series are defined generally while special cases drawn from the economic problems are treated by means of examples. The basic contributions of the paper are two-fold: First we extend the use of SSA-I to time series analysis by transforming the mutual relationship between (as well as within) the time series in a symmetric matrix. As a result, the tool of SSA-I developed by L. Guttman may easily be used. Second, by an introduction of non-metric techniques such as SSA-I in time series analysis we increase our capacity to deal with problems hitherto unsolved. In particular, ordinal data as well as behavioral data for which model processes are not defined and seasonal patterns similarities may be studied by our technique.     

A note on factor analysis and arbitrage pricing theory

This paper examines some theoretical and empirical properties of factor analysis and spells out their implications for Arbitrage Pricing Theory (APT). Doubts on the appropriateness of conventional factor analytic procedures for testing APT are raised on theoretical as well as empirical grounds.     

Modeling exchange rate return volatility of RMB/USD using GARCH family models

The paper examines volatility of RMB exchange rate return of onshore and offshore markets. The onshore rate covered 4/01/2008–5/09/2016 while offshore spanned 31/12/2008-22/09/2016, the returns were not normally distributed and were integrated of order zero I(0). The Ljung-Box Q statistics depicts the presence of autocorrelation in return series and Ljung-Box Q² statistics of power transformed for conditional heteroscedasticity for lags of 6, 12 and 20 all indicated the presence of conditional heteroscedascity. The exchange rates volatility was persistent in both markets. However, offshore return was more persistent while leverage effects exist in both markets. Asymmetry power Autoregressive conditional Heteroscedastic (APARCH) model was the best model for forecasting purposes in both markets while Glosten, Jogannathan and Rankle, Generalized Autoregressive conditional Heteroscedastic (GJR-GARCH) model and Integrated Generalized Autoregressive conditional Heteroscedastic (I-GARCH) were the worst models in onshore and offshore return markets respectively. APARCH model should be adopted for future studies.     

Auditor Responses to Shareholder Activism

In this paper, we investigate how auditors respond to shareholder activism against their clients. Our study is important because activism may be viewed by auditors as a source of increased engagement risk, thereby impacting audit outcomes. The potential relationship between shareholder activism and audit outcomes leads us to predict that activism targets will pay higher audit fees and also will be more likely to receive adverse internal control opinions (ICOs) and first‐time going concern opinions (GCOs). Our results, which support all three predictions, suggest that the public scrutiny associated with activism campaigns heightens auditors' concerns about reputational damage and litigation risk. Consistent with this notion, we find that activism targets are more likely to experience accounting‐related lawsuits. We also find that the increased likelihood of adverse ICOs documented in our baseline tests reflects higher‐quality reporting rather than increased auditor conservatism. Overall, our findings suggest that activism campaigns spur auditor diligence while also increasing the possibility of negative outcomes that may not be fully anticipated by activist investors.     

A Consumer Choice Theory Incorporating Behavioral and Spiritual Wisdom

A consumer makes choices by following a certain paradigm, a system for organizing his thinking based on norms that are determined by certain norm-setters or role models. Widespread societal ills such as depression and suicide seem to correlate with certain types of consumer behavior. However, current consumer choice theories don＇t appear to be effective in evaluating epidemiology research. This study compares existing consumer choice paradigms and introduces the linguistic paradigm as a framework for studying the organization of human thinking. The linguistic paradigm is based on the nature of human language and on spiritual wisdom. The paradigm is implemented to generate models （process templates） for the analysis of selected consumer choice issues. The potential effectiveness of these models in analyzing consumer behavior is discussed.     

Reconstructing the corporate social responsibility construct in Utlish

The charged debate on the 'C-S-R-ization' of organizational practices seems to have produced two opposing and seemingly incompatible explanations for why organizations should engage in corporate social responsibility (CSR): one, the normative rationale based on an appeal to ethics; and the other, the instrumental rationale, based on an appeal to business pragmatism. This paper argues that a missing link in this debate is the failure to recognize that the normative and instrumental approaches to corporate social responsibility are underpinned by substantively, differentiating, relative logics of emotional rationalism on the one hand, and instrumental rationalism on the other. The paper makes a case that for CSR as a management practice to be practicable and actionable within a sustainable business agenda, it will need to be stripped of its current normative undertone and reconstructed in the instrumentally, pragmatic ( utlish ) language of business. Otherwise, the whole concept of CSR may continue to dwell in the realm of abstract theorizing without yielding many beneficial and practicable outcomes. The paper concludes that such an approach that situates CSR within a pragmatic business lingua, rather than a non-business lingua, will help in legitimizing CSR as a 'neutral' management practice.