Financial Misrepresentation and Its Impact on Rivals

This paper examines how the announcement of an accusation of fraudulent financial misrepresentation affects industry rivals of the accused firm. Consistent with the importance of the industry competition effect, we find that rivals in less competitive industries benefit from the event. However, in competitive industries, the information spillover effect dominates the competition effect, resulting in negative returns to rival shareholders following the event. The spillover effect increases in importance with the severity of the accusation and is more important for opaque rivals and for rivals that had positive stock price reactions to past positive earnings surprises of the accused firm.     

Secular Outlook for Global Growth: 2015–34

Fidelity’s Asset Allocation Research Team employs a multi-time-horizon asset allocation approach that analyzes trends among three temporal segments: tactical (short term), business cycle (medium term), and secular (long term). This report focuses exclusively on secular trends that may influence the long-term outlook for various asset classes. Key takeaways are the following:??Slower growth is expected to result in a historically lower interest-rate climate and less of a tailwind to equities. ??With the economy providing the backdrop for asset markets, our secular GDP growth forecasts are the foundation for developing long-term capital market assumptions. ??Our forward-looking, global approach emphasizes the key components of GDP growth—population and productivity—and calculates the critical drivers that have been most predictive. ??Over the next 20 years, global growth is expected to be somewhat slower, due primarily to deteriorating demographics in most countries, particularly aging populations in advanced economies. ??Emerging Asia is expected to grow more slowly, due in part to less catch-up potential after a period of rapid growth, though developing economies in general should continue to experience faster relative growth. ??Slower world growth will lead to lower-than-historical-average interest rates and provide less of a boost to equity returns, but global opportunities for investment are still expected to expand.     

“As Much Calcium as a Glass of Milk!” Understanding American Consumers’ Preferences for Fortified Foods

This study examines predictors of American consumers’ preferences for fortified foods, focusing on sociodemographic as well as psychological correlates. Analysis of a probability-based survey (N = 6,728) revealed that females and the more educated tended to have greater preferences for fortified foods. Whites held the least favorable views on fortified foods when compared to Blacks and Hispanics. In terms of psychological predictors, people who were more health-conscious were more likely to prefer fortified foods. Perceived usefulness of nutrition labels and confusion about healthy food choices were both associated with stronger preferences for fortified foods. Both relationships appeared to be moderated by health consciousness. Communication and policy implications of these findings are discussed.     

One‐Stop Shopping Behavior,Buyer Power and Upstream Merger Incentives

We analyze how consumer preferences for one‐stop shopping affect the (Nash) bargaining relationships between a retailer and its suppliers. One‐stop shopping preferences create ‘demand complementarities’ among otherwise independent products which lead to two opposing effects on upstream merger incentives: first a standard double mark‐up problem and second a bargaining effect. The former creates merger incentives while the later induces suppliers to bargain separately. When buyer power becomes large enough, then suppliers stay separated which raises final good prices. We also show that our result can be obtained when wholesale prices are determined in a non‐cooperative game and under two‐part tariffs.     

Dismantling institutional complexity behind international competitiveness of emerging market firms

The paper examines the perceived role of emerging market institutions in the creation of firm‐specific advantages of local small‐ and medium‐sized enterprises (SMEs) supporting international expansion and competitiveness. Our objective is to deepen conceptual understanding of the complex link between emerging market institutional factors and an ability of emerging market SMEs to compete internationally. Our empirical evidence from Russian software SMEs operating in global niche markets reveals that managers perceive institutional influence on their firms' ability to compete internationally in a number of direct and indirect means. We find that, in addition to the well acknowledged negative impact of institutions, there are supportive and triggering forces that incentivize SMEs' international expansion and development of competitive advantages. We contribute to the literature by elaborating about the complexity of institutional influence on international competitiveness of emerging market SMEs. This research offers insights for managers about the prospects of international expansion of SMEs from emerging markets.     

Correction to: A multi-country,multi-sector replication challenge to the validity of the cultural tightness-looseness measure

Asia Pacific Journal of Management - The original version of this article unfortunately contained mistakes. Appendix heading was misplaced and first entry of the Appendix table was incorrectly...     

On the exposure of the BRIC countries to global economic shocks

The financial crisis led to a deep recession in many industrial countries. While large emerging countries recovered relatively quickly, their performance deteriorated in recent years, despite the modest recovery in advanced economies. The higher divergence of business cycles is closely linked to the Chinese economy. During the crisis, the Chinese fiscal stimulus prevented an abrupt decline in GDP growth not only in that country, but also in resource‐rich economies. Due to lower commodity demand, the environment became more challenging for many emerging markets in recent years. This view is supported by Bayesian structural VARs specified for the individual BRIC (Brazil, Russia, India and China) countries. The results reveal a strong impact of the international economy on GDP growth. However, in contrast to the other countries, China plays a crucial role in determining global trade and oil prices. Therefore, the Chinese economy exerts significant spillovers to the other countries under analysis. The change in the Chinese growth strategy puts additional reform pressure especially in countries with abundant natural resources.     

Discussing the political survival of Romanian ministers since 1989—Do economic conditions matter?

Political longevity in young democracies has attracted the attention of scholars and practitioners alike due to several particular characteristics of such democracies, such as a low level of trust, a low level of credibility, corruption, economic difficulties, a less well‐established rule of law and an increased bureaucracy. In such a context, we studied the tenure duration of Romanian ministers since 1989, as well as their accumulated political longevity in ministerial offices. Using proportional hazards regression, we observed some peculiarities in the young Romanian democracy in comparison with more established regimes. We observed that left‐wing majorities tend to increase the probability of seat changes and thus diminish tenure longevity. We also observed that good economic conditions may lead to the substitution of certain types of ministries, while higher inflation rates tend to shorten tenure longevity for Romanian ministers. Moreover, our estimations support the finding that Romanian ministers tend to have shorter tenures as the number of past ministerial functions increases and that the burden of simultaneously managing various ministries significantly contributes to the shorter political longevity of a given minister. Finally, recent ministers have had longer tenures than those in the first years after the fall of communism in Eastern Europe in 1989.     

Corporate social responsibility reports: topic analysis and big data approach

ABSTRACT

This paper performs topic modeling using all publicly available CSR (Corporate Social Responsibility) reports for all constituent firms of the major stock market indices of 15 industrialized countries included in MSCI Europe for the sample period from 1999 to 2016. Our text mining results and LDA analyses indicate that ‘employees safety’, ‘employees training support’, ‘carbon emission’, ‘human right’, ‘efficient power’, and ‘healthcare medicines’ are the common topics reported by publicly listed companies in Europe and the UK. There is a clear sector bias with industrial firms emphasizing ‘employee safety’, Utilities concentrating on ‘efficient power’ while consumer discretionary and consumer staples highlighting ‘food waste’ and ‘food packaging.’ To produce these results, we used a battery of python code to organize the hundreds of reports downloaded from Bloomberg and the internet, the latest R-algorithm to estimate LDA (Latent Dirichlet Allocation) model and the LDAvis interactive tool to visualize and refine the LDA model.     

The EU Electricity Sector Will Need Reform,Again

Intereconomics - The low-carbon transition, for example in line with the European Commission’s proposed Long-Term Strategy1 net-zero2 target by 2050 or the Commission President-elect...