The Actuarial Balance Sheet for Pay‐As‐You‐Go Finance: Solvency Indicators for Spain and Sweden*

This paper provides the first estimate of the actuarial balance of the Spanish contributory pension system for the old‐age contingency, based on official data. The main accounting entries are developed from the principles of double‐entry bookkeeping. The novel entry in the balance sheet, entitled the ‘contribution asset’ or ‘hidden asset’, is at the centre of the theoretical discussion. A comparison between the official balance sheet for the Swedish notional account system and our balance sheet for the Spanish contributory pension system is also provided. The main finding is that the Spanish pension system has an insolvency rate of 31.4 per cent. The policy implication is that unless current legislation is reformed, Spanish taxpayers (the plan sponsor) should count on making transfers to the pension system with a present discounted value of 31.4 per cent of current liabilities. Moreover, a comparison of the consecutive balance sheets for 2001‐06 shows that the degree of insolvency is growing over time, even though the cash‐flow outcome has improved over the same period. Taking steps to reverse this trend and restore solvency is in Spanish taxpayers' interest, and possibly also in the interest of those in the European Union who recognise that there is a chance that they may have to support the Spanish budget in the future.     

The Anticipated Capitalisation Effect of a New Metro Line on Housing Prices*

Housing units with closer access to public transportation enjoy a higher market value than those with similar characteristics but poorer access. This difference can be explained by the lower cost of transport to the main workplaces and shopping areas in town. For this reason, investments in public transport infrastructure, such as building a new metro line, are capitalised totally or partially into land and housing prices. This work empirically analyses the degree of capitalisation into housing prices of the benefits of the new Line 4 of the Santiago metro system, which began operating in December 2005. We focus on anticipated capitalisation into housing prices at the moment construction of Line 4 was announced and at the moment information on the basic engineering project was unveiled, identifying the location of the future stations. We use a unique database containing all home buying and selling transactions in the Greater Santiago area between December 2000 and March 2004. The results show that the average apartment price rose by between 4.2 per cent and 7.9 per cent after construction was announced and by between 3.1 per cent and 5.5 per cent after the location of the stations was identified. These increases were not distributed evenly, but depended on the distance from the apartment to the nearest station. An indirect effect of this kind of capitalization is that property tax collections will increase if property is reappraised following the price rise. This effect is not negligible in magnitude and could represent 11 to 17 per cent of investment in the new metro line. This raises and interesting discussion on how the metro network extension is financed.     

Work‐related perks,agency problems,and optimal incentive contracts

Work‐related perks, such as corporate jets, nice offices, and so forth, improve the tradeoff between incentives and insurance that determines the optimal incentive contract. We show that (i) such perks may be offered even if their direct consumption benefits are offset by their costs; (ii) they will be offered for free; (iii) agents in more uncertain production environments will receive more perks; (iv) senior executives should receive more perks; and (v) better corporate governance can lead to more perk consumption by CEOs. Our analysis also offers insights into firms' decisions about how much autonomy they should grant to their employees.     

The economic production quantity (EPQ) with shortage derived algebraically

Previously, in several papers and textbooks, the classical economic order quantity (EOQ) and the economic production quantity (EPQ) formulas for the shortage case, have been derived using differential calculus and solving two simultaneous equations (derived from setting the two first partial derivatives to zero) with the need to prove optimality conditions with second-order derivatives. In a previous original piece of work, a new approach to find the EOQ with backlogging using some slight algebraic developments appeared. This paper extends the mentioned algebraic approach to the EPQ formula taking shortages into consideration within the case of only one backlog cost per unit and time unit. The final expressions provide the same formulas that are available in the classic textbooks on inventory theory.     

Entrepreneur: do social capital and culture matter?

This paper analyzes the effect of the individual perceptions of social capital and culture in entrepreneurial aspirations before and after the economic crisis in Western Europe. Following the approach of the Theory of Planned Behavior (Ajzen in Organizational Behavior and Human Decision Processes, 50, 179–211, 1991), we advance the analysis of the effect of the perception of subjective norms in the entrepreneurial intentions. We studied the Total Early-Stage Entrepreneurial Activity (TEA) of twelve countries in 2006 and 2010. The results reveal that the perception of having social networks is significant for the TEA, and it increases after the economic crisis. However, the cultural factors do not have a significant impact, except the one related with the perception of social equality. The results obtained through the double perspective of this analysis (individual’s social capital vs cultural factor of individualistic perspective) offers a certain dilemma when we try to understand the entrepreneurial intntion through the individual’s perception of subjective norms, following the Ajzen’s model. The more individualist is a person, the lower the weight of its social capital. However, the more a person has access to social networks, the greater his entrepreneurial intention will be. This result opens future lines of research focused on understanding the value of the individual’s social capital for different countries and groups of entrepreneurs.

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Differences in work–family conflict: which individual and national factors explain them?

This paper contributes to cross-cultural literature on work–family relationships by testing not only hypotheses about the impact of work and family demands and gender at individual level on work–family conflict (WFC), but also at country level. Concretely, several theories commonly used in the literature (role conflict, boundary management and social support theory) are used to analyzed how national culture dimensions affects WFC. Using information about employee residents in each of the countries interviewed in the Second European Quality of Life Survey and also GLOBE dimensions of national culture, the paper shows that the relationship between work and family demands and WFC is universal and equal phenomenon throughout Europe. In line with gender role theory, demanding and stressing work have stronger effects on women’s WFC than on men’s. While opposite to it, household hours also have stronger effect on women’s WFC than on men’s. Moreover, the paper shows that national culture affects how people perceive work–family relationships. In line with integration/segmentation hypotheses derived from boundary management theory, uncertainty avoidance decreases WFC. Moreover, in line with social support, human orientation decreases the level of WFC, especially for men. Eastern Europe and Mediterranean countries have higher levels of WFC, while Scandinavian countries are those that have lower levels of WFC.     

Inflation and interest rates: Some time series evidence from 6 OECD countries

This study examines the time series properties of inflation and interest rates variables using monthly data from 6 OECD countries covering the period 1972.1–1984.8. The analysis focuses on the hypotheses that real rates of interest are constant over time and that movements in nomial rates can be explained by inflation only. These hypotheses are tested by applying both formal and informal test procedures and by carrying out tests both in the time and in the frequency domain. On the whole, the empirical evidence is at variance with these hypotheses. Only in the case of the United States do the results lend some support for the existence of the Fisher relationship.     

Entrepreneurial intention among University students in Malaysia: integrating self-determination theory and the theory of planned behavior

The present study endeavors to develop a deeper understanding of the motivational processes involved in intentional entrepreneurial behavior. For this purpose, it integrates the social cognitive approach of the theory of planned behavior (TPB) and the organismic theory of motivation of self-determination theory (SDT). More specifically, it tests the role of basic psychological needs of autonomy, competence and relatedness as defined in SDT in shaping university students’ attitudes and intentions toward entrepreneurship. The sample of this study consisted of 438 (Males?=?166, Females =272) 3rd and 4th year university students from four Malaysian Public Universities. The results of the study show that the model strongly explains about 71% of the variance in entrepreneurial intention. Basic psychological needs of autonomy, competence and relatedness have a strong indirect impact on entrepreneurial intention via their attitudinal antecedents: attitude, subjective norm, and perceived behavioral control. This indicates a full-mediational model, where the attitudinal factors operated as transmitters of effects from the distal constructs of SDT on entrepreneurial intention. These findings confirm that both SDT and the TPB provide complementary explanations of the motivational processes of entrepreneurial behavior. The study contributes to the existing knowledge by providing a theory-based understanding of the role of motivations in the formation of entrepreneurial intentions. It opens the way for future research to analyze how alternative motivations may affect new venture creation, survival and success.

     

Employees are satisfied with their benefits,but so what? The consequences of benefit satisfaction on employees’ organizational commitment and turnover intentions

Firms are increasing their efforts to offer benefits that satisfy their employees. However, the attitudinal and behavioral consequences of such satisfaction remain unclear. This article draws on the social exchange perspective and organizational support theory to examine the consequences of three dimensions of employees’ benefit satisfaction on organizational commitment and turnover intention, by considering the mediating effect of perceived organizational support (POS). A hypothesized model is developed and tested using partial least squares analysis on a sample of 870 employees working in Spanish firms. The results show that three dimensions of benefit satisfaction contribute to the development of POS, and that POS mediates their effects on organizational commitment. However, only benefit determination and benefit administration satisfaction have an effect on turnover intention, through the mediation of POS and organizational commitment.     

Is transfer pricing strictness deterring profit shifting within multinationals? Empirical evidence from Europe

This paper examines the extent to which the introduction and tightening of transfer pricing frameworks deter income shifting strategies by European multinational companies. To do so, we have built an index that measures the transfer pricing framework strictness by host country and year. Then, tax rate differentials are used to capture profit-shifting incentives and are interacted with the strictness index to assess whether the host country's transfer pricing framework impacts profit-shifting behaviour. The index is shown to increase significantly over the sample period, indicating that the scrutiny of related party transactions by European governments has increased over the period 2001–2009. Using a sample of European foreign subsidiaries, the results suggest that the stricter the transfer pricing framework the lower the tax rate difference sensitivity of reported earnings. This indicates that tightening the transfer pricing framework is capable of dissuading multinational companies from shifting profits from higher- to lower-tax countries.