Real options with unknown-date events

The real options literature has provided new insights on how to manage irreversible capital investments whose payoffs are uncertain. Two of the most important predictions from such theory are: (i) greater risk delays a firm’s investment timing, and (ii) greater risk increases the option value of waiting. This paper challenges such conclusions in a setting in which the relevant random variable is the arrival time of an unfavorable event. In particular, we model situations in which a firm must choose the time at which to invest in a project whose profit grows at a known rate until a random date is reached and decays thereafter, which may be representative of stochastic product or industry life cycles. This is a novel framework in which a firm can update its beliefs about the profitability of an investment opportunity by simply waiting to invest. Thus, a wait-and-see approach allows the firm to capitalize on favorable market evolutions and avoid adverse ones to some extent. Our framework is simple and does not require using stochastic calculus, which allows for an economic interpretation of optimal investment policies for the cases of one-time and sequential investments.     

Noncentral bimatrix variate generalised beta distributions

In this paper, we determine the density functions of nonsymmetrised doubly noncentral matrix variate beta type I and II distributions. The nonsymmetrised density functions of doubly noncentral and noncentral bimatrix variate generalised beta type I and II distributions are also obtained.     

A netnographic sensibility: developing the netnographic/social listening boundaries

Netnography is constantly evolving as technologies and access to online data develop. Our paper outlines how large data sets of social media can be analysed through bridging the divide between the small, rich and contextually nuanced data that is the hallmark of netnography and the scope and scale of data made possible through social media listening conventions. We define this approach as netnographic sensibility and with the use of a short case study discuss the process through which social media data could be gathered, triangulated and analysed. We orientate the paper around two interrelated questions: investigating how netnographic insights can be extended using social media monitoring tools, and asking how this can be used to add richness and depth to understanding mass consumer realities. Our contribution complements the widely established methodological approach of netnography as we argue that netnography has the capacity and capability to embrace technological advances within the domain of social listening to add value for academic researchers.     

Understanding the Racial/Ethnic Gap in Bank Account Ownership among Older Adults

The observed racial/ethnic gap in bank account ownership among older adults is substantial. We investigate socioeconomic, cognitive, and cultural barriers underling it. As additional potential barriers are accounted for, the residual gaps in financial inclusion with respect to Whites are reduced by 19% for blacks and 46% for Hispanics. We find that citizenship and “taste for privacy” play a limited role for both minority groups, while real asset ownership, health, cognitive ability, and cultural hurdles contribute substantially to the gap. For Hispanics, language barriers explain most of the gap, while neighborhood‐level socioeconomic characteristics are more salient for blacks. We also examine how the racial/ethnic composition of couples influences financial decisions. We estimate a significantly smaller residual gap between “mixed” and white couples than between minority and white couples. We provide empirical evidence suggesting that, other things equal, mixed couples are less concerned with the cultural/psychological barriers facing minority couples.     

Bergstrom,Blume, and Varian: Voluntary contributions and neutrality

Bergstrom, Blume, and Varian provided a neutrality result for the private provision of public goods that has inspired a considerable literature. The result has significant implications for income redistribution and broader policy interventions. This paper reviews the basic result and its applications, and discusses extensions to general private provision economies.     

Monitoring,Corporate Performance and Institutional Directors

Our main objective is to study the effect of institutional directors on firm performance, distinguishing directors according to whether they maintain business relationships (pressure‐sensitive) or not (pressure‐resistant). Our results show that in weak regulatory and low investor protection environments, institutional directors have a negative impact on corporate performance. Our evidence shows that this negative effect is mainly driven by the role of pressure‐resistant directors and not for those directors representing mainly banks and other financial institutions with a long‐term investment horizon. These findings have implications for numerous parties, such as institutional investors, regulators, potential new board members and other corporate governance reform proponents, who frequently examine board characteristics to assess the effectiveness of boards in value‐creation policies.     

A spatial approach to the FDI-growth nexus in Spain: Dealing with the headquarters effect

This paper examines the effects of inward FDI on economic growth across the Spanish regions over the period 1996–2013, paying particular attention to the ‘headquarters effect’, namely that FDI is not always registered where it is effectively made but in the region in which the firm’s headquarters is located. By estimating a panel Spatial Durbin Model to allow for the detection of spatial spillovers, two main findings are reported. First, FDI does foster economic growth. Second, only when the headquarters effect is properly addressed do spatial spillovers arise. Hence, this effect is masking the impact of regional FDI spillovers on growth, which affects the reliability of the results and, consequently, FDI policies choice. Importantly, the results are: a) robust to the way of computing the headquarters effect; b) independent of the spatial weight matrix specification; and c) confirmed when splitting FDI into different industrial and service branches.     

Corporate governance and the probability of default

We employ Merton's probability of default as a continuous ex‐ante measure of the likelihood of firm failure and dynamic panel generalised method of moments to better characterise the relationship between corporate governance and the chance of default. In doing so, we overcome limitations of discrete proxies widely used in previous studies and more completely account for endogeneity issues permeating this area of research. While initial testing designed to facilitate comparison with previous studies suggests a significant relationship between the probability of default and executive pay, board structure and ownership structure, once endogeneity concerns are accounted for, no such relationship remains.     

Economic impact of onabotulinumtoxinA for overactive bladder with urinary incontinence in Europe

Background: Overactive bladder (OAB) is a common condition that has a significant impact on patients’ health-related quality-of-life and is associated with a substantial economic burden to healthcare systems. OnabotulinumtoxinA has a well-established efficacy and safety profile as a treatment for OAB; however, the economic impact of using onabotulinumtoxinA has not been well described.

Methods: An economic model was developed to assess the budget impact associated with OAB treatment in France, Germany, Italy, Spain and the UK, using onabotulinumtoxinA alongside best supportive care (BSC)—comprising incontinence pads and/or anticholinergic use and/or clean intermittent catheterisation (CIC)—vs BSC alone. The model time horizon spanned 5 years, and included direct costs associated with treatment, BSC, and adverse events.

Results: Per 100,000 patients in each country, the use of onabotulinumtoxinA resulted in estimated cost savings of €97,200 (Italy), €71,580 (Spain), and €19,710 (UK), and cost increases of €23,840 in France and €284,760 in Germany, largely due to day-case and inpatient administration, respectively. Projecting these results to the population of individuals aged 18 years and above gave national budget saving estimates of €9,924,790, €27,458,290, and €48,270,760, for the UK, Spain, and Italy, respectively, compared to cost increases of €12,160,020 and €196,086,530 for France and Germany, respectively. Anticholinergic treatment and incontinence pads were the largest contributors to overall spending on OAB management when onabotulinumtoxinA use was not increased, and remained so in four of five scenarios where onabotulinumtoxinA use was increased. This decreased resource use was equivalent to cost offsets ranging from €106,110 to €176,600 per 100,000 population.

Conclusions: In three of five countries investigated, the use of onabotulinumtoxinA, in addition to BSC, was shown to result in healthcare budget cost savings over 5 years. Scenario analyses showed increased costs in Germany and France were largely attributable to the treatment setting rather than onabotulinumtoxinA acquisition costs.