Persistence and Kurtosis in GARCH and Stochastic Volatility Models

This article shows that the relationship between kurtosis, persistenceof shocks to volatility, and first-order autocorrelation ofsquares is different in GARCH and ARSV models. This differencecan explain why, when these models are fitted to the same series,the persistence estimated is usually higher in GARCH than inARSV models, and, why gaussian ARSV models seem to be adequate,whereas GARCH models often require leptokurtic conditional distributions.We also show that introducing the asymmetric response of volatilityto positive and negative returns does not change the conclusions.These results are illustrated with the analysis of daily financialreturns.     

The adoption of IFRS in Australia: The case of AASB 138 (IAS 38) Intangible Assets

AASB 138 Intangible Assets, adopted by reporting entities in Australia for annual reporting periods beginning on or after 1 January 2005, required derecognition of internally generated intangible assets. Prior to its adoption, the standard was widely expected to have a substantial impact on the reports of affected listed entities. On the basis of information available in the 2004/05 annual reports, this paper projects the expected effects of AASB 138 on reported intangible assets and on key financial measures. It compares these projected measures to the realised measures, reported under both Australian GAAP and AIFRS in the 2005/06 reports. While reported intangible assets and the debt to equity ratio were expected to change significantly as a result of AASB 138, the reported AIFRS results show a significant change in only the debt to equity ratio. The paper considers reasons why the pre-adoption expected changes did not eventuate, and also how the actual changes were reported to stakeholders in the management discussion sections of the annual reports. The conclusion draws implications regarding the transparency of communication in annual reports.     

Allocative and distributional effects of a monopolistic cooperative firm in a capitalist economy

It is well known that labor-managed firms operating under socialism exhibit “bizarre” behavior with respect to their production strategy. We prove that under capitalism most of these distortions disappear, consequently, the production strategies of an entrepreneurial monopoly and of the labor-managed firm become indistinguishable. However, there appears an almost inherent instability in the distribution of profits. The degree of instability depends on the existence of some sort of supportive legislation. Thus, unlike under socialism, in a capitalistic economy the labor-managed firm may have an effect on the distribution of profits at most.     

Children's Responses to Advertising in Social Games

This study explored children's (ages 9 through 12) level of persuasion knowledge and peer influence susceptibility concerning advertising in social games and investigated how these variables affect children's desire for the brands advertised in these games. Results showed that (1) children have a fairly good knowledge of the advertising in social games yet hold uncritical attitudes toward it and claim to be not very susceptible to peer influence; (2) the most important predictors of children's desire for the advertised brands are a low critical attitude and high peer influence susceptibility; and (3) recognition and understanding of advertising in social games is effective in reducing advertised brand desire only for children who are familiar with social games.     

Mergers and Exclusionary Practices in Health Care Markets

We evaluate the relationship between insurers (payers) and providers of health care (hospitals) when they each have a nonnegligible share of the market. We focus in particular on their incentives to merge and the existence of equilibria where payers offer preferential treatment to a subset of hospitals. We demonstrate that hospitals are more likely to merge without consolidating their capacities the less competitive they are vis-à-vis the payer's market. Payers are more likely to merge without consolidating their capacities the less competitive either the hospitals' or the payers' market is. A given payer follows an exclusionary strategy when its starting bargaining position vis-à-vis hospitals is weak. At such exclusionary equilibria, payers tend to distinguish themselves from neighboring payers by contracting with a different subset of hospitals.     

Nationality and low-cost trip duration. A microeconometric analysis

This study examines the determinants of trip duration of international tourism using low-cost carrier services from the UK, Germany, France and Italy; top tourist emitting countries in the EU. Data is from a survey conducted for one of the largest low-cost carriers tourist markets; the Girona–Catalonia region in Spain. A model of traveller/tourist demand is estimated using an econometric duration model. It is found that that while there are some common effects for associated with the four nationalities of tourist, some differences exist relating to such things as age or education.     

Offshore Financial Centres in the Caribbean: Prospects in a New Environment

This paper reviews the development of offshore financial activities in the English‐speaking Caribbean islands and takes stock of the size of these sectors today, and analyses the future prospects. A number of Caribbean jurisdictions are market leaders in the offshore products they offer and have identified the growth of this sector as a development strategy. Established centres in the Bahamas, Barbados and Cayman Islands have managed to become global players and have generated sizeable gains in employment and income. However, in view of the heightened concerns by the international community about money laundering and more recently, terrorist financing, the costs of compliance and risks to countries of having or establishing offshore sectors have risen considerably. This is particularly relevant to the newer entrants, with significant regulatory differences from international standards. The paper assesses the risks, benefits and costs of compliance with international best practices for established and newer offshore jurisdictions. The paper asks the questions whether offshore jurisdictions constitute a sustainable development strategy and concludes that for nascent jurisdictions, the gains are very small.     

The Effects of Institutional Distance and Headquarters’ Financial Performance on the Generation of Environmental Standards in Multinational Companies

This article combines institutional and resources’ arguments to show that the institutional distance between the home and the host country, and the headquarters’ financial performance have a relevant impact on the environmental standardization decision in multinational companies. Using a sample of 135 multinational companies in three different industries with headquarters and subsidiaries based in the USA, Canada, Mexico, France, and Spain, we find that a high environmental institutional distance between headquarters’ and subsidiaries’ countries deters the standardization of environmental practices. On the other hand, high-profit headquarters are willing to standardize their environmental practices, rather than taking advantage of countries with lax environmental protection to undertake more pollution-intensive activities. Finally, we show that headquarters’ financial performance also imposes a moderating effect on the relationship between environmental institutional distance between countries and environmental standardization within the multinational company.     

Entrepreneur Attributes and Formalization of Micro,Small and Medium Enterprises in Tanzania

New institutional economics literature underscores the role of entrepreneur attributes in structuring the entrepreneur’s views and decision-making about (in)formalizing the business while considering the environment which shapes one’s perceptions. However, empirical knowledge on same, based on the African/Tanzanian context, remains scant. Based on Tanzanian national survey data from 5549 micro, small and medium enterprises, this paper assesses the influence of entrepreneur attributes on business formalization while controlling for structural and institutional factors. The results reveal that attributes likely to increase the probability of formalizing one’s business include being either a male, aged between 31 and 50, opportunity-driven or having at least secondary education.