A comparison between qualitative and quantitative histories: the example of the efficient market hypothesis

ABSTRACT

This paper uses the example of the history of the efficient market hypothesis (EMH) and citation analysis in order to investigate some differences between qualitative history and a quantitative history. The history of the EMH provides a telling example of the way quantitative analyses can supply different perspectives on the qualitative history of this hypothesis or complement it. For instance, since the EMH was proposed, several criticisms emerged. In addition, the definition and the scope of this hypothesis have been modified several times. Although the qualitative history of the EMH refers to these criticisms and these alternative definitions and scopes, qualitative tools cannot provide a clear measure of the impact of these criticisms and these modifications among economists. By studying the dissemination of the EMH, its major criticisms, and the answers economists provided, citation analysis sheds a different light on the history of the EMH.     

Judicial impartiality in politically charged cases

This paper examines under which institutional and political circumstances tenured public officials make partisan decisions. It analyzes the decisions of the judges from the French supreme administrative court regarding the validity of controverted mayoral elections between 1958 and 2007 and uses the vote differential between winners and losers in each election as a quasi-natural experiment to assess the judges’ impartiality. It appears that the judges became partisan after 1981, when the far-right Front National party started to gain more votes. Before 1981, judges cancelled elections only when the vote differential between the election winner and the closest challenger was small. Afterwards, the affiliation of the parties’ candidates also mattered as judges seldom cancelled elections won by communist, mainstream left-wing and mainstream right-wing politicians.     

An exploration into Pigou's theory of cycles

This paper explores a theory of business cycles in which recessions and booms arise due to difficulties encountered by agents in properly forecasting the economy's future needs in terms of capital. The idea has a long history in the macroeconomic literature, as reflected by the work of Pigou (Industrial Fluctuation, MacMillan, London, 1926). The contribution of this paper is twofold. First, we illustrate the type of general equilibrium structure that can give rise to such phenomena. Second, we examine the extent to which such a model can explain the observed pattern of U.S. recessions (frequency, depth) without relying on technological regress. We argue that such a model offer a framework for understanding elements of both the recent U.S. recession and of the Asia downturns of the late 1990s.     

Modeling the business risk of financially weakened firms: A new approach for corporate bond pricing

Most structural models of default risk assume that the firm's asset return is normally distributed, with a constant volatility. By contrast, this article details the properties that the process of assets should have in the case of financially weakened firms. It points out that jump-diffusion processes with time-varying volatility provide a refined and accurate perspective on the business risk dimension of default risk. Representative Arrow-Debreu state price densities (SPD) and term structures of credit spreads are then explored. The credit curves show that the business uncertainties play a major in the pricing of corporate liabilities.     

Does Contact Between Employees and Service Recipients Lead to Socially More Responsible Behaviours? The Case of Cleaning

Cleaning occupations, which in recent years have accounted for a not inconsiderable share of employment and job creation in France, are characterised by particularly bad working conditions and low pay. Is this situation inevitable? Are there not in fact mechanisms that might lead employers in the cleaning sector to adopt socially more responsible behaviours towards their employees? After all, the literature on corporate social responsibility suggests that the actions of consumers could be one of these mechanisms. The aim of our paper is to test the impact on job quality of contact between cleaning workers and service recipients. To this end, we analyse data from a survey carried out by the French Ministry of Labour and supplemented by interviews. Our results indicate that contact with service recipients does indeed have an influence.     

The Predictive Power of the French Market Volatility Index: A Multi Horizons Study

The main purpose of this paper is to examine empirically the time series properties of the French Market Volatility Index (VX1). We also examine the VX1's ability to forecast future realized market volatility and finds a strong relationship. More importantly, we show how the index can be used to generate volatility forecasts over different horizons and that these forecasts are reasonably accurate predictors of future realized volatility.     

Motives for fixed-asset revaluation: An empirical analysis with Swiss data

This paper investigates the economic motives of fixed-asset revaluations of Swiss listed companies. We provide international insights on revaluation motives, particularly in a stakeholders' regime, over a period which is characterized by significant changes of the accounting standards relative to fixed-assets valuation. We also test the impact of international stakeholders on the choice of whether to revalue assets. Results from pooled data show positive associations between revaluation and both the proportion of foreign sales and leverage, and a negative association with the investment opportunities. These findings suggest that revaluation is used as a device to improve creditors' and foreign stakeholders' perceptions of the financial health of the firm and thereby improve the firm's borrowing capacity. Cross-sectional results show that although leverage has declined over the periods investigated, interest rates have become lower for firms that revalue upward their fixed assets (compared to non-revaluers), emphasizing the debt-costs hypothesis.     

Package Graphic Design: Investigating the Variables that Moderate Consumer Response to Atypical Designs

Designers and marketing managers often agree that visual codes, in terms of product and package design, typify certain product categories. These “category‐based visual codes” refer to the formal and graphic characteristics most frequently seen in a given category, like specific shapes, colors, materials, typefaces, layouts, and illustrations. Given that the concept of “category‐based visual codes” seems to be connected with the concepts of “perceived typicality,” “cognitive categories,” “family resemblance,” and “design newness,” this research examines the impact of typicality/atypicality judgments regarding the visual appearance of a product on consumers' aesthetic appreciation and purchase intent. Several studies have sought to determine the relationships among design perceived typicality, aesthetic appreciation, and purchase intent. However, the literature indicates contradictory results. While some studies have shown a preference for the most typical design, others have demonstrated that consumers prefer moderately atypical design. This paper offers an explanation for this discrepancy by providing evidence that the relationships among design perceived typicality, aesthetic appreciation, and purchase intent are a case of moderated mediation. An empirical study using wine labels was conducted with 780 respondents. The results indicate that the relationships among perceived typicality, aesthetic appreciation, and purchase intent are linear and positive, although several individual variables have a moderating effect. Thus, it appears that certain consumer segments are more likely to appreciate atypical packages. Moreover, the level of perceived risk at the time of purchase also plays an essential role. Consumers are more apt to accept atypical packaging when the perceived risk is low. Several theoretical and managerial implications are drawn from these results.     

DETERMINANTS OF CAPITAL STRUCTURE IN BUSINESS START‐UPS: THE ROLE OF NONFINANCIAL STAKEHOLDER RELATIONSHIP COSTS

According to the finance literature, nonfinancial stakeholders (NFS), such as customers, suppliers, and employees, take into account their expected liquidation costs when dealing with a firm. In this framework, firms can influence their probability of liquidation by choosing an appropriate capital structure. Also, the literature suggests NFS bargaining power may affect firm financing decisions. In the current article we investigate these ideas for initial financing decisions by business start‐ups, where ex ante failure risk is high and NFS must decide whether to make relationship‐specific investments. We find that start‐ups imposing larger costs on their NFS following liquidation significantly reduce leverage. This effect is strengthened when suppliers have greater bargaining power. We also document a marginally negative effect of NFS liquidation costs on the proportion of bank loans. Finally, business start‐ups rely less on bank loans when customers and suppliers are in a powerful bargaining position.