The Technical Efficiency Impact of Farm Credit Programmes: A Case Study of Northern Germany

We analyse the technical efficiency of dairy farms in Schleswig‐Holstein that took part in the European Farm Credit Programme over the period 1987 to 1994. One goal of this programme is to increase the productivity of farms. We test whether participants show higher technical efficiency. We utilise a stochastic frontier model that allows for heteroscedasticity and estimation of determinants of technical inefficiency. Statistical tests indicate dominance of this model over alternative specifications. On average, we observe a high level of technical efficiency between 1987–94, but participation in the programme has rather led to a slight decrease. Thus, the programme seems to have failed to increase the competitiveness of farms.     

China and India in the global economy

The purpose of this overview paper is to present the economic growth in China and India over the last three decades with a specific focus on the integration of these countries into the global economy. In the first part, we briefly review the long-run process of growth and institutional change, emphasizing the reforms leading to the “opening” of the two economies. Then, we focus on key structural features and compare the recent development processes of the two countries. At the end, there are some hints about certain persisting imbalances and the sustainability of the growth processes.     

Hosting major sports events: the challenge of taming white elephants

While the literature on the economic impacts of major sports events has grown considerably over the years, the question of utilisation of venues built for these events after the party is over has received little attention. This article fills some of the gaps in the literature. By means of a Stadium Utilisation Index, it measures the post-event utilisation of venues that were constructed of significantly refurbished to host major sports events in the period from 1996 to 2010. It reveals some of the challenges facing the utilisation of the venues once ‘the circus has left town’. The regressions identify that private owned stadiums have a higher rate of utilisation than publicly built venues. The stadiums with the highest capacity tend to have higher utilisation. Last, but not least in terms of importance, stadiums in nations with a high degree of corruption had the lowest utilisation.     

Is doing more doing better? The relationship between responsible supply chain management and corporate reputation

Responsible supply chain management (RSCM) can help protect a firm's corporate reputation by shielding it from negative media attention and consumer boycotts. RSCM can also enhance a firm's corporate reputation, which allows firms to secure business contracts and penetrate new market segments successfully. This study empirically examines: (i) the extent to which responsible supply chain management practices is driven by a desire to protect corporate reputation; and (ii) whether responsible supply chain management can enhance corporate reputation and thereby generate competitive advantage to the firm. We draw on primary and secondary datasets across seven firms, spanning the publishing, technology, beverage, tobacco, finance and home improvement sectors. We find compelling evidence to suggest that firms often engage in RSCM due to a desire to protect corporate reputation. Similarly, we find empirical evidence to suggest that responsible supply chain practices can enhance reputation and thereby create competitive benefits, although this link is not as profound as the relationship between RSCM and reputation protection and there are significant variations across industries. These findings have significant implications for marketing theory and, in particular, industrial marketers, who are increasingly expected to implement responsible supply chain practices.     

The pricing kernel puzzle in forward looking data

The pricing kernel puzzle concerns the locally increasing empirical pricing kernel, which is inconsistent with a risk-averse representative investor in a single period, single state variable setting. Some recent papers worry that the puzzle is caused simply by the mismatch of backward looking subjective and forward looking risk-neutral distributions of index returns. By using a novel test and forward looking information only, we generally confirm the existence of a u-shaped pricing kernel puzzle in the S&P 500 options data. The evidence is weaker for tests against an alternative with a risk-neutral investor and for longer horizons.     

New model valuating for life assurances with invalidity benefits

Abstract

In a paper in this journal 1977, pp. 106–109 I described a technique splitting the risk element of a life assurance from the saving element. This technique can be extended to assurances with invalidity benefits. In Denmark, life assurances often include exemption of premium payment in case of invalidity caused by accident or disease.     

The front end of innovation in an era of industry convergence: evidence from nutraceuticals and functional foods

Industry convergence, defined as a 'blurring' of boundaries between industries, induced by converging value propositions, technologies and markets, appears to be a pervasive phenomenon leading to the emergence of inter-industry segments. A current example of convergence can be witnessed in the nutraceuticals and functional foods sector, emerging at the boundary between the food and pharmaceutical industries. Not only technologies blur, but there is also a convergence of demand structures: consumers try to satisfy different needs in one transaction. In this context, this paper explores how actors from different industry-specific resource backgrounds can engage in an innovative activity requiring new technological and marketing competences. Given that absorptive capacity is limited by existing competences, this paper asks how organizations with different R&D competences are able to seize opportunities for innovation emerging from convergence. Empirical findings based on primary data collected from 54 R&D projects of a nutraceutical cluster show that there are different approaches of front end decision making: while some firms follow existing processes for front end decision making, others leave existing paths and need partners to fill in gaps already identified at the front end of innovation.     

Investor protection and the value effects of bank merger announcements in Europe and the US

Investor protection regimes have been shown to partly explain why the same type of corporate event may attract different investor reactions across countries. We compare the value effects of large bank merger announcements in Europe and the US and find an inverse relationship between the level of investor protection prevalent in the target country and abnormal returns that bidders realize during the announcement period. Accordingly, bidding banks realize higher returns when targeting low protection economies (most European economies) than bidders targeting institutions which operate under a high investor protection regime (the US). We argue that bidding bank shareholders need to be compensated for an increased risk of expropriation by insiders which they face in a low protection environment where takeover markets are illiquid and there are high private benefits of control.     

Distance to default,subordinated debt,and distress indicators in the banking industry*

The recent financial crisis has highlighted the inadequacy of present supervisory arrangements to identify reliable ex‐ante indicators of banking distress. For a sample of US bank holding companies, we analyse the extent to which distance to default based on market data can be explained using accounting‐based indicators of risk. We show that a larger number of bank fundamentals help predict default for institutions that issue subordinated debt. For banks that issue sub‐debt, we find that higher charter values and low bank capitalizations further increase the power of bank fundamentals to predict default risk.