Can sustainable investments outperform traditional benchmarks? Evidence from global stock markets

To contribute to overcoming global sustainability challenges, investors have been increasingly interested in making sustainable investments and incorporating environmental, social and governance (ESG) criteria into their portfolio selection decisions and managerial activities. However, these investors and other agents interested in sustainable investment need updated and robust information to support their decision making. We analyzed the performance of several Dow Jones Sustainability Indices (DJSIs) and compared them with their respective market benchmarks from 2013 to 2018. The indices comprise the following regions and countries: the world, the Asia‐Pacific, Europe, emerging markets and the US. The analysis was conducted based on both classic and modern portfolio metrics. The results suggest that sustainable investment performance is still heterogeneous worldwide, but there is a promising opportunity for investors to obtain superior risk‐adjusted returns in certain regions while incorporating sustainable investment practices. The findings are of utmost importance to financial market practitioners, business managers, academics and other stakeholders interested in promoting investments, corporate practices and scientific knowledge to achieve the Sustainable Development Goals (SDGs).     

The relationship between tax rates and tax revenues in eurozone member countries - exploring the Laffer curve

We estimate Laffer Curves for direct and indirect taxes for each Eurozone country, using panel data from 1995 to 2011, by means of Seemingly Unrelated Regression (SUR) models. We choose the three taxes that contribute the most to the government tax revenue: the value added tax (VAT), the corporate income tax (CT), and the labour income tax (LT). From our estimated significant parameters, which have the expected signs according to the Laffer Curve theory, we obtained a maximum/optimal tax rate for VAT for Greece, Portugal, and Slovakia and for the majority of the Eurozone countries for direct taxes. We also take into consideration the business cycle. Many countries do not present differences in regime, and when they do, the optimal tax rate is higher during recessions. Finally, we compare the observed tax rates in 2012 to the estimated optimal tax rates, to assess if the 2012 policy was located at the prohibitive range of the Laffer Curve. Our results are important for the discussions about fiscal discipline and harmonization in the Eurozone, since they exhibit important disparities between countries and taxes. We can see that, especially for CT and LT, there is a strong divide between the values of the optimal maximum tax rates for Eastern European countries and Western European economies. Additionally, the economic and financial conditions of each country also influence the value for the tax rate.     

Unveiling investor-induced channels of financial contagion in the 2008 financial crisis using copulas

Understanding how financial crises spread is important for policy-makers and regulators in order to take adequate measures to prevent or contain the spread of these crises. This paper will test whether there was contagion of the subprime financial crisis to the European stock markets of the NYSE Euronext group (Belgium, France, the Netherlands and Portugal) and, if evidence of contagion is found, it will determine the investor-induced channels through which the crisis propagated. We will use copula models for this purpose. After assessing whether there is evidence of financial contagion in the stock markets, we will examine whether the ‘wealth constraints’ transmission mechanism prevails over the ‘portfolio rebalancing’ channel. An additional test looks at the interaction between stock and bond markets during the crisis and allows us to determine if the transmission occurred due to the ‘cross market rebalancing’ channel or the ‘flying to quality’ phenomenon. The tests suggest that (i) financial contagion is present in all analyzed stock markets, (ii) a ‘portfolio rebalancing’ channel is the most important crisis transmission mechanism, (iii) and the ‘flight-to-quality’ phenomenon is also present in all analyzed stock markets.     

Conflict, Distribution and Population Growth

This paper studies an optimal foraging model where distributive conflicts among foragers emerge from population growth. It investigates distributive rules set to resolve the conflicts. Efficient distributive rules are the ones associated with the most efficient productive decisions. Unequal societies, where the ruling class or King maximizes the surplus, engender the choice of more efficient productive combinations and to a smaller population relative to egalitarian societies.     

A model of the learning process with local knowledge externalities illustrated with an integrated graphical framework

We present a unified graphical framework accounting for the nature and impact of spillover effects. The dynamics of the learning process with a specific spillover transfer mechanism can be illustrated by referring to this four-quadrant picture. In particular, a whole cycle of technological learning is explained with the help of such a graphical representation of the basic learning process in the presence of knowledge spillovers.

We hypothesize two different functional specifications of spillover exchanges among firms within a local innovation system. Each conceivable shape for the knowledge transfer relationship among firms expresses a possible mode and intensity of information processing arising from technology spillovers. A general proposition regarding the relative efficiency of the two alternative formal models with spillover effects is derived. The basic models with spillover effects are then extended in several relevant directions.     

The Brazilian bankruptcy law reform,corporate ownership concentration,and risk-taking

We investigate whether a bankruptcy reform, which increased creditors' protection, affected the risk taking of Brazilian firms. Collecting data from Brazilian (treatment group) and Argentinian, Chilean, Colombian, Mexican, and Peruvian firms (control group) and using a difference-in-difference technique, we show that Brazilian firms with concentrated ownership structure decreased risk taking after the reform. Our results suggest that these firms reduced risk in response to increasing creditors' protection, possibly because controlling shareholder fear losing control. Moreover, our results indicate that the reform probably provoked a wealth transfer from minorities to controlling shareholders.     

Stress at the top: myth or fact? Causal explanations from a fuzzy-set qualitative comparative analysis (fsQCA)

Stress and its associated health issues are a serious concern, because they not only affect employees but also organizations through related costs. The common perception is that being at the top of a hierarchy is associated with higher levels of stress because of the increased responsibilities, challenges, and demands. The present study examines this perception by applying a fuzzy-set qualitative comparative analysis. The study investigates how the top position, authority, number of subordinates, workload, and a sense of control, alone or in combination, lead to stress or its absence. The results show that there are several recipes for stress and that being (or not being) in the top position is neither a sufficient nor a necessary condition for stress (or absence of stress). One of the recipes, however, indicates that being in the top position might be conducive to stress. This finding shows that the position an individual has in the hierarchy does not determine stress. The present study also shows that the absence of a sense of control is almost always a necessary condition for predicting stress and is present in all recipes for the absence of stress. The results can inform managers about the conditions that cause stress and enable managers to think about solutions that can lead to good mental health in their organizations.     

The Tragic Consumer: A Nietzschean Reading of Irremediably Unsatisfactory Consumption

This essay criticizes the romantic ethic of consumption (Campbell, 1987) from the tragic perspective (Nietzsche, 2006). By tragic, we refer to the constant tension between Apollo and Dionysius (Nietzsche, 2006, p. 47). It is suggested that the romantic ethic of consumption, which orders our existence, is associated with Apollonian ideals, thus, creating a protective and individuating illusion against the chaotic, the amorphous, and the contradictory—characteristics associated with the Dionysian. What has been considered as the romantic-Apollonian ethic of consumption promises to satiate our desires (Campbell, 2006), even though this is not possible since incompleteness is inherent to the individual (Freud, 1996, 1997). This ethic may prove frustrating for some consumers since the satiation of wills has a transient effect and the individual therefore remains in a state of desire. In cases like these, an alternative to the romantic meaning would be the adoption of a tragic conception of consumption, a conception consubstantiated in the knowledge of its uselessness as a strategy to recover a lost completeness. Thus, this article describes the figure of the tragic consumer, the one who knows the chaotic side of the act of consuming, but who reaffirms his or her will, either consuming—since he perceives that there is no escape from the logic imposed by consumption—or by choosing to abandon specific categories of goods that do not respond to the reiteration of his will. As a practical instance for the development of this critique, we have reflected on the phenomenon of category abandonment (Suarez & Chauvel, 2012).