Corporate Ethics Practices in the Mid-1990's: An Empirical Study of the Fortune 1000

This empirical study of Fortune 1000 firms assesses the degree to which those firms have adopted various practices associated with corporate ethics programs. The study examines the following aspects of formalized corporate ethics activity: ethics-oriented policy statements; formalization of management responsibilities for ethics; free-standing ethics offices; ethics and compliance telephone reporting/advice systems; top management and departmental involvement in ethics activities; usage of ethics training and other ethics awareness activities; investigatory functions; and evaluation of ethics program activities. Results show a high degree of corporate adoption of ethics policies, but wide variability in the extent to which these policies are implemented by various supporting structures and managerial activities. In effect, the vast majority of firms have committed to the low cost, possibly symbolic side of ethics management (e.g., adoption of ethics codes and policies, etc.). But firms differ substantially in their efforts to see that those policies or codes actually are put into practice.     

More leeway for unilateral trade measures?

The report of the WTO Appellate Body in the shrimp-turtle case may prove to be of fundamental importance for the development of the GATT/WTO system. It asserts that a WTO member can unilaterally condition access to its market on compliance with environmental policies, as long as the regulations are administered in an even-handed manner and do not amount to disguised protectionism. Will the incidence of unilateral trade measures increase dramatically as a result of this decision?     

Early exercise of American put options: Investor rationality on the Swedish equity options market

Using Swedish equity option data, this study investigates how well the actual exercise behavior of American put options corresponds to the early exercise rules. The optimal exercise strategy is established in two ways. First, the critical exercise price, above which a put option should be exercised early, is computed and compared to the actual exercise price. Second, the exercise value of the option is compared to its market bid price. The results show that most early exercise decisions conform to rational exercise behavior, even though a large number of failures to exercise are found. Most of the faulty exercises can also be discarded after a sensitivity analysis, although several failures to exercise are considered irrational, even after taking transaction costs into account. © 2000 John Wiley & Sons, Inc. Jrl Fut Mark 20:167–188, 2000     

Abolishing the Tax‐Free Threshold in Australia: Simulating Alternative Reforms*

This paper examines the role of the tax‐free income tax threshold in a complex tax and transfer system consisting of a range of taxes and benefits, each with its own taper rates and thresholds. Considering a tax and benefit system with benefit taper rates whereby some benefits are received by income groups other than those at the bottom of the distribution, it is suggested that a tax‐free threshold is not a necessary requirement to achieve redistribution. Four alternative policy changes, each involving the elimination of the tax‐free threshold in Australia and designed to achieve approximate revenue neutrality, were examined using the Melbourne Institute Tax and Transfer Simulator. A range of implications were examined, including labour supply responses to tax changes and the effects of policy changes on inequality and social welfare. The results demonstrate that it is possible to eliminate the tax‐free threshold under approximate overall revenue and distribution neutrality, but that it is impossible to improve labour supply incentives at the same time. In order to achieve improved incentives, either revenue or distribution neutrality has to be sacrificed.     

Commonalities in the order book

This paper uses data from one of the most important European stock markets and shows that, in line with predictions from theoretical market microstructure, a small number of latent factors captures most of the variation in stock specific order books. We show that these order book commonalities are much stronger than liquidity commonality across stocks. The result that bid and ask side as well as the visible and hidden parts of the order book exhibit quite specific dynamics is interpreted as evidence that open order book markets attract a heterogeneous trader population in terms of asset valuations and impatience. Quantifying the informational content of the extracted factors with respect to the evolution of the asset price, we find that the factor information shares are highest (about 10%) for less frequently traded stocks. We also show that the informational content of hidden orders is limited.

Towards the global adoption of XBRL using International Financial Reporting Standards (IFRS)

XBRL is a language based on XML for the electronic communication of business information. It is designed to improve the exchange, aggregation and analysis of corporate data requiring disclosure, through a unique tagging structure that provides interoperability. But, the proliferation of a multitude of XBRL taxonomies, based on different accounting principles, can risk the objectives of standardization, comparability and re-usability of the information that is sought with XBRL. It is therefore essential to develop global accounting standards as a unique foundation on which the XBRL taxonomies can be established, so that it becomes possible to compare the financial information originating from various countries. Along these lines, the International Financial Reporting Standards (IFRS-GP) taxonomy was created to establish a common ground for international firms and create a platform that would enhance the benefits of XBRL. This paper examines whether the IFRS-GP taxonomy, at its current state, adequately covers European companies' dissemination practices and strengthens the benefits of XBRL. Our results provide implications for the evaluation of the effectiveness of the IFRS-GP taxonomy and shed light on directions that may lead to the improvement of this taxonomy.     

Inference on vertical contracts between manufacturers and retailers allowing for nonlinear pricing and resale price maintenance

We present a model of vertical contracts between manufacturers and retailers with nonlinear pricing strategies. Using home‐scan data on bottled water produced by manufacturers and sold by retail chains in France, we estimate a structural demand and supply model allowing for two‐part tariff contracts between manufacturers and retailers. Using price‐cost margins recovered from estimates of demand parameters, we select the best supply model by performing nonnested tests, and find that manufacturers use two‐part tariff contracts with resale price maintenance. We then perform counterfactual policy simulations that restrict the use of these vertical contracts and assess welfare effects under alternative scenarios.     

The ancillary insolvency proceeding

The main legal acts on International Insolvency Law (the European Regulation, the UNCITRAL Model Act and the European Convention on Certain International Aspects of Bankruptcy) lay down several local proceedings with substantive effects as regards the debtor, the distribution of proceeds and the ranking of claims. These—full—proceedings are characterized by a high degree of unpredictability and prove to be inadequate for creditors. These are the reasons why, as an immediate solution, the existing insolvency rules should be reinterpreted according to a certain logic of the market. However, such revision would only partially and provisionally solve the inconveniences of the current model. The true and ‘unsolvable’ problem is that even though the full local proceeding is based on international assistance, it alters the substantive insolvency rules. Therefore, in future it would be necessary to create a truly ancillary proceeding. Such a proceeding would not have any substantive effect as regards the debtor, the creditors and third parties, nor would it require any kind of distribution of proceeds and ranking of claims. However, this proceeding would enable to provide procedural assistance to foreign courts and procedural protection to local creditors. Copyright © 2010 John Wiley & Sons, Ltd.     

The insolvent subsidiary and liability of the parent corporation in the USA,Argentina, and UNCITRAL

The increasing unacceptability of the concept of entity law and the emergence of the doctrine of enterprise law with respect to many aspects of the legal relationships of parent and subsidiary corporations particularly in insolvent situations is a very interesting issue. This change is very significant because it reflects a growing unwillingness on the part of the courts and legislatures to continue accepting the traditional view of corporate law when it no longer corresponds to the economic reality of the modern business enterprise in a complex industrialized international society. This paper examines the American case law and in particular the decisions that have imposed liability where a company is liable for the obligations of an insolvent subsidiary and by contrast the decisions that have denied liability. The paper also examines the position in Argentina within the Argentine law and the UNCITRAL recommendations in respect of liability issues within corporate groups in insolvency. Copyright © 2010 John Wiley & Sons, Ltd.     

The effects of customer age and recovery strategies in a service failure setting

The aim of this article is to explore the relationship between the type of service failure, age and the customer's negative emotions after a service failure; as well as the relationship between these emotions, the recovery strategies executed and service recovery satisfaction. The proposed model is tested on a sample of financial services customers who suffered some type of failure. The results indicate that the customer's age has a negative impact on the intensity of the negative emotions experienced after a service failure. In addition, the type of service failure (process or outcome) interacts with the age variable on its effect on these negative emotions. Finally, results also show that recovery strategies offset the negative effect of negative emotions on customer satisfaction and that a compensation strategy is more efficient if offered quickly.