Born under a lucky star? Latin American CEOs' perceptions about their own career development

This article explores Latin American Chief Executive Officers' (CEOs') perceptions about the influence of career self-management practices and chance events on their career pathways. Through an edited topical life story approach, we investigate the relationship between those variables throughout CEO's career trajectories in the Latin American context. Semi-structured in-depth interviews with 22 CEOs working for multinational companies were conducted. Interviews were transcribed and analyzed with the aid of QSR NVivo 7 software. The study showed that even in volatile macroeconomic environments, typical of Latin American countries, CEOs do plan their careers. Career planning constitutes the backbone of the career management process. To deal with low predictability chance events, CEOs relied on active development network as the main career self-management practice. However, choice of mobility was the key career self-management behavior when responding to high predictability chance events. These central strategies were frequently combined with other career self-management practices, taking into consideration the type of chance event being responded to. According to this study, if individuals want to develop their careers in unstable environments, they will need to be proficient in career self-management practices, with particular emphasis on network development and choice of job mobility, as well as in happenstance skills.     

Implications of the Joint Provision of CSR Assurance and Financial Audit for Auditors' Assessment of Going-Concern Risk

We examine whether the joint provision of corporate social responsibility (CSR) assurance services and financial audit by the same audit firm influences auditors' assessment of going-concern risk. We predict that the provision of CSR assurance and financial audit by the same audit firm creates CSR-related knowledge spillovers from the CSR assurance team to the financial audit engagement team, which helps in the auditor's assessment of going-concern risk. Using more than 28,000 firm-year observations from 55 countries, we document that, relative to audit firms that provide only the financial audit, audit firms that provide both CSR assurance and financial audit for the same client (i) issue more frequent going-concern opinions and have lower Type II going-concern errors, (ii) have clients that book larger environmental and litigation provisions, (iii) report earnings that are more persistent and value-relevant and are less likely to book income-decreasing earnings restatements, and (iv) do not charge higher audit fees or total fees. Our results are important especially because of firms' increasing exposure to CSR risks and the growing number of countries that require assurance of CSR reports.     

Improving the Forecast of Longevity by Combining Models

Mortality is a dynamic process whose future evolution over time poses important challenges for life insurance, pension funds, public policy, and fiscal planning. In this paper, we propose two contributions: (1) a new dynamic corrective methodology of the predictive accuracy of the existing mortality projection models, by modeling a measure of their fitting errors as a Cox-Ingersoll-Ross process and; (2) various out-of-sample validation methods. Besides the usual static method, we develop a dynamic one allowing us to catch the change in behavior of the underlying data. For our numerical application, we choose the Cairns-Blake-Dowd (or M5) model. Using the Italian and French females mortality data and implementing the backtesting procedure, we empirically test the ex-post forecasting performance of the CBD model both for itself (CBD) and corrected by the CIR process (mCBD). We focus on age 65, but we show results for a wide range of ages, also much younger, and for cohort data. On the basis of average measures of forecasting errors and information criteria, we show that the mCBD model is parsimonious and provides better results in terms of predictive accuracy than the CBD model itself.     

Why Development Programmes Fail: William Easterly and the Political Economy of Intervention

Throughout his considerable body of work, William Easterly has identified several critical problems with foreign aid and economic development programmes. In particular, he argues that many working in areas of development act as ‘planners’, who believe they can implement effective policies but who in fact lack the necessary knowledge. Moreover, Easterly claims that these agents face perverse incentives that lead to suboptimal development outcomes. This article explores the theoretical roots of Easterly's critiques and relates them to the work of two Nobel prize‐winning economists, F.A. Hayek and James M. Buchanan. It explores the broader applicability of Easterly's criticisms by applying a similar framework to military activity.     

Detecting Common Longevity Trends by a Multiple Population Approach

Recently the interest in the development of country and longevity risk models has been growing. The investigation of long-run equilibrium relationships could provide valuable information about the factors driving changes in mortality, in particular across ages and across countries. In order to investigate cross-country common longevity trends, tools to quantify, compare, and model the strength of dependence become essential. On one hand, it is necessary to take into account either the dependence for adjacent age groups or the dependence structure across time in a single population setting—a sort of intradependence structure. On the other hand, the dependence across multiple populations, which we describe as interdependence, can be explored for capturing common long-run relationships between countries. The objective of our work is to produce longevity projections by taking into account the presence of various forms of cross-sectional and temporal dependencies in the error processes of multiple populations, considering mortality data from different countries. The algorithm that we propose combines model-based predictions in the Lee-Carter (LC) framework with a bootstrap procedure for dependent data, and so both the historical parametric structure and the intragroup error correlation structure are preserved. We introduce a model which applies a sieve bootstrap to the residuals of the LC model and is able to reproduce, in the sampling, the dependence structure of the data under consideration. In the current article, the algorithm that we build is applied to a pool of populations by using ideas from panel data; we refer to this new algorithm as the Multiple Lee-Carter Panel Sieve (MLCPS). We are interested in estimating the relationship between populations of similar socioeconomic conditions. The empirical results show that the MLCPS approach works well in the presence of dependence.     

Is the Optimism in CEO’s Letters to Shareholders Sincere? Impression Management Versus Communicative Action During the Economic Crisis

In this study, we explore the sincerity of the rhetorical tone of 664 annual letters to shareholders (CEO letters). Prior studies adopt Impression Management theory to predict that firms obfuscate failures and emphasize successes to unfairly enhance their image and maintain organizational legitimacy. Yuthas et al. (J Bus Ethics 41:141–157, 2002) challenged such a view, showing that firms reporting earnings surprises engage in ethical discourse with shareholders. We adopt the methodology of Yuthas et al. (J Bus Ethics 41:141–157, 2002) to explore the association between firm performance and the rhetorical features of CEO letters in a large sample of Fortune 500 firms in the wake of the global economic crisis. In contrast to most prior research, we find that optimistic tone is congruent with both past and future performance. We conclude that under tough macroeconomic conditions, incentives to distort public information strategically are low. Rather, firms tend to engage in communicative action aimed at dialoguing with shareholders through sincere disclosure. However, in our conclusions, we warn about the impact of accounting and rhetorical manipulation on the congruence between optimistic tone and financial performance.     

Production in advance versus production to order: The role of downstream spatial clustering and product differentiation

In every production process, suppliers have to decide whether an item should be produced and stored as inventory before an explicit purchase order is received (production in advance), or whether it should be produced only after such an order is received (production to order). We study the determinants of this firm-level choice. We present a simple conceptual framework to derive predictions that we subsequently test in the empirical analysis. We argue that an increment in buyers’ spatial concentration benefits production in advance more in homogenous industries than in differentiated ones, while the benefits for production to order are larger as product differentiation increases. Consequently, the propensity to adopt one of the two production modes, following an increase in the number of local downstream buyers, changes according to the degree of product differentiation of the goods. Relying on a large data set of Italian manufacturing firms, we find empirical support to our ideas.     

Ownership structure, family control, and acquisition decisions

We investigate how ownership and family control influence the decision to take part in M&As as an acquirer or as an acquired company in a sample of 777 large Continental European companies in the period 1998-2008. We find that ownership is negatively correlated with the probability of launching a takeover bid, and family firms are less likely to make acquisitions, especially when the stake held by the family is not large enough to assure the persistence of family control. On the passive side of M&A deals, the effect of the largest shareholders' ownership on the decision to accept an acquisition proposal depends non-linearly on the voting rights they hold, and family control reduces the probability of being acquired by an unrelated party. We do not find evidence that family-controlled firms destroy wealth when they acquire other companies. Finally, we document that ownership and family control, while being negatively correlated with M&A activity, are not negatively correlated with growth in firm size.