Firms size and R&D spillovers: Evidence from Italy

The recent emergence in the industrial organization literature of a wave of studies identifying small firms as more innovative than their larger counterparts poses something of a paradox? Where do small firms get their knowledge generating inputs? The purpose of this paper is to link innovative inputs to innovative outputs. This enables the identification of the extent to which spillovers exist from major sources generating new economic knowledge, such as the research and development (R&;D) laboratories of private and public firms, as well as universities, to the innovative activity of large and small enterprises. Based on twenty Italian regions over a period of nine years, the emprical evidence suggests that, while firm R&;D expenditures contribute to the generation of innovative output for all firms, as well as for large and small firms, the spillovers from university research are apparently more important for small-firm innovation than for large-firm innovation.     

Optimal Design of Intergovernmental Grants Under Asymmetric Information

This paper develops a theoretical explanation why it may be optimal for higher-level governments to pay categorical block grants or closed-ended matching grants to local governments. We consider a federation with two types of local governments which differ in the cost of providing public goods. The federal government redistributes between jurisdictions, but cannot observe the type of a jurisdiction. In this asymmetric information setting, it is shown that the second-best optimum can be implemented with the help of categorical block grants and closed-ended matching grants, but not with unconditional block grants or open-ended matching grants. JEL Code: H77, D82     

Forward-Looking Disclosures,Financial Verifiability and Analysts' Forecasts: A Study of Cross-Listed European Firms

Forward-looking disclosures are a crucial source of information when valuing a company. We study the effect of forward-looking disclosures on analysts' forecast properties, in particular accuracy and dispersion. Our sample includes all the non-financial firms from Italy, Germany, France and Switzerland that in year 2002 were cross-listed on local stock exchanges and on the New York Stock Exchange. We conduct a content analysis on the Annual Report and the 20F form of these companies for the years 2002, 2003 and 2004. We differentiate between forward-looking information on the basis of the disclosure of expected effects on future financial performance and the disclosure of a measure of this impact. We define forward-looking information disclosed with the characteristics of being quantified and directed (and financial) as financially verifiable as it facilitates the comparison with its subsequent realisation in relation to expected future financial performance. Our analysis finds support for the theoretical prediction that verifiable disclosures are more effective than unverifiable disclosures at improving accuracy and reducing dispersion of analysts' forecasts. Our sample also allows us to explore the effects of the difference between the degrees of verifiability between forward-looking disclosures of the 20F form versus those of the domestic annual report. Our analysis provides empirical support for the hypotheses that these differences are significant and have a significant effect on forecast properties.     

The Causal Effects of the Minimum Wage Introduction in Germany – An Overview

In 2015, Germany introduced a statutory hourly minimum wage that was not only universally binding but also set at a relatively high level. We discuss the short‐run effects of this new minimum wage on a wide set of socioeconomic outcomes, such as employment and working hours, earnings and wage inequality, dependent and self‐employment, as well as reservation wages and satisfaction. We also discuss difficulties in the implementation of the minimum wage and the measurement of its effects related to non‐compliance and suitability of data sources. Two years after the minimum wage introduction, the following conclusions can be drawn: while hourly wages increased for low‐wage earners, some small negative employment effects are also identifiable. The effects on aspired goals, such as poverty and inequality reduction, have not materialised in the short run. Instead, a tendency to reduce working hours is found, which alleviates the desired positive impact on monthly income. Additionally, the level of non‐compliance was substantial in the short run, thus drawing attention to problems when implementing such a wide reaching policy.     

Convergence of outcomes and evolution of strategic behavior in double auctions

We study the emergence of strategic behavior in double auctions with an equal number of buyers and sellers, under the distinct assumptions that orders are cleared simultaneously or asynchronously. The evolution of strategic behavior is modeled as a learning process driven by a genetic algorithm. We find that, as the size of the market grows, allocative inefficiency tends to zero and performance converges to the competitive outcome, regardless of the order-clearing rule. The main result concerns the evolution of strategic behavior as the size of the market gets larger. Under simultaneous order-clearing, only marginal traders learn to be price takers and make offers equal to their valuations/costs. Under asynchronous order-clearing, all intramarginal traders learn to be price makers and make offers equal to the competitive equilibrium price. The nature of the order-clearing rule affects in a fundamental way what kind of strategic behavior we should expect to emerge.     

Can an Ethical Revival of Prudence Within Prudential Regulation Tackle Corporate Psychopathy?

The view that corporate psychopathy played a significant role in causing the global financial crisis, although insightful, paints a reductionist picture of what we present as the broader issue. Our broader issue is the tendency for psychopathy, narcissism and Machiavellianism to cluster psychologically and culturally as ‘dark leadership’ within global financial institutions. Strong evidence for their co-intensification across society and in corporations ought to alarm financial regulators. We argue that an ‘ethical revival’ of prudence within prudential regulation ought to be included in any package of solutions. Referencing research on moral muteness and the role of language in framing thoughts and behaviours, we recommend that regulators define prudence in an explicitly normative sense, an approach that may be further strengthened by drawing upon a widely appealing ethic of intergenerational care. An ethical revival of prudence, we argue, would allow the core problems of greed and myopia highlighted by corporate psychopathy theory to be addressed in a politically sensitive manner which recognises the pitfalls of regulating directly against corporate psychopathy. Furthermore, it would provide a viable conceptual framework to guide regulators along the treacherous path to more intrusive cultural regulation.     

The usefulness of Schwartz's ‘Values Theory’ in understanding consumer behaviour towards differentiated products

Abstract

The Values Theory adopts a generic framework whereby a set of values is employed across consumer decision-making contexts in a manner that makes no distinction among various product categories. The present study advances this theory by exhibiting the adaptation capability of the generic values instrument (the Portrait Value Questionnaire, PVQ), demonstrating that tailor-made PVQ versions can reflect consumers' motives towards differentiated products (i.e. organic foods). A questionnaire was completed by approximately 1000 households in each of eight EU countries (N?=?8171). The organic food-relevant PVQ was developed through a preliminary qualitative phase (i.e. a means-end chain analysis), and its factorial design was validated through CFA, showing high statistical performance. PVQ-based European clusters with strong self-transcendence values comprised large numbers of organic purchasers. Moreover, results point to the fact that when a circumplex taxonomy, such as the PVQ, is applied in a real context (i.e. organic food purchases), the situation-relevant value domains merge into new hierarchical dimensions in absolute respect of the original taxonomy. This conclusion points to PVQ's robustness in adaptability to different situations of human value perspective.