Dynamic Financial System: Complexity,Fragility and Regulatory Principles

A financial system improves the allocation of real resources and enhances the performance of the production economy, but these benefits are offset in part by the risk of financial distress and the associated deadweight loss resulting from bankruptcy costs. We argue that “tiers” of financial claims increase complexity and fragility of the financial network. In equilibrium, the financial system grows relative to the real economy as the allocation of funds and risks becomes more sophisticated and as more financial claims are tiered. Growth is limited by the risk of a tiered, complex financial network and by the need to set aside additional capital as the financial sector grows. We discuss several sources of fragility in the financial system. We propose that regulators should limit the breaks in the system and do more to improve the resiliency of the network and less on individual issues that are only symptoms of fundamental problems of a network. We advocate a market based system of regulation in which market participants regulate each other, to a degree. In order for this to be feasible, the financial network must be organized according to three principles: trading transparency, competitive markets and competitive regulators, and incentive alignment of participants. Insofar as these regulatory approaches are successful in limiting network fragility, capital requirements can be reduced. Regulators should keep in mind this tradeoff between capital and regulation. With regard to regulatory policy, regulators should let the three principles be their guide in adapting to the evolving financial system rather than implementing narrowly conceived regulations that are quickly outmoded.     

Using involvement for segmenting the adoption of e-commerce in travel

While the adoption of e-commerce in the purchasing of leisure travel is gaining momentum, higher levels of adoption can be achieved if greater knowledge of the market for e-commerce is obtained. This research uses two variables, involvement with computers for leisure purposes and purchasing leisure travel over the Internet, as a means of segmenting the market with regard to the adoption of e-commerce in the purchasing of leisure travel. A sample of residents of a suburban borough of Lisbon (Portugal) was surveyed and hierarchical clustering was performed on 225 usable questionnaires. The four resulting clusters of residents that emerged were quite different from one another in relation to the adoption of e-commerce in the purchasing of leisure travel and in supporting the internal and external validity of the clustering procedure. One segment that has not been reported in the literature before was identified, comprising those who have moderate involvement with both innovations (the moderate enthusiasts). Moreover, the results suggest that individuals in this cluster may be stronger candidates for the adoption of e-commerce in the purchasing of leisure travel that computer fanatics.     

Advertising Creativity: The Role of Divergence Versus Meaningfulness

Creativity is seen as an essential component of advertising and is continuing to attract research interest. While there is widespread agreement on the value of creativity, there are two different perspectives on the key components of creativity. One perspective sees creativity as primarily divergence, containing elements of novelty, aesthetic representation, newness, and difference. The second includes, in addition to divergence, the concept of meaningfulness (or appropriateness or connectedness) to the consumer. This view argues that if an advertisement is not meaningful then it simply is not creative. We attempt to find some empirical resolution to this issue. Our findings indicate that divergence is indeed an important element of creativity. Meaningfulness, however, while certainly very important to ad effectiveness, appears to be a distinct and separate construct from creativity.     

Organisational citizenship behaviours and effectiveness: an empirical study in two small insurance companies

The study relates six dimensions of organisational citizenship behaviours (OCB) at the branch level with several indicators of the effectiveness of 38 branches of two insurance companies. Results suggest that the branches where employees display more OCB are the most effective. These findings are discussed in the context of a scarcity of empirical studies on the topic, despite researchers' assumption that OCB enhances team and organisational effectiveness.     

Impacts of the End of the Coffee Export Quota System on International‐to‐Retail Price Transmission

We examine the impact of the end of the coffee export quota system (EQS) on international‐to‐retail price transmission in France, Germany and the United States. We take account of the existence of long‐run threshold effects and short‐run price transmission asymmetries (PTAs). We find evidence of threshold effects in both periods (EQS and post‐EQS) in all three countries and the presence of short‐run PTAs during the post‐EQS period in all countries, but not during the EQS period. Our results indicate that the threshold values are smaller in the post‐EQS period, suggesting that retail prices became more responsive to changes in international prices. However, the speed of adjustment towards the long‐run equilibrium decreases during the post‐EQS period in the three countries. In the short run, non‐linear impulse response analyses indicate that a shock in international prices was more persistent during the EQS period than in the post‐EQS period. Moreover, we find evidence of short‐run PTAs in the post‐EQS period, with differences across countries. We find support for the ‘rockets and feathers’ principle in the United States; in contrast, retail prices respond faster when international prices are falling in Germany and France. We explain these differences in terms of market structures.     

Individual best response in the repeated Cournot model

We propose a particular style of punishments to support collusive behavior in an infinitely repeated Cournot oligopoly model for at least the same range of discount factors as Friedman’s trigger strategies. The punishment lasts for a finite number of periods and asymmetry is introduced in such a way that each punisher’s output is the individual best response.      

The Formation of a Tourist Destination's Image via Information Sources: the Moderating Effect of Culture

The present study aims to outline the growing importance of culture in the field of tourism. More specifically, it highlights culture as a moderating variable in pre‐visit tourist destination image formation, through the information sources utilized by the tourist in the selection of a holiday destination (that is, travel agencies alone vs. travel agencies together with the Internet). For this purpose primary research used a multicultural sample of 371 tourists from different European countries. The results show that the formation of a destination's pre‐visit image amongst tourists, based on the information sources they use, is moderated by the level of uncertainty‐avoidance of their national cultures. Copyright © 2011 John Wiley & Sons, Ltd.     

Lobbying on Accounting Standards: Evidence from IFRS 2 on Share-Based Payments

Lobbying is an essential part of the International Accounting Standards Board (IASB) standard-setting process. There is still much to learn, however, about key aspects of the roles played and arguments employed by various constituents when lobbying practices do occur. This paper focuses on the regulation of share-based payments. As these transactions were under-regulated before International Financial Reporting Standard (IFRS) 2, we expect that the strong debate that occurred during the 1990s resulted in conflicting opinions when this standard was under discussion. To analyse lobbying behaviour and assess its influence on the IASB's decision-making, we conducted a content analysis of 539 letters addressing the documents issued by the G4+1 and the IASB preceding IFRS 2. Consistent with the rational-choice model, our analysis of lobbying activity shows that preparers constituted the most active group, particularly when the IASB started the project, whereas participation of standard-setters increased at the end, which is more consistent with institutional theory. A common strategy was to provide arguments merely on points of disagreement. Preparers and consultants constituted the only groups using economic-consequences arguments to disagree, but later enlisted conceptual arguments as well. The IASB considered only conceptual arguments, and no interested party had a dominant influence.     

An analysis of the construct “involvement” in consumer behaviour

The aim of this paper is to analyse the construct involvement. Specifically, the present work extends the sphere of study of the construct involvement at brand level, applying it to Denominations of Origin (D.O.s). Hence, after an overview of the concept, it suggests a cognitive approach to the measurement of involvement. It proposes as indicators the number of values associated with this designation, the centrality of these values and the intensity of the association. In this delimitation of the concept, a model is presented that is set within the framework of an analysis of the decision-making process adopted by consumers when purchasing wine. This postulates that temporary involvement with a D.O. has explanatory power, as does the direct effect of the regular outcomes of a permanent involvement with such a designation on the process in question. In addition, a correlation is proposed between the state of temporary involvement with a D.O. and the continuing consequences of a permanent involvement with this designation.     

Characterising human resources management practices in Portugal: an empirical analysis

The importance of human resources as a fundamental channel towards the competitiveness and sustainability of firms is now theoretically unchallenged. This article provides an overall characterisation of the main human resources management (HRM) practices implemented in Portugal and compares them with the benchmark models proposed in the literature.

To evaluate the degree to which HRM practices diverge from these benchmark models, this article relies on the analysis of five criteria: i) How do the main HRM practices fit the existing management models (familiar, professional or mixed); ii) How does the HRM conform to a work organisation of the matricial type; iii) To identify whether the role of HRM is essentially administrative or strategic; iv) To identify where the responsibility for HRM lies within the firms operating in Portugal; and v) To characterise the relation between HRM and work organisation in Portugal.

Drawing on a representative sample of firms operating in Portugal, we identify three clusters that allow us to characterise and analyse the stylised HRM practices implemented in Portugal (network-based, familiar-based or bureaucratised). Results show contrasting management patterns, which can be interpreted as different stages of evolution in terms of HRM practices in Portugal.