Women Directors on Corporate Boards: From Tokenism to Critical Mass

Academic debate on the strategic importance of women corporate directors is widely recognized and still open. However, most corporate boards have only one woman director or a small minority of women directors. Therefore they can still be considered as tokens. This article addresses the following question: does an increased number of women corporate boards result in a build up of critical mass that substantially contributes to firm innovation? The aim is to test if ‘at least three women’ could constitute the desired critical mass by identifying different minorities of women directors (one woman, two women and at least three women). Tests are conducted on a sample of 317 Norwegian firms. The results suggest that attaining critical mass – going from one or two women (a few tokens) to at least three women (consistent minority) – makes it possible to enhance the level of firm innovation. Moreover, the results show that the relationship between the critical mass of women directors and the level of firm innovation is mediated by board strategic tasks. Implications for both theory and practice, and future research directions are discussed.     

Women and Employee-Elected Board Members,and Their Contributions to Board Control Tasks

We present results from a study about women and employee-elected board members, and fill some of the gaps in the literature about their contribution to board effectiveness. The empirical data are from a unique data set of Norwegian firms. Board effectiveness is evaluated in relation to board control tasks, including board corporate social responsibility (CSR) involvement. We found that the contributions of women and employee-elected board members varied depending on the board tasks studied. In the article we also explored the effects of the esteem of the women and employee-elected board members, and we used creative discussions in the boardroom as a mediating variable. Previous board research, including research about women and employee-elected directors, questions if the board members contribute to board effectiveness. The main message from this study is that it may be more important to ask how, rather than if, women and employee-elected board members contribute, and we need to open the black box of actual board behavior to explore how they may contribute.     

Raising Rivals’ Fixed Costs

This article demonstrates that raising fixed costs can serve as a credible mechanism for a well placed firm to exclude its rivals. We identify a number of credible avenues, such as increased regulation, vexatious litigation and increased prices for essential inputs, through which such a firm can raise fixed costs. We show that for a wide range of oligopoly models this may be a profitable strategy, even if the firm’s own fixed costs are affected as much (or even more) than its rivals and even if it is less efficient. The resulting reduction in the number of firms in the market is detrimental to consumer welfare and hence worthy of scrutiny by competition and regulatory authorities.     

Inducing value and institutional learning effects in stated choice experiments using advanced disclosure and instructional choice set treatments

This article analyses the effect of inducing institutional and value learning in a choice experiment survey concerning food safety. Respondents were subjected to two types of treatments, namely, Advance Disclosure (ADV) and Instructional Choice Set (ICS). Employing a split‐sample setup, we test the effect of providing ICS and ADV in two treatment groups relative to a control group where learning is not induced. We further test and compare the effects of ADV and ICS directly against each other. We find some evidence that ICS reduces institutional uncertainty as intended. Moreover, the results suggest that both ICS and ADV could potentially remove a gender‐specific status‐quo bias.     

Australia's consumption‐based greenhouse gas emissions

We use data from the World Input‐Output Database in a multiregional input–output model to analyse Australian consumption‐based greenhouse gas emissions for the years 1995 to 2009. We find that the emission content of Australian macroeconomic activity has changed over the 15‐year period. Consumption‐based emissions have been growing faster than production‐based emissions since 2001. We show that emissions embodied in Australian imports are increasingly becoming a significant source of emissions. We investigate emissions in Australian imports and find that increased trade with China contributed substantially to the increase in Australia's consumption emissions. China was the largest exporter of emissions to Australia and accounted for almost half of emissions embodied in Australian imports since 2002. The growth of trade with China coincides with the increase in imported emissions as well as the increase in aggregate consumption emissions. Our results suggest that tracking consumption emissions together with production emissions provides a more complete picture of Australian emissions.     

Board-management relations in small firms: The paradox of simultaneous independence and interdependence

The author introduces constructs based on neo-classical and socio-economic assumptions, and argues that board-management relations should be characterized by both independence and interdependence. Interdependence is especially important in small firms. The article presents a model of directorates from research about directorates based on agency theory assumptions. This model is supplemented with constructs from the theory of contractual relations. Whilst traditional literature tends to focus upon independence from an agency theory perspective, this article argues that it is necessary to use more than one dimension of attributes regarding the board-management relations in order to understand the board's contribution to company performance, and that trust and solidarity is especially important in small firms. Board-management relations described by simultaneous independence and interdependence are proposed to give the highest contribution to company performance. The theoretical propositions are exemplified and supported by results of a field survey of directorates in small firms.     

Tariffs as Signals of Uncompetitiveness

In this paper, a domestic and a foreign firm compete as Cournot duopolists in the domestic market. The foreign firm has incomplete information about the costs of the domestic firm, but the domestic government and the domestic firm are completely informed. It is shown that the domestic government can use its tariff to signal about the costs of the domestic firm. In the separating equilibrium, the domestic government signals the uncompetitiveness of the domestic firm by setting a lower tariff than is optimal under complete information.     

Third wave development expertise

In this paper I offer a normative account of development expertise. Although extending expertise beyond the traditional development experts to include local stakeholders, this normative account aims to delimit legitimate forms of expertise. I label this normative view third wave development expertise. Third wave expertise is distinguished from both the technocratic and the social constructivist views of development expertise. In particular, I discuss the notions of contributory and interactional expertise. Contributory expertise denotes the extent to which a group of agents possesses (tacit, embodied, or explicit) knowledge which can make a significant contribution to development decision-making, while interactional expertise denotes the extent to which they are able to communicate this knowledge meaningfully. While local stakeholders may possess contributory expertise in matters of their own development, they may lack interactional expertise to communicate this knowledge. Resolving this issue, I argue, requires a mediator who can interact with and between external experts and local stakeholders.     

Fast Ninomiya–Victoir calibration of the double-mean-reverting model

Abstract

We consider the three-factor double mean reverting (DMR) option pricing model of Gatheral [Consistent Modelling of SPX and VIX Options, 2008], a model which can be successfully calibrated to both VIX options and SPX options simultaneously. One drawback of this model is that calibration may be slow because no closed form solution for European options exists. In this paper, we apply modified versions of the second-order Monte Carlo scheme of Ninomiya and Victoir [Appl. Math. Finance, 2008, 15, 107–121], and compare these to the Euler–Maruyama scheme with full truncation of Lord et al. [Quant. Finance, 2010, 10(2), 177–194], demonstrating on the one hand that fast calibration of the DMR model is practical, and on the other that suitably modified Ninomiya–Victoir schemes are applicable to the simulation of much more complicated time-homogeneous models than may have been thought previously.     

The value of local political connections in a low-corruption environment

We use exogenous changes in Danish local municipality sizes to identify a large positive effect of political power on the profitability of firms related by family to local politicians. Our difference-in-differences estimate is consistent with a unitary elasticity of connected firms’ performance to political power (as measured by population per elected politician). Increasing power boosts firms’ operating returns, especially in industries relying heavily on public demand. Focusing on arguably the world's least corrupt country, we highlight the importance of corporate rent seeking at local governmental levels, which account for nearly half of total public expenditures.