Socially responsible and conventional investment funds: performance comparison and the global financial crisis

We investigate the performance of socially responsible funds (SRFs) and conventional funds (CFs) in different market (geographical area and class size) segments during the period 1992–2012. From an unbalanced sample of more than 22 000 funds, we define a matched sample using a beta-distance measure to match any SRF with the ‘nearest neighbour’ CF in terms of sensitivity to risk factors. Using this matching approach and a recursive analysis, we identify several switch points in the lead/lag relationship between the two investment styles over time in different market segments. A relevant finding of our analysis is that SRFs played an ‘insurance role’ outperforming CFs during the 2007 global financial crisis.     

Initial Impressions Determine Behaviours: Morality Predicts the Willingness to Help Newcomers

Prior research has demonstrated the impact of morality (vs. competence) information for impression formation. This study examines behavioral implications of people’s initial impressions based on information about their morality vs. competence in a workplace. School teachers and employees (N = 79) were asked to form an impression of a new school manager (i.e. a prospective boss), who was presented as High vs. Low in Morality and High vs. Low in Competence. Results showed that morality information rather than competence information determined initial emotional responses to the new manager, which mediated willingness to help the newcomer adjust in task and social contexts. Results are discussed in terms of their theoretical and practical implications and future research directions are outlined.     

Targeting welfare in Italy: old problems and perspectives on reform

This paper has two principal objectives. Using a tax‐benefit microsimulation model and the 1998 micro data of the Bank of Italy survey of household income and wealth, we first study the distributional effects of the current Italian income maintenance system and highlight its main defects and limitations, concerning in particular its unequal coverage of the population and its low efficiency in fighting poverty. The second aim is to describe and analyse the reforms recently implemented in this field; in particular, the Italian government has reformed the targeting criteria and introduced three new cash transfers. We describe these reforms both in their institutional characteristics and in their likely distributional consequences, and examine whether and to what extent they are able to overcome the shortcomings of the current system.     

Competition and Regulation in Network Industries: Not an Easy Balance to Strike. Comments on Koski and Kretschmer*

Network industries present several counterintuitive aspects. This peculiarity has attracted particular attention among policymakers, but public intervention has not always been irreproachable. A continuously improving appraisal of network industries tends to allow a better informed policy action and a good balance between otherwise potentially competing policies (competition policy and sector-specific regulation in the first place, but also innovation and standardization policies).     

Employment protection: Do firms' perceptions match with legislation?

Drawing from harmonized surveys of firms around the world, we compare employers' responses with actual labor legislation. Employers' concerns about labor regulations are closely related to the relative stringency of labor laws. Medium and large firms, as well as innovating firms, are those most negatively affected by onerous labor regulations.     

Managing M&A Risk with Collars,Earn‐outs,and CVRs*

M&A transactions expose both the bidder and target shareholders to a number of major risks both prior to the close of the deal and during the post‐close integration phase. The main pre‐closing risk is the possibility that fl uctuations of bidder and target stock prices will affect the terms of the deal and reduce the likelihood the deal closes. After the closing, a major risk for bidder shareholders is the failure of the target to perform up to expectations, thus resulting in overpayment. This article describes a number of tools that can be used to manage such risks, using a number of examples to illustrate the structure and pricing of such tools. In the case of pre‐closing risks, offers with “collars” can protect target company shareholders from a drop in bidder company share prices while at the same protecting acquirers from excessive dilution. Post‐closing instruments such as earn‐outs and contingent value rights can be used to manage the risk of substandard performance and the overpayment that would result from underperformance.     

The emergence of institutions in Hayek’s theory: two views or one?

Hayek opposes the explanation of the emergence of institutions as “spontaneous (unintentional) order”, which he considers correct, against “constructivism” (viewed as erroneous). This dichotomy exhibits some inconsistencies, for, on Hayek’s account, constructivist ideologies seem able both to prevent the evolutionary emergence of norms and to generate institutions coherent with deliberate, intentional, purposes. If this is so, are there then two views on the emergence of institutions in Hayek’s theory? The paper consequently discusses whether constructivism and evolution of norms are two alternative kinds of explanation, and in particular whether the former can be interpreted in evolutionary terms.     

The exact Taylor formula of the implied volatility

In a model driven by a multidimensional local diffusion, we study the behavior of the implied volatility \({\sigma}\) and its derivatives with respect to log-strike \(k\) and maturity \(T\) near expiry and at the money. We recover explicit limits of the derivatives \({\partial_{T}^{q}} \partial_{k}^{m} \sigma\) for \((T,x-k)\) approaching the origin within the parabolic region \(|x-k|\leq\lambda\sqrt{T}\), with \(x\) denoting the spot log-price of the underlying asset and where \(\lambda\) is a positive and arbitrarily large constant. Such limits yield the exact Taylor formula for the implied volatility within the parabola \(|x-k|\leq\lambda\sqrt{T}\). In order to include important models of interest in mathematical finance, e.g. Heston, CEV, SABR, the analysis is carried out under the weak assumption that the infinitesimal generator of the diffusion is only locally elliptic.     

Powerless: gains from trade when firm productivity is not Pareto distributed

Most trade models featuring heterogeneous firms assume a Pareto productivity distribution, on the basis that it provides a reasonable representation of the data and because of its analytical tractability. However, recent work shows that the characteristics of the productivity distribution crucially affect the estimated gains from trade. This paper thoroughly compares the gains from trade obtained under three different productivity distributions (Pareto, lognormal, and Weibull) and investigates their policy implications. We find that both the magnitude of the welfare gains and the relative importance of the fixed versus variable trade costs change significantly. Hence, relying blindly on a single distribution is dangerous when performing trade policy analysis.     

Methodological Issues in Cross-Linguistic and Multilingual Advertising Research

This article discusses methodological issues related to language in advertising research. We introduce a framework that distinguishes between cross-linguistic research settings, where several languages are used in the study and different samples of respondents are studied in their own language, and multilingual research settings, where only a single language is used and multilingual respondents are studied either in their native or nonnative language. We review key principles that govern cross-linguistic and multilingual effects in advertising research to formulate guidelines for research design and data analysis. In the cross-linguistic context, these principles address nonuniform cross-linguistic differences in responses (related to nonequivalence of individual questionnaire items) versus uniform response effects (related to nonequivalence of verbal response category labels). In the multilingual context, we bring together evidence that shows how—even when comprehension is not a problem—stimuli, questions, and response categories may be processed differently in respondents' native versus nonnative language.