Exports,Gender Wage Gaps,and Poverty in Honduras

This paper identifies and estimates the reduction in poverty attributable to the improved opportunities that international trade integration offered to women in Honduras. The expansion of the export-oriented maquila sector has brought gender equality both in terms of employment and labour earnings. A simulation exercise shows that, at a given point in time, poverty in Honduras would have been 1.5 percentage points higher had the maquila sector not existed. Of this increase in poverty, 0.35 percentage points is attributable to the wage premium paid to maquila workers, 0.1 percentage points to the wage premium received by women in the maquila sector, and 1 percentage point to employment creation.     

The Impact of Capital-Based Regulation on Bank Risk-Taking

In this paper we model the dynamic portfolio choice problem facing banks, calibrate the model using empirical data from the banking industry for 1984–1993, and assess quantitatively the impact of recent regulatory developments related to bank capital. The model implies a U-shaped relationship between capital and risk-taking: As a bank's capital increases it first takes less risk, then more risk. A deposit insurance premium surcharge on undercapitalized banks induces them to take more risk. An increased capital requirement, whether flat or risk-based, tends to induce more risk-taking by ex-ante well-capitalized banks that comply with the new standard. Journal of Economic Literature Classification Numbers: G20, G28.     

Name-your-own-price as participative pricing strategy: a review of the literature from 2001–2017

ABSTRACT

Name-your-own-price (NYOP), a pricing strategy often referred to as a reverse auction, is a participative pricing mechanism in which consumers have a relatively high control over the price they pay for a product or service. In an NYOP mechanism, buyers generate the final price of a product or service when they bid above an unrevealed threshold price set by the seller. Although NYOP as a pricing strategy was previously investigated, the literature remains scarce and fragmented. This paper attempts to assemble the relevant findings of this pricing strategy, by systematically reviewing all publications from 2001 to 2017. We explored the impacts of this mechanism for companies and consumers, such as increased profit for companies and higher savings for consumers, reduced competition for companies and increased satisfaction for consumers. We also highlighed the best practices of NYOP, such as the bidding practices, threshold price, and willingness to pay.     

Antecedents and Consequences of Consumer Commitment in Traditional and Low-Cost Airlines

The present work aims to gain further knowledge regarding the influence of consumer commitment on loyalty in traditional and low-cost airlines. A survey of 592 consumers of traditional and low-cost carriers demonstrates that commitment is built on the basis of trust and identification, which are in turn driven by corporate reputation in both types of airline. With regard to post-purchase behavior, in low-cost companies, customer repurchase intention and word-of-mouth (WOM) recommendation are mainly triggered by satisfaction. With traditional airlines, commitment plays a more important role, having a significant effect on repurchase intention and acting as the principal predictor of WOM recommendation.     

Measuring executive personality using machine-learning algorithms: A new approach and audit fee-based validation tests

We present a novel approach for measuring executive personality traits. Relying on recent developments in machine learning and artificial intelligence, we utilize the IBM Watson Personality Insights service to measure executive personalities based on CEOs’ and CFOs’ responses to questions raised by analysts during conference calls. We obtain the Big Five personality traits – openness, conscientiousness, extraversion, agreeableness and neuroticism – based on which we estimate risk tolerance. To validate these traits, we first demonstrate that our risk-tolerance measure varies with existing inherent and behavioural-based measures (gender, age, sensitivity of executive compensation to stock return volatility, and executive unexercised-vested options) in predictable ways. Second, we show that variation in firm-year level personality trait measures, including risk tolerance, is largely explained by manager characteristics, as opposed to firm characteristics and firm performance. Finally, we find that executive inherent risk tolerance helps explain the positive relationship between client risk and audit fees documented in the prior literature. Specifically, the effect of CEO risk-tolerance – as an innate personality trait – on audit fees is incremental to the effect of increased risk appetite from equity risk-taking incentives (Vega). Measuring executive personality using machine-learning algorithms will thus allow researchers to pursue studies that were previously difficult to conduct.     

Child hunger in the developing world: An analysis of environmental and social correlates

Using two complementary methods in a framework that allows incorporating both environmental and household-level factors, we explore the correlates of underweight status among children. We use individual children as the units of analysis in 19 African countries, and subnational survey strata in 43 African, Asian and Latin American countries. We consider the relationship between household-level demographic and health survey data, environmental factors from external geospatial data sets and two indicators of malnutrition among children aged 1–3, deviations from the international standards of weight-for-age and height-for-age. We discuss methods for data integration. In general, household determinants explain more variation than environmental factors, perhaps partly due to more error-prone measurement at the community level. Among individual children, some measures of agricultural capacity are related to lower incidence of child hunger, while among regions, measures relating to urbanness and population density show a stronger relationship. We give recommendations for further study, data collection and policy making.     

Excessive Dollar Debt: Financial Development and Underinsurance

We propose that the limited financial development of emerging markets is a significant factor behind the large share of dollar-denominated external debt present in these markets. We show that when financial constraints affect borrowing and lending between domestic agents, agents undervalue insuring against an exchange rate depreciation. Since more of this insurance is present when external debt is denominated in domestic currency rather than in dollars, this result implies that domestic agents choose excessive dollar debt. We also show that limited financial development reduces the incentives for foreign lenders to enter emerging markets. The retarded entry reinforces the underinsurance problem.     

SEC monitoring of foreign firms’ disclosures in the presence of foreign regulators

SEC comment letters indicate that the SEC has reviewed the firm’s filings and identified a disclosure issue. Using the existence of an SEC comment letter as a proxy for SEC monitoring, we document a negative association between the level of SEC monitoring of foreign firms and the strength of those foreign firms’ home-country institutions, consistent with the idea that the SEC implicitly shares its regulatory duties with international securities regulators. We find that foreign cross-listed firms are subject to lower monitoring intensity than foreign firms listed only on US exchanges, but do not find a statistically significant difference in monitoring between foreign firms listed only on US exchanges and US firms. These findings suggest that it is the presence of another regulator that drives the intensity of SEC monitoring. We also find that US investor holdings are positively associated with the level of SEC oversight, suggesting that the SEC focuses its resources on firms that pose a greater risk to US investors. Collectively, our analyses show that two countervailing forces drive the SEC’s choice to monitor foreign firms. On the one hand, the SEC reduces monitoring intensity when it can rely on the public and private enforcement institutions in the foreign firm’s home country. On the other hand, the SEC provides increased monitoring of certain foreign firms when investors on US exchanges have greater investment exposure in those firms.     

Does a Mandatory Reduction of Standard Working Hours Improve Employees' Health Status?

Most of the empirical evidence regarding the impact of reductions of standard working hours analyzes its effects on employment outcomes, family life balance, and social networks, but there is no empirical evidence of its effects on health outcomes. This study uses panel data for France and Portugal and exploits the exogenous variation of working hours coming from labor regulation and estimates its impact on health outcomes (from 39 to 35 hours a week and from 44 to 40 hours a week, respectively). Results suggest that the mandatory reduction of standard working hours decreased the working hours of treated individuals (and not the hours of individuals in the control group). Results also suggest that the fact of being treated generated a negative (positive) effect on young males’ (females’) health in France. No effects on health outcomes were found for Portugal.