The ecological conscious consumer behaviour: are the activists different?

In recent decades, concern about the environment has been increasing. Many individuals are now more worried about their purchasing behaviour and the consequences their actions could have for the environment. Managers are becoming more committed to responding to individual needs and desires in a responsible way, taking into account possible environmental damage. Previous studies concentrated more on explaining this phenomenon through demographic variables, but the trend now is towards explaining this through psychographic and environmental variables, which have already been shown to be the most significant in this context. This study sought to establish the relationship between activists and ecologically conscious consumer behaviour (ECCB) by analyzing the profile of green consumers (i.e. demographic and psychographic variables). To reach this objective, an online survey was conducted. The results of data analyses support the conclusion that activism is the strongest predictor of ECCB.     

Use of microcredit for household income and consumption smoothing by low income communities

This paper discusses findings of a study that investigated income, savings and consumption patterns of low income people and critical factors that influence the use of microcredit—a form of small instant loans targeted for low income people—for household income and consumption smoothing. The sample of the study consisted of households from low income communities living in a lower‐middle income country—Sri Lanka. It was found that microcredit borrowers were using the loans for purposes that can be identified as income and consumption smoothing, which is beyond the ideas and intended practice of microcredit. The findings suggest that the consequences of using microcredit for income and consumption smoothing could be costly for households and the society at large.     

Does the size of a fund family matter when choosing an investment strategy? Evidence from spain

This paper aims to determine whether the size of a fund family influences investment strategy (stock picking or market timing) in the Spanish mutual fund market. This is a highly concentrated market, being controlled by two banks with a percentage of 46%. The impact of considering time-varying returns and risks on selectivity and market timing results is also assessed. Our results indicate that large management companies follow a market timing strategy, while small management companies are better at stock picking. These results are more obvious when conditional information is included. Additional tests are carried out to check the robustness of our results. We observe that the results obtained for large and small management companies are maintained when we control for fund size and when we introduce additional benchmarks into the timing model. However, when the time period is divided into two subperiods, the results are no longer robust. This may be connected to the evolution of returns in the Spanish market.     

Selecting the governance mode when offshoring knowledge-intensive activities

The offshoring phenomenon has evolved in recent years, and can be understood from a threefold perspective: first, the evolution in the type of activity being offshored; second, the learning curve involving both the companies implementing offshoring and service providers; and third, the reasons for offshoring. This study proposes an empirical framework that will allow us to explore the interaction between the type of activity (specifically knowledge-intensive) and the drivers of the decision to select the most appropriate governance mode. Specifically, our results show that market-seeking drivers become the primary determinants prompting firms to offshore knowledge-intensive activities through a captive center. In contrast, the motivation to reduce costs moderates the decision to offshore knowledge-intensive activities by nurturing a preference for offshore outsourcing. The empirical evidence is supported by multi-country data from the Offshoring Research Network.     

Accounting conservatism and corporate governance

We predict that firms with stronger corporate governance will exhibit a higher degree of accounting conservatism. Governance level is assessed using a composite measure that incorporates several internal and external characteristics. Consistent with our prediction, strong governance firms show significantly higher levels of conditional accounting conservatism. Our tests take into account the endogenous nature of corporate governance, and the results are robust to the use of several measures of conservatism (market-based and nonmarket-based). Our evidence is consistent with the direction of causality flowing from governance to conservatism, and not vice versa, indicating that governance and conservatism are not substitutes. Finally, we study the impact of earnings discretion on the sensitivity of earnings to bad news across governance structures. We find that, on average, strong-governance firms appear to use discretionary accruals to inform investors about bad news in a timelier manner.

Systemic Risk, Dollarization, and Interest Rates in Emerging Markets: A Panel-Based Approach

This study investigates the impact of systemic risks and financialdollarization on real interest rates in emerging economies.Higher systemic risks induce both higher real interest ratesand increased dollarization. Using appropriate instruments forthe dollarization ratio, the study overcomes the simultaneousequation problem and correctly estimates a negative coefficientfor the dollarization ratio in the interest rate equation. Itconfirms the theoretical prediction that a strategy of "dedollarizing"the economy will raise the equilibrium domestic real interestrate if the strategy fails to address fundamental macroeconomicrisks. Even so, it also finds that this effect is small, aftercontrolling for the risks of dilution and default. The resultsbring to light the systemic-risk reasons for high interest ratesin emerging economies—and contribute to evaluating thedifficulties of dedollarization policies.     

OPTIMAL DIVIDEND POLICY WITH MEAN-REVERTING CASH RESERVOIR

Motivated by empirical evidence and economic arguments, we assume that the cash reservoir of a financial corporation follows a mean reverting process. The firm must decide the optimal dividend strategy, which consists of the optimal times and the optimal amounts to pay as dividends. We model this as a stochastic impulse control problem, and succeed in finding an analytical solution. We also find a formula for the expected time between dividend payments. A crucial and surprising economic result of our paper is that, as the dividend tax rate decreases, it is optimal for the shareholders to receive smaller but more frequent dividend payments. This results in a reduction of the probability of default of the firm.     

Simple and inertial behavior: an optimizing decision model with imprecise perceptions

Summary Simplicity and inertial (or status-quo) bias are common features of actual decision rules used by real-life agents. In this paper, we provide one possible rationale for these features in terms of a model in which the decision maker is subject to imprecise perceptions about the consequences of actions that differ from (an already experienced) status quo.I am grateful to participants in seminars at Harvard University, University of Virginia, Virginia Polytechnic Institute, and Universitat Autonoma de Barcelona for helpful comments. Finantial support by the CICYT, project no. PB86-0613, and the Institute for Advanced Studies of the Hebrew University of Jerusalem in gratefully acknowledged.