The Brave New World of Carbon Trading

Human-induced climate change has become a prominent political issue, at both national and international levels, leading to the search for regulatory ‘solutions’. Emissions trading has risen in popularity to become the most broadly favoured government strategy. Carbon permits have then quickly been developed as a serious financial instrument in markets turning over billions of dollars a year. In this article, I show how the reality of permit market operation is far removed from the assumptions of economic theory and the promise of saving resources by efficiently allocating emission reductions. The pervasiveness of Greenhouse Gas emissions, strong uncertainty and complexity combine to prevent economists from substantiating their theoretical claims of cost-effectiveness. Corporate power is shown to be a major force affecting emissions market operation and design. The potential for manipulation to achieve financial gain, while showing little regard for environmental or social consequences, is evident as markets have extended internationally and via trading offsets. At the individual level, there is the potential for emissions trading to have undesirable ethical and psychological impacts and to crowd out voluntary actions. I conclude that the focus on such markets is creating a distraction from the need for changing human behaviour, institutions and infrastructure.     

Spurious regressions with stationary series

A spurious regression occurs when a pair of independent series, but with strong temporal properties, are found apparently to be related according to standard inference in an OLS regression. Although this is well known to occur with pairs of independent unit root processes, this paper finds evidence that similar results are found with positively autocorrelated autoregressive series or long moving averages. This occurs regardless of the sample size and for various distributions of the error terms.     

Employer size–wage effects: evidence from matched employer–employee survey data in the UK

This paper employs a random sample of matched employer–employee data from the UK to test seven possible explanations for the positive relationship between employer size and pay. Individual wage equations show a large employer size–wage premium. We then control for a range of establishment-level variables, based on seven hypotheses typically advanced to explain this premium. Each establishment-level factor reduces the wage premium, but a sizeable premium nonetheless remains. In adjudicating on these hypotheses, we find a strong association between the internal labour market and the employer size–wage premium. This finding supports the theory that the employer size–wage effect may be due to the higher costs of turnover or monitoring in larger firms. However, we find contrasting effects for public versus private sector establishments.     

Psychopathic Leadership A Case Study of a Corporate Psychopath CEO

This longitudinal case study reports on a charity in the UK which gained a new CEO who was reported by two middle managers who worked in the charity, to embody (respectively) all or most of the ten characteristics within a measure of corporate psychopathy. The leadership of this CEO with a high corporate psychopathy score was reported to be so poor that the organisation was described as being one without leadership and as a lost organisation with no direction. This paper outlines the resultant characteristics of the ensuing aimlessness and lack of drive of the organisation involved. Comparisons are made to a previous CEO in the same organisation, who was reportedly an authentic, effective and transformational leader. Outcomes under the CEO with a high corporate psychopathy score were related to bullying, staff withdrawal and turnover as effective employees stayed away from and/or left the organisation. Outcomes also included a marked organisational decline in terms of revenue, employee commitment, creativity and organisational innovativeness. The paper makes a contribution to both leadership and to corporate psychopathy research as it appears to be the first reported study of a CEO with a high corporate psychopathy score.     

Size and book to market effects and the Fama French three factor asset pricing model: evidence from the Australian stockmarket

The present study adds to the sparse published Australian literature on the size effect, the book to market (BM) effect and the ability of the Fama French three factor model to account for these effects and to improve on the asset pricing ability of the Capital Asset Pricing Model (CAPM). The present study extends the 1981–1991 period examined by Halliwell, Heaney and Sawicki (1999) a further 10 years to 2000 and addresses several limitations and findings of that research. In contrast to Halliwell, Heaney and Sawicki the current study finds the three factor model provides significantly improved explanatory power over the CAPM, and evidence that the BM factor plays a role in asset pricing.     

Deliberative monetary valuation (DMV): Issues in combining economic and political processes to value environmental change

This paper explores and contrasts the different social processes of valuation now appearing as economic means of valuing the environment. Monetary valuation via stated preference approaches has been criticised for assuming well formed and informed preferences and excluding a range of sustainability concerns such as rights, fairness and equity. Deliberative monetary valuation (DMV) in small groups is a novel hybrid of economic and political approaches which raises the prospect of a transformative and moralising experience. Critics of standard contingent valuation approaches have advocated this as offering a way forward. However there has been a lack of clarity as to the means of obtaining values, the expected outcomes and their role. Moving to group settings of deliberation raises concepts of social willingness to pay and accept which are distinct from an aggregate of individual value, although this does not seem to have been widely recognised. A new classification of values is presented appropriate to the literature trying to merge economic and political processes. Values associated with the individual may be exchange values, charitable contributions or fair prices, while social values can be speculative, expressive or arbitrated. The use of DMV is shown to result in different values due to variations in the institutional setting and process of valuation.