Do institutional investors drive corporate transparency regarding business contribution to the sustainable development goals?

Institutional investors show increasing interest in how companies align their corporate social responsibility strategies with the sustainable development goals (SDGs) proposed by the United Nations (UN). The information disclosed in this regard is essential to know and monitor business contribution to the 2030 Agenda. In this paper, we analyze the influence that institutional investors have on the adoption of the disclosure strategy established by UN and the Global Reporting Initiative (GRI)—GRI‐SDG Compass. The results obtained for a sample of 989 international companies, which prepare their sustainability reports following the GRI guidelines, show that ownership by foreign investors, pension funds, and “other” investors boosts the relevance of the information disclosed in relation to the 2030 Agenda. On the contrary, government, financial institutions, and cross holdings have no impact on the information systems developed.     

Tests of Normality of Functional Data

The paper is concerned with testing normality in samples of curves and error curves estimated from functional regression models. We propose a general paradigm based on the application of multivariate normality tests to vectors of functional principal components scores. We examine finite sample performance of a number of such tests and select the best performing tests. We apply them to several extensively used functional data sets and determine which can be treated as normal, possibly after a suitable transformation. We also offer practical guidance on software implementations of all tests we study and develop large sample justification for tests based on sample skewness and kurtosis of functional principal component scores.     

A Geometrical Interpretation of Collinearity: A Natural Way to Justify Ridge Regression and Its Anomalies

Justifying ridge regression from a geometrical perspective is one of the main contributions of this paper. To the best of our knowledge, this question has not been treated previously. This paper shows that ridge regression is a particular case of raising procedures that provide greater flexibility by transforming the matrix X associated with the model. Thus, raising procedures, based on a geometrical idea of the vectorial space associated with the columns of matrix X , lead naturally to ridge regression and justify the presence of the well-known constant k on the main diagonal of matrix X ^′ X . This paper also analyses and compares different alternatives to raising with respect to collinearity mitigation. The results are illustrated with an empirical application.     

A unified framework for robust modelling of financial markets in discrete time

Finance and Stochastics - We unify and establish equivalence between the pathwise and the quasi-sure approaches to robust modelling of financial markets in finite discrete time. In particular, we...     

Police-Monitored Cameras and Crime*

We study the effects of police monitoring on crime. We exploit detailed information on the location and date of installation of police-monitored surveillance cameras, coupled with data at the street-segment level on all reported crimes in the city of Montevideo, Uruguay. We find that the introduction of police-monitored surveillance cameras reduces crime by about 20 percent in monitored areas relative to a pure control group located outside the city. We also explore potential displacement effects, and we do not find evidence of such effects.     

Disappearing investment-cash flow sensitivities: Earnings have not become a worse proxy for cash flow

According to a recent conjecture in the literature, earnings have become a poorer proxy for cash flow from operations over time. We find that since 1988, when cash flow statements started to be consistently reported in Compustat, the cash effectiveness of earnings has actually increased for a large sample of US manufacturing firms. This occurs despite the introduction of fair value accounting and increasing accounting accruals during the last three decades. Also contrary to the conjecture, using more comprehensive measures of cash flow does not restore the investment-cash flow sensitivity, which continues to be around 0.05 in more recent periods.     

Country-by-Country Reporting: A Step Towards Unitary Taxation?

Intereconomics - Multinational companies are now obliged to deliver an annual report to the tax authorities with information disaggregated by country (country-by-country reporting) in order to show...     

Do analysts add value when they most can? Evidence from corporate spin‐offs

This article investigates how securities analysts help investors understand the value of diversification. By studying the research that analysts produce about companies that have announced corporate spin‐offs, we gain unique insights into how analysts portray diversified firms to the investment community. We find that while analysts' research about these companies is associated with improved forecast accuracy, the value of their research about the spun‐off subsidiaries is more limited. For both diversified firms and their spun‐off subsidiaries, analysts' research is more valuable when information asymmetry between the management of these entities and investors is higher. These findings contribute to the corporate strategy literature by shedding light on the roots of the diversification discount and by showing how analysts' research enables investors to overcome asymmetric information. Copyright © 2013 John Wiley & Sons, Ltd.     

Marketing capabilities and innovation. How do they affect the financial results of hotels?

From the point of view of firms’ managers, the knowledge of the factors which explain their firms’ financial results is considered of great usefulness to propose the most appropriate and profitable marketing strategies and actions. This research sets out from this central idea and proposes a model of relationships that considers the marketing results, the marketing capabilities, and the innovation capability as key factors for achieving good financial results. This model is verified via an empirical investigation carried out among 200 directors of hotel establishments in Andalusia, a region in the south of Spain which is one of the country's main tourist destinations. The results indicate that innovation capability is strongly conditioned by marketing capabilities and resources and that this innovation capability affects the financial results of the firms analyzed. Likewise, it is deduced that a market-oriented management philosophy contributes to the development of these marketing capabilities. The implications for management are considered very relevant as they must lead these firms to invest in the development of marketing resources and capabilities, and apply a market-oriented management philosophy if they wish to improve their financial results.     

Assessing Systemic Importance With a Fuzzy Logic Inference System

Three metrics are designed to assess Colombian financial institutions' size, connectedness and non-substitutability as the main drivers of systemic importance: (i) centrality as net borrower in the money market network; (ii) centrality as payments originator in the large-value payment system network; and (iii) asset value of core financial services. An aggregated systemic importance index is calculated based on expert knowledge by using a fuzzy logic inference system. We use principal component analysis to calculate a benchmark index for comparison purposes. Overall similarities between both indexes put forward that expert knowledge aggregation is consistent with that based on a purely quantitative standard approach. Specific non-negligible differences concur with the nonlinear features of an approach whose intention is to replicate human reasoning. Both indexes are complementary and provide a comprehensive relative assessment of each financial institution's systemic importance in the Colombian case, in which the choice of metrics pursues the macroprudential perspective of financial stability. Copyright © 2015 John Wiley & Sons, Ltd.