Modelling oil price expectations: Evidence from survey data

Using Consensus Forecast survey data on WTI oil price expectations for 3- and 12-month horizons over the period November 1989 to December 2008, we find that the rational expectation hypothesis is rejected and that none of the traditional extrapolative, regressive and adaptive processes fits the data by itself. We suggest a mixed expectation model defined as a linear combination of these traditional processes, which we interpret as the aggregation of individual mixing behavior and of heterogenous groups of agents using these simple processes. This approach is consistent with the economically rational expectations theory. We show that the target oil price included in the regressive component of this model depends on the long-run marginal cost of crude oil production and on short term macroeconomic fundamentals whose effects are subject to structural changes. For the two horizons, estimation results provide evidence for our mixed expectation model incorporating this break-dependent target price.     

How children view their travel behaviour: a case study from Flanders (Belgium)

Understanding the thoughts of contemporary children about travel and their opinions on different transport modes of transport may provide important answers for policy-makers on how to respond to current and future transport needs of children. Obviously, children do not act autonomously and their travel behaviours also strongly influence their parents’ travel behaviours. Therefore, a better understanding of children’s travel behaviours seems necessary.This paper reports the results of a large-scale, self-reporting survey (N = 2546) that was conducted to examine the concept and meaning of travel and travel behaviour of children aged between 10 and 13 years in Flanders. It was found that children are able to complete a travel diary on their own, that their travel patterns differ and that the most important part of travelling for them is the social aspect.     

The (1992) Bonus-Malus System in Tunisia: An Empirical Evaluation

The objective of this study is to assess empirically what impact introduction of the bonus‐malus system (BMS) has had on road safety in Tunisia. The results of the Tunisian experiment are of particular importance since, during the last decade, many European countries decided to eliminate their mandatory bonus‐malus scheme. These results indicate that the BMS reduced the probability of reported accidents for good risks but had no effect on bad risks. Moreover, the reform's overall effect on reported accident rates is not statistically significant, but the exit variable is positive in explaining the number of reported accidents. To avoid any potential selectivity bias, we also made a joint estimate of the reported accident and selection equations. The reform has a positive effect on the exit variable but still does not affect the accidents reported. This indicates that policyholders who switch companies are those attempting to skirt the imposed incentive effects of the new rating policy. Some of the control variables are statistically significant in explaining the number of reported accidents: the vehicle's horsepower, the policyholder's place of residence, and the coverages for which policyholders are underwritten.     

External factors in emerging market recoveries: An empirical investigation

We estimate conditional duration models to analyse recovery processes in emerging market economies. Our reduced form specification is parsimonious, as we focus on exogenous factors, such as the effect of growth in the US, EU, and Japan on the prospects for recovery in emerging market economies experiencing recessions. The model confirms the importance of external factors in recovery processes. However, the short-run effect of Japanese growth on recovery prospects is unconventional: weak economic conditions in Japan turn out to facilitate recoveries.     

Consolidation and value creation in the insurance industry: The role of governance

We examine the long run performance of M&A transactions in the property–liability insurance industry. We specifically investigate whether such transactions create value for the bidders’ shareholders, and assess how corporate governance mechanisms, internal and external, affect such performance. Our results show that M&A create value in the long run as buy and hold abnormal returns are positive and significant after 3 years. While tender offers appear to be more profitable than mergers, our multivariate evidence does not support the conjecture that domestic transactions create more value than cross-border transactions. Furthermore, positive returns are significantly higher for frequent acquirers and in countries where investor protection is weaker. Internal corporate governance mechanisms, such as board independence, and CEO share ownership, are also significant determinants of the long run positive performance of bidders.     

Switching between Expectation Processes in the Foreign Exchange Market: a Probabilistic Approach using Survey Data*

This paper relaxes a fundamental hypothesis commonly accepted in the expectation formation literature: expectations are, unchangingly, either rational or generated by one of the three simple extrapolative, regressive, or adaptive processes. Using expectations survey data provided by Consensus Forecasts on six European exchange rates against the US dollar, we find that the rational expectations hypothesis is rejected at the aggregate level. By implementing a switching‐regression methodology with stochastic choice of regime, we show that the expectation generating process is given at any time by some combination of the three simple processes. An interpretation of this framework in terms of economically rational expectations is suggested.     

Explaining returns on venture capital backed companies: Evidence from Belgium

Using a unique database of 990 VC-backed Belgian firms, we study whether compatibility between corporate and environmental characteristics matters. We address two questions: (i) Does the interplay of company, industry, and product factors affect the expected returns of the VC-backed firms? (ii) Does the joint compatibility between these factors results in a non-linear increase in performance? Panel data analysis shows a significant influence of factor compatibility on returns. Quantile regression analysis indicates a non-linear relationship between the return and its determinants. Conjoint analysis identifies certain combinations of factors, which collapse into classifiable patterns described in the strategic management literature.     

FOCUS: A Comparison of Business Ethics in North America and Continental Europe

The author of this major study compares the significantly different approaches to business ethics on both sides of the Atlantic and considers what they have to learn from each other. He has considerable experience of business ethics in both Europe and North America, having taught and researched the subject at the University of St Gallen in his native Switzerland before his appointment as Professor of International Business Ethics in the College of Business Administration, University of Notre Dame, Indiana 46556, USA. Professor Enderle was also the founding Honorary Treasurer of the European Business Ethics Network and is an Associate Editor of this Review.