Fractional integration and cointegration in merger and acquisitions in the US petroleum industry

This article employs methodologies based on fractional integration and cointegration to analyse the time-series properties of merger and acquisitions (M&A) activity and crude oil prices in the US from 1980 to 2012. Our results indicate that an increase in the crude oil price produces a significant increase in the M&A data between 2 and 3 months after the initial shock.     

Using templates and linguistic patterns to define process performance indicators

Process performance management (PPM) aims at measuring, monitoring and analysing the performance of business processes (BPs), in order to check the achievement of strategic and operational goals and to support decision-making for their optimisation. PPM is based on process performance indicators (PPIs), so having an appropriate definition of them is crucial. One of the main problems of PPIs definition is to express them in an unambiguous, complete, understandable, traceable and verifiable manner. In practice, PPIs are defined informally – usually in ad hoc, natural language, with its well-known problems – or they are defined from an implementation perspective, hardly understandable to non-technical people. In order to solve this problem, in this article we propose a novel approach to improve the definition of PPIs using templates and linguistic patterns. This approach promotes reuse, reduces both ambiguities and missing information, is understandable to all stakeholders and maintains traceability with the process model. Furthermore, it enables the automated processing of PPI definitions by its straightforward translation into the PPINOT metamodel, allowing the gathering of the required information for their computation as well as the analysis of the relationships between them and with BP elements.     

Regime shifts in stock–flow I(2)–I(1) systems: the case of US fiscal sustainability

In the last two decades, fiscal sustainability has been tested through the use of non‐stationary time series analysis. Two different approximations can be found in the literature: first, a univariate approach that has focused on the stochastic properties of the stock of debt and, second, a multivariate one that has focused on the long‐run properties of the flows of expenditures and revenues, i.e., in the stochastic properties of the deficit. In this paper we unify these approaches considering the stock–flow system that fiscal variables configure. Our approach involves working in an I(2) stochastic processes framework. Given the possibility of the existence of regime shifts in the sustainability of US deficit that the literature has pointed out, we develop a new statistic that can be applied to test several types of I(2) cointegration and multicointegration relationships allowing for regime shifts. To test for these kinds of changing long‐run relationships we propose the use of a residual‐based Dickey–Fuller class of statistic that accounts for one structural break. We show that consistent estimates of the break fraction can be obtained through the minimization of the sum of squared residuals when there is I(2) cointegration. The finite sample performance of the proposed statistic is investigated by Monte Carlo simulations. The econometric methodology is applied to assess whether the US fiscal deficit and debt are sustainable. Copyright © 2010 John Wiley & Sons, Ltd.     

ECONOMIC RECESSIONS,BANKING REFORM AND THE FUTURE OF CAPITALISM1

In the 2010 London School of Economics and Political Science Hayek Memorial Lecture, the author argues that flaws in the design of the monetary and financial system were responsible for the global financial crisis and the subsequent recession. The crash reflected the unsustainable nature of the bubble induced by artificial credit expansion created by fractional‐reserve banking under the direction of central banks. Such boom–bust cycles will continue until radical reforms are implemented, including a 100% reserve requirement for demand deposits.     

Waves and Determinants in Mergers and Acquisitions: The Case of Latin America

This article contributes to the current literature on mergers and acquisitions (M&As) by identifying the existence of waves and the determinants of M&A activity in the economies of Argentina, Brazil, Chile, Colombia, Mexico, and Peru. From a sample of 2,391 M&A announcements reported by Thomson One on these countries, applying the methodology proposed by Harford (2005), evidence of M&A waves is found for the periods 1995–2002 and 2003–2010, as reported for other regions in various international studies. After controlling for economic and business environment variables, as well as for profitability and book-to-market variables at the industry level, we find evidence that supports neoclassical theory as a main explanation for M&A activity but not for the misvaluation effect.     

Power Relations and Social Mix in Metropolitan Neighbourhoods in North America and Europe: Moving Beyond Gentrification?

Research on spatial segregation has suggested that social mix may be a temporary phase in class displacement, where relations between different groups are at best divided or ‘tectonic’, for instance in England. Political and policy discourses, by contrast, tend to uncritically valorize social mix as a means to breaking up concentrations of poverty and providing neighbourhoods with a middle‐class voice. In the literature, little attention has been paid to power dynamics in socially mixed neighbourhoods and the implications this may have for understanding theory and policy. The five articles that make up this symposium address the ways in which social and ethnic groups interact in major cities in Europe and North America and, as the title suggests, this involves taking into account power relations, domination and negotiation between the different groups. There is a need to connect the experience of the deployment of power within neighbourhoods (and between them) with the discussions of power mechanisms at work in wider urban processes.     

Students' persistent preconceptions and learning economic principles

Economic views held by the general public tend to differ significantly from those of economic experts. Would these differences fade away if people were exposed to some economic instruction? In this article, the authors identify college students' preconceptions about economic issues at the beginning of the semester, verify their persistence throughout the semester, and test whether their beliefs are correlated to course performance. The authors conduct a survey at the beginning and end of the semester on a sample of first-year students taking an economic principles course. They find evidence of preconception persistence and reasoning inconsistencies, pointing to some cognitive biases as a plausible cause. Most students do not integrate the newly learned tools into their thinking process, even if they perform well in tests.