Does a Switch of Budget Regimes Affect Investment and Managerial Discretion of State-Owned Enterprises? Evidence from Italian Firms

We investigate the investment decisions of Italian state-owned enterprises (SOEs) across budget constraint regimes and carry out a natural experiment that exploits a regime switch in 1987. Drawing on the theory of capital market imperfections, we apply an empirical framework for investment analysis to a panel of manufacturing SOEs in competitive industries. We identify parallels between SOEs and widely held, quoted companies afflicted by agency problems, managerial discretion, and overinvestment. We argue that, in the case of SOEs, the soft budget regime increases managerial discretion, facilitates collusion with vote-seeking politicians, and results in wasteful investment. Consistent with our predictions, we find that the regime switch disciplines SOE's investment behavior. Following a hardening of the budget constraint, managers lose discretion to indulge in collusion and overinvestment. J. Comp. Econ., June 2002 30(4), pp. 787–811. London School of Economics and Political Science, Houghton Street, London WC2A 2AE, United Kingdom; and CERIS–CNR, Institute for Economic Research on Firms and Growth, National Research Council, Via Avogadro, 8, 10121 Turin, Italy. © 2002 Association for Comparative Economic Studies. Published by Elsevier Science (USA). All rights reserved.Journal of Economic Literature Classification Numbers: E32, G31, G32, L32, M40.     

Does Managerial Behavior Determine Farm Technical Efficiency? A Case of Grape Production in an Economy in Transition

This study explores how farmers' managerial behavior in their production planning processes influences the economic performance of their farms, measured through input‐oriented and output‐oriented technical efficiency. A conceptual framework in which differences in managerial behavior were assumed to be due to bounded rationality was developed. The 3‐year means (2006–2008) from a panel data set on grape‐producing family farms in FYR Macedonia were analyzed. Technical efficiency was estimated with the nonparametric data envelopment analysis approach. The impact of farmers' managerial behavior was assessed in a second‐stage regression. The results suggest that bounded rationality in farmers' production planning decisions causes inefficiency. Copyright © 2011 John Wiley & Sons, Ltd.     

Flexpatriate assignments: a neglected issue in global staffing

The demands of managing international assignments are major considerations within strategic IHRM theory and most frequently considered within long-term employment choices between parent-country expatriates or host-country nationals. Yet recent studies from the Centre for Research into the Management of Expatriation (CReME) (Harris, ; Petrovic, ) have highlighted the frequency of alternative types of international assignment, which they classify as ‘short-term’, ‘commuter’ and ‘frequent flyer’ assignments, which are now a regular part of global business life. This paper reports on a case study of one Austrian multinational organization and highlights management issues in terms of incidence, purpose, management and personal impact for assignments involving frequent travel without relocation (flexible expatriation) compared with traditional expatriate assignments. It begins by reviewing the emphasis on expatriate assignment before presenting evidence regarding the extent of alternative forms of international assignment. The research method and background to the study are then discussed before the findings are presented and discussed.     

Discretionary Accruals and Auditor Behaviour in Code-Law Contexts: An Application to Failing Spanish Firms

This study examines the relationship between earnings management and auditor behaviour in the pre-bankrupt client segment of the Spanish audit market. As proxies for auditor behaviour, we use type of audit firm (Big N/non-Big N) and type of audit report. In contrast to the USA, audit reports in Spain often include modifications other than a going-concern opinion. This allows us to study the relationship in more detail than is possible with US data. The results of our study show that discretionary accruals are negatively related to going-concern opinions but are positively related to reports modified for reasons other than going-concern problems. However, unlike Butler et al. (Journal of Accounting and Economics, 37, pp. 139–165, 2004) the negative relationship is explained not by liquidity survival tactics but by auditor conservatism. We find this conservatism not only in the value of discretionary accruals but also in the qualifications that accompany a going concern. In these cases GAAP violations have a much greater income effect and a stronger relationship with the reversal of manipulation accumulated over the years than with the manipulation introduced during the last year. Finally, our results suggest that Big N differentiation in a code-law country is context-specific and depends on the business risk parameter of the ‘audit risk model’. In particular, for high-risk firms, Big N auditors show a significantly lower level of discretionary accruals and a greater propensity to issue a going-concern opinion.     

Procurement of logistics services and sustainable development in Europe: Fields of activity and empirical results

This paper strives to answer the general question; how far purchasers of logistics services take into account aspects of sustainable development. Modeled on the German Sustainable Development Strategy, which is based on the EU Sustainable Development plan, five fields of activity are defined: the reduction of transport intensity and emission, the reduction of land use, the choice of carrier under consideration of sustainable aspects, the permanent improvement of working conditions, and the enhancement of qualified employment. Then, propositions for purchasing companies of logistics services are developed, which contribute to safeguard ecological as well as social sustainability. In order to conduct an explorative study, a questionnaire was sent to 750 purchase and logistics managers. It was found that purchasing companies place high value on ecological and social aspects. But the perceived importance is not associated with purchasing companies' own contributions to logistics service providers' sustainable activities. Additionally, it was seen that purchasing companies exert only a minor influence on logistics service providers regarding ecologically and socially sustainable actions. A fundamental precondition for a sustainably oriented procurement of logistics services can be seen in the purchasing companies' awareness of the need for integrating sustainable aspects in economic decisions.     

The home field advantage: Implications for the pricing of tickets to professional team sporting events

Existing empirical estimates of the elasticity of demand for tickets to professional team sporting events are consistently inelastic, throwing into question the assumption of profit-maximizing behavior on the part of team management. We provide a new theory of team sport ticket pricing, based on the home field advantage, which implies that the elasticity of demand relevant for profit maximization is more elastic than the traditional ceteris paribus elasticity measure. Thus, the inelastic traditional point estimates are not necessarily inconsistent with team profit maximization.     

Motivations and differences upon reconciling professional and personal life: an empirical study of businesswomen and businessmen in the Valencian Community

According to the last report “Women FTSE 2009” developed by Cranfield School of Management and the IE Business School and sponsored by Pricewaterhouse-Coopers, Sainsbury, Enlivens, HSBC and Pearson, the number of European companies with women in positions of executive direction has been reduced from 16 to 15 and the number of women in the board meetings from 39 to 37 has fallen. Moreover, there has been a decrease in the number of total of businesses with women in their counsels, since 1 of each 4 businesses has an exclusively male counsel. The study, reveals a pessimistic panorama for women from the analysis of the number of guidelines that work in the companies that belong to FTSE 100, the British index that includes the 100 main values of the London stock market. The study also reflects a descent in the number of women that occupy key positions in the businesses of the FTSE 100. In the year 2008 there were only 5 women CEOs and 3 regional executive directors. In the 2009 only there were 4 CEOs. The purpose of this article is to see if the origin of this situation is a direct consequence of businesswomen confronting more difficulties than the businessmen upon putting in common its professional and personal life or if by contrast this corresponds to an stereotyped perception of gender inequality. With this end we conducted a study using a sample of businesswomen and men with experience analyzing its motivations to create business, difficulties that they find, and the solutions to improve the conciliation of its professional and personal lives. The results show that there are no significant gender differences in the motivations, regardless of who the head of the family is (bearing main responsibility for the house and children). On the other hand, we show that businesswomen diverge from businessmen in the perception of motivations and challenges they have. Indeed, businessmen agree with businesswomen in the motivations and difficulties that these have, and consider that they give to them more importance than women themselves.     

Analyzing the volume and nature of emergency medical calls during severe weather events using regression methodologies

An effective emergency medical service (EMS) response to emergency medical calls during extreme weather events is a critical public service. Nearly all models for allocating EMS resources focus on normal operating conditions. However, public health risks become even more critical during extreme weather events, and hence, EMS systems must consider additional needs that arise during weather events to effectively respond to and treat patients. This paper seeks to characterize how the volume and nature of EMS calls are affected during extreme weather events with a particular focus on emergency preparedness. In contrast to other studies on disaster relief, where the focus is on delivery of temporary commodities, we focus on the delivery of routine emergency services during blizzards and hurricane evacuations. The dependence of emergency service quality on weather conditions is explored through a case study using real-world data from Hanover County, Virginia. The results suggest that whether it is snowing is significant in nearly all of the regression models. Variables associated with increased highway congestion, which become important during hurricane evacuations, are positively correlated with an increased call volume and the likelihood of high-risk calls. The analysis can aid public safety leaders in preparing for extreme weather events.     

Firms,public good provision and institutional uncertainty: Evidence from Russia

Enterprises in post-socialist and transition economies often participate in providing infrastructure and social services to the surrounding community which in the Russian legal setting should be local authorities’ responsibility. We propose that this bundling of social and infrastructure goods provision with firm's core operations is a fully rational choice in an uncertain institutional environment. A unique survey data suggest that this manifests itself through more reliable infrastructure, stronger employee attachment to the firm and, most interestingly, through better relations with the authorities. Relationship with authorities is a two-way game where the firm gains from the arrangement but on the other faces sanctions if it decided to depart from it. Firm's participation in the arrangement is clearly enhanced by inherited fixed capital assets from the Soviet era.     

Capital flows and the boom–bust cycle: The case of Estonia

During 2000–2007, Estonia was among the fastest growing emerging market economies, but in late-2008 entered a deep recession. This paper examines shocks, institutions, and policies that have made Estonia's boom–bust cycle so severe. It finds that an open capital account, the prospect for EU entry, and the currency board facilitated massive capital inflows, which led to credit and real estate booms. In late-2008 a domestic slowdown was greatly amplified by the global financial and economic crisis. To resume sustainable growth, the country will need to regain competitiveness and rebalance resources to exports. Estonia's experience underscores the importance for other emerging market economies to retain some flexibility in their macroeconomic frameworks and approach capital account liberalization cautiously.