Government financial statistics and accounting in Europe: is ESA 2010 improving convergence?

This paper provides an empirical analysis of the impact of ESA 2010 on EU member states, looking at countries both individually and as a whole and analysing the global impact of the adjustments and the partial impacts of each category. Changing the system of national accounts has introduced conceptual and methodological changes, but there has not been any significant variation in the convergence/divergence between government financial statistics and budgetary accounting in reporting deficits. The effect on the deficits reported by individual member states was quite marked however.     

The Value‐relevance of Equity Accounted Carrying Amounts and Disclosed Fair Values of Listed Associates

Equity accounting is a controversial accounting treatment. Although fair value measurement represents a potential alternative measurement base, information content may be lost under a pure fair value measurement approach. This study investigates the value‐relevance of equity accounted carrying amounts and disclosed fair values of listed associates, using a sample of the largest firms listed in South Africa, Australia and the UK. The main finding is that the alternative measurement bases are incrementally value‐relevant during the sample period of 31 December 2005 to 31 December 2011, implying that equity investors do not blindly accept either measurement base. Rather, investors include their own assessment of the intrinsic value of an entity's listed associates in their valuations.     

Consumers’ avoidance of information on red meat risks: information exposure effects on attitudes and perceived knowledge

In accordance with cognitive dissonance theory, individuals generally avoid information that is not consistent with their cognitions, to avoid psychological discomfort associated with tensions arising from contradictory beliefs. Information avoidance may thus make risk communication less successful. To address this, we presented information on red meat risks to red meat consumers. To explore information exposure effects, attitudes toward red meat and perceived knowledge of red meat risks were measured before, immediately after, and two weeks after exposure. We expected information avoidance of red meat risks to be: positively related to (1) study discontentment; and (2) positive attitudes toward red meat; and negatively related to (3) information seeking on red meat risks; and (4) systematic and heuristic processing of information. In addition, following exposure to the risk information, we expected that (5) individuals who scored high in avoidance of red meat risks information to change their attitudes and perceived risk knowledge less than individuals who scored low in avoidance. Results were in line with the first three expectations. Support for the fourth was partial insofar as this was only confirmed regarding systematic processing. The final prediction was not confirmed; individuals who scored high in avoidance decreased the positivity of their attitudes and increased their perceived knowledge in a similar fashion to those who scored low in avoidance. These changes stood over the two-week follow-up period. Results are discussed in accordance with cognitive dissonance theory, with the possible use of suppression strategies, and with the corresponding implications for risk communication practice.     

Is it all about awareness? The normalization of coastal risk

Coastal risk is already high in several parts of the world and is expected to be amplified by climate change, which makes it necessary to outline effective risk management strategies. Risk managers assume that increasing awareness of coastal risk is the key to public support and endorsement of risk management strategies – an assumption that underlies a common worldview on the public understanding of science, which has been named the deficit model. We argue that the effects of awareness are not as straightforward. In particular, awareness of coastal hazards might not lead to more technically accurate risk perceptions. Based on research on risk perception normalization, we explored the hypothesis that coastal risk awareness reduces coastal risk perception – in particular the perceived likelihood of occurrence of coastal hazards – through its effect on reliance on protective measures to prevent risk. Individuals can rely on protective measures, even when those are not effective, as a positive illusion to reduce risk perception. This effect might be stronger for higher probability hazards and for permanent residents of costal zones. Data from 410 individuals living in coastal zones corroborated most of our expectations. Global results demonstrated a risk normalization effect mediated by reliance on current measures. Additional analyses made clear that this effect occurred in 2 of the 5 high-probability hazards (flood and storm), and not in the low-probability hazard (tsunami). Normalization might be more likely among high-probability hazards which entail catastrophic and immediate impacts. This effect was also found among permanent residents, but not among temporary residents. Results imply that coastal risk management might benefit from (a) taking risk perception normalization effects into account, (b) tailoring strategies for permanent and temporary residents and (c) promoting a higher public engagement, which would facilitate a more adaptive and effective coping with coastal risk than the use of positive illusions.     

Net equity issuance effect in the UK

Net equity issuance (NEI) by firms has predictive power for US stock returns. This paper examines the NEI anomaly for UK stocks, using regression on firm characteristics and sorted portfolios with several factor models. The anomaly generalises to the UK only in part. We confirm the existence of a large NEI effect for small and midsize stocks, but not for large stocks. The repurchase effect, of positive abnormal returns following repurchases, is absent in the UK. We also find that the NEI effect in smaller stocks is not exploitable by investors, allowing for transaction costs.     

What Explains the Union Membership Gap between Migrants and Natives?

This article explores the differences in unionization rates between migrant and native‐born workers in 23 European countries. It explores whether individual characteristics or contextual factors explain the variation across countries in the degree of trade unions’ inclusion of migrant workers. The analyses show that individual characteristics cannot explain the variation in the difference between migrant and native unionization rates. Characteristics of the industrial relations regime in the country of destination, in particular the institutional embeddedness of trade unions, affect the likelihood that migrants join trade unions as compared to native workers.     

Amino acid formula as a new strategy for diagnosing cow’s milk allergy in infants: is it cost-effective?

Aims: To estimate the cost-effectiveness of a new strategy that uses an amino acid formula in the elimination diet of infants with suspected cow’s milk allergy (CMA).

Materials and methods: This pharmacoeconomic study was developed from the perspective of the Brazilian Public Healthcare System. The new strategy proposes using an amino acid formula in the diagnostic elimination diet of infants (≤24 months) with suspected CMA. The rationale is that infants who do not respond to the amino acid formula do not suffer from CMA. Patients with a positive oral challenge test receive a therapeutic elimination diet based on Brazilian Food Allergy Guidelines. This approach was compared to the current recommendations of the Brazilian Food Allergy Guidelines. A decision model was constructed using TreeAge Pro 2012 software. Model inputs were based on a literature review and the opinions of a panel of experts. A univariate sensitivity analysis of incremental cost-effectiveness ratios was performed.

Results: The mean cost per patient of the new amino acid formula strategy was R$3,341.57, while the cost of the current Brazilian guidelines strategy was R$3,641.08. The mean number of symptom-free days per patient, which was used as an indicator of effectiveness, was 900.6 and 875.7 days, respectively. The new strategy is, therefore, dominant. In the sensitivity analysis, the dominance was maintained with parameter variation.

Limitations: In the absence of information in the literature, some premises were defined by a panel of specialists.

Conclusions: The new strategy, which uses an amino acid formula in the elimination diagnostic diet followed by an oral food challenge, is a dominant pharmacoeconomic approach that has a lower cost and results in an increased number of symptom-free days.     

On the nature and role of financial systems in Keynes’s entrepreneurial economies

In his debate with Bertil Ohlin, Keynes observed that entrepreneurs, when deciding to invest, have to be sure they will access the amount of finance necessary to initiate the investment process and that they will be able, when the time comes, to fund their debts in ways that are adequate to the profile of assets they are purchasing. In this statement, Keynes outlines the functions of financial systems in Entrepreneurial Economies, the type of economies he hypothesizes we live in. In entrepreneurial economies, investing firms have to be able to get hold of the necessary amount of means of payment required to purchase or order investment goods and to build balance sheets where in- and outflows of cash are broadly matched within reasonable margins of safety. This means that financial systems’ primary role in Keynesian economics is not to allocate savings or capital but to allocate liquidity and to allow investors to build liquid balance sheets. The article develops this proposition, presenting Keynes's basic concepts on the matter and showing how modern financial systems perform their role.