Audit committees and financial reporting quality: The 8th EU Company Law Directive perspective

In order to increase corporate governance quality, the 8th EU Company Law Directive enacted a mandatory audit committee in publicly listed companies in the EU and defined its tasks and responsibilities. In response to the directive, we examine the incremental value of audit committee monitoring effectiveness and audit committee competencies over the mere existence of an audit committee. We find that audit committee monitoring effectiveness and competencies are positively associated with financial reporting quality, whereas, somewhat surprisingly, the effect of the existence of an audit committee is negative. This finding shows that the existence of audit committees is a necessary but not a sufficient condition for enhancing financial reporting quality. Collectively, the study’s findings suggest that the 8th Directive has had a positive effect on corporate governance quality and, in turn, financial reporting quality in the EU.     

The key risk indicators of road traffic crashes in Serbia,Niš region

Traffic crashes are a serious public health and socio-economic problem, and they are one of leading causes of death of males in Serbia. In order to determine the main causes of road traffic crashes in Ni? region, Republic of Serbia, nine key risk indicators of road traffic crashes are identified, organized into four groups (number and structure of crashes, consequences of traffic crashes, temporal and spatial location of traffic crashes, causes and sanctions), and described in detail. The indicators are ranked based on group fuzzy analytic hierarchy process (AHP), where experts from insurance companies, professionally engaged in the process of risk assessment, with different previous experience present different impact on the final ranking. In relation to the most influential factors in the assessment of traffic crashes, improper and unadjusted vehicle speed, overtaking and passing, as well as the physical condition of the driver have the highest effect.     

Franchising in the Balkans: History,status, and challenges

Abstract

Since the Balkans have not been covered with regards to franchising in any comprehensive fashion in the past, this study represents a first look at the topic in this part of the world and contributes to the literature on franchising in emerging economies. This research contrasts the development of franchising in the ten Balkan countries of Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Kosovo, Macedonia, Montenegro, Romania, Serbia, and Slovenia. A comprehensive overview of the franchise industry and its history is created for each country, integrating economic and franchise infrastructure development. The study reveals severe deficiencies in the region with regards to the availability of official data and a lack of specific legislation with regards to franchising and disclosure mandates, as well as education about franchising and a reliable legal environment. Implications for researchers and policy makers conclude the study.     

A critical re-examination of the Carlson–Parkin method

The euro area has been experiencing a long period of inflation well below the targeted 2%. This has once again brought the problem of quantifying inflation expectations into the scientific focus. Within the framework of the Carlson–Parkin (CP) method, previous research has mostly focused on altering the probability distributions. Analysing as much as 2688 versions of the CP method, we prove that the distribution choice provides only minor improvements in the forecasting accuracy. On the other hand, the method assumptions (unbiased expectations and the number of survey response categories) play the pivotal role. We make an attempt to provide an assumptions-free quantification method by recognizing the fact that agents perceive ‘moderate’ inflation through the inflation targeting policy.     

The impact of foreign direct investment on host country exports: A meta-analysis

In this paper, we present a synthesis of the literature examining the impact of foreign direct investment on host country exports. We reviewed and summarised 37 theoretical papers, 27 micro-level empirical studies and analysed 627 specifications from 117 macro-level empirical studies. In exploring the reasons behind the variations of the reported effects in the empirical literature, we applied meta-regression methodology. Our results indicate that the existing empirical literature generally reports a positive impact of foreign direct investment on exports, especially in developing countries. The reported effects are sensitive to research design, model specification and the context of the research. No publication bias was detected in the sampled studies. Based on our results, we provide some avenues and guidelines for future research on this topic. Our results could also have some important implications for policymakers.     

Pre-crisis reforms,austerity measures and the public-private wage gap in two emerging economies

This paper analyzes crisis adjustments of the public and private sectors in two emerging market economies, Croatia and Serbia, during the 2008–2011 period. It focuses on public-private wage gaps at the onset of and during the crisis, decomposed into structural and composition effects using an extension to the Oaxaca-Blinder method based on Recentered Influence Function (RIF) regressions and reweighting. The main results indicate that at the beginning of the crisis public sector workers in both countries enjoyed a significant wage premium, with the premium in Serbia being about three times higher than in Croatia. During the crisis, both countries experienced a similar increase of the premium, with Croatia reaching the size of gap usually estimated for EU countries, while Serbia stayed largely ahead. The results also show that the wage distribution in the public sector is more compressed than in the private sector in both countries, which is further exacerbated by the crisis. Despite the introduced austerity measures, public sector workers continue to enjoy well-protected and privileged jobs in terms of wages relative to their private sector counterparts. Structural reforms undertaken prior to the crisis played a decisive role in determining the countries’ responses to the crisis.     

MODEL UNCERTAINTY AND SCENARIO AGGREGATION

This paper provides a coherent method for scenario aggregation addressing model uncertainty. It is based on divergence minimization from a reference probability measure subject to scenario constraints. An example from regulatory practice motivates the definition of five fundamental criteria that serve as a basis for our method. Standard risk measures, such as value‐at‐risk and expected shortfall, are shown to be robust with respect to minimum divergence scenario aggregation. Various examples illustrate the tractability of our method.     

Book Review

Tourist experiences are often profound and help to shape the social world of actors. Memories of travels become part of lived experiences to share with others. Experiences of travels or holidays achieve iconic status in everyday lives, and are communicated through the stories of life into lived identities. Accounts of touristic experiences in naturalistic everyday interaction have a story-like quality to them which become mythologised, fabled and flamboyantly and richly narrated to friends and relatives back home. However it is often extremely difficult to collect naturally occurring data of these storied experiences. Interviews in contrast appear to have a more structured and less naturalistic quality. This paper argues that using less structured interview situations, and a very close, fine-detailed analysis of interview data that draws upon socio-linguistic approaches, it is possible to reveal the underlying narrative structure of accounts for and of touristic experience. The paper argues that the natural attitude of the tourist is a ‘narrativistic’ attitude, that an account of touristic experience requires the development of a story, to define, describe and provide reasoned accounts for touristic events. Thus stories are crucial to the development of touristic accounts, and understandings of touristic experience must take account of these narrative structures in order to fully understand what tourists do when they talk about their experiences: they talk about their identities and their worlds. This paper explores how such narratives are constructed and what ‘things’ (other than the events themselves) they communicate.     

A general characterization of one factor affine term structure models

We give a complete characterization of affine term structure models based on a general nonnegative Markov short rate process. This applies to the classical CIR model but includes as well short rate processes with jumps. We provide a link to the theory of branching processes and show how CBI-processes naturally enter the field of term structure modelling. Using Markov semigroup theory we exploit the full structure behind an affine term structure model and provide a deeper understanding of some well-known properties of the CIR model. Based on these fundamental results we construct a new short rate model with jumps, which extends the CIR model and still gives closed form expressions for bond options. Manusript received: June 2000, final version received: October 2000