Severance Pay and Corporate Finance: Empirical Evidence from a Panel of Austrian and Italian Firms

This paper examines the empirical link between severance pay and corporate finance. Severance pay is an economic debt of the employer and hence should be taken into account by the market in its assessments of risk. Using a hand-collected dataset of accounting data from Italy and Austria we find there is only a limited relationship between severance pay and market risk indicators. This suggests that arguments that severance pay systems destroy corporate value may need to be reassessed.     

The present and future use of ‘land’ below ground

The world's subsurface space, including Britain's, is already used in a variety of ways, ranging from occupancy to disposal and the bulk storage of materials and fuels. In the future it is likely that it will be put to further use in response to trends in technology, resource supply and demand, socioeconomics and geopolitics. Here the present and future uses of underground space, and the potential planning and social issues affecting its development, are reviewed. Future uses are likely to be in the area of increasing occupancy (both commercial and residential), the secure storage of documents and data, the storage of carbon dioxide for carbon abatement, natural gas, compressed air stores of energy from traditional and renewable sources, the use of underground heat in buildings and the proposed deep geological disposal of radioactive waste. The article will also explore pressure points and challenges. These will include the regulation of multiple uses of subsurface storage space and, for projects of national importance including natural gas and radioactive waste storage, legislation to lessen the effect of local opposition relative to the ‘national need’. This article does not discuss future mining, hydrocarbon extraction, or water resources.     

Estimating Technical Efficiency and Production Risk under Contract Farming: A Bayesian Estimation and Stochastic Dominance Methodology

We investigate production risk, technical efficiency and risk attitudes amongst contract and independent farmers. We use a Bayesian parametric approach and stochastic dominance quantile regression methods to compare technical efficiency and risk attitude of smallholders in Nepal. Using farm‐level data, we find that contract farmers appear to show lower inefficiency and lower production risk. Additionally, contract and independent farmers can increase output by reducing the scale of operation. Regardless of the commodity produced and farming arrangement (contract or independent production), we find that labour, land and other inputs are risk‐augmenting, while the role of capital is mixed. We find a second order stochastic dominance (SSD) for lentils, and first order stochastic dominance (FSD) for tomatoes, ginger and HYV paddy seed commodities. Finally, contract farmers are more risk averse than independent farmers, regardless of the commodity produced.     

Multi-product costs and standby capacity derived from queuing theory: the case of Belgian hospitals

Empirical hospital cost function studies can be divided into two categories: studies estimating traditional multi-product cost functions and studies including demand uncertainty (assuming that hospitals provide standby capacity to cope with uncertain demand and stressing that the relationship between the uncertain demand, excess capacity and costs should be investigated). Most studies include (the inverse of) the occupancy rate in a relatively basic cost function. The first contribution of this paper is to incorporate an indicator of reserve capacity into a genuine multi-product cost function. The second contribution is to propose an alternative indicator to proxy the reserve margin. The often used occupancy rate has an important shortcoming: the same occupancy rate can hide different turnaway probabilities and waiting times, obscuring the true degree of reservation quality. Since turnaway probabilities and waiting times are typical queuing theory indicators, an indicator for average waiting time (derived from queuing theory) is incorporated into a proper multi-product cost function to capture the degree of standby capacity into a proper multi-product cost function. The study uses 1997 data on Belgian general care hospitals to estimate a multi-product cost function and calculate cost elasticities, marginal costs and the degree of economies of scale. The results further show that providing standby capacity has a significant impact on total costs.     

MARKET REFORM AND FOREIGN DIRECT INVESTMENT IN LATIN AMERICA: Evidence from an Error Correction Model

This study models dollar values of foreign direct investment (FDI) inflows to conditions in seven Latin American countries (Argentina, Brazil, Chile, Colombia, Mexico, Peru, and Venezuela) during the 1988-1992 period. Although much research on FDI has used time series data to explain inward or outward flows, two things set this study apart. First, this study includes market reforms as independent variables. Second, this study uses newer time series econometric tools (unit root test and cointegration analysis) to correct for a spurious regression. Our model is robust, explaining 79.4 percent of variation. We found three independent variables (size of current account deficit, size of GDP, and value of privatization less FDI in privatized companies) to be significant. Although we found directional support for three other independent variables (degree of capital market liberalization, low inflation rate, and depreciation of the real exchange rate), none of these proved significant.     

Optimal monetary policy using an unrestricted VAR

This paper proposes a simple benchmark for monetary policy. Assuming the true model of the economy is unknown, it is based on an unrestricted vector autoregression (VAR). The key result is that instead of deriving optimal policy using the original VAR equations as the constraint, when no restriction is placed on the correlation structure of the VAR disturbances, the constraint should be formed from a transformation of the VAR. This method is applied to the USA, 1964–2009. Significant welfare gains are found compared with actual policy and using a Taylor rule. Incorporating a zero interest rate lower bound lowers output and inflation. Copyright © 2010 John Wiley & Sons, Ltd.     

Relationship management for innovation: the central role of communication in australia's participation in two hi-tech industries

Individuals make decisions about whether innovations are adopted and transferred to new uses or locations. This Paper argues that relational competence Is critical for innovation management and technology transfer and that personal communication, formal and informal, is the core component in such competence. It shows how “close ties” and communication are critical to innovation, particularly given the changing nature and role of technolop management in the context o f rapidly increasing globalization. This is illustrated with reference to the communication in he mindset and practice of technology partnering in Australia's participation in the aerospace and telecommunications industries.     

Internationalization of private firms: environmental turbulence and organizational strategies and resources

Profiles of exporting and superior-performing private small and medium-sized enterprises (SMEs) are presented. Multivariate regression evidence suggests that SMEs focusing upon an offensive and market differentiation strategy of product/service protection is associated with the propensity and the intensity of exporting. Exporting SMEs are also associated with younger and manufacturing firms as well as firms with product or service quality and/or technology resources. The perceptions by SMEs of external environmental turbulence were not significantly associated with the exporting-dependent variables. Most notably, variables associated with exporting SMEs are not the same as those associated with superior firm performance. Moreover, exporting firms did not report superior levels of performance. Implications for policy-makers, practitioners and researchers are discussed.     

Entrepreneurial orientation in family firms: the case of the hospitality industry

Research increasingly shows interest in the motives and characteristics of entrepreneurs in the tourism and hospitality industry. Small and medium-sized family firms dominate this industry. Learning from the concept of entrepreneurial orientation and family business research, this explorative study aims at analysing entrepreneurial behaviours and their effect on performance as perceived by owner-managers of hospitality family businesses. The authors conduct narrative in-depth interviews to understand the managers' meaning of entrepreneurship and performance, and discuss the results in the light of existing entrepreneurship literature. Results indicate that family firms in hospitality and tourism are peculiar, and their embeddedness in the destinations and regions outlines their entrepreneurial behaviour against Schumpeter's definition of growth-oriented entrepreneurship.     

Sovereign debt disputes: A database on government coerciveness during debt crises

This paper measures “debt disputes” between governments and foreign private creditors in periods of sovereign debt crises. We construct an index of government coerciveness, consisting of 9 objective sub-indicators. Each of these sub-indicators captures unilateral government actions imposed on foreign banks and bondholders. The results provide the first systematic account of debt crises that goes beyond a binary categorization of default versus non-default. Overall, government behavior and rhetoric show a strong variability, ranging from highly confrontational to very smooth crisis resolution processes. In a preliminary analysis on the determinants of coercive behavior, we find political institutions to be significant, while economic and financial factors play a lesser role. These results open up an agenda for future research.