Equilibrium points of non-atomic games: Asymptotic results

An elementary proof, as well as an asymptotic version of David Schmeidler's theorem on the equilibrium points of non-atomic games is presented.     

Does organisational capital influence environmental strategies? Evidence from environmental innovation

As a result of increasing consumer awareness and stakeholder demands about environmental management, firms face stricter challenges surrounding the impact of business operations on the environment. In this regards, environmental innovation is one of the important ways of acting in harmony with the environment. Thus, the purpose of this study is to examine the impact of organisational capital on environmental innovation measured as the process innovation and product innovation. Using environmental innovation data from ASSET4 for the US listed firms between 2002 and 2018, our empirical results reveal a significant positive association between organisational capital and both the process innovation and product innovation. Furthermore, the relationship is stronger in high-profitability and sensitive industries subsamples. These results are robust to additional control variables and endogeneity tests. This study, while endorsing the resource-based view (RBV), provides important implications for the top management teams that organisational capital could be an important channel through which managers can boost environmental innovation.     

Stock market reactions to US Consumer Product Safety Commission enforcement actions

This study examines stock market reaction to violations of product safety regulations and firm product responsibilities in the post-enforcement period. Our event study results show that market reaction was negative to failures by firms to report product defects in a timely way. Our results also show that the stock market reaction varies depending on the type of violations, and whether there are single or multiple violations. Firms spend more on research and development and advertising in the post-enforcement period, in addition to investing in their compliance programmes which have a significant positive impact on product responsibility stewardship. Our empirical results show that the stock market reacts negatively to recall volume and refund remediation strategy. The stock market reaction is negative to social media communication about product recalls initiated by manufacturers. However, this negative effect appears to be counteracted by the positive corporate social responsibility (CSR) reputation effect of the manufacturers. Our findings imply that US manufacturing firms dealing with product recalls must be sensitive to how consumers and investors interpret the communication.     

Time Discounting and the Overexploitation of Coral Reefs

Environmental and Resource Economics - The incentive to overexploit a fishery resource is thought to exist if the resource owner’s discount rate is sufficiently higher than the biological...     

Price Elasticity of Demand and an Optimal Cash Discount Rate in Credit Policy

While the provision of a cash discount is equivalent to a reduction in price, the role of price elasticity of demand in determining credit terms has been neglected in the extant literature. In this paper, this role is investigated and it is shown that the optimal cash discount rate is affected by the price elasticity of demand for the firm's product. The comparative effects on the optimal cash discount rate with respect to exogenous changes in the fraction of credit sales paid after taking cash discount, the cost of short-term funds and the bad debt loss ratio are investigated. A trade-off between the time value gain and the price elasticity of demand is established. We find that firms which sell in locations having different price elasticities for their products, and/or which face various costs of short-term funds in different locations, should vary their cash discount terms accordingly.     

Assessing the potential impact of Microfinance with agent-based modeling

Recent empirical results have cast doubt on the value of Microfinance as a tool for reducing poverty. But, the difficulty lies in evaluating the impact of Microfinance in a world where the Microfinance institutions, their borrowers, and government policies are constantly changing. There is a need for a comprehensive and transparent framework to develop the theoretical grounds for believing in (or against) the efficacy of Microfinance, which can at the same time be used as a testing ground for policymakers. This paper presents a first attempt to develop an agent-based modeling (ABM) framework for pre-policy-implementation testing of the effects of Microfinance. Under the ABM paradigm, a set of behaviors for individual agents in the economy is used to construct a simulation whereby random interaction allows agents to change their state over time. Simulation of the model in different scenarios supported all our intuitions about Microfinance; in particular, there was positive impact of Microfinance on the wealth level of the poor. It was found that increase of available funds, easy access for producers and lower interest rates increase the effectiveness of Microfinance.     

The role of institutional investors in the inventory and cash management practices of firms in Asia

This paper examines the role of a particular class of institutional investors, domestic and foreign banks, in corporate decisions that have liquidity implications such as inventory and cash management. Using a sample of 256 non-financial listed firms in six Asian countries over the period of 2002–2005, this paper shows that foreign banks improve inventory and cash management practices, due to their superior monitoring of the managers. The disproportionate numbers of the institutional investors across industrial sectors in these Asian countries seem to suggest that some industrial sectors have stable demand of their products, such as in consumer goods sector, which is an attraction, for these institutional investors. Furthermore, the paper finds that forward-looking government policies are crucial to entry of these institutional investors in the developing countries. The research findings have implications for board structure and corporate governance standards.