Corporate strategy financialized: Conjuncture,arbitrage and earnings capacity in the S&P500

The conjuncture that ushered in the era of shareholder value served to embed capital market expectations into corporate governance aligning management and shareholder interests. Market arbitrage focussed on modifying contractual relations with stakeholders to extract a (higher) return on invested capital. In this article we focus on cash earnings on capital employed generated by the S&P 500 survivor group of firms covering the period 1990–2008. We use this financial data to construct three complementary perspectives on corporate financial performance: firm, firm-relative and macro. Within this framework the financial numbers and perspectives are analogous to a ‘hall of mirrors’ where ambiguity and contradiction are in play frustrating straightforward performative narratives that connect purpose with financial transformation an era of shareholder value.     

Do Antitrust Laws Facilitate Collusion? Experimental Evidence on Costly Communication in Duopolies*

Bertrand supergames with non‐binding communication are used to study price formation and stability of collusive agreements on experimental duopoly markets. The experimental design consists of three treatments with different costs of communication: zero‐cost, low‐cost and high‐cost. Prices are found to be significantly higher when communication is costly. Moreover, costly communication decreases the number of messages, but more importantly, it enhances the stability of collusive agreements. McCutcheon (1997) presents an interesting application to antitrust policy by letting the cost of communication symbolize the presence of an antitrust law that prohibits firms from discussing prices. Although our experimental results do not support the mechanism of McCutcheon's (1997) argument, the findings point in the direction of her prediction that antitrust laws might work in the interest of firms.     

When it comes to the crunch: What are the drivers of the US banking crisis?

This article considers how permissive regulatory conditions helped change the size and scope of the US mortgage market. Asset backed securitization facilitated an expansion of the US mortgage market and modified the structure of the value chain within which financial assets, risk and liquidity were managed. New sophisticated mortgage products, indulgent lending practices, loose credit assessment and flimsy documentation increased the probability of mortgage default in an economic downturn. US banks were not in a position to absorb mark-to-market losses on mortgage assets and goodwill impairment resulting from a credit crunch because they operate with narrow profit margins and a limited equity cushion in the balance sheet. This article questions the viability and sustainability of this banking business model.     

Doing Unto Others: The Reciprocity of Helping Behavior in Organizations

Reciprocity is a fundamental aspect of social life, and a phenomenon studied from a wide variety of philosophical, theological, and social scientific perspectives. In this study, we use social exchange theory to investigate why employees help other employees. We hypothesize, based on the norm of reciprocity (Gouldner, 1960), that a significant cause of an employee's helping behavior is how much organizational citizenship behavior (OCB) the employee has received from coworkers. To provide evidence of the discriminant validity of OCB received as an antecedent of helping behavior, we also assess its effects on another form of extra-role behavior, voice, as well as in-role performance. We found, in a sample of 157 employee-supervisor dyads, that OCB received was related to helping behavior after controlling for several antecedents of helping behavior identified in past research, and was less related to voice and in-role behavior, as hypothesized. Implications for theory and practice are presented.     

Exchange rates dynamics revisited: a panel data test of the fractional integration order

We test the possibility that exchange rates from nine developed countries have a unit root against the alternate possibility that they are fractionally integrated. Theoretically, exchange rates are only expected to follow a random walk under restrictive assumptions. However, most traditional unit root tests cannot reject a unit root in exchange rates, and time series tests that allow for fractional integration have given inconclusive results. To increase the power of the test of the integration order we develop two panel data tests of the fractional integration order. Monte Carlo simulations show that these tests are correctly sized and have relatively high power compared to other similar tests. Moreover, our empirical results show that we can reject a unit root in exchange rates with a high probability, but the integration order is close to one. This indicates that exchange rates are mean-reverting, although the reversion is slow, resulting in long swings.     

Creating a bridge between university and industry in small European countries: the role of the Industrial Liaison Office

The frequent and intermittent need for new scientific knowledge has resulted in an increasing focus on links between industry and academic institutions. This has been particularly pronounced in the flows of knowledge between the two partners, which may lead to considerable diffusion of scientific and technical knowledge, particularly into the small firm sector. This development could be of particular benefit to smaller peripheral economies, which have demonstrated low levels of indigenous industrial technological development. As a result, universities could become increasingly important for local economic development in smaller countries on the periphery of Europe. However, a greater understanding is required of the pro-active role that the university itself can play in developing strong linkages with industry, particularly through mechanisms such as the Industrial Liaison Office (ILO). In particular, there needs to be an examination of the strategies and policies that are undertaken to increase the process of technology transfer from academia into local indigenous business within smaller countries. This paper will therefore examine the role that universities play in the regional economic development in two contrasting small countries of Europe, namely Sweden and Ireland. Drawing on interviews with key individuals in the processes of technology transfer between academia and industry (including ILOs), as well as secondary data, it will examine the general role and function of the industrial liaison office and how this has changed. It will also discuss the involvement of the university in different types of industrial links, the main opportunities and barriers to the development of links between university and industry, the benefits to the university from industrial links, and the perception of industry’s assessment of the relationship with universities. The research will provide valuable insight into the role of universities in developing innovation and entrepreneurship within the smaller and peripheral countries of Europe and will determine whether these universities are undertaking a pro-active role in encouraging the growth of innovative indigenous industry. This may have significant policy implications, especially with regard to the development of specific regional programmes to encourage academic-based entrepreneurship.     

A community-based impact assessment of the Wild Coast spatial development initiative, 1997–2004

Much of the debate around the spatial development initiatives (SDIs) in South Africa is based on economic theory. To add the community perspective, an evaluation of local economic development on the Wild Coast followed a baseline in 1997 with comparable surveys in 2000 and 2004. Apart from an increase in access to piped water and a reduction in unofficial payments for health services, there was little community evidence of development over this period. Residents reported decreasing knowledge of the SDI and there was no increase in numbers considering small business ownership. In the investment-intensive ‘anchor’ areas, as in the SDI as a whole, there was no significant increase in employment and more households received remitted incomes from migrant workers. In an SDI for small businesses in tourism and agriculture, there was a dramatic fall-off in food production. No more households had loans in 2004 than in 1997, but more were taking loans from loan sharks. Other spatial planning initiatives might learn from the Wild Coast, not least through the perspectives gained from community-based impact assessments.