The consequences of managerial indiscretions: Sex,lies, and firm value

Personal managerial indiscretions are separate from a firm's business activities but provide information about the manager's integrity. Consequently, they could affect counterparties’ trust in the firm and the firm's value and operations. We find that companies of accused executives experience significant wealth deterioration, reduced operating margins, and lost business partners. Indiscretions are also associated with an increased probability of unrelated shareholder-initiated lawsuits, Department of Justice and Securities and Exchange Commission investigations, and managed earnings. Further, chief executive officers and boards face labor market consequences, including forced turnover, pay cuts, and lower shareholder votes at re-election. Indiscretions occur more often at poorly governed firms where disciplinary turnover is less likely.     

Disaggregating operating and financial activities: implications for forecasts of profitability

Researchers, practitioners, and standard setters emphasize the importance of disaggregating financial statements into operating and financial activities. However, there is a lack of research demonstrating that this disaggregation improves forecasts of profitability. In this study, we consider whether and when the operating/financial disaggregation improves forecasts of profitability. Contrary to the use of an aggregate forecasting approach by most related prior research, we first show that the operating/financial disaggregation only provides forecast improvement over a benchmark model incorporating aggregate information when the components forecasting approach is used. We also compare the operating/financial disaggregation to the unusual/infrequent disaggregation required by US GAAP. We find that the operating/financial disaggregation yields less accurate forecasts than the unusual/infrequent disaggregation. However, when using the components forecasting approach, we find that the combination of both disaggregations improves forecasts of profitability. Finally, we document that the incremental usefulness of the operating/financial disaggregation relative to a benchmark model incorporating aggregate information is a function of growth and accounting conservatism. Overall, our study provides timely evidence concerning how analysts and investors might best use the operating/financial disaggregation for forecasting profitability.     

Laying the foundations of international careers research

As an editorial to the special issue “new avenues in international careers research” this article discusses the roots of the international careers research stream, which sits at the intersection between career studies, HRM and international management. In order to support future studies in this emerging area of enquiry, we attempt to lay down the foundations of a research agenda based around what we see as the three core areas of interest: contextualised careers research, comparative careers research and careers research in internationally operating organisations. After providing some suggestions for the kinds of theoretical and methodological tools that will be required to build on these foundations, we introduce the five empirical papers that comprise this special issue.     

Bankruptcy reform in the Middle East and North Africa: Analyzing the new bankruptcy Laws in the UAE,Saudi Arabia,Morocco, Egypt,and Bahrain

For years, countries in the Middle East and North Africa (MENA) region have been trying to increase entrepreneurship rates and attract foreign investment, however, their bankruptcy statutes remained antiquated and punitive in nature. Potential start‐ups and foreign investors have been deterred from these markets due to a lack of alternative solutions to liquidation and a fear of punishment for business failure. At least seven countries in the region have now taken steps to modernize their bankruptcy laws to provide restructuring mechanisms and other measures designed to incentivize risk‐taking rather than to deter it. With this year's crash in oil prices, an unprecedented global pandemic and an imminent recession, an effective bankruptcy system has become even more critical to avoid catastrophic results for the employment rates and economic value of the companies in the region. However, despite these recent reforms, significant improvements are still needed to maximize the value and benefits of bankruptcy procedures in the face of these growing economic threats.     

Putting the Cart before the Horse? Re-Examining the Relationship between Domestic Savings and Economic Growth in Selected Sub-Saharan African Countries

In addition to the standard Granger causality, this paper employs the Toda–Yamamoto approach and instantaneous causality test to examine the causal relationship between domestic savings and economic growth in 10 sub-Saharan African countries utilizing time series data. Findings from both the standard Granger causality and Toda–Yamamoto approach are consistent and robust only in five countries where domestic savings and economic growth are completely independent in three countries. For the remaining two, causality runs from savings to growth. However, for the other five countries, findings produced from both causality tests are grossly inconsistent and mixed leaving us under a quandary although the Toda–Yamamoto test is often reliable on account of its ability to avoid misleading results associated with the asymptotic nature of the standard Granger causality test. Our findings further reveal an instantaneous unidirectional causality from domestic savings to economic growth for only Benin, Mali, and South Africa suggesting that savings-led growth is rapid for these countries. We conclude based on our findings that the myriad of ‘evidence’ in earlier studies on savings-growth causality should be treated with caution given that methodological differences can produce misleading results with the potential of misdirecting policy.     

Von der Inflationsphobie bis zur „schwarzen Null“

The article examines some of the key statements of the supply-side economic theory that rejects debt-financed government investment programs for stabilizing high employment. It turns out that supply-side objections are not empirically proven. Subsequently, the author attempts to explain why nevertheless the supply-side paradigm stubbornly remains the prevailing theory in economics. It shows that the mechanisms of deliberative democracy in the economic decision-making in Germany do not work.