Integrated reporting and capital markets in an international setting: The role of financial analysts

This study investigates the interplay between integrated reporting (IR) and capital markets. In particular, building on voluntary disclosure and information processing theories, we hypothesize and empirically find that IR adoption improves analysts' ability to make accurate earnings forecasts. Whereas previous studies focus on the South African context, we rely on an international sample that also allows us to study the moderating effect of the corporate governance regime (shareholder or stakeholder oriented). The results suggest that IR improves analysts' ability to make accurate predictions to a larger extent in North America than in Europe, and we derive interesting insights on the much‐debated nature of IR. This study offers valuable insights to policy makers interested in improving disclosure practices in the financial market.     

The effects of offshoring on wages: a meta-analysis

Review of World Economics - Offshoring, either as FDI or offshore outsourcing, is a phenomenon of increasing importance that has been widely studied in the economics literature. Studies analysing...     

Raising the bar (11)

This editorial summarizes the papers published in issue 14(2) so as to raise the bar in applied spatial economic research and highlight new trends. The first paper deals with past and current challenges for regional science research. The second paper investigates whether people living in deprived neighbourhoods have less chance of succeeding in a job application. The third paper finds evidence that real estate firms can avoid price competition when market shares of their allies increase in the vicinity. The fourth paper is methodological: it considers a spatial autoregressive (SAR) model with heterogeneous coefficients and extensively analyzes the impact of this extension on the direct and indirect effects estimates. The fifth paper proposes an innovative method to estimate the elements of the spatial weight matrix in a spatial econometric model. The final paper is econometric–theoretical: it proposes a new generalized method of moments (GMM) estimator of the coefficients of a SAR model if the error terms are heteroskedastic of an unknown form.     

Simulation-based estimation of state-dependent project volatility

Project volatility is an essential parameter for real options analysis, and it may also be useful for risk analysis. Many volatility estimation procedures only consider the volatility in the first year of the project. Others consider that different years may have different values of the project volatility. This article takes into account that volatility may change not only with time but also with the state of the project. Two possible definitions for the project volatility are considered, the log-variance and the variance of the project value, and two simulation-based procedures are proposed for estimating state-dependent volatility: two-level simulation and one-and-a-half-level simulation. Computational experiments show that both procedures perform better than the method proposed by Copeland and Antikarov and that the one-and-a-half-level simulation procedure leads to the most accurate estimations of project volatility.     

Social norms,cooperation and inequality

This paper analyzes the outcomes that can be supported by social norms in a society of infinitely lived and patient agents that are randomly matched in pairs every period to play a given game. I find that any mutually beneficial outcome can be supported by a self-enforcing social norm under both perfect information and a simple local information system. These Folk Theorem results explain not only how social norms can provide incentives that support cooperation in a community, providing support to the concepts of social capital and corporate culture, but also how they can support inequality and discrimination.I am grateful to David Levine for invaluable guidance and ideas. I also thank Anna Aizer, Hongbin Cai, Walter Cont, Ernesto Dal Bó, Jean-Laurent Rosenthal, Federico Weinschelbaun, William Zame, anonymous referees and seminar participants at Universidad de Buenos Aires, UCLA, Universidad T. Di Tella, Harvard Business School and Stockholm School of Economics for very useful comments and discussions     

Some Difficulties in Sacconi's View about Corporate Ethics

Lorenzo Sacconi's The Social Contract of the Firm (Berlin, Springer, 2000) is a major contribution to the normative theory of the firm. It contains a full-fledged contractarian explanation of the role of Corporate Codes of Ethics. Sacconi proposes a game-theoretical model of the normative structure of the firm, including explicit and implicit contracts binding the members of the organisation, and the so-called constitutional contract: the hypothetical agreement that sets the basic co-operative structure in which the organisation consists. While Sacconi's theory is sound and full of suggestions, it is doubtful whether it completely grasps the nature of organisational ethics. In presenting organisations as the product of an agreement among self-interested individuals, the model does not account for the social and systemic embeddedness of business institutions. This paper points to several shortcomings of Sacconi's view, and explores alternative understandings of a contractarian morality as applied to business ethics.     

On the Determinants of SME Cash Holdings: Evidence from Spain

Abstract:  This work analyses the factors that might explain the level of cash holdings in a sample of 860 small and medium-sized firms from Spain during the period 1996–2001. The empirical results show that firms have a target cash level to which they attempt to converge. The level of this target is higher for firms with more growth opportunities and larger cash flows. In contrast, the target level for cash holdings falls when the use of bank debt and the presence of substitutes for cash increase. Moreover, when the interest rates in the economy increase firms reduce their cash holding.     

Manufacturing strategy-technology relationship among auto suppliers

Each manufacturing plant has to develop its own path to success based on contingencies and on manufacturing practices links. On the basis of the latter, this paper tests the link between two of the most important manufacturing practices areas, manufacturing strategy (MS) and technology, without addressing causality or their combined effect on performance. This is done by selection fit, i.e. congruency adjustment. However, this paper goes beyond grouping both sets of practices in pairs, by using a more general selection view version, with practices from both sets related multidimensionally and subordinated by regression analysis to test for any congruent pattern. Regression results from a wide-ranging survey of auto supplier plants show that, in general, MS seems to have some kind of impact on technology, and that technology has some kind of influence on MS. In addition, a strong congruency between both practices areas is observed when using correlation. This suggests that when implementing or adjusting MS or technology, the other should also be considered; otherwise they may not operate effectively.     

On the Time Inconsistency of Optimal Monetary and Fiscal Policies with Many Consumer Goods*

In this paper, we study the time consistency of optimal policies in an environment where agents use cash to purchase many consumer goods and where those goods might be taxed at differential rates. Our main result is that optimal monetary and fiscal policies are, in general, time‐inconsistent, because the number of bond instruments is insufficient to influence all future fiscal decisions. However, there is one special case where optimal policies are time‐consistent, which is when differential tax rates across cash goods are optimally zero.     

University spillovers and new business location in high-technology sectors: Spanish evidence

This paper examines the relationship between knowledge spillovers from universities and new business location in high-technology sectors. We focus on the contribution to new business formation through spillovers stemming from three main university outputs: knowledge-based graduates, research activities, and technological knowledge. We construct a new dataset with information on 604 companies and 63 universities in Spain and group the data across 36 geographical areas from 2001 to 2004 (144 observations). After controlling for several traditional cost factors and agglomeration characteristics, we find that university spillovers are relevant in explaining the location of new businesses in high-technology sectors in Spain. Further, our analysis draws attention to the relevance of graduates as the main source of spillovers, while research activities and university technology do not have significant effects.