Optimal Diversification: Reconciling Theory and Evidence

In this paper we show that the main empirical findings about firm diversification and performance are consistent with the maximization of shareholder value. In our model, diversification allows a firm to explore better productive opportunities while taking advantage of synergies. By explicitly linking the diversification strategies of the firm to differences in size and productivity, our model provides a natural laboratory to investigate several aspects of the relationship between diversification and performance. Specifically, we show that our model can rationalize the evidence on the diversification discount ( Lang and Stulz (1994) ) and the documented relation between diversification and productivity ( Schoar (2002) ).     

Do consumers perceive benefits from the implementation of a EU mandatory nutritional labelling program?

This paper examines consumers’ knowledge about nutritional labels (i.e., nutritional panel), use of nutritional labels, and perceived benefits from a mandatory nutritional labeling program. Using data from a pilot study conducted in a Spanish city and a three-equation multivariate probit model, our results suggest that individuals who suffer some health problems related to food intake are more knowledgeable about nutritional labels. Further, those who are more knowledgeable about nutritional labels are more likely to use nutritional labels, and nutritional label users are more likely to consider mandatory nutritional labeling as beneficial. Perceived usefulness of the information provided by nutritional labels as well as the amount of presented information affect consumer perceptions about whether or not mandatory nutritional labeling would be beneficial.     

A choice experiment model for beef: What US consumer responses tell us about relative preferences for food safety,country-of-origin labeling and traceability

Several food safety issues have prompted questions regarding the role of country-of-origin labeling, traceability, and food safety inspections in consumers’ perceptions of food safety and quality. The importance of origin-labeling and traceability have been discussed in the EU for some time. North American cases of mad cow disease have led to increased discussions of these topics in the US, however, relatively little research has been conducted to examine the value US consumers place on these attributes. Choice experiments were used to analyze US consumers’ relative preferences and willingness-to-pay for these meat attributes in labeled ribeye beef steaks. Relatively speaking, consumers value certification of USDA food safety inspection more than any of the other choice set attributes, including country-of-origin labeling, traceability and tenderness. As a result, indication of origin may only become a signal of enhanced quality if the source-of-origin is associated with higher food safety or quality.     

UNCOVERED INTEREST PARITY IN ARGENTINA, BRAZIL, CHILE, AND MEXICO: A UNIT ROOT TEST APPLICATION WITH PANEL DATA

The aim of this study was to test uncovered interest parities for Argentina, Brazil, Chile, and Mexico, for the January 1990–December 2001 period, with the use of the rational expectation hypothesis. We also intend to evaluate the degree of mobility of foreign capital in these political jurisdictions, using panel data estimations, with unit root tests proposed by Levin and Lin (1992) , and Im, Pesaran and Shin (1997) . The econometric results indicate the rejection of uncovered interest parity (UIP), for the period under study, for the group consisting of Argentina, Brazil, Chile, and Mexico. However, the UIP hypothesis is not rejected for the group consisting of Argentina, Chile, and Mexico for the January 1991–December 2000 period.     

Corporate reputation,satisfaction, delight,and loyalty towards rural lodging units in Portugal

This paper enriches the model of delight and satisfaction that Oliver et al. (1997) propose and Finn (2005) modifies, with a suggested causal relationship between disconfirmation and arousal and the introduction of two new variables: the lodging unit's corporate reputation and perceived quality. The modified model is applied to rural tourism accommodations in Portugal and validated using PLS (Partial Least Squares). The results suggest that the lodging unit's reputation is a more significant determinant of loyalty than satisfaction or even delight. This study further supports the conceptualization of customer delight and customer satisfaction as distinct constructs. Results may help managers of rural tourism accommodations to develop and implement more successful relationship marketing strategies.     

Asset prices and business cycles with costly external finance

This paper asks whether the asset pricing fluctuations induced by the presence of costly external finance are empirically plausible. To accomplish this, we incorporate costly external finance into a dynamic stochastic general equilibrium model and explore its implications for the properties of the returns on key financial assets, such as stocks, bonds and risky loans. We find that the mean and volatility of the equity premium, although small, are significantly higher than those in comparable adjustment cost models. However, we also show that these results require a procyclical financing premium, a property that seems at odds with the data.     

The indexation of wages and bonds in Brazil

This paper analyses the dynamic relationship between the degrees of indexation of wages and public bonds in Brazil. A simple model is constructed to show that both degrees of indexation are determined simultaneously. We apply cointegration techniques and estimate error-correction representations to assess the temporal causality between them. Our results provide empirical support for the existence of simultaneity in the degrees of indexation in Brazil in the period 1980–93.     

Real wages and labor-saving technical change: evidence from a panel of manufacturing industries in mature and labor-surplus economies

Recent theories have provided a persuasive account of a key stylized fact of mature economies: the common long-run trends of average real wages and labor productivity, and the ensuing stationarity of functional distribution. Central to these theories is the notion of directed technical change, which claims that a rise in labor costs sparks the adoption of labor-saving innovations. This paper empirically examines a core prediction of these theories, namely that shocks to functional distribution elicit compensatory adjustments in real product wages and labor productivity. Using two disaggregated data-sets of manufacturing industries (EU-Klems and Unido), I find evidence of cointegration and two-way, long-run Granger causality between these two variables. These findings suggest that directed technical change is indeed key for producing stationarity in functional distribution, and they complement the recent empirical literature on distributive cycles and productivity growth. Preliminary evidence from the Unido data-set also suggests the importance of directed technical change in developing countries. To illuminate the empirical procedure, I present a theoretical model of growth and distribution with directed technical change.     

Physician's Advice Affects Adoption of Desirable Dietary Behaviors

Due to the prevalence of and economic costs associated with poor dietary behaviors, the purpose of our research is to investigate the relationship between receipt of physician's dietary advice and the individual's tendency to adopt the desirable dietary behavior. Using a trivariate probit model, we find that physician's advice has dramatic positive effects on the probability of both eating fewer high fat and high cholesterol foods and on eating more fruits and vegetables to reduce risk of developing heart disease or stroke.