Regulatory harmonization and the development of private equity markets

This paper introduces a new dataset from 100 Dutch institutional investors’ domestic and international asset private equity allocations. The data indicate that the perceived comparative dearth of regulations of private equity funds impedes institutional investor participation in private equity funds, particularly in relation to the lack of transparency. The data further indicate that the perceived importance of regulatory harmonization of institutional investors has increased Dutch institutional investor allocations to domestic and international private equity funds. The Financieel Toetsingskader (regulation of portfolio management standards such as matching of assets and liabilities) has had the most pronounced and robust effect, followed by Basel II (regulation of risk management and disclosure standards) and the International Financial Reporting Standards (regulation of reporting standards and transparency).     

Bertrand under Uncertainty: Private and Common Costs*

Does asymmetric information about costs in a homogeneous-good Bertrand model soften competition? Earlier literature has shown that the answer (perhaps counter-intuitively) is “no,” while assuming (i) private (i.e., independent) cost draws and (ii) no drastic innovations. I first show, in a fairly general setting, that by relaxing (i) and instead allowing for sufficiently much common (interdependent) cost draws, asymmetric information indeed softens competition. I then study a specification that yields a closed-form solution and show that relaxing (ii) but not (i) does not alter the result in the earlier literature. While relying on specific functional forms, this specification is quite rich and might be useful in applications. It allows for any (positive) degree of interdependence between the cost draws, for any demand elasticity, and for any number of firms. The closed-form solution is simple and in pure strategies.     

Corporate social responsibility reporting: A comprehensive picture?

This study develops a content analysis framework that provides information on the comprehensiveness of corporate social responsibility (CSR) reporting, an important aspect of social and environmental accountability. Comprehensive reporting, as defined here, requires three types of information for each disclosed CSR item: (i) vision and goals, (ii) management approach, and (iii) performance indicators. The feasibility of the framework to assess the comprehensiveness of CSR reporting is demonstrated using the 2005 annual reports of a sample of publicly traded Belgian companies. The content analysis reveals a low level of comprehensive reporting. This finding complements those of prior studies on the completeness of CSR reporting and, therefore, feeds the debate regarding the extent to which CSR reporting can be considered a mechanism for discharging social and environmental accountability.     

Chris Willett (Ed.): Public Sector Reform and the Citizen's Charter. London: Blackstone Press, 1996.

Journal of Consumer Policy -     

Environmental issue entrepreneurship: a Schumpeterian perspective

In this paper, the recent growth in national and international environmental legislation and the subsequent emergence of rather vague ecological concepts like sustainable development and the precautionary principle, are analyzed from a Schumpeterian perspective in which polical issue entrepreneurschip plays a central role. Schumpeter wrote that the emergence of unfavorable circumstances in capitalist societies will activate strong opposition from social critics and intellectuals. Is modern environmentalism one of the most powerful recent forces that will further impact capitalism? Did Schumpeter foresee this evolution and what are the mechanisms that did lead to this situation? We discuss aspects of Schumpeterian issue entrepreneurship and relate these to theories on the emergence of environmental regulation, the expansion of environmental organizations, the use of new instruments in environmental policy and pro-active business strategies.     

Estimating Systematic Risk Using Time Varying Distributions

This article proposes a dynamic vector GARCH model for the estimation of time-varying betas. The model allows the conditional variances and the conditional covariance between individual portfolio returns and market portfolio returns to respond asymmetrically to past innovations depending on their sign. Covariances tend to be higher during market declines. There is substantial time variation in betas but the evidence on beta asymmetry is mixed. Specifically, in 50% of the cases betas are higher during market declines and for the remaining 50% the opposite is true. A time series analysis of estimated time varying betas reveals that they follow stationary mean-reverting processes. The average degree of persistence is approximately four days. It is also found that the static market model overstates non-market or, unsystematic risk by more than 10%. On the basis of an array of diagnostics it is confirmed that the vector GARCH model provides a richer framework for the analysis of the dynamics of systematic risk.