Can partial fiscal coordination be welfare worsening?: A model of tax competition

Most work on tax competition argues that mobile factors tend to be undertaxed except if there is coordination of tax policies. Full coordination is not however always feasible, and as a consequence some measures of partial coordination have been proposed such as minimal withholding taxes on interest income. We show that partial coordination can be in some instances welfare worsening and that then no coordination is to be preferred.     

Market Structure and Return Volatility: Evidence from the Hong Kong Stock Market

There is no consensus about the cause for higher volatility at the market open than at the market close in the U.S. market. As an order–driven, nonspecialist market, the Hong Kong stock market provides a useful setting for an examination. If halt of trade were the major cause of higher open–to–open volatility, the open–to–open volatility in the Hong Kong market would be higher. However, this is not observed. The autocorrelation of the open–to–open return series also indicates that the temporary price deviation at the market opening is not significant. We view these findings as consistent with the specialist argument.     

Downside Risk and Investment Choice

This paper develops an optimal investment strategy for individuals concerned with avoiding the possibility of realizing returns below a predetermined target level within a prescribed period of time. Assuming a Brownian motion process, a model is developed which allows computation of the exact probability of failure. The algorithm and associated comparative statics with respect to the mean and standard deviation of returns, target return, time horizon, and risk-free rate of return are likely to have many useful practical applications.     

Quality of Leadership and Workplace Bullying: The Mediating Role of Social Community at Work in a Two-Year Follow-Up Study

The theoretical and empirical link between leadership and workplace bullying needs further elaboration. The aim of the study is to examine the relationship between quality of leadership and the occurrence of workplace bullying 2 years later. Furthermore, we aim to examine a possible mechanism from leadership to bullying using social community at work as mediator. Using survey data that were collected at two different points in time (2006–2008) among 1664 workers from 60 Danish workplaces, we examined the total, direct and indirect effects between quality of leadership and workplace bullying. Our results indicate that quality of leadership plays a role in establishing working conditions that lead to workplace bullying. Furthermore, social community at work fully mediates the effect of poor quality of leadership on workplace bullying. This longitudinal study adds to previous cross-sectional studies on the substantial role played by leaders in the bullying process. Within the leadership–bullying relationship, social community at work acts as a full mediator, adding a significant contribution to the discussion of mechanisms involved in the bullying process. Plausible explanations of this mechanism and practical implications are discussed.     

When Lying Does Not Pay: How Experts Detect Insurance Fraud

A growing literature has focused on understanding how to detect and deter unethical consumer behavior. In this work, we focus on a particularly important type of unethical consumer behavior, consumer insurance fraud, and we analyze a unique dataset to understand how experts investigate suspicious claims. Two separate but related literatures inform the process of investigating suspicious insurance claims. The first literature is grounded in field research and emphasizes the importance of secondary sources. The second literature is grounded in laboratory studies that emphasize the importance of interpersonal interactions. Here we draw upon both literatures to consider the importance of claimant interviews within the context of many investigative actions and the potential for claimants to avoid interviews. In an empirical study using qualitative and quantitative data from auto insurance claim investigations, we analyze investigative chronologies conducted by skilled experts. In doing so, we find that even when investigators can access information from a variety of sources such as witnesses, databases, and physical evidence, claimant interviews are the most important step in determining whether or not claims are denied or paid. Furthermore, we identify interpersonal avoidance as an important signal of unethical claimant behavior. Our findings inform deception detection theory and practice. We identify implications for deception detection in business, particularly for consumer unethical behavior and insurance fraud investigations.     

Habit,prisoner's dilemma and Americans’ welfare cost of working much more than Europeans

Europeans work much less than Americans. Some studies claim this is due to Europe's high taxes and that Europeans would gain by adopting US tax rates and work time. I argue that Americans would gain by reducing work time to Europe's level. Due to historical experience, Europe is able to internalise work‐time‐related negative externalities by enacting restrictive work‐time policies, while the United States is not, resulting in a prisoner's dilemma equilibrium and “overworking trap.” A simple model and work‐time data are used to derive the US welfare gain from reducing work time to Europe's level. Findings are as follows: (i) parameter values are consistent with experimental results on own vs. other people's income value; (ii) the welfare gain's present value is between 80 and 120% of annual welfare; and (iii) a European policy that reduces work time excessively remains beneficial if the reduction is less than twice the optimal one.     

Market presence, contestability, and the terms-of-trade effects of regional integration

This paper examines the impact of market presence and contestability on the price behavior of US exporters in Brazil’s market when MERCOSUR and MFN trade liberalization take place. Using detailed panel data on trade and tariff rates, we find that both the preferred supplier’s market presence and threat of entry lower (raise) the US price reaction to MFN (preferential) trade liberalization, with similar quantitative effects. Thus, presence in, or threat of entry into, partners’ markets implies lower optimal MFN tariffs, and regional agreements can have pro-competitive effects in contestable markets. We also examine the ‘symmetry’ hypothesis between the effect of tariffs and exchange rates.     

Valuation of controlling shares in closely held banks

This paper investigated factors that affect the valuation of controlling shares of closely held bank stocks. With regard to traditional financial factors, earnings and growth variables proved to be important. In addition, the prior ownership position of the buyer was important in pricing the stock. Other non-traditional valuation factors were investigated with only limited success. The statistical work was enhanced by a robust regression technique.