Saving under rank-dependent utility

Summary. In this note we use the rank-dependent utility (RDU) model to analyze saving decisions. The RDU model enables us to separate the effects of pessimism and optimism on saving from that of concavity of the utility function. While pessimism induces more saving, the importance of this effect is shown to depend upon properties of the utility function such as prudence and temperance.JEL Classification Numbers: D11, D81.An anonymous referee provided helpful comments. Han Bleichrodts research was made possible by a grant from the Netherlands Organisation for Scientific Research (NWO). Louis Eeckhoudt acknowledges support from the Interuniversity Attraction Poles Programme - Belgian State - Federal Office for Scientific, Technical, and Cultural Affairs.     

The symmetry of the wage-change distribution: Survey and contract data

Using a new non-parametric symmetry test we examine Canadian contract and survey data for evidence of nominal wage rigidities. We compare results from the two data sets with the view to examining the accuracy of survey data and consider whether the private/public and union/non-union sector distinctions are useful. First version received: July 2000/Final version received: June 2001     

Exploring the relationship between scenario planning and perceptions of strategic conversation quality

This study examines the construct of strategic conversation in a scenario planning context. After defining key terms and a conceptual framework for the strategic conversation, this study presents data gathered from individual participants in a scenario planning project. Data concerning perceptions of strategic conversation skills were collected pre-and post-scenario planning project, and then compared with a standard t-test. Conclusions are drawn and limitations are presented and discussed in depth. Recommendations for improving this research in future studies are also identified.     

Knowledge sharing and strategic fit in integrated product development proejcts: An empirical study

While product strategy has been approached from a variety of perspectives, the role of strategic fit as a critical linkage of knowledge sharing practices and new product development outcomes have not been adequately explored. This paper discusses how strategic fit is instrumental for cross-functional teams to integrate product development outcomes. This paper identifies critical knowledge sharing components that enhances the extent of strategic fit that in turn improves the success of product development efforts. Strategic fit or alignment requires knowledge sharing practices of the product development team. Teams with a shared knowledge base are more capable of thinking strategically, adapting their actions to their project environment and accordingly engaging in innovative problem-solving while ultimately achieving project goals of time, cost and value. This paper presents and tests a research model using a sample of 285 product development projects of firms from USA, Canada and Spain. The results suggest that strategic fit is associated with greater knowledge sharing and enhance product development outcomes in both small and large firms as well as diverse regions (i.e., USA, Canada and Spain).     

The effect of remittances prior to an election

The objective of the article is to assess whether remittances have an influence on political manipulation, which may occur prior to an election, through an increase in the government consumption-to-GDP ratio. We combine data from the National Elections across Democracy and Autocracy data set compiled and discussed in Hyde and Marinov (2012) and the World Development Indicators data set. We focus on 70 developing countries over the period 1990–2010. It appears that the political budget cycle is reduced up to the point where it is fully cancelled out at a remittance threshold of 10.7% of GDP. Those findings are robust to different robustness checks.     

Risk sharing in the Middle East and North Africa

This study investigates welfare gains and channels of risk sharing among 14 Middle Eastern and North African (MENA) countries, including the oil‐rich Gulf region and the resource‐scarce economies such as Egypt, Morocco and Tunisia. The results show that for the 1992–2009 period, the overall welfare gains across MENA countries were higher than those documented for the Organization for Economic Cooperation and Development (OECD) nations. In the Gulf region, the amount of factor income smoothing does not differ considerably when output shocks are longer lasting rather than transitory, whereas the amount smoothed by savings increases remarkably when shocks are longer lasting. In contrast, both factor income flows and international transfers respond more to permanent shocks than to transitory shocks in the non‐oil MENA countries. The results also show that a significant portion of shocks is smoothed via remittance transfers in the economically less‐developed MENA countries, but not in the oil‐rich Gulf and OECD countries. Finally, for the overall MENA region, a large part of the shock remains unsmoothed, suggesting that more market integration is needed to remedy the weak link of incomplete risk sharing.     

How do stock prices respond to fundamental shocks in the case of the United States? Evidence from NASDAQ and DJIA

In this paper, we use both the Dow Jones and NASDAQ indices to test the robustness of Binswanger's (2004c) finding that US stock market dynamics are governed mostly by nonfundamental shocks or speculative bubbles after the 1982 debt crisis. We estimate a total of 72 SVAR models and 36 SVECM models. We determine that the findings are robust indeed and that fundamental shocks have become less and less important over the years, irrespective of which US stock market index is considered.     

Earnings Management and the Post‐earnings Announcement Drift

We posit that the post‐earnings announcement drift (PEAD) is related to earnings management. Accordingly, we find that firms with large negative (positive) changes in operating cash flows manage accruals upward (downward). Most importantly, we find that PEAD is concentrated largely among those firms that are most likely to have smoothed their reported earnings and is generally associated with discretionary accruals as opposed to nondiscretionary accruals. There is no evidence of a positive (negative) PEAD for those firms with large positive (negative) earnings changes that are least likely to have managed earnings downward (upward).