Predicting corporate financial distress: Reflections on choice-based sample bias

Financial distress precedes bankruptcy. Most financial distress models actually rely on bankruptcy data, which is easier to obtain. We obtained a dataset of financially distressed but not yet bankrupt companies supplying a major auto manufacturer. An early warning model successfully discriminated between these distressed companies and a second group of similar but healthy companies. Previous researchers argue the matched-sample design, on which some earlier models were built, causes bias. To test for bias, the dataset was partitioned into smaller samples that approach equal groupings. We statistically confirm the presence of a bias and describe its impact on estimated classification rates.     

Inter-local relations and trans-scaling through finance in Poland

Inter-local cooperation is difficult to measure. In Poland, however, the data-set concerning financial transfers between local government budgets (one of the most popular quantitative measures of cooperation) has never been described in scientific literature. This paper aims at contributing to fill this gap. On the basis of the budget expenditures of all Polish local governments, we applied two research methods: OLS regression and Heckman two-stage regression. The results show that the decision whether to get into cooperation, and the decision on the extent of involvement are driven by different factors.     

With which countries do tax havens share information?

In recent years tax havens and offshore financial centres have come under increasing political pressure to cooperate with other countries in matters of taxation and efforts to crowd back tax evasion and avoidance. As a result many tax havens have signed tax information exchange agreements (TIEAs). In order to comply with OECD standards tax havens are obliged to sign at least 12 TIEAs with other countries. This paper investigates how tax havens have chosen their partner countries. We ask whether they have signed TIEAs with countries to which they have strong economic links or whether they have systematically avoided doing this, so that information exchange remains ineffective. We analyse 565 TIEAs signed by tax havens in the years 2008–2011 and find that on average tax havens have signed more TIEAs with countries to which they have stronger economic links. Our analysis thus suggests that tax havens do not systematically undermine tax information exchange by signing TIEAs with irrelevant countries. However, this does not mean that they exchange information with all important partner countries.     

CORPORATE BONDS AND PRODUCT MARKET COMPETITION

I examine the effect of product market competition on the yield spread of corporate bonds. I find that firms that face more competitive threats also face a higher cost of corporate bond debt. After controlling for common bond-level, firm-level, and macroeconomic variables, my results show that bondholders of firms that are subject to increased competition demand significantly higher credit spreads than holders of otherwise similar bonds. Furthermore, this effect is more pronounced for firms that have assets that are difficult to redeploy. Overall, my findings provide evidence that competitive threats are being reflected in corporate debt prices.     

The optimal asset allocation of the main types of pension funds: a unified framework

The existing literature deals with the optimal investment strategy of defined benefit (DB) or defined contribution (DC) pension plans. This article’s objective is to compare the optimal policies of different types of pension plans. This is done by first defining an original framework, which is based on the distinction between the nature of the guarantee—which can be internal or external—offered by or to a pension fund. This framework allows to establish links between optimization programs of DC, DB and targeted money purchase schemes. The case of an internal guarantee appears as a standard portfolio insurer’s problem. The second kind of guarantee, not analyzed in the literature yet with regard to the resulting optimal policy, is characterized by the existence of an option in the final wealth definition. Four funds are present in the internal guarantee optimal allocation: the speculative component, the preference independent guarantee- and contribution-hedge terms and the preference dependent state variable-hedge fund. The external guarantee program, solved with an original method using the principles of standard options theory, yields an optimal policy incorporating the delta of the option embodied in the final wealth definition. The conclusion is that the resulting optimal portfolio policy becomes riskier.

The reference model of competitiveness factors for SME medical sector

The paper presents the issue of SME competitiveness in terms of determining their competitive position on the market. The proposed reference model, focused on the evaluation of the competitiveness of a selected group of SMEs on the market of medical services, was developed to support strategic decision-making. The usefulness of the model is verified in the process of determining the competitive position of a selected group of participants, applying research methods of strategic analysis. Relationships, observed during the study, occurring between the competitiveness factors and the competitive position taken by a company, provide knowledge, whose utilization directs the company's business to improving its market performance, organizational and economic conditions.     

Organising campaigns as ‘revitaliser’ for trade unions? The example of the Lidl campaign

US‐style organising campaigns are a relatively new repertoire of action for German trade unions and can be seen as further evidence of their transformation. The example of the Lidl campaign organised by German United Service Union ver.di is chosen to illustrate tensions between organising and campaigning as revitalisation strategies.