The anticipated and concurring effects of the EMU: exchange rate volatility, institutions and growth

Reduced exchange rate volatility and higher and less heterogeneous quality of institutional rules and macroeconomic policies are two of the main (anticipated and concurring) effects expected from a currency union.In this paper, we measure the magnitude of these two effects for the Eurozone countries looking at real effective exchange rates (REER) and at different indicators of quality of institutional rules and macroeconomic policies (QIRMP). We find that the first effect is much stronger than the second when we compare relative changes for Eurozone countries and the rest of the world in the relevant period.We further evaluate the impact of both effects on economic growth on a larger sample of countries. Our findings show that both have significant impact on levels (more robust) and on rates of growth (weaker) of per capita GDP.     

Multi-stage real option evaluation with double barrier under stochastic volatility and interest rate

Annals of Finance - This paper focuses on valuing R&D projects using a twofold compound real option by including two knock-out barriers. However, the valuation of R&D projects is...     

The Repeated Prisoner's Dilemma with Imperfect Private Monitoring

In this paper, I study a repeated Prisoner's Dilemma game in which monitoring is private and imperfect. A partial folk theorem is proved for the case of almost perfect monitoring.     

An integrated algorithm for three-way compositional data

Quality & Quantity - Compositional data with a tridimensional structure are not uncommon in social sciences. The CANDECOMP/PARAFAC model is one of the most adequate techniques for modeling...     

Time,space and accounting at Nonantola Abbey (1350–1449)

Accounting historians have provided several accounts of monastic life and accounting's role in it, considering important settings such as Montecassino and San Pietro abbeys in Italy and Durham Cathedral Priory in England. Research has shown how their governance arrangements and common values enabled the Benedictines to manage their monasteries in an efficient manner which was essential in tackling the misappropriation of resources by organisational actors, including abbots. Other studies have shed light on the use of practical and effective accounting practices by the Benedictines to manage their considerable wealth and pursue their spiritual and temporal goals. Nevertheless, this body of literature is yet to explicitly consider the dimensions of time and space and their relationship with accounting practices. This study begins to address this oversight by analysing the surviving accounting records of the Benedictine abbey of Nonantola in northern Italy from 1350 to 1449. In the accounting books of Nonantola Abbey linear and cyclical conceptions of time coexisted and had an impact on the way in which transactions were reflected in the accounts. At the same time, the abbey was at the centre of a complex network of accountabilities which included lay accountants, farmers and the lessees of the abbey's properties. The main characteristic of this system was not the accuracy of the records in detailing the assets, liabilities, expenses and revenue of the abbey but the maintenance of a control system to administer an extensive agricultural network and the identification of the relationships between the abbey and the stakeholders inhabiting its space.     

It is not a flat world after all: Tax repatriation costs and cash value

US corporations have accumulated record‐high amounts of cash, and most of it is trapped in foreign accounts. This study tests the hypothesis that the marginal value of cash decreases in the presence of tax repatriation costs, as these costs are a strong indication that part of the cash is trapped abroad. Cash abroad is not readily available to the company because it is subject to an additional layer of tax before it can be used or distributed. Moreover, uncertainty surrounds the potential use of foreign cash, and research documents that firms holding high amounts of cash abroad are likely to invest in negative net present value activities. Finally, possible changes in tax regulation are an additional source of uncertainty. Consequently, foreign cash should be worth less than domestic cash. Using a large sample of US firms drawn from COMPUSTAT during the 1991–2012 period, the analysis suggests that shareholders value an extra dollar of cash at $1.086. However, this result changes dramatically when the change in cash is interacted with the tax cost of repatriating the earnings. That is, the marginal value of cash decreases significantly in the presence of tax repatriation costs, and shareholders discount cash when it is likely to be held abroad. This study contributes to the literature on cash holding by investigating whether tax repatriation costs affect the value of corporate cash. Moreover, the findings show that there are important economic consequences linked to the phenomenon of cash accumulation in foreign countries and therefore provide regulators with a sound foundation on which to take additional actions to require more disclosure of and transparency in the actual location of firms’ cash holdings.     

How useful are signals? A micro-structure analysis

We analyze how the market processes a signaling event by studying a sample of self-tender offers, events often viewed as signals of firm value. By examining changes in the degree of informed trading, we find asymmetric information costs fall at announcement, remain low throughout the event, and increase at offer expiration. By one month following expiration, informed trading returns to a level not significantly different from that prior to the offer. Higher risk firms have significantly larger declines in information asymmetry during the offer. Increases in information asymmetry persist one month following expiration for firms with lower pre-offer informed trading. (JEL G14, G32)     

GROWTH AND CYCLES, IN THE MODE OF MARX AND SCHUMPETER

I propose a theory of endogenous growth and cycles under competitive conditions. Firms choose how many workers to hire, how much to invest, and which technologies to use. New capacity, embodying labor-saving technologies, is costlier than old one but allows for a lower wage bill. The interaction between labor-saving innovations and changes in the relative price of labor is the source of growth cycles.     

How capital markets assess the credibility and accuracy of CSR reporting: Exploring the effects of assurance quality and CSR restatement issuance

This research examines how the credibility and accuracy of corporate social responsibility (CSR) disclosures enhance market confidence by exploring their effect on the cost of capital. How do capital markets react to higher-quality assurance of CSR reporting? Can the hypothetical reduction in the cost of capital that assurance quality produces be explained by restatements of previous information given in these CSR reports? We explore the relationship between assurance quality, as a proxy for credibility and market confidence, and the mediating effect of CSR restatements as indicators of accuracy. We propose regression models with a sample of CSR reports issued by European companies. Building upon the signalling and legitimacy theories, the results support the positive effect of higher assurance quality statements on market confidence by confirming a decrease in the cost of capital; assurance quality gives an indication of credibility to the capital market and restatements related to methodological updates signal accuracy. The reduction in the cost of capital brought on by higher assurance quality appears to be determined by the issuance of CSR restatements, which create legitimacy for both client companies and assurance providers. CSR reporting and assurance have reached a greater level of maturity as demonstrated by the evolution of these practices and financial market perceptions.