WHO’S THE BOSS? HOUSEHOLD DISTRIBUTION OF POWER IN A NON‐COOPERATIVE FRAMEWORK

When labour market participation influences bargaining power in a household, the male and the female labour supplies can be either positively or negatively related. If negatively related, possibilities include: ‘balance of power’, the complete dominance of one member, and circumstances where inequity persists with incomplete dominance. If effort levels are positively sloped, it is possible to have equilibrium at either high or low effort levels leading to equity. The effects of economic development and wage discrimination are also discussed.     

An analysis of the effect of mandatory adoption of IAS/IFRS on earnings management

This paper examines whether mandatory adoption of international accounting standards, IAS/IFRS, by French companies is associated with lower earnings management. In addition, the impact of six factors that may be related to earnings management level are also considered: the independence and the efficiency of the board of directors, the separation of roles of CEO and Chairman of the board, the existence of an independent audit committee, the existence of block shareholders, the quality of the external audit and the listing on foreign financial markets.Based on a sample of 353 French listed groups relating to the period 2003–2006, our results show that the mandatory adoption of IAS/IFRS is associated with a reduction in the earnings management level. In addition, the independence and the efficiency of the board of directors, the existence of an independent audit committee, the existence of block shareholders, the quality of the external audit and the listing on foreign financial markets are important factors for enforcement of IAS/IFRS in France. Mandatory adoption of IAS/IFRS has decreased earnings management level for companies with good corporate governance and those that depend on foreign financial markets.     

Political regimes: a coalition formation approach

What leads to the stability of a particular regime and what causes its demise? With the aid of formal modeling, the paper illustrates the necessary and sufficient conditions for different political regimes to exist. The game involves two factions representing the differing interests of the civil society and the armed forces of a nation. We illustrate the emergence of political regimes that includes both unconstrained and constrained democracies, both military and civilian autocracies and an alliance formed by a segment of the civil society and the military.     

Combatant recruitment and the outcome of war

What determines who wins a civil war? We propose a simple model in which the power of each armed group depends on the number of combatants it is able to recruit. This is in turn a function of the relative ‘distance’ between the group leadership and potential recruits. We emphasize the moral hazard problem of recruitment: fighting is costly and risky so combatants have the incentive to defect from their task. They can also desert altogether and join the enemy. This incentive is stronger the farther away the fighter is from the principal, since monitoring becomes increasingly costly. Bigger armies have more power but less monitoring capacity to prevent defection and desertion. This general framework allows a variety of interpretations of what type of proximity matters for building strong cohesive armies ranging from ethnic distance to geographic dispersion. Different assumptions about the distribution of potential fighters along the relevant dimension of conflict lead to different equilibria. We characterize these, discuss the implied outcome in terms of who wins the war, and illustrate with historical and contemporaneous case studies.     

Price volatility and the political economy of resource-rich nations

This paper attempts to understand how price volatility affects the political transition of a resource-rich nation. Two states reflect price volatility: ‘high prices’ and ‘low prices’. We argue that whether or not political transition (i.e., a switch from one regime to another) will take place in a particular state depends critically on the kind of goods a country produces. If the main economic activity in a country is the extraction of “point-source” resources such as oil that demands capital-intensive production, the opportunity cost of switching the existing regime does not alter if the price of the resource changes but the benefit becomes more lucrative. Therefore, the incumbent group is most vulnerable during ‘high prices’. If the main economic activity of the nations is the production of “diffused resources” such as coffee that requires labor, prices do affect the opportunity cost. Nations concentrating in these commodities face acute political crisis during downturns.     

Consumer Attitudes toward Online Advertising: The Moderating Role of Personality

This study investigates how consumer attitudes toward advertising in general affect their attitudes toward online advertising. It also investigates the moderating role of the personality traits of introversion and extroversion in explaining this relationship. An online survey is used to collect data from a convenience sample of 244 respondents living in Canada. Results show that attitude toward advertising in general has a positive and significant impact on attitude toward online advertising. Introversion is found to have no moderating impact on the relationship between both attitudes. However, extroversion moderates this relationship.     

COALITION FORMATION WITH LEARNING FROM PREDECESSORS: A CASE OF DYNAMIC POSITIVE EXTERNALITY

We consider a simple multi‐period model where the entry cost varies with respect to the number of firms that have entered previously. In the non‐cooperative outcome, there is clustered entry among the firms in the last period; hence, the full potential of learning is not expropriated. When firms are allowed to form coalitions, the non‐cooperative outcome is dominated; thus, there is a gain in efficiency. We also find that full efficiency is obtained when a grand coalition is formed. The implications of policies on coalitions as well as on individual firms are also discussed.