Are Venture Capitalists a Catalyst for Innovation?

In this paper we test two hypotheses concerning the presence of innovation in venture capital investments and the growth of innovative venture backed firms. To examine these hypotheses we considered sample of 37 Italian venture backed firms that went public on the Italian Stock Exchange between 1995 and 2004 and by a statistical matching procedure we picked 37 twin firms among the non‐venture backed IPOs for the same period. Our evidence shows that innovation is an important factor during the selection phase but once the investment is made, the company does not promote continued innovation and concentrates all efforts to improve other economic and managerial aspects.     

Greenwashing Revisited: In Search of a Typology and Accusation‐Based Definition Incorporating Legitimacy Strategies

Is greenwashing a concept describing companies using misleading communication or is it co‐constructed in the eye of the beholder? By discussing the literature, we find that existing definitions of greenwashing overemphasize the strategic intention to mislead and do not incorporate unjust allegations. Then, by combining signaling theory with legitimacy theory, we frame the communication process of the greenwashing accusation and the emergence of a negative narrative caused by the accusation and its effect on legitimacy. Hence, in this paper we argue that greenwashing epistemologically is constituted in the eye of the beholder , depending on an external accusation. Following this view, the greenwashing accusation is understood as a distortion factor altering the signal reliability of green messages. Based on our conceptual analysis, we provide a conceptual framework introducing a new typology of case‐based greenwashing (greenwashing , false greenwashing , potential greenwashing and no greenwashing ) and the effects of these types on corporate legitimacy. Finally, we propose a revised definition of greenwashing as co‐creation of an external accusation toward an organization with regard to presenting a misleading green message. Copyright © 2015 John Wiley & Sons, Ltd and ERP Environment     

The Biodiversity Bargaining Problem

We employ cooperative bargaining theory and Nash’s ‘rational threats’ idea to cast light on the biodiversity bargaining problem. The problem of global environmental negotiations is argued to be of the nature of a bargaining problem, in which bargainers must agree on the distribution of cooperative surplus in order to move to the bargaining frontier. We discuss the importance of both efficiency (bargaining frontier) and fairness (recognition of characteristics of bargainers) in the choice of the appropriate contract. We show that the incremental cost contract, used to resolve the biodiversity bargaining problem, is of the form of an extreme point contract that fails to recognise the contributions of the South to the production of cooperative surplus. A rational response to such a contract is the use of threats of biodiversity destruction. Contracts must evince both efficiency and fairness in order to represent lasting solutions.     

Co-ordinating fiscal authorities in the euro-zone: a key role for the ECB

This paper examines the conditions for fiscal restraint to emergeas Nash equilibrium in the game between fiscal authorities ina monetary union and discusses the implications for the ECB'smonetary strategy. We show that fiscal authorities fail to internalizethe adverse area-wide effects of their policies when the ECBtargets union-wide aggregates. To address this co-ordinationfailure, we propose that the ECB reacts to fiscal restraintby implementing a monetary reward. Applying the pareto- andrisk dominance criteria to the ensuing co-ordination game, weshow that the ECB can ensure convergence upon fiscal restraintby adopting a weakly countercyclical reaction function.     

Does access to credit improve productivity? Evidence from Bulgaria1

Although it is widely accepted that financial development is associated with higher growth, the evidence on the channels through which credit affects growth at the microeconomic level is scant. Using data from a cross‐section of Bulgarian firms, we estimate the impact of access to credit, as proxied by indicators of whether firms have access to a credit line or overdraft facility, on productivity. To overcome potential omitted variable bias of Ordinary Least Squares (OLS) estimates, we use information on firms’ past growth to instrument for access to credit. We find credit to be positively and strongly associated with TFP. These results are robust to a wide range of robustness checks.     

Measuring Value‐at‐Risk in Project Finance Transactions

Despite the remarkable importance of project finance in international financial markets, no quantitative models to measure and quantify the risk associated with a deal for the project's lenders have been developed yet. The topic has recently become crucial, since the New Basle Capital Accord gives banks a choice of whether to adopt simpler (but possibly higher) standard capital requirements or to develop internal rating models for project finance transactions. The paper proposes how Monte Carlo simulations may be used to derive a Value‐at‐Risk estimate for project finance deals and discusses the critical issues that must be considered when developing such a model.     

Child labor and agricultural shocks

This paper examines the relationship between household income shocks and child labor. In particular, we investigate the extent to which transitory income shocks lead to increases in child labor and whether household asset holdings mitigate the effects of these shocks. Using data from a household panel survey in Tanzania, we find that both relationships are significant. We investigate mechanisms that could account for these results, including buffer stocks and borrowing.     

Welfare-State Retrenchment: The Partisan Effect Revisited

This paper aims to shed light on the role of the ‘ideology’of political parties in shaping the evolution of the welfarestate in 18 developed democracies, by providing empirical findingson the determinants of social-programme entitlements and socialspending over the period 1981–99. The paper shows thatstructural change is a major determinant of the extent of socialprotection. Our results suggest that overall spending is drivenup by structural change. On the other hand, strong structuralchange has a negative influence on welfare entitlements measuredby the net rate of sickness insurance. Partisan influence playsan important role in the dynamics of the welfare state. Left-winggovernments strengthen the positive effect of shocks on aggregatesocial expenditure, while right-wing governments undertake evenstronger cutbacks in replacement rates as a reaction to structuralchange. Footnotes ¹ E-mail addresses: bruno.amable{at}ens.fr; donatella.gatti{at}cepremap.cnrs.fr;jan.schumacher{at}wiwi.uni-regensburg.de     

Earnouts: The real value of disagreement in mergers and acquisitions

Earnout agreements link part of the payment for an acquired company to its future performance. Despite their option-like features, they cannot be valued using vanilla option-pricing methods. Two peculiar sources of risk affect these contracts: Bidder default before the earnout expiration (default risk) and potential litigation associated with earnouts (litigation risk). We developed an option-pricing model that encompasses these sources of risk, showing that counterparty and litigation risk can have a remarkable impact on earnout values. Our model's relevance is further enhanced by recent accounting standards that require contingent payments to be valued at fair value.     

Complex agent-based macroeconomics: a manifesto for a new paradigm

This article discusses some issues and challenges facing modern macroeconomics. We argue for the necessity to replace the reductionist approach at the heart of mainstream DSGE models with an approach rooted on the science of complexity and agent-based modelling. To strengthen and exemplify our position, we show a simple example and introduce several items for a research agenda along these lines.