The Gravity Model and Trade Efficiency: A Stochastic Frontier Analysis of Eastern European Countries' Potential Trade

The opening up process of the eastern European countries is characterised by an increasing degree of trade integration with their Western neighbouring countries. Typically, the degree of East–West trade integration is assessed by comparing actual trade volumes with potential trade volumes projected from the gravity model parameters estimated for a group of countries that best represent normal trade relations. This approach, however, does not compare trade levels against a maximum level of trade feasible for the group of eastern European countries. This paper using a stochastic frontier specification of the gravity model is able to identify the efficiency of trade integration relative to maximum potential levels. The findings, based on a panel data set of bilateral exports from 17 Western European countries to the 10 new member states over the 1994–2007 period, indicate a high degree of East–West trade integration close to two‐thirds of frontier estimates, suggesting a low degree of trade resistances.     

Imperfect information,insurance, and auditors' legal liability*

Abstract. This paper analyzes the incentive effects of alternative legal systems on the auditor's decision making process. The first system, termed strict liability, holds the auditor liable whenever there is a loss, and the second system, termed negligence, holds the auditor liable for losses arising from the auditor's deviation from a prescribed due care standard. The auditor is assumed to have ex ante limited knowledge of the financial state of the client and the standard setting process. He revises his beliefs on the client's financial state based on a costless signal that may be interpreted as an internal audit report. The analysis shows that signal “quality” and auditor's perception of the client's financial state jointly determine the level of liability required to induce the auditor to adopt a socially optimal due care level. As in Simon's (1982) Model, negligence with supplementary insurance is preferred to strict liability. Further, negligence is shown to operate with less information than strict liability, in contrast to models such as Green (1978) and Shavell (1978). Résumé. Cet article analyse les effets incitatifs de systèmes juridiques alternatifs sur le processus décisionnel du vérificateur. Le premier système, dit de responsabilité stricte, considère le vérificateur responsable à chaque fois qu'il y a une perte, et le deuxième système, dit de négligence, considère le vérificateur responsable des pertes résultant de sa déviance d'une norme prescrite. Le vérificateur est supposé posséder ex ante une connaissance limitée de la situation financière du client ainsi que du processus de normalisation. Il révise ses opinions portant sur la situation financière du client à la lumière d'un signal sans frais qui peut être assimilé à un rapport de vérification interne. L'analyse montre qu'un signal «qualité» ainsi que la perception du vérificateur quant à la situation financière du client déterminent conjointement le niveau de responsabilité requis pour inciter le vérificateur à retenir un niveau de soin raisonnable socialement optimal. De même que le modèle de Simon (1982), le système de négligence avec assurances additionnelles est préféré à la responsabilité stricte. De plus, il est montré que le système de négligence fonctionne avec moins d'information que le système de responsabilité stricte, par opposition à d'autres modèles tels Green (1978) et Shavell (1978).     

Segmentation in the informal credit markets: the case of the Philippines

This paper explains market segmentation that occurs in the Philippine informal credit markets through the matching of borrowers and lenders by their occupational specializations to internalize transaction costs and facilitate economic activity. The regression results support a predictable pattern of matching farmer lenders with borrowers specialized in non-farm activities and trader lenders with borrowers specialized in farming.     

FDI performance: a stochastic frontier analysis of location and variance determinants

The opening up process of the eastern European countries was marked by greater integration of FDI with their western neighbouring countries. Using the single-step ML approach to stochastic frontier analysis, the location and variance determinants of FDI are estimated using the knowledge capital (KK) model framework. The findings, based on a panel of bilateral FDI stocks from 10 western to 10 eastern European countries over the 1996–2007 period, suggest FDI is determined by both horizontal and vertical motives while the process of liberalization and infrastructural developments significantly reduces the variance of FDI. In using a stochastic frontier specification of the KK model, the efficiency of FDI performance is identified relative to maximum levels. The bilateral efficiency scores suggest a mixed performance, indicating scope to improve the efficiency of FDI.     

Consumer Acceptance of Camel Milk in Emerging Economy

Abstract

Camel is considered as an indispensable part of desert eco-framework across the globe. Apart from helping in transport, it is also used for its milk. Camel's milk is used worldwide because of its salty taste. However, it has many beneficial effects such as cure for autism and helps to control diabetes, allergy, and also prevents liver cirrhosis. Objective of this study is to analyze the ways to make people purchase and consume camel milk. In the last few years, awareness about nutritional and medicinal benefits of camel milk has rapidly increased. Consequently, the demand of the product has also increased. Objective of this article is to analyze the consumers’ willingness to buy camel milk before and after knowing its health benefits. It also explores the linkage between lifestyle diseases and consumer’s willingness to buy. We analyzed data in two stages. Initially, we did qualitative analysis with twitter text mining to understand customer’s sentiments about camel milk. Later, primary data was collected through structured questionnaire from a sample of 120 respondents by convenience sampling for quantitative analysis. There is a significant increase in the proportion of people willing to buy camel milk and once they were aware of the benefits, people are willing to buy more after knowing the benefits. People exposed to lifestyle diseases are more willing to buy camel milk. Hence, support of market-based awareness campaigns to stimulate demand for quality camel milk among consumers can be realized through information dissemination and awareness campaign.     

Organ donation in India—A social marketing perspective

Organ donation is a social issue, and marketers face challenges promoting it. If factors aiding and inhibiting it are identified, it becomes easier to enhance intention of donating organs. The objective of this research is to establish the role of perceived awareness, family support, perceived individual value, and religiosity on organ donation intention (ODI). A sample of 247 respondents answered a structured questionnaire. Proposed model is mediated by organ donation attitude (ODA) and moderated by perceived risk. Findings from the study show that all the predictors are positively related with ODI mediated through ODA and perceived risk moderates the influence of ODA on ODI.     

Store environment's impact on variety seeking behavior

This paper explores the influence of store environment on variety seeking behavior with a model incorporating various components of store environment (music, light, assortment, employee, and layout) and personality variables, optimum stimulation level (OSL) and deal proneness. Using a mall survey with shoppers in Dubai, the study establishes that store environment, OSL and deal proneness affect variety seeking positively. This paper extends extant literature by studying comprehensively the impact of store environment on variety seeking. This research suggests that retailers need to invest in the components of store environment to enhance variety seeking. Methodologically, the model incorporates the Schmid–Leiman factor structure to address the limitations posed by reflective models.     

Corporate Capital Structure,Agency Costs,and Ownership Control: The Case of All-Equity Firms

This paper provides evidence that all-equity firms exhibit greater levels of managerial stockholdings, more extensive family relationships among top management, and higher liquidity positions than a matched sample of levered firms. Further, top managers of all-equity firms with family involvement in corporate operations have greater control of corporate voting rights than managers of all-equity firms without family involvement. These findings are consistent with the interpretation that managerial control of voting rights and family relationships among senior managers are important factors in the decision to eliminate leverage.     

CEO Turnover and Retention Light: Retaining Former CEOs on the Board

Prior CEO turnover literature characterizes the board's decision as a choice between retaining versus replacing the CEO. We focus instead on the CEO's decision rights and introduce a third option in which the incumbent CEO is removed but retained on the board for an extended period, which we call Retention Light. Firms may benefit from Retention Light because former CEOs possess unique monitoring and advising abilities, but the former CEO could also exploit available decision rights for personal benefit. A Retention Light CEO's decision rights generally exceed those of CEOs who exit the firm entirely but fall short of the rights of a retained CEO. We find that when prior firm performance is better, the former CEO is more likely to be retained on the board (Retention Light) than to exit the firm. However, this relation is weaker when the CEO reaches normal retirement age at which time CEO power becomes more important. We also provide evidence on how the nature of the CEO's bargaining power varies with his personal attributes and board characteristics in its influence on the Retention Light decision. Retention Light firms are more likely than CEO‐exit firms to select a successor CEO with relatively weaker bargaining power. Finally, Retention Light involving a nonfounder CEO is negatively associated with the firm's postturnover financial performance. Overall, Retention Light is a distinct CEO turnover option that has important consequences for board decisions and firm performance.     

Does Membership Homogeneity Matter for Group-based Financial Services? Evidence from the Gambia

This paper examines the effect of membership composition on the components of group design to provide financial services, and on the performance of these groups. Regression results based on data from RoSCAs in the Gambia show that gender homogeneity is less likely to affect components of group design than is homogeneity in income generating capacity of members. Membership homogeniety does not directly affect the repayment performance of the members but only indirectly through the components of the group design. — Cet article examine l’incidence de la composition sur les composantes et la performance des groupes constitués en vue de la fourniture de services financiers. Selon les résultats d’une analyse de régression basée sur les données de “RoSCA” en Gambie, il apparaît que l’homogénéité du genre influe moins sur les composantes de la conception des groupes que l’homogénéité de la capacité des groupes à générer des revenus. En ce qui concerne la performance en matière de remboursement, l’incidence de l’homogénéité de la composition n’est pas directe mais indirecte au travers des composantes de la conception des groupes.