Stock Returns,Productivity, and Corruption in Eight European Fast-Emerging Markets

This article addresses the impact of productivity, corruption, and trade openness on the stock returns of 265 industrial companies listed in eight Eastern European fast-emerging markets, over the 2004-2013 period. Through a three-factor model that includes both measures at firm level and macro-level control variables, our findings suggest that country corruption index is negatively correlated with the total annual return of the stocks of the listed industrial companies of our sample. Moreover, the most productive firms are featured by higher stock returns, while leverage seems not to be a key predictor of stock returns. In addition, the article uncovers innovative evidence about trade openness that is negatively correlated with stock returns due to its connection with the recent financial crisis. That is, firms operating in markets that are more open to trade show a higher degree of interconnection with other economies and are more likely to undergo the effects of negative fluctuations from foreign markets during the economic crisis. © 2015 Wiley Periodicals, Inc.     

Causes of corruption: a survey of cross-country analyses and extended results

We survey and assess the empirical literature on the sources of corruption Thanks to the improved availability of data, we are able to produce an improved cross-country econometric model to test well-established and more recent hypotheses jointly. We do not find that the common law system, or a past as a British colony predicts corruption. Our results support cultural theories on the causes of corruption, and suggest that a medium-long exposure to uninterrupted democracy is associated with lower corruption levels, while political instability tends to raise corruption. Our results also suggest that the diffusion of newspapers helps to lower corruption levels.      

Asymptotic expansion for some local volatility models arising in finance

Decisions in Economics and Finance - In this paper, we study the small noise asymptotic expansions for certain classes of local volatility models arising in finance. We provide explicit expressions...     

Conditionally heteroscedastic unobserved component models and their reduced form

The reduced form of the local level model with conditionally heteroscedastic GARCH(1,1) noises is analyzed. We show that the IMA-GARCH model is a good alternative but its conditional heteroscedasticity is weaker than this of the unobserved disturbances.     

Industrial policy evaluation in the presence of spillovers

The shortage of studies on spatial spillovers of capital subsidy policies is rather surprising, considering that such policies are usually designed to generate spatial externalities. We propose a new framework that allows positive agglomeration effects to be contrasted with the negative cross-sectional substitution and the crowding-out effect. The global evaluation of the ATT and the spillover parameters shifts the spotlight from the policy effect on subsidised firms to the global effect of capital subsidy policies on the targeted territory. The empirical evaluation of a policy in Italy mainly directed towards small- and medium-sized firms shows that the impact on investments, turnover and employment is positive and large, but is negative on TFP. However, the employment growth is partially determined to the detriment of the untreated firms.     

What Sparks Ethical Decision Making? The Interplay Between Moral Intuition and Moral Reasoning: Lessons from the Scholastic Doctrine

There has been limited coverage of the corporate responsibility (CR) practices of small and medium-sized enterprises (SMEs) in the mainstream CR literature. Furthermore, there has been no systematic analysis of the responsibilities of the high value jewellery industry and jewellery SMEs in particular. This study explores the potential for harm and value creation by individual stakeholders in fine jewellery production. Using the harm chain and institutional theory to frame our investigation, we seek to understand how small businesses within the fine jewellery industry respond to the economic, social and environmental challenges associated with responsible jewellery production, and to investigate how they perceive and negotiate the tensions between responsibility and the resistance derived from the operational norms of secrecy and autonomy within the industry. Our exploratory research provides illustrative examples of how complex harm networks operate within and across the fine jewellery industry, and demonstrates the inter-relationships that exist across the different stages of the fine jewellery harm chain. Findings suggest that institutional forces are coalescing towards a more responsible agenda for the fine jewellery industry. Moreover, while CR is a tool to disrupt harmful institutional norms and practices within such an industry, it requires the co-creation of new transformative business models and multi-stakeholder involvement including firms (SMEs and MNEs), trade associations, non-governmental organisations and consumers. Solutions include national and international legislation, price adjusted certification routes for small firms, harmonisation of industry CR standards to reduce overlap in certification and regulation and gem and precious metal “track and trace” schemes.     

Prediction intervals in conditionally heteroscedastic time series with stochastic components

Differencing is a very popular stationary transformation for series with stochastic trends. Moreover, when the differenced series is heteroscedastic, authors commonly model it using an ARMA-GARCH model. The corresponding ARIMA-GARCH model is then used to forecast future values of the original series. However, the heteroscedasticity observed in the stationary transformation should be generated by the transitory and/or the long-run component of the original data. In the former case, the shocks to the variance are transitory and the prediction intervals should converge to homoscedastic intervals with the prediction horizon. We show that, in this case, the prediction intervals constructed from the ARIMA-GARCH models could be inadequate because they never converge to homoscedastic intervals. All of the results are illustrated using simulated and real time series with stochastic levels.     

Is your open-innovation successful? The mediating role of a firm's organizational and social context

Open firms are not equally successful. This is because, in order to benefit from external sources of knowledge, firms must be able to absorb such knowledge. The paper outlines a firm's context as a set of organizational and social features, which may be considered absorptive capacity antecedents. It explores the mediating role of such antecedents in the relationship – hitherto insufficiently researched – between the degree of openness and innovative performance. The use of a methodology combining both direct interviews and survey of Italian firms has allowed us to confirm the supposed mediating role. We also identify different modes for companies to open up their innovation process and, for each of them, the antecedents that are consistent with choices regarding the degree of openness.     

Practical wisdom: A virtue for leaders. Bringing together Aquinas and Authentic Leadership

This article analyzes in detail the virtue of practical wisdom as described by Thomas Aquinas, and on this basis it develops a comprehensive framework to enrich Authentic Leadership theory, establishing the virtue of practical wisdom as foundational for the authentic leader’s behavior and character development, and highlighting shortfalls that may stem from vices opposed to it. The goal of the article is two-fold: First, it seeks to fill a void on the role of virtues–and in particular practical wisdom–in leadership studies; second, it aims to show how cultivating the virtue of practical wisdom as described by Aquinas promotes the development of exactly those traits that are characteristic of an authentic leader, offering a set of propositions delineating these correlations.