Evaluating Projects and Assessing Sustainable Development in Imperfect Economies

We are interested in three related questions:(1) How should accounting prices be estimated?(2) How should we evaluate policy change in animperfect economy? (3) How can we check whetherintergenerational well-being will be sustainedalong a projected economic programme? We do notpresume that the economy is convex, nor do weassume that the government optimizes on behalfof its citizens. We show that the same set ofaccounting prices should be used both forpolicy evaluation and for assessing whether ornot intergenerational welfare along a giveneconomic path will be sustained. We also showthat a comprehensive measure of wealth,computed in terms of the accounting prices, canbe used as an index for problems (2) and (3)above. The remainder of the paper is concernedwith rules for estimating the accounting pricesof several specific environmental naturalresources, transacted in a few well knowneconomic institutions.     

Potential economic impacts of zero thresholds for unapproved GMOs: The EU case

As the pipeline of new biotech crops has continued to expand, regulatory approvals of such crops across different countries have become less synchronized. As a result, some biotech crops can be cultivated in one or more countries but may not be approved for use in others. Under such circumstances, small amounts of unapproved biotech crops can be found in the food/feed supplies of some countries and under zero threshold policies they must be withdrawn and can lead to market disruptions. In this paper we examine the potential economic implications of regulatory asynchronicity and zero threshold policies for unapproved GMOs using the EU as a case study. To measure the potential economic impacts from possible trade disruptions between the EU and its major suppliers of soybeans, we develop a spatial equilibrium model and examine alternative scenarios where bilateral trade flows are set to zero. From our analysis we find that when asynchronous approvals become a systemic problem leading to trade disruptions with multiple trading partners the impacts can be severe. For instance, we find that if the EU were to stop imports from its three main suppliers the US, Brazil and Argentina, it would pay roughly 220% more for soybeans, 211% more for soybean meal and 202% more for soy oil.     

Raising the Bar (3)

This editorial summarizes and comments on the papers published in issue 11(3) so as to raise the bar in applied spatial economic research and highlight new trends. The first paper proposes spatial and a-spatial indicators to describe the networks of airline companies around the world. The second paper sets forth a two-regime gravity-type model with an endogenous threshold parameter to assess the effect of labour market conditions on interregional migration flows. The third paper utilizes micro-data to explain student migration flows to higher education institutions. The fourth paper is among the first to make use of simulation-based location quotients in a multiregional input–output model. Finally, the last paper provides a purely economic–theoretical model on cooperative limit pricing in the context of spatial competition.     

Does sport make you happy? An analysis of the well‐being derived from sports participation

This paper examines the impact of sports participation upon the subjective well‐being of individuals. Encouraging participation in sports activity is now an important public policy issue, as it is argued that there are benefits in terms of health and well‐being to individuals as well as to society through externalities. Controlling for personal and socio‐demographic characteristics affecting well‐being, this paper examines if participation in, and the frequency and duration of, 67 sports activities affects well‐being. The form in which sports participation takes place is also investigated by examining if social‐interaction sports produce more well‐being. This paper demonstrates that sports participation has a positive affect upon the subjective well‐being of the population and, moreover, estimates its monetary value. The effects are larger if one allows for social interactions.     

Saltatory Ontogeny and the Life-History Model: Neglected Processes and Patterns of Evolution

A single cell – an egg – cannot be in the same stabilized state as a differentiated multicellular embryo or reproducing adult. The entire ontogeny must, therefore, consist of a sequence of stabilized states. Ontogeny of a phenotype cannot progress gradually but is a saltatory homeorhetic system, proceeding via natural thresholds from one self organized state to the next, hierarchically ever more complex and specialized. The natural boundaries of ontogeny – the far-from-stabilized thresholds – represent also states when changes can be easiest inserted or induced, and especially in the early ontogeny, from the intervals where evolution (change) can occur. As a result, ontogeny can also be divided into distinct life-history intervals called periods, be it embryo, larva (infant, pup), juvenile, adult and senescence, each divided in turn into phases, and each of these into natural steps. It is left to the imagination of scholars in social sciences to find parallels of saltation in economics and history.     

中国上市公司现金流管理研究——兼对中美市场现金流管理行为比较研究

This paper examines cash flow management in the Chinese market and compares it to that in the U.S. market. It adopts Burgstahler and Dichev (1997) and Degeorge et al.’s (1999) method and the best-fitted distribution model to analyze the financial data of Chinese listed firms during 1998–2005 and the forecasted cash flow per share (CPS) data for Chinese firms in the I/B/E/S database during 1993–2005. Results reveal that cash flows reports are not as reliable as people think, and managers manipulate cash flows just as they manipulate earnings. Further analyses show that zero point, last year’s cash flow and analyst cash flow forecast are the three thresholds that influence managers’ decision when they report cash flow performance. Over 16% of the firms with small positive cash flows manipulate their cash flow. Moreover, 16.64% of the firms with small changes in cash flow and 9.81% of the firms with small surprises manipulate cash flows to reach the targets. A comparative analysis shows that cash flow management behaviors around zero and zero changes are more prevalent in the Chinese market than in the U.S. market. Cash flow management around analyst cash flow forecasts, however, is no more prevalent than that in the U.S. market. Translated and revised from Zhongguo Kuaiji Pinglun 中国会计评论 (China Accounting Review), 2007, 5(3): 381–400     

Abnormal Returns from Predicting Earnings Thresholds

This study examines the performance of a trading strategy based on the prediction of firms concurrently reporting a positive earnings change and meeting analysts’ earnings forecasts. The evidence indicates that a model predicting both earnings thresholds concurrently can yield excess returns that are incremental to predicting only one earnings threshold. Further, I find that the prediction of forecast errors is relatively more important than predicting earnings changes as the incremental benefit from predicting earnings changes concurrently with forecast errors is small relative to a model that predicts only forecast errors. The results hold while controlling for various risk factors and known anomalies.     

Interregional Migration and Thresholds: Evidence from Spain

We analyse the effects of labour market factors on interregional migration in Spain for the period 1988–2010. A basic theoretical framework is developed, suggesting that the effect of labour market variables on migration varies, depending on a certain threshold. The model implications are tested using a new approach based on the presence of endogenous thresholds. We show that Spanish interregional migration can be explained by labour market variables when the labour market conditions at the source region are unfavourable relative to those of the host region. We test the results for several migrant characteristics, such as citizenship, the age range, and return migration.

Migration inter-régionale et seuils - résultats de la recherche en Espagne     

Processes of auditability in sustainability assurance – the case of materiality construction

This study examines how financial audit-styled concepts such as materiality are transferred to non-financial audit arenas. Drawing on a case study of assurors working within a Big 4 professional services firm, we uncover a number of interrelated features of the materiality determination and assessment process within sustainability assurance (assurance on sustainability reports). We illustrate how assuror flexibility, underpinned by assuror intuition, is central to uncovering assurance technologies deemed capable of addressing the materiality of ambiguous sustainability data. Assurors with no financial audit background retrospectively rationalise their intuition using the assumed authority of structured financial audit methodologies. This facilitates the tentative translation of financial audit knowledge to the sustainability assurance domain. Collaborative, holistic decision-making processes inform the assurors’ continual construction of materiality and are characterised by alliances of (accountant and non-accountant) ‘expert’ assurors merging formal and tacit knowledge. These alliances seek social cohesion within sustainability assurance teams in order to establish a social consensus among assurors around the materiality determination and assessment process. Our analysis develops and extends Power’s theorisation of how new areas are made auditable and advances our understanding of the more practical aspects of non-financial assurance services offered by Big 4 professional services firms.