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This study examines whether sell-side equity analysts engage in “social learning” where their earnings forecasts are influenced by the forecasts and outcomes of other analysts associated with other firms (i.e., the “peers”) in their respective portfolios. We find that analyst optimism is negatively correlated with the recent forecast errors among peers on other firms in the analyst portfolio. An analyst is also more likely to issue “bold” forecasts when similar forecasts were recently issued for other portfolio firms. Analysts learn more from their peers with similar personal characteristics. Overall, social learning is beneficial to analysts and improves their forecast accuracy.

We consider a sequential investment process that is characteristic of crowdfunding platforms, among other contexts. Investors wish to avoid the cost of information acquisition and thus prefer to rely on information acquired by previous investors. This may lead to a phenomenon similar to an information cascade. We characterize the optimal policy that balances between the incentive to acquire information and the optimal investment decision. The policy is based on time-varying transparency levels such that it may be worthwhile to conceal some information in some periods. This paper was accepted by Joshua Gans, business strategy.

Summary The problem of detecting change points in the mean of high dimensional panel data with potentially strong cross-sectional dependence is considered. Under the assumption that the cross-sectional dependence is captured by an unknown number of common factors, a new CUSUM-type statistic is proposed. We derive its asymptotic properties under three scenarios depending on to what extent the common factors are asymptotically dominant. With panel data consisting of N cross sectional time series of length T, the asymptotic results hold under the mild assumption that $\min \lbrace N,T\rbrace \rightarrow \infty$, with an otherwise arbitrary relationship between N and T, allowing the results to apply to most panel data examples. Bootstrap procedures are proposed to approximate the sampling distribution of the test statistics. A Monte Carlo simulation study showed that our test outperforms several other existing tests in finite samples in a number of cases, particularly when N is much larger than T. The practical application of the proposed results are demonstrated with real data applications to detecting and estimating change points in the high dimensional FRED-MD macroeconomic data set.

We study the cross-section of returns on FX options sorting currencies based on implied volatilities (IV). Long straddle positions in currencies with low (high) implied volatilities perform well (poorly). A long low IV-short high IV strategy produces large average returns after transactions costs. Total volatility matters rather than any component or transformation of volatility. The returns are distinct from those in the literature on foreign exchange returns or equity option returns and cannot be explained convincingly by standard risk factors. We argue cross-sectional differences in hedging demand combined with limits to arbitrage contribute to misspricing in FX options.

In this paper we analyze market segmentation by firm size in the commercial real estate transaction process. Using novel micro-level data, we look at the probability distribution of investors acquiring a specific bundle of real estate characteristics, distinguishing between investors based on the size of their real estate portfolio. We find evidence of market segmentation by investor size: institutional investors segment across property characteristics based on the size of their real estate portfolio. The probability that a large (small) seller will sell a property to a similar-sized buyer is higher, keeping all else equal. We explore potential drivers of this market segmentation and find that it is mainly driven by investor preferences. During the Global Financial Crisis (GFC), large investors were less likely to buy the ‘average’ property, as compared to the period before or after the crisis, indicating time-varying investor preferences.

I use the simulation approach of Jobson and Korkie (J Portfolio Manag 7:70–74, 1981), combined with Michaud optimization (Michaud and Michaud, Efficient asset management: a practical guide to stock portfolio optimization and asset allocation, Oxford University Press, Oxford, 2008), to evaluate whether US international equity closed-end funds (CEF) provide out-of-sample diversification benefits. My study finds that international CEF do not provide diversification benefits across the whole sample period. However, the out-of-sample diversification benefits of international CEF do vary across economic states. I find that there are significant diversification benefits when the lagged one-month US Treasury Bill return is lower than normal, and when higher than normal, regardless of the benchmark investment universe used.

This article considers the surprising, tentative, emergence of the London Metal Exchange as a quasi-labour regulator following persistent scandals over cobalt mined by child labour in the Democratic Republic of the Congo (DRC). It argues that this case offers us a useful window on the limits to financialization. The ‘financialization’ of cobalt here refers to the process by which cobalt has come to be traded as a speculative asset. Such processes have often been understood in terms of a ‘divorcing’ of value from the underlying material form. The persistence of controversies around child labour and cobalt highlights particularly clearly how fraught a process any such divorce is. Theoretically, the article develops these arguments through engagements with Marxian and Science and Technology Studies (STS) literatures on commodification.

This article examines the development of the World Bank’s agricultural credit programming between 1960 and 1990. I show how these projects constituted key sites where neoliberal development governance was initially articulated, negotiated, and contested. Agricultural credit was a key point of emphasis for the Bank during its ‘Assault on Poverty’ era in the 1970s. Agricultural programming in this era reflected a strong emphasis on agricultural development through marketisation and commercialisation, yet also very clearly demonstrated clear points of ambivalence around the role of credit in relation to agricultural markets. Agricultural credit projects increasingly included implicit or explicit conditionalities linked to the marketisation of interest rates, the commercialisation of state-owned agricultural lenders, and the marketisation of wider financial sectors into the 1980s. But these efforts to marketize and commercialise agricultural credit through these projects often reflected mundane operational challenges as much as ideological shifts, and themselves largely failed even on their own terms. Looking at the evolution of agricultural credit projects thus shows how broadly neoliberal positions were arrived at in part through trial and error adjustments to operational concerns, as well as how fraught the promotion of market-based financial systems was in practice even in the structural adjustment era.\ud \ud

With the growing call for private sector actors to address global challenges, it is necessary to first assess whether regions with the greatest needs are accessing corporate philanthropy. In this paper, we ask whether corporate philanthropy is reaching those with the greatest health-care needs. Drawing on economic geography and corporate homophily, we argue that corporate philanthropy tends to exacerbate health inequality as grants are destined for counties with fewer health problems. We test and find support for this hypothesis using data on health grants made by US corporate foundations and county-level health data. Our results that corporate health grants are less likely to go to counties which have a lower proportion of medical service providers and insured citizens suggest that corporate foundations are unwittingly complicit in worsening the resource gap between small, poor, rural counties and large, wealthy, urban counties. From an ethical perspective, we provide some guidance as to how this may be corrected.

Financial reports should provide useful information to shareholders and creditors. Directors, however, normally owe fiduciary duties to equity holders, not creditors. We examine whether this slant in fiduciary duties affects the extent to which firms use financial engineering to circumvent debt covenants violation. By avoiding debt covenants violation, firms prevent creditors from taking actions to reduce bankruptcy risk and recover their investment, and allow the firm to continue operating for the benefit of equity holders. We find that a Delaware court ruling that imposed fiduciary duties toward creditors led to a decrease in financial engineering and debt‐covenant avoidance in Delaware firms. We also show that board quality lowers financial engineering and debt‐covenant avoidance by firms only when their directors owe a legal fiduciary duty to creditors. Collectively, our results suggest that unless directors are required to protect creditors’ interest, they are likely to take actions to circumvent debt covenant violations.\ud \ud

Using data from multiple card issuers, we show that the most common penalty fee type incurred by credit card holders, late payment fees, declines sharply over the first few months of card life. This phenomenon is wholly due to some consumers adopting automatic payments after a late payment event, thereby insuring themselves against future late payment fees. Nonadopters, who remain on manual-only payments, experience an unchanged high likelihood of future fees, despite exhibiting ample levels of available liquidity. Our results show that heterogeneity in adopting account management features of financial products, such as automatic payments, is important for understanding who avoids financial mistakes. This paper was accepted by Gustavo Manso, finance.

Intermediary and downside-risk asset-pricing theories lay the foundations for spanning the multi-asset return space by a small number of risk factors. Recent studies document strong empirical\ud support for such factors across major asset classes. We revisit these results and show that robust evidence for common factor pricing remains elusive. Importantly, the proposed risk factors do not\ud seem to provide incremental information to the traditional market factor. We argue that most of the economic and statistical challenges are not specific to these analyses and, with the aid of a placebo test, offer general recommendations for improving empirical tests, thus adding to the prescriptions in Lewellen, Nagel, and Shanken (2010).

The literature on cross-sectional stock return predictability has documented over 450 factors. We take the perspective of an institutional investor and navigate this zoo of factors by focusing on the evidence relevant to the practicalities of factor-based investment strategies. Establishing a sound theoretical rationale is key to identifying “true” factors, and we emphasize the need to recognize data-mining concerns that may cast doubt on the relevance of many factors. From a practical investment perspective, much of the factor evidence documented by academics may be more apparent than real. The performance of many factors is dependent on the inclusion of small- and micro-cap stocks in academic studies, although such stocks would likely be excluded from the real investment universe due to illiquidity and transaction costs. Nevertheless, a parsimonious set of factors emerges in equities and other asset classes, including currencies, fixed income, and commodities. These factors can serve as meaningful ingredients to factor-based portfolio construction.

We develop a liquidity-based asset pricing model featuring investors with heterogeneous investment horizons and stochastic transaction costs. In an equilibrium where all investors invest in all assets (integration), we nd that the existence of investors with heterogeneous horizons, as opposed to homogeneous horizons, reduces the importance of liquidity risk relative to the standard CAPM market risk and generates a more complex eect of expected liquidity. In an equilibrium where short-term investors do not invest in some more illiquid assets (partial segmentation), our model generates an additional segmentation premium for these assets. We estimate the model for the cross-section of U.S. stocks using GMM and nd that our heterogeneous-horizon asset pricing model fares better than a standard liquidity-adjusted CAPM. The segmented version of our model delivers the best cross-sectional t and generates a substantial eect of expected liquidity on ex

We investigate whether air pollution harms business ethics from the perspective of earnings manipulation, which exerts a real effect on the economy and social welfare. Using a large sample and a comprehensive air quality index in China, we find that firms located in cities with more severe air pollution exhibit higher levels of discretionary accruals and are more likely to restate their financial statements, consistent with exposure to air pollution leading to more earnings manipulation. We further provide causal evidence using propensity score matching and a discontinuity regression design (RDD) exploiting the Qinling Mountain–Huai River Heating Policy Line, which exogenously leads to more air pollution to cities located immediately north of the Line but not those in the south. Our findings are robust to controlling for weather conditions and alternative samples and measures of air pollution and earnings manipulation. Overall, this study unveils how the ecological environment shapes business ethics.

Drawing on institutional theory, we argue that the level of corruption in an alliance partner’s country negatively affects the market reaction to a focal firm’s international strategic alliance announcement, as corruption creates uncertainty regarding the behavior of the partner firm. We further propose that anti-bribery laws in the focal firm’s home country strengthen the negative relation between corruption and market reactions, while the focal firm’s prior alliance experience in more corrupt countries and the level of corruption in its home country weaken the relationship. Analyses of over one thousand international strategic alliance announcements involving firms from 30 countries furnish evidence largely consistent with our theory. The findings indicate the importance of corruption as a facet of the institutional environment that shapes firms’ value creation opportunities and risks in international alliances.

The paper examines the emergence of a new landscape of international development finance that is blurring traditional boundaries between public and private resources for meeting the Sustainable Development Goals (SDGs) and other global public goods (GPGs). In the SDG financing ecosystem, private actors are no longer passive bystanders in the development process but as active contributors to and investors in development projects and programmes. The paper argues that the emerging ‘private turn’ in the architecture of development finance represents a technology of governance that is rooted in the assemblage of international development policy and practice. This regime constitutes an emerging complex and often problematic framework of organising and managing countries’ access to external finance and establishing their terms of engagement with the broader global economy.

This paper re-examines stock returns predictability over the business cycle using price-dividend and price-earnings valuation ratios as predictors. Unlike prior studies that habitually implement long-horizon/predictive regressions, we conduct a testing framework in the frequency domain. Predictive regressions support no predictability; in contrast, our results in the frequency domain verify significant predictability at medium and longhorizons. To robustify predictability patterns, the analysis is executed repetitively for fixed-length rolling samples of various sizes. Overall, stock returns are predictable for wavelengths higher than five years. This finding is robust and independent of time, window size and predictor.

The endowment effect occurs when people assign a higher value to an item they own than to the same item when they do not own it, and this effect is often taken to reflect an ownership-induced change in the intrinsic value people assign to the object. However recent evidence shows that valuations made by buyers and sellers are influenced by market prices provided for the individual products, suggesting a role for beliefs about the markets. Here we elicit individuals’ beliefs about whole distributions of market prices, enabling us to quantify whether or not a given transaction constitutes a “good deal” and to demonstrate how an endowment effect may reflect such considerations. In a meta-analysis and three laboratory experiments, we show for the first time that ownership has no effect on beliefs about either: (a) the quality of the item or (b) the appropriate market price for the item. Instead, we show that sellers demand a price for the item that matches their beliefs about the item’s relative quality and the distribution of market prices in the market. Buyers, in contrast, offer less than what they believe the appropriate market price is. Thus, we argue that the endowment effect may largely reflect “adaptively rational” behavior on the part of both buyers and sellers (given their beliefs about relevant markets) rather than any ownership-induced bias or change in intrinsic preferences.\ud

The U.S. banking holiday of March 1933 was a pivotal event in twentieth-century political and economic history. After closing the nation's banks for nine days, the administration of newly inaugurated president Franklin D. Roosevelt restarted the banking system as the first step toward national recovery from the global Great Depression. In the conventional narrative, the holiday succeeded because Roosevelt used his political talents to restore public confidence in the nation's banks. However, such accounts say virtually nothing about what happened during the holiday itself. We reinterpret the banking crises of the 1930s and the 1933 holiday through the lens of bank supervision, the continuous oversight of commercial banks by government officials. Through the 1930s banking crises, federal supervisors identified troubled banks but could not act to close them. Roosevelt empowered supervisors to act decisively during the holiday. By closing some banks, supervisors made credible Roosevelt's claims that banks that reopened were sound. Thus, the union of FDR's political skills with the technical judgment of bank supervisors was the key to solving the banking crisis. Neither could stand alone, and both together were the vital precondition for further economic reforms—including devaluing the dollar—and, with them, Roosevelt's New Deal.

In the context of data that is missing completely at random, we propose a new data imputation method that exploits Cholesky decomposition. The data imputation method falls within the multiple imputation framework and is designed to ensure consistency with the correlation structure of the available data. The advantage is an accessible and computationally efficient approach to managing missing data that avoids the model risk associated with applying complex model-based data imputation methods. The non-recursive nature of our data imputation method further avoids the convergence issues associated with recursive approaches.

We show that there is cross-sectional variation in the quality of shareholder proposals. On average, proposals submitted by the most active individual sponsors are less likely to receive majority support, but they occasionally pass if shareholders mistakenly support them and may even be implemented due to directors’ career concerns. While gadfly proposals destroy shareholder value if they pass, shareholder proposals on average are value enhancing in firms with more informed shareholders. We conclude that more informed voting could increase the benefits associated with shareholder proposals.

During the first decade of the euro, southern countries experienced a boom-bust cycle in bank lending, non-tradable sector growth, and capital inflows. I develop a quantitative, open economy model of banking that is consistent with the banks’ behavior in credit allocation and foreign borrowing observed in Spanish data. I illustrate how movements in the frictions of cross-border deposits generate an endogenous asymmetric allocation of bank credit toward non-traded sectors, while producing a persistent and climbing current account deficit. A common central bank’s unconventional policies in response to sudden stops are successful at ameliorating the downturn. Postprint

Hedge fund activists target firms engaging in empire building and improve their future acquisition and divestiture strategy. Following intervention, activist targets make fewer acquisitions but obtain substantially higher returns by avoiding large and diversifying deals and refraining from acquisitions during merger waves. Activist targets also increase the pace of divestitures and achieve higher divestiture returns than matched non-targets. Activists curtail empire building through the removal of empire building chief executive officers (CEOs), compensation based incentives, and appointment of new board members. Our findings highlight an important channel through which activists improve efficiency and create shareholder value.

In view of the fact that minimum charge and premium budget constraints are natural economic considerations in any risk-transfer between the insurance buyer and seller, this paper revisits the optimal insurance contract design problem in terms of Pareto optimality with imposing these practical constraints. Pareto optimal insurance contracts, with indemnity schedule and premium payment, are solved in the cases when the risk preferences of the buyer and seller are given by Value-at-Risk or Tail Value-at-Risk. The effect of our constraints and the relative bargaining powers of the buyer and seller on the Pareto optimal insurance contracts are highlighted. Numerical experiments are employed to further examine these effects for some given risk preferences.

This article examines the ways in which ‘Chinese walls’ – that is, information barriers within financial institutions – are constituted and subverted by acts of trespass within large investment banking firms in New York. While Chinese walls positively serve to prevent corruption and fraud, they simultaneously attract legal, semi-legal and illegal forms of trespassing. My analysis shows that some trespassing is based on non-verbalized and embodied exchanges of information that are not in and of themselves illegal. Referred to as playing ‘the game’, the result of these forms of trespass is that the Chinese wall becomes an ‘effect’ or fiction. At other times, trespassing can cause inconvenient suspicion, encouraging those who operate amid these walls to participate strategically in various aspects of wilful blindness. Together, these examples reveal the conceptual and material relationships between ‘seeing’ and ‘knowing’, thereby highlighting the complexity of information flows in financial institutions and demonstrating how the critical regulation of financial capitalism is sometimes weakened.

The UK population is predicted to grow from 65 m in 2015 to 71 m in 2030 and 75 m in 2040, with the number aged 65-plus rising to 18 m. Successive governments have been reluctant to increase taxes but this looks increasingly unsustainable, if the increasing demand for health and social care is to be met. Increasing state pension age is the customary response for keeping pension contributions and benefits in balance in Pay As You Go (PAYG systems). However, this policy raises concerns about the capability of people to work to ever higher pension ages. Using newly available labour market data on health and disability, the paper finds limits to how far pension age can be increased without necessary health improvements. If improvements were forthcoming, planned pension age rises could be postponed. However, inequalities in healthy life expectancy across the UK are a major barrier to its achievement.

We study the tax/subsidy competition between two countries to attract the FDI projects of two firms. We assume that governments lack the capacity to target every potential inward investor such that each can only bid for a single firm. When the characteristics of the two countries are common knowledge, subsidy competition never arises in equilibrium. Both governments may target the same firm if there is uncertainty as to the more profitable location for that firm’s plant, such that both governments believe they may win the competition. We also explore how such uncertainty affects the firms’ after-tax profits.

In times of crisis, innovation and entrepreneurship can be considered as a path out of val- uation uncertainty of firms. All types of innovation output, however, may not have a sim- ilar impact across different firm size and sectors during bad times. Specifically, financially less-constrained (high leverage) innovative firms could be valued higher or experience less uncertainty in their performance. By considering the innovation intensity and leverage in pre- and post-2008 financial crisis periods, and using firm-level quarterly data from listed firms in the UK during 20 0 0–2014, we find that leveraged firms can achieve greater valua- tion and mitigate any valuation uncertainty in the post-crisis period if they are knowledge- or high-technology intensive. In terms of size effect, although leverage distorts market val- uation of large UK firms, the impact is positive for SMEs that are innovation intensive. Finally, in terms of sectoral effect, firms within manufacturing and services with leverage have benefitted from R&D and patenting activities during the post-crisis period, but not in the pre-crisis period. This also gets revealed when we classify all firms into high-tech and low-tech sectors, implying that firms in the high-tech sectors with debt dependence have benefitted favorably in terms of higher valuation and lower uncertainty in the post-crisis period, not firms in the low-technology sectors, reflecting further the role of technological intensity in firm valuation.

Using a multi-factor continuous-time model we study the impact of the global financial crisis on the information transmission mechanism between interest rate and equity markets in the US and each of the four major economies (UK, Japan, Germany and Canada). The exchange of information through the return channel shows that the equity markets communicate differently with the short- and long-term interest markets: the linkages between the equity and moneymarkets follow similar patterns across all four major economies, while the feedbacks between the returns on equity and bond markets suggest country-specific relationships with the US The level of interdependence is higher between the equity and long-term bond markets, while within the money-markets context there is evidence of the flight-to-quality phenomenon.

Using data on the universe of U.S. based mutual funds, we find that two out of five fund families hold corporate bonds of firms in which they also own an equity stake. We show that the greater the fraction of debt a fund family holds in a given firm, the greater its propensity to vote in line with the interests of firm debtholders at shareholder meetings, even when against Institutional Shareholder Services (ISS) recommendation. Voting has direct policy consequences as firms that receive more votes in favor of creditors make corporate decisions more in line with the interests of debtholders.

Motivated by the introduction of share repurchases regulations in 1998 and 2007 coupled with unique characteristics of the Indonesian market, we investigate the effect of firm’s sub-optimal financial position on its share repurchases decisions. Then, we study the effect of these determinants through an exogenous shock, the 2007 regulatory change. We show that sub-optimal financial positions play a role in the corporate share repurchases decisions. Further, we find that the enactment of the regulations has a significant effect on firms’ undertaking share repurchases programs. Unlike the common perception and findings in the literature, we observe that the underpricing of shares has a weak effect on the Indonesian firms’ decisions to repurchase their stocks. Our results hold using several estimation methods that account for potential endogeneity issues.

We examine how the regulation of financial reporting frequency affects corporate innovation. We use a difference-in-differences approach based on a sample of treatment firms that experience a change in their reporting frequency and matched industry peers and control firms whose reporting frequency remains unchanged. We find that higher reporting frequency significantly reduces treatment firms’ innovation output, but find no evidence that the net externality effect on industry peers is statistically significant. Together, our results are consistent with the hypothesis that frequent reporting induces managerial myopia and impedes corporate innovation.

We study whether commonality of incentives and opportunity to commit fraud trigger reputational contagion from culpable firms to nonculpable firms. Relying on a sample of 30 banks involved in fixing the London Interbank Offered Rate (LIBOR) and a control sample of 30 banks, we find that banks' reputations suffered substantial damage upon the announcement of their involvement in the scandal. We also document reputational contagion spread from banks that manipulated LIBOR to banks that shared the same incentives and opportunity to commit the fraud. The reputational contagion is more pronounced for large derivatives dealers who have had the strongest incentive to commit the fraud.

This Special Issue of the Annals of Actuarial Science contains 12 contributions to the academic literature all dealing with longevity risk and capital markets. Draft versions of the papers were presented at Longevity 14: The Fourteenth International Longevity Risk and Capital Markets Solutions Conference that was held in Amsterdam on 20-21 September 2018. It was hosted by the Pensions Institute at Cass Business School and the Netspar Network for Studies on Pensions, Ageing and Retirement.

This article critically examines how banks and microfinance companies morally construed and evaluated their lending practices and income in Kazakhstan and Kyrgyzstan. Banks occupy a powerful position in a monetary economy, because they do not merely create money ‘out of thin air’, but can charge for it, that is, interest. In doing so, they obtain unearned income and extract wealth. The article examines how banks and microfinance companies used myths, ideals, discourses, norms and emotions to justify and de-politicise their unequal power, unearned income and damaging effects. The study draws on the moral economy perspective and the post-Keynesian theory of money to understand financial institutions’ moral justifications and rationalisations of their position and power. This article contributes to a wider literature on neoliberalism and morality in post-socialist economies.

Sociological debates on financialisation emphasise that workplace‐based productivity bargains between employers and employees are often precarious. This literature suggests that where employers are unable to keep their side of the bargain, participative arrangements with employees are likely to become unsustainable in generating high workplace performance. Recessions substantially increase the pressures on employers to breach (unwritten and invisible) implicit bargains with employees. We propose that a robust (rather than shallow) implementation of union voice and Human Resource Management (HRM) practices will make implicit bargains more resilient and benefit workplace performance if recession impact is high. Using two waves of the British Workplace Employment Relations Survey (2004 and 2011), we examine our hypotheses in the context of the deep 2008–2009 recession and find supportive evidence – especially in (a) firms without a dominant individual or family owner and (b) growing markets.

This paper is about the effectiveness of qualitative easing, a form of unconventional monetary policy that changes the risk composition of the central bank balance sheet. We construct a general equilibrium model where agents have rational expectations, and there is a complete set of financial securities, but where some agents are unable to participate in financial markets. We show that a change in the risk composition of the central bank’s balance sheet affects equilibrium asset prices and economic activity. We prove that, in our model, a policy in which the central bank stabilizes non-fundamental fluctuations in the stock market is self-financing and leads to a Pareto efficient outcome.

This commentary explores the manner in which the current COVID-19 crisis is affecting key sources of entrepreneurial finance in the United Kingdom. We posit that the unique relational nature of entrepreneurial finance may make it highly susceptible to such a shock owing to the need for face-to-face interaction between investors and entrepreneurs. The article explores this conjecture by scrutinising a real-time data source of equity investments. Our findings suggest that the volume of new equity transactions in the United Kingdom has declined markedly since the outbreak of the COVID-19 pandemic. It appears that seed finance is the main type of entrepreneurial finance most acutely affected by the crisis, which typically goes to the most nascent entrepreneurial start-ups facing the greatest obstacles obtaining finance. Policy makers can utilise these real-time data sources to help inform their strategic policy interventions to assist the firms most affected by crisis events. Publisher PDF

Regulatory initiatives are frequently shaped by the ability of the financial industry to build alliances across the wider business community. Yet comparative and international political economy scholarship remains divided over how to explain the resulting networks of financial lobbying. Using quantitative text analysis of 1300 responses to EU financial regulatory consultations between 2010 and 2018, we map patterns of lobbying coordination based on cosigning and text re-use in consultation responses for the first time. This unique dataset is used to analyze hitherto hidden patterns of domestic and cross-border coordination by financial organizations within and between European countries. We find that while distinctive national lobbying networks persist at the country level, the internationalization of financial actors is statistically associated with the formation of coordination ties with foreign financial actors. This suggests that European financial integration has facilitated the emergence of new cross-border alliances which complement–rather than substitute for–existing domestic financial interest coalitions. We argue that the text-as-data approach employed here makes an important new contribution to scholarship on business power and the political economy of Europe.

The article puts forward a case against the nominalist ontology of money, that is, the heterodox notion that moneyness – the quality of being money – is conferred by the money of account. From the nominalist perspective, money is essentially a balance-sheet phenomenon: a credit-debit bookkeeping entity whose origins can be traced back to ancient Near Eastern practices of accounting. This ontological position, which is often erroneously traced back to Keynes’ Treatise, mystifies and obscures the actual history of the money of account as a regime of monetary governance and a mode of speculation that only made sense in the European late medieval context of bimetallism. The article thus provides a critique of monetary nominalism based on Keynes’ reflection on the value of money in the Treatise and the General Theory. In turn, it proceeds to historicise the phenomenon of the money of account, building on the seminal contributions of Marc Bloch and Luigi Einaudi.

Cross-market linkages allow transmission of shocks among markets. Previous measures of such spillovers are based on broader stock market indexes, which cannot identify the industries that are the principal drivers of spillovers and the industries that are most exposed to the spillovers. Using investable equity indexes, we show that basic materials, financials, industrials, technologies, and telecommunication equity sectors were the primary exporters of volatility from the U.S. and that the magnitude of the spillovers increased primarily during andpost-2008 financial crisis. There is evidence that Canada was most vulnerable to spillovers, while China’s exposure was the lowest among the countries in the sample. Based on the minimum variance portfolio optimization, we find that investing in foreign industries with low exposure to spillovers from the U.S. generates high Sharpe ratios for U.S. portfolio managers, especially during the financial crisis.

We study the empirical hedging performance of alternative VIX option pricing models. Recent advances in the literature find evidence of asymmetric volatility-of-volatility (similar to the leverage effect in equity markets), stochastic mean-reversion and jumps. Using such findings in our model framework, we show that while sophisticated models have superior pricing performance and can explain a range of stylized facts in the VIX derivatives market, their hedging performance is inferior to a simple Black model hedge. We also study the empirical performance of regime-dependent hedge ratio adjustments commonly applied in equity markets.

To provide new understanding of the effect of historical ties in the field of international business, through the lens of institutional theory and the concept of the liability of foreignness, we examine how prior colonial relationships influence inward FDI from former colonisers to their former colonies in Africa. With an estimation based on a balanced panel of annual observations from 2001 to 2012, we find that prior colonial ties are positively related to inward FDI from colonisers to former colonies. However, there is substantial heterogeneity in colonial relationships, with the nature of British colonialism more likely to exhibit the colonial relationship in explaining inward FDI. Moreover, there is ambiguity associated with the influence of the time period of colonization and the time period of independence on inward FDI. We report a negative relationship between the period a country was a colony and FDI from the coloniser and a U-shape relationship between the period of independence and FDI from the coloniser. Our findings indicate that the nature and influence of colonial ties on FDI from colonisers are more nuanced and complex than previously considered.\ud \ud

Little has contributed more to the emergence of today's world of financial globalization than the setup of the international monetary system. In its current shape, it has a hierarchical structure with the US-Dollar (USD) at the top and various other monetary areas forming a multilayered periphery to it. A key feature of the system is the creation of USD offshore – a feature that in the 1950s and 60s developed in co-evolution with the Bretton Woods System and in the 1970s replaced it. Since the 2007–9 Financial Crisis, this ‘Offshore US-Dollar System’ has been backstopped by the Federal Reserve's network of swap lines which are extended to other key central banks. This systemic evolution may continue in the decades to come, but other systemic arrangements are possible as well and have historical precedents. This article discusses four trajectories that would lead to different setups of the international monetary system by 2040, taking into account how its hierarchical structure and the role of offshore credit money creation may evolve. In addition to a continuation of USD hegemony, we present the emergence of competing monetary blocs, the formation of an international monetary federation and the disintegration into an international monetary anarchy.

The role of brand value in driving brand competitiveness has recently received attention from marketing scholars like Winzar et al. (2018). From the perspectives of marketing and strategic orientation, we propose and test a framework that depicts the effects of these variables on brand competitiveness. Development of the framework was achieved by synthesising existing research from the marketing and management streams. A convenience sample of 374 retailers who worked with the brand as its business customers completed a survey questionnaire. Structural Equation Modelling (SEM) was employed to test the proposed model. We found that brand value, created for business customers, indirectly enhances brand competitiveness through marketing orientation, albeit not directly. Moreover, brand differentiation directly and positively influences brand competitiveness in addition to building brand value. Our study is one of the initial attempts to explore the capability of brand value to bring together market orientation and strategic orientation for brand competitiveness and also extend the periphery of current knowledge about the variables that drive the competitiveness of a brand.

Using an extensive global sample, this paper investigates the impact of the term structure of interest rates on bank equity returns. Decomposing the yield curve to its three constituents (level, slope and curvature), the paper evaluates the time-varying sensitivity of the bank's equity returns to these constituents by using a diagonal dynamic conditional correlation multivariate GARCH framework. Evidence reveals that the empirical proxies for the three factors explain the variations in equity returns above and beyond the market-wide effect. More specifically, shocks to the long-term (level) and short-term (slope) factors have a statistically significant impact on equity returns, while those on the medium-term (curvature) factor are less clear-cut. Bank size plays an important role in the sense that exposures are higher for SIFIs and large banks compared to medium and small banks. Moreover, banks exhibit greater sensitivities to all risk factors during the crisis and post-crisis periods compared to the pre-crisis period; though these sensitivities do not differ for market-oriented and bank-oriented financial systems.

This article describes a randomized controlled trial to evaluate the effectiveness of intervention tools designed to help people save more or spend less money by enhancing their capabilities, motivations, and opportunities. The participants included 177 students from an English University who were randomly allocated to either the Control, Savings-Tool, or Savings+Habit-Tools group. Participants provided with the intervention tool(s) for 4 weeks were more likely to experience improvements in both their financial satisfaction and subjective perceptions than those in the Control group not asked to use either tool. The tools did not significantly affect financial behaviors or objective financial wellness. The discussion examines limitations of the study and discusses avenues for future research such as including a longer follow-up period.

We develop an efficient method for computing the probability that a non-decreasing, pure jump (compound) stochastic process stays between arbitrary upper and lower boundaries (i.e., deterministic functions, possibly discontinuous) within a finite time period. The compound process is composed of a process modelling the arrivals of certain events (e.g., demands for a product in inventory systems, customers in queuing, or claims/capital gains in insurance/dual risk models), and a sequence of independent and identically distributed random variables modelling the sizes of the events. The events arrival process is assumed to belong to the wide class of point processes with conditional stationary independent increments which includes (non-)homogeneous Poisson, binomial, negative binomial, mixed Poisson and doubly stochastic Poisson (i.e., Cox) processes as special cases. The proposed method is based on expressing the non-exit probability through Chapman-Kolmogorov equations, re-expressing them in terms of a circular convolution of two vectors which is then computed applying fast Fourier transform (FFT). We further demonstrate that our FFT-based method is computationally efficient and can be successfully applied in the context of inventory management (to determine an optimal replenishment policy), ruin theory (to evaluate ruin probabilities and related quantities) and double-barrier option pricing or simply computing non-exit probabilities for Brownian motion with general boundaries.

Purpose This paper aims to explore the sharing economy in Italy, focusing on key socioeconomic characteristics. Design/methodology/approach Adopting an exploratory approach, it analyzes the answers of a questionnaire, created using Google Forms and administered via social networks and e-mails. To analyze the answers statistical tests and descriptive statistics were used. The survey reveals potential behavioral factors, which influence the participation propensity to share economic practices. Findings Results exhibit that the age of the consumer is an impactful participating factor of sharing economy, and therefore, it seems to be a discriminant. On the contrary, gender and annual income are insignificant determinants. Research limitations/implications The sample is unbalanced, the majority of the answers were provided by young people. Social implications The paper can give a picture of the role and the importance of the sharing economy in Italy. Motivated by its global economic growth that could reach in 2025 the value of €570bn, it contextualizes what drives people to collaborate and share tangible and intangible assets. Originality/value It aims to discover how this digital trend shapes the social fabric of the global economy, providing a broader reflection in terms of future sustainability developments. Ongoing dynamic changes on digital consumer preferences toward sharing products and services provide valuable evidence on their future commercial behavior.