ambition versus conscience does corporate social responsibility pay off the application of matching methods in this article we examine the effect of corporate social responsibility csr on firms financial performance csr effect two competing hypotheses social impact hypothesis and shift of focus hypothesis are proposed to investigate this issue where the former suggests that csr has a positive relation with performance and the latter are opposite in order to ensure the csr effect is not contaminated by other factors or samples are randomly drawn we employ four matching methods nearest caliper mahala and mahala caliper to match the samples of csr csr firms and without csr noncsr firms with similar characteristics although four methods yield slightly different results firms engaging in csr activities tend to obtain significantly higher values on pretax income to net sales and profit margin and adopting csr at the very least not deteriorate the performance of firms making our conclusion favors the social impact hypothesis and against shift of focus hypothesis in taiwan thus ambition and conscience are not conflicting with each other

corporate social responsibility of the most highly reputed european and north american firms the objective of this article is double first to analyze using a descriptive analysis the main differences in the level and components of social behaviour between european and north american firms and second to contrast empirically using a multiple linear regression model whether the motives behind corporate social behaviour are different depending on the region or country of the firm with this aim an indicator of social behaviour termed effort in sustainability has been constructed by aggregating the firm s social effort with customers employees community and environment for a sample of the 40 european and north american companies most highly reputed in the years 2003 and 2004 the results obtained indicate that the region or country of the firm influences the level components and motivation of its social behaviour

testing for asymmetric information in insurance markets the first goal of this paper is to provide a simple and general test of the presence of asymmetric information in contractual relationships within a competitive context we also argue that insurance data are particularly well suited to such empirical investigations to illustrate this claim we use data on contracts and accidents to investigate the extent of asymmetric information in the french market for automobile insurance using various parametric and nonparametric methods we find no evidence for the presence of asymmetric information in this market

the brevity and violence of contractions and expansions abstract early studies of business cycles argued that contractions in economic activity were briefer shorter and more violent rapid than expansions this paper systematically investigates this claim and in the process discovers a robust new business cycle fact contractions in employment are briefer and more violent than expansions but we cannot reject the null of equal brevity and violence for expansions and contractions in output the difference arises because employment typically lags output around peaks but they coincide in their troughs we discuss the performance of existing business cycle models in accounting for this fact and conclude that none can fully account for it we then show that a business cycle model with asymmetric adjustment costs on employment and a choice of when to scrap old technologies can account for the business cycle fact both qualitatively and quantitatively

the ins and outs of european unemployment in this paper we study the contribution of inflows and outflows to the dynamics of unemployment in three european countries the united kingdom france and spain all countries are interesting in their own right and in the comparison with each other britain s labour markets were strictly regulated up to the mid 1980s but they have been liberalized since then france is still a regulated economy compared with britain with unemployment averaging about 8 spain has had the biggest rise in unemployment in europe reaching 24 in the mid 1990s but policy reforms and fast growth since then brought it down to a level below france s we compare performance in these three countries making use of both administrative and labor force survey data we find that the impact of the 1980s reforms in britain is evident in the contributions of the inflow and outflow rates the inflow rate became a bigger contributor after the mid 1980s although its significance subsided again in the late 1990s and 2000s in france the dynamics of unemployment are driven by the outflow rate virtually entirely which is consistent with a regime with strict employment protection legislation in spain however both rates contribute significantly to the dynamics perhaps as a consequence of the prominence of fixed term contracts since the late 1980s

the ins and outs of uk unemployment this study shows that in the uk increases in unemployment in a recession are driven by rises in the separation rate a new decomposition of unemployment dynamics is devised that does not require unemployment to be in steady state at all times this is important because low uk transition rates one quarter the size of the us imply substantial deviation of unemployment from steady state near cyclical turning points in periods of moderation the job finding rate is shown to have most influence on uk unemployment dynamics evidence comes from the first study of monthly data derived from individuals labour market spells recorded in the british household panel survey from 1988 to 2008

corporate social responsibility and firm productivity evidence from the chemical industry in the united states prior research suggests that participating in corporate social responsibility csr activities can lead to higher future productivity however the empirical evidence is still scarce the purpose of this study is to examine the relationship between csr and future firm productivity in the u s chemical industry specifically this study examines the relationship between csr in year t and firm productivity in year t 1 t 2 and t 3 we use data envelopment analysis a non parametric method to measure firm productivity results from the regression analysis support a significantly positive relationship between csr and future firm productivity suggesting that csr can lead to higher productivity in the chemical industry the findings add to the validity of the proposition in prior research

preference heterogeneity and insurance markets explaining a puzzle of insurance the textbook approach to insurance markets emphasizes the role of private information about risk in determining who purchases insurance in the classic adverse selection model of michael rothschild and joseph stiglitz 1976 individu als with higher expected claims buy more insur ance than those with lower expected claims who may be out of the market entirely this basic prediction of asymmetric information models of a positive correlation between insurance cov erage and accident occurrence has been shown to be robust to a variety of extensions to the stan

health insurance without single crossing why healthy people have high coverage standard insurance models predict that people with high risks have high insurance coverage it is empirically documented that people with high income have lower health risks and are better insured we show that income differences between risk types lead to a violation of single crossing in an insurance model where people choose treatment intensity we analyse different market structures and show the following if insurers have market power the violation of single crossing caused by income differences and endogenous treatment choice can explain the empirically observed outcome our results do not rely on differences in risk aversion between types

the cyclicality of separation and job finding rates this paper uses cps gross flow data to analyze the business cycle dynamics of separation and job finding rates and to quantify their contributions to overall unemployment variability cyclical changes in the separation rate are negatively correlated with changes in productivity and move contemporaneously with them while the job finding rate is positively correlated with and tends to lag productivity contemporaneous fluctuations in the separation rate explain between 40 and 50 percent of fluctuations in unemployment depending on how the data are detrended this figure becomes larger when dynamic interactions between the separation and job finding rates are considered

criteria for responsible business practice in smes an exploratory case of u k fair trade organisations this paper develops a set of 16 criteria divided into four groupings for responsible business practice rbp in small and medium sized enterprises smes drawn from the existing sme rbp literature the current lack of a general set of criteria against which such activity can be judged is noted and this deficit is redressed in order to make an initial assessment in support of the criteria so derived an exploratory feasibility study of rbp in u k fair trade organisations was conducted the findings from this study show that most but not all of the rbp criteria seem to be applicable to u k fair trade organisations but it is recommended that the complete set of criteria continues to be used in further research until such time as there is a general consensus as to which criteria are appropriate implications for rbp in small businesses in general and for fair trade organisations in particular are drawn out and suggestions for further research are identified

pricing and welfare in health plan choice premiums in health insurance markets frequently do not reflect individual differences in costs either because consumers have private information or because prices are not risk rated this creates inefficiencies when consumers self select into plans we develop a simple econometric model to study this problem and estimate it using data on small employers we find a welfare loss of 2 11 percent of coverage costs compared to what is feasible with risk rating only about one quarter of this is due to inefficiently chosen uniform contribution levels we also investigate the reclassification risk created by risk rating individual incremental premiums finding only a modest welfare cost

the welfare cost of unpriced heterogeneity in insurance markets we consider the welfare loss of unpriced heterogeneity in insurance markets which results when private information or regulatory constraints prevent insurance companies to set premiums reflecting expected costs we propose a methodology which uses survey data to measure this welfare loss after identifying some types which determine expected risk and insurance demand we derive the key factors defining the demand and cost functions in each market induced by these unobservable types these are used to quantify the efficiency costs of unpriced heterogeneity we apply our methods to the us long term care and medigap insurance markets where we find that unpriced heterogeneity causes substantial inefficiency

the creation of value through corporate reputation the relationship between social and financial performance csp fp has been a main objective in the literature on business management as it would provide an economic justification for the social investment insofar as it contributes to the creation of value this relationship has been empirically tested by several authors though without using a theoretical model that sustains this relationship the aim of this article is to propose a theoretical model of the process of the creation of value from the reputation generated by companies integrating the factors that have been shown to be more relevant in this process from previous research in such a way that hypotheses are put forward regarding the existence of this relationship and the factors that determine it finally an empirical test is performed using the 100 most prestigious companies operating in spain during 2004

a dynamic analysis of the demand for health insurance and health care we find that asymmetric information is important for the uptake of supplementary private health insurance and health care utilization we use dynamic panel data models to investigate the sources of asymmetric information and distinguish short run selection effects into insurance from long run selection effects short run selection effects i e responses to shocks are adverse but small in size also long run effects driven by differences in for example preferences and risk aversion are small but we find some evidence for multidimensional asymmetric information for example mental health causes advantageous selection estimates of health care utilization models suggest that moral hazard is not important

is there adverse selection in life insurance markets adverse selection theory predicts people with a high risk of death are more likely to own life insurance using a unique data set merging administrative and survey records we test this theory and find the opposite people with high death risk are less likely to own life insurance we postulate advantageous selection and price discrimination swamp adverse selection in individual life insurance markets to determine which effect is more powerful we analyze group life insurance markets where insurance companies cannot price discriminate as well as in individual markets our data suggest that price discrimination has a stronger effect than advantageous selection jel d8 g1 i1

reexamining the expected effect of available resources and firm size on firm environmental orientation an empirical study of uk firms an emergent body of literature examined why some firms apply some environmental initiatives while other firms do not take responsibility for their natural environment thus firm environmental orientation responsiveness and performance are linked in the literature to several variables unfortunately the relationship between firm environmental orientation and either available resources or firm size showed mixed results and inconclusive evidence therefore the aim of this paper is to show empirically how available resources and firm size can explain differences in firm environmental responsiveness and environmental performance econometric results of environmental responsiveness using the logistic regression model demonstrated that firm size does appear to add something unique in explaining differences in environmental responsiveness while available resource can be safely dropped from the model however econometric analysis of environmental performance using the maximum likelihood random effects model showed strong evidence that available resources and firm size are significant predictors of firm environmental performance

multiple dimensions of private information evidence from the long term care insurance market we demonstrate the existence of multiple dimensions of private information in the long term care insurance market two types of people purchase insurance individuals with private information that they are high risk and individuals with private information that they have strong taste for insurance ex post the former are higher risk than insurance companies expect while the latter are lower risk in aggregate those with more insurance are not higher risk our results demonstrate that insurance markets may suffer from asymmetric information even absent a positive correlation between insurance coverage and risk occurrence the results also suggest a general test for asymmetric information

accounting for endogeneity and the dynamics of corporate social corporate financial performance relationship abstract this paper examines the endogeneity problem in studies dealing with corporate social performance and financial performance relationship since randomized controlled experiments in the business research field are often unfeasible researchers rely mostly on observational data to make claims about doing good doing well arguments in response to several strong calls for additional well crafted empirical research that address endogeneity we revisit the csp cfp relationship in the airline industry to understand how endogeneity arises and how to control for it in studies based on observational panel data we exploit various approaches such as ols fixed effects fixed effects iv 2sls dynamic system gmm and gls estimators we show the appropriateness behind the use of the dynamic system gmm estimator and its benefits over the fixed effects estimator in addition we demonstrate that results in models that do not account for endogeneity lead to inflated estimations misleading interpretations and wrong theoretical propositions about the dynamic nature of csp cfp relationship

advantageous selection in insurance markets this article reverses the standard conclusion that asymmetric information plus competition results in insufficient insurance provision risk tolerant individuals take few precautions and are disinclined to insure but they are drawn into a pooling equilibrium by the low premiums created by the presence of safer more risk averse types taxing insurance drives out the reckless clients allowing a strict pareto gain this result depends on administrative costs in processing claims and issuing policies as does the novel finding of a pure strategy partial pooling subgame perfect nash equilibrium in the insurance market copyright 2001 by the rand corporation

the harm of symbolic actions and green washing corporate actions and communications on environmental performance and their financial implications we examine over 100 top performing canadian firms in visibly polluting industries as we seek to answer four research questions what specific environmental issues are firms addressing how do these issues differ between industries are both symbolic and substantive actions financially beneficial does green washing measured as the difference between symbolic and substantive action and or green highlighting measured as the combined effect of symbolic and substantive actions pay we find that substantive actions of environmental issues green walk neither harm nor benefit firms financially but symbolic actions green talk are negatively related to financial performance we also find that green washing discrepancy between green talk and green walk has a negative effect on financial performance and green highlighting concentrated efforts of the talk and walk has no effect on financial performance in this article we provide explanations of our findings and put forth future research directions

asymmetric information in insurance general testable implications several recent articles on empirical contract theory and insurance have tested for a positive correlation between coverage and ex post risk as predicted by standard models of pure adverse selection or pure moral hazard we show here that the positive correlationproperty can be extended to general setups competitive insurance markets and cases where risk aversion is public we test our results on a french dataset our tests confirm that the estimated correlation is positive they also suggest the presence of market power

exploring the curvature of the relationship between hrm csr and corporate financial performance this article contributes to the general literature on the relationship between corporate social performance and corporate financial performance as well as to the emerging hrm csr literature by exploring the curvature of the relationship between hrm csp and cfp we advance conceptual arguments in favor of an inverted u shaped relationship our results demonstrate a significant quadratic relationship between hrm csp and cfp we provide evidence that this relationship is not linear or s shaped but rather inverted u shaped

deriving risk adjustment payment weights to maximize efficiency of health insurance markets risk adjustment is critical to the functioning of regulated health insurance markets to date estimation and evaluation of a risk adjustment model has been based on statistical rather than economic objective functions we develop a framework where the objective of risk adjustment is to minimize the efficiency loss from service level distortions due to adverse selection and we use the framework to develop a welfare grounded method for estimating risk adjustment weights we show that when the number of risk adjustor variables exceeds the number of decisions plans make about service allocations incentives for service level distortion can always be eliminated via a constrained least squares regression when the number of plan service level allocation decisions exceeds the number of risk adjusters the optimal weights can be found by an ols regression on a straightforward transformation of the data we illustrate this method with the data used to estimate risk adjustment payment weights in the netherlands n 16 5 million

experimental identification of asymmetric information evidence on crop insurance in the philippines abstract i study asymmetric information in crop insurance in the philippines using a two level randomized field experiment and incentivized preference elicitation in this first experimental study of moral hazard in non health insurance preventable damages double on randomly insured plots among farmers with high trust in the insurance provider farmers prefer insurance on plots that are at risk of floods and crop diseases a sign of classic adverse selection and plots that are far away from home a sign of selection on anticipated moral hazard behavior resulting in 72 higher payouts on preferred plots overcoming these challenges requires leveraging new technologies

human capital risk contract enforcement and the macroeconomy we use data from the survey of consumer finance and survey of income program participation to show that young households with children are under insured against the risk that an adult member of the household dies we develop a tractable macroeconomic model with human capital risk age dependent returns to human capital investment and endogenous borrowing constraints due to the limited pledgeability of human capital limited contract enforcement we show analytically that consistent with the life insurance data in equilibrium young households are borrowing constrained and under insured against human capital risk a calibrated version of the model can quantitatively account for the life cycle variation of life insurance holdings financial wealth earnings and consumption inequality observed in the us data our analysis implies that a reform that makes consumer bankruptcy more costly like the bankruptcy abuse prevention and consumer protection act of 2005 leads to a substantial increase in the volume of both credit and insurance

a study of the link between a corporation s financial performance and its commitment to ethics a number of studies have tested the relationship between a corporation s social and ethical performance and its financial performance in contrast this is the first study to demonstrate a link between overall financial performance and an emphasis on ethics as an aspect of corporate governance it identifies the 26 8 percent of the 500 largest u s public corporations that in their annual report to shareholders commit to ethical behavior toward their stakeholders or emphasize compliance with their code of conduct the financial performance of these corporations ranks higher than that of those who do not at a significance level of p 0 005 using the 1997 business week ranking which averages eight publicly reported measures of historical financial performance these findings should motivate more corporations to utilize the principles of social and ethical accounting auditing and reporting seaar

corporate social and financial performance an investigation in the u k supermarket industry the comparison of corporate social performance with corporate financial performance has been a popular field of study over the past 25 years the results while broadly conclusive of a positive relationship are not entirely consistent in addition most of the previous studies have concentrated on large scale cross industry studies and often with a single variable for corporate social performance in order to produce statistically significant results this weakens the richness of understanding that might be obtained from a single industry study with multiple social variables which would also allow investigation of inter relationships between individual and sub sets of social performance measures and between individual and sub sets of social performance and financial performance measures there have also been criticisms that the results lack a rigorous theoretical basis and the paper demonstrates clearly how stakeholder theory must form the basis for this area of research following a review of the literature this paper presents the initial findings from a study of the u k supermarket industry which suggest that contemporaneous social and financial performance are negatively related while prior period financial performance is positively related with subsequent social performance positive relationships between both age and size of the company with social performance are also found

adverse selection in annuity markets evidence from the british life annuity act of 1808 abstract we study adverse selection using data from an 1808 act of british parliament that effectively opened a market for life annuities our analysis indicates significant selection effects the evidence for adverse selection is strongest for a sub sample of annuitants whose annuities were purchased by profit seeking speculators a sub sample in which advantageous selection resulting from multi dimensional heterogeneity is unlikely to have been significant these results support the view that adverse selection can be masked by advantageous selection in empirical studies of standard insurance markets

corporate philanthropy in the u k 1985 2000 some empirical findings this paper briefly reviews the theories that seek to explain the phenomenon of corporate charitable donations and then provides a review of the empirical issues that have arisen in previous studies in this area the findings of an analysis of charitable donations data from the entire u k ftse index for the years 1985 2000 are then reported these findings include the observation of a time related increase in charitable donations which is compared with an earlier study to give a 24 year history of charitable donations in the u k the findings note little responsiveness of the monetary value of charitable donations to the economic performance of firms an international comparison over time against u s trends is also reported and shows how u s corporations have traditionally been more generous than u k firms but that the trend in the u s is downwards membership of a u k based tithing club the percent club is shown to be associated with higher profit performance against non members members charitable contributions against profit are shown to be higher than the ftse mean although short of the 0 5 target figure in cash terms the paper concludes with a brief discussion of these findings in relation to the theoretical positions advanced for corporate philanthropy

preference heterogeneity and selection in private health insurance the case of australia a basic prediction of theoretical models of insurance is that if consumers have private information about their risk of suffering a loss there will be a positive correlation between risk and the level of insurance coverage we test this prediction in the context of the market for private health insurance in australia despite a universal public system that provides comprehensive coverage for inpatient and outpatient care roughly half of the adult population also carries private health insurance the main benefit of which is more timely access to elective hospital treatment like several studies on different types of insurance in other countries we find no support for the positive correlation hypothesis because strict underwriting regulations create strong information asymmetries this result suggests the importance of multi dimensional private information additional analyses suggest that the advantageous selection observed in this market is driven by the effect of risk aversion the ability to make complex financial decisions and income

private information and insurance rejections across a wide set of nongroup insurance markets applicants are rejected based on observable often high risk characteristics this paper argues that private information held by the potential applicant pool explains rejections i formulate this argument by developing and testing a model in which agents may have private information about their risk i first derive a new no trade result that theoretically explains how private information could cause rejections i then develop a new empirical methodology to test whether this no trade condition can explain rejections the methodology uses subjective probability elicitations as noisy measures of agents beliefs i apply this approach to three nongroup markets long term care disability and life insurance consistent with the predictions of the theory in all three settings i find significant amounts of private information held by those who would be rejected i find generally more private information for those who would be rejected relative to those who can purchase insurance and i show it is enough private information to explain a complete absence of trade for those who would be rejected the results suggest that private information prevents the existence of large segments of these three major insurance markets publication abstract

genetic adverse selection evidence from long term care insurance and huntington disease abstract individual personalized genetic information is increasingly available leading to the possibility of greater adverse selection over time particularly in individual payer insurance markets we use data on individuals at risk for huntington disease hd a degenerative neurological disorder with significant effects on morbidity to estimate adverse selection in long term care insurance we find strong evidence of adverse selection individuals who carry the hd genetic mutation are up to 5 times as likely as the general population to own long term care insurance this finding is supported both by comparing individuals at risk for hd to those in the general population and by comparing across tested individuals in the hd risk population with and without the hd mutation

vacancy posting job separation and unemployment fluctuations abstract what is the relative importance of hiring and separation in driving unemployment fluctuations this paper presents a framework to decompose the moments of unemployment and study the respective contributions of vacancy posting a measure of firms hiring efforts and separation separation accounts for about 40 of unemployment s variance compared to 60 for vacancy posting and contributes to about 60 of unemployment steepness asymmetry the fact that unemployment increases faster than it decreases further while vacancy posting is on average the most important contributor of unemployment fluctuations the opposite is true around business cycle turning points when separation is responsible for most of unemployment movements

are tax subsidies for private medical insurance self financing evidence from a microsimulation model this paper develops an empirical strategy to estimate whether subsidies to private medical insurance are self financing in countries where public and private insurance coexist and the latter covers the same treatments as the former we construct a simulation routine based on a micro econometric discrete choice model that allows us to evaluate the impact of premium changes on the utilization of outpatient and inpatient health care services as an application we estimate the budgetary effects of scrapping a subsidy from the purchase of individual private policies using micro data from catalonia our results suggest that the subsidy is not self financing this result is driven by the fact that private medical insurance holders make concurrent use of public and private services and by the price inelasticity of the demand for private policies

labor friendly corporate practices is what is good for employees good for shareholders as corporate managers interact with non shareholder stakeholders potential tradeoffs emerge and questions arise as to how these interactions impact shareholder value we argue that this shareholder stakeholder debate is an important issue within the overall corporate governance and corporate policy domain and examine one such stakeholder group employees by studying labor friendly corporate practices we find that announcements of labor friendly policies are associated with positive abnormal stock returns labor friendly firms also outperform otherwise similar firms both in terms of long run stock market returns and operating results in addition we find that the probability and benefits of labor friendliness increase with the demand for highly skilled labor our analysis of excess executive compensation suggests that top management derives no pecuniary benefits from labor friendly practices we interpret our results as consistent with a genuine concern for employees translating into higher productivity and profitability which in turn facilitate value creation it appears that the benefits of labor friendly practices significantly outweigh the costs and that what is good for employees is good for shareholders

a rose by any other name are family firms named after their founding families rewarded more for their new product introductions the authors explore the relation between the way different family firms are named and the shareholder value impact of these firms new product introductions using an event study of 1 294 product introduction announcements of 107 publicly listed u s family firms the authors find that the presence of the founding family s name as part of a family firm s name acts as a valuable firm resource increasing the abnormal stock returns surrounding the firm s new product introductions superior returns to family named firms new product introductions are partially mediated by these firms history of ethical product related behavior family named firms particularly those with corporate branding and those wherein a founding family member holds the ceo or chairman position are more likely to exhibit a history of avoiding such product related controversies as product safety issues and deceptive advertising the authors highlight the managerial and theoretical contributions of this research

adverse selection in insurance markets policyholder evidence from the u k annuity market in this paper we investigate the importance of adverse selection in insurance markets we use a unique data set consisting of all annuity policies sold by a large u k insurance company since the early 1980s to analyze mortality differences among individuals who purchased different types of policies we find systematic relationships between ex post mortality and annuity policy characteristics such as whether the annuity will make payments to the estate in the event of an untimely death and whether the payments from the annuity rise over time these mortality patterns are consistent with the presence of asymmetric information in the annuity market we find no evidence of substantive mortality differences however across annuities of different size even though models of insurance market equilibrium with asymmetric information would predict such differences we also find that the pricing of various features of annuity contracts is consistent with the self selection patterns we find in mortality rates our results therefore suggest that selection may occur across many specific features of insurance contracts and that the absence of selection on one contract dimension does not preclude its presence on others this highlights the importance of considering the detailed features of insurance contracts when testing theoretical models of asymmetric information

estimating welfare in insurance markets using variation in prices we provide a graphical illustration of how standard consumer and producer theory can be used to quantify the welfare loss associated with inefficient pricing in insurance markets with selection we then show how this welfare loss can be estimated empirically using identifying variation in the price of insurance such variation together with quantity data allows us to estimate the demand for insurance the same variation together with cost data allows us to estimate how insurers costs vary as market participants endogenously respond to price the slope of this estimated cost curve provides a direct test for both the existence and the nature of selection and the combination of demand and cost curves can be used to estimate welfare we illustrate our approach by applying it to data on employerprovided health insurance from one specific company we detect adverse selection but estimate that the quantitative welfare implications associated with inefficient pricing in our particular application are small in both absolute and relative terms

complementary resources and capabilities for an ethical and environmental management a qual quan study managers commitment to contribute to sustainable development holds the key to their long term business success and may be a source of competitive advantage the managerial perception of business ethics is influenced by the level of moral development and personal characteristics of managers these perceptions are also shaped by forces existing in the environment of the firm including available resources societal expectations sector and regulations the resource based perspective can thus contribute to the analysis of ethical issues offering important insights on how they can influence the environmental strategy of the firm the findings of this study show that firm resources have a strong influence on business managers ethical attitudes in addition the application of resource based rationales to ethical issues can be justified in the following several ways it influences a managerial perception of natural environment as a competitive opportunity it requires investments of financial and human resources flexibility and speed in the adaptation to environmental changes and it creates new resource based opportunities through changes in prevention pollution technology policy process and market forces

an empirical examination of information barriers to trade in insurance this paper uses direct evidence to evaluate whether asymmetric information is a barrier to trade in the largest market for private insurance in the world life insurance we report several findings that seem difficult to reconcile with the conventional theory of insurance under asymmetric information we conjecture that sellers may know their costs of production better than consumers in this market as in those for most other products

optimal mandates and the welfare cost of asymmetric information evidence from the u k annuity market much of the extensive empirical literature on insurance markets has focused on whether adverse selection can be detected once detected however there has been little attempt to quantify its welfare cost or to assess whether and what potential government interventions may reduce these costs to do so we develop a model of annuity contract choice and estimate it using data from the u k annuity market the model allows for private information about mortality risk as well as heterogeneity in preferences over different contract options we focus on the choice of length of guarantee among individuals who are required to buy annuities the results suggest that asymmetric information along the guarantee margin reduces welfare relative to a first best symmetric information benchmark by about 127 million per year or about 2 percent of annuitized wealth we also find that by requiring that individuals choose the longest guarantee period allowed mandates could achieve the first best allocation however we estimate that other mandated guarantee lengths would have detrimental effects on welfare since determining the optimal mandate is empirically difficult our findings suggest that achieving welfare gains through mandatory social insurance may be harder in practice than simple theory may suggest

on the timing and efficiency of creative destruction we analyze the timing pace and efficiency of ongoing job reallocation that results from product and process innovation there are strong reasons why an efficient economy ought to concentrate both job creation and destruction during recessions when the opportunity cost of reallocation is lowest incomplete contracting between labor and capital can disrupt this synchronized pattern and decouple creation and destruction transactional difficulties also lead to technological sclerosis characterized by excessively slow renovation government incentives to production may alleviate high unemployment but exacerbate sclerosis in contrast creation incentives increase the pace of reallocation an optimal combination of both policies restores economic efficiency

investing in socially responsible companies is a must for public pension funds because there is no better alternative with assets of over us 1 0 trillion and growing public pension funds in the united states have become a major force in the private sector through their holding of equity positions in large publicly traded corporations more recently these funds have been expanding their investment strategy by considering a corporation s long term risks on issues such as environmental protection sustainability and good corporate citizenship and how these factors impact a company s long term performance conventional wisdom argues that the fiduciary responsibility of the pension funds trustees must be solely focused on their beneficiaries and therefore their investment criteria must be based strictly on narrowly defined financial measures it is also asserted that well established financial measurements of corporate performance already include long term risk assessment through discounted present value of future flow of earnings consequently all other criteria are contrary to the best interest of the pension funds beneficiaries in this paper we assert that contrary to conventional wisdom pension funds and for that matter other mutual funds must be concerned with the long term survival and growth of corporations these measures are generally referred to socially responsible investing sri and when applied to corporations it is termed socially responsible corporate conduct srcc we demonstrate that current measurement of future risk assessment invariably understates and quite often completely overlooks these long term risks because of the inherent bias towards short run on the part of financial intermediaries whose compensation depends greatly on short term results furthermore there is ample evidence to suggest that these intermediaries have been engaging in self serving practices and thus failing in their duties to serve their clients i e pension funds best interests because of their large holdings in the total market as well as individual companies these funds cannot easily divest from poorly performing companies without destabilizing the companies stock and overall markets hence they must opt for a strategy of emphasizing investment criteria that encourage companies to take into account long term aspects of their operations in terms of their impact on environment sustainability and community welfare to name a few we argue that an exclusionary and even a primary focus on short term financial criteria is no longer a viable option it also calls for the pension funds to encourage greater transparency and accountability of the entire corporate sector through improved corporate governance thus socially responsible investing practices are not merely discretionary and desirable activities they are a necessary imperative which both the corporations and public pension funds and other large institutional holders will ignore at serious peril to themselves finally the paper considers some of the recent developments where corporations have been responding to these challenges and how their actions might be strengthened through greater disclosure and transparency of corporate activities it also makes recommendations for the pension funds to support further research in creating new measurement standards that further refine the concept of socially responsible investing as a necessary ingredient of long term corporate survival and growth in the context of a changing economic environmental and socio political dynamic

fostering corporate social responsibility through public initiative from the eu to the spanish case should csr be approached only on a voluntary basis or should it be complemented with a compulsory regulatory framework what type of government intervention is more effective in fostering csr among companies this paper is an attempt to answer these questions reviewing the debate between proponents of the voluntary case and the obligatory case for csr and critically analysing current international government led initiatives to foster csr among companies and national government led initiatives in the eu area finally the paper focuses on the spanish case as an example of the failure of an exclusively voluntary approach despite the rapid uprise of csr spain is still far behind late in csr promotion strategies most action has been undertaken by companies themselves with no common guidelines governmental support or independent verification the lack of a regulatory framework for csr or ethical investment issues and the virtual absence of other indirect incentives explains the misbalance between private public and third sector initiatives based on the spanish context which is quite similar to other non oecd countries the authors call for a more proactive government position in csr related issues the conclusions of the paper detail the features of this regulatory framework and other policies to promote csr in spain as well as in other oecd countries

the cyclicality of the separation and job finding rates in france abstract in this paper we shed light on the relative contribution of the separation and job finding rates to french unemployment at business cycle frequencies by using administrative data on registered unemployment and labor force surveys we first investigate the fluctuations in steady state unemployment and then in current unemployment in order to take into account the unemployment deviations from equilibrium both data sets lead to quite similar results both rates contributed to unemployment fluctuations during the nineties 50 50 split while in the last decade the job finding rate was more significant and explained around 65 of the french unemployment fluctuations in particular the last business cycle episode including the last recession exacerbated the role of the job finding rate we then show that the predominant role of the job finding rate in the last decade holds when the economy is hit by aggregate business cycle shocks moving unemployment and vacancies along the beveridge curve

how the ins and outs shape differently the u s unemployment over time and across frequencies abstract although the u s case has been studied extensively the importance of job finding and separation rates to unemployment variability remains unsettled the aim of this paper is to contribute to this debate by adopting a novel lens wavelet analysis we resort to wavelet analysis to unveil time and frequency varying features regarding the contribution of the job finding and job separation rates for the u s unemployment rate dynamics drawing on this approach we are able to reconcile some apparently contradictory findings reported in previous literature we find that the job finding rate is more influential for the overall unemployment behaviour but the job separation rate also plays a critical role especially during recessions in particular the job separation rate accounts for on average 53 per cent of the unemployment variability at short run fluctuations during recessions in sharp contrast with an overall contribution of 21 per cent over time and across frequencies

implementing supplier codes of conduct in global supply chains process explanations from theoretic and empirical perspectives western buying companies impose supplier codes of conduct scc on their suppliers in developing countries however many suppliers cannot fully comply with scc and some of them even cheat in scc in this research we link contract characteristics price pressure production complexity contract duration to the likelihood of supplier s commitment to scc through a mediating process how the buying companies govern their suppliers our structural equation model analysis shows that the hierarchy relational norms governance is a perfect mediator of contract characteristics effects on the likelihood of supplier s commitment the market governance an insignificant one the managerial implications are provided for successfully implementing scc in global supply chains

the life insurance market asymmetric information revisited abstract this paper finds evidence for the presence of asymmetric information in the life insurance market a conclusion contrasting with the existing literature in particular we find a significant and positive correlation between the decision to purchase life insurance and subsequent mortality conditional on risk classification individuals who died within a 12 year time window after a base year were 19 more likely to have taken up life insurance in that base year than were those who survived the time window moreover as might be expected when individuals have residual private information we find that the earlier an individual died the more likely she was to have initially bought insurance the primary factor driving the difference between our and the prior literature s findings is that we focus on a sample of potential new buyers rather than on the entire cross section to address the sample selection problem induced by potential mortality differences between those with and those without coverage

incentive and selection effects of medigap insurance on inpatient care the medicare program which provides insurance coverage to the elderly in the united states does not protect them fully against high out of pocket costs for this reason private supplementary insurance named medigap has been available to cover medicare gaps this paper studies how medigap affects the utilization of inpatient care separating the incentive and selection effects of supplementary insurance for this purpose we use two alternative estimation methods a standard recursive bivariate probit and a discrete multivariate finite mixture model we find that estimated incentive effects are modest and quite similar across models there seems to be very significant selection with the presence of both adversely and advantageously selected individuals stemming from the multidimensional nature of residual heterogeneity

adverse selection and inertia in health insurance markets when nudging hurts this paper investigates consumer inertia in health insurance markets where adverse selection is a potential concern we leverage a major change to insurance provision that occurred at a large firm to identify substantial inertia and develop and estimate a choice model that also quantifies risk preferences and ex ante health risk we use these estimates to study the impact of policies that nudge consumers toward better decisions by reducing inertia when aggregated these improved individual level choices substantially exacerbate adverse selection in our setting leading to an overall reduction in welfare that doubles the existing welfare loss from adverse selection jel d82 g22 i13 a number of potential impediments stand in the way of efficient health insur ance markets the most noted of these is adverse selection first studied by akerlof 1970 and rothschild and stiglitz 1976 in insurance markets prices reflect the expected risk costs of the insured pool whether the reason is price regulation or private information when insurers cannot price all risk characteristics riskier consumers choose more comprehensive health plans this causes the equilibrium prices of these plans to rise and healthier enrollees to select less comprehensive coverage than they would otherwise prefer

estimating risk preferences from deductible choice we develop a structural econometric model to estimate risk preferences from data on deductible choices in auto insurance contracts we account for adverse selection by modeling unobserved heterogeneity in both risk claim rate and risk aversion we find large and skewed heterogeneity in risk attitudes in addition women are more risk averse than men risk aversion exhibits a u shape with respect to age and proxies for income and wealth are positively associated with absolute risk aversion finally unobserved heterogeneity in risk aversion is greater than that of risk and as we illustrate has important implications for insurance pricing

the impact of a public option in the u s health insurance market we develop a game theoretical framework to examine the implications of the introduction of a nonprofit public option in the u s health insurance market in this model heterogeneous consumers have to choose between two competing insurance plans one plan is offered by a profit maximizing private insurer the other by social welfare maximizing public option in equilibrium the distinct objectives of the two insurers induce adverse selection in consumer choice the public option covers the less healthy consumers yielding the more profitable segment of market to the private insurer however our empirical results suggest that both insurers will capture significant parts of the health insurance market jel i11 l10 l21 l32

insurer pricing and consumer welfare evidence from medigap this article examines the welfare impact of imperfect competition in the medicare supplement insurance medigap market two firms control nearly three fourths of the medigap market and premiums exceed claims by over 25 i find that a low price elasticity and consumers brand preferences lead firms to engage in substantial marketing and price above cost therefore the strategic behavior of insurers facing relatively inelastic demand is critical in explaining poor market performance i also find that insurers do not capture all of the rents in this market rents also accrue to actors who perform marketing functions including agents and brokers

the effect of risk preferences on household use of water treatment abstract this paper uses mexican household data on water treatment to provide empirical evidence on the relationship between risk preferences and use of preventive health measures the main finding is that in households with children more risk averse mothers are more likely to treat the water the household consumes this result suggests that while households may face external constraints on their behaviour personal preferences are also determinants of their choices

risk selection and heterogeneous preferences in health insurance markets with a public option conventional wisdom suggests that if private health insurance plans compete alongside a public option they may endanger the latter s financial stability by cream skimming good risks this paper argues that two factors may contribute to the extent of cream skimming i degree of horizontal differentiation between public and private options when preferences are heterogeneous ii whether contract design encourages choice of private insurance before information about risk is revealed i explore the role of these factors empirically within the unique institutional setting of the german health insurance system using a fuzzy regression discontinuity design to disentangle adverse selection and moral hazard i find no compelling support for extensive cream skimming of public option by private insurers despite their ability to fully underwrite risk a model of demand for private insurance supports the idea that heterogeneity in non pecuniary preferences and long term structure of private insurance contracts may be muting cream skimming in this setting

ethical commitment financial performance and valuation an empirical investigation of korean companies a variety of stakeholders including investors corporate managers customers suppliers employees researchers and government policy makers have long been interested in the relationship between the financial performance of a corporation and its commitment to business ethics as a subject of research the relations between business ethics and corporate valuation has yet to be thoroughly quantified and investigated this article is an effort to amend this inadequacy by demonstrating a statistically significant association between ethical commitment and corporate valuation measures consistent with anecdotal evidence we have found a significant association between the ethical commitment of korean companies and their valuation on the korean stock market however the result reveals that the association between ethical commitment and financial performance is not significantly supported

tariffs and the risk of invasive pest introductions in commodity imports theory and empirical evidence abstract we investigate using tariffs as corrective taxes to reduce risks from biological invasions due to expanded world trade a theoretical analysis indicates that higher tariffs have ambiguous effects on invasive pest introductions an econometric analysis using data from us department of agriculture surveillance screening indicates that tariff rates exert a negligible influence on expected invasive pest introductions from commodities currently facing positive tariffs removal of duty free status would decrease expected pest intercepts but undermine other goals of us trade policy and lower consumer welfare consumer welfare loss is on the order of 38 million per expected intercept avoided

direct evidence of risk aversion as a source of advantageous selection in health insurance abstract using the self stated degree of risk aversion regarding health from the gsoep we find some evidence for risk aversion being a source of advantageous selection risk averse men more often procure supplementary insurance for hospital visits despite needing the additional coverage less

a study of management perceptions of the impact of corporate social responsibility on organisational performance in emerging economies the case of dubai although a number of studies have shown that corporate social responsibility csr activities often lead to greater organisational performance in western developed economies researchers are yet to examine the strategic value of csr in emerging economies using survey data from 280 firms operating in dubai this study examines the link between csr activities and organisational performance the results show that csr has a positive relationship with all three measures of organisational performance financial performance employee commitment and corporate reputation these results reinforce the accumulating body of empirical support for the positive impact of csr on performance and challenge the dominant assumption that given the weak institutional framework in emerging economies csr activities drain resources and compromise firms competitiveness