growth patterns of the european venture capital industry abstract although the european venture capital industry has become nearly as important as its american counterpart little research has been done to describe its nature and importance this study gives in the first place an overview of the importance of the venture capital industry in the major european countries thereafter we look for funding and investment patterns in the different european countries we hypothesize that there is a difference between countries in which the venture capital industry is just emerging and those where the venture capital industry is since long established the data are mainly but not solely taken from the yearly statistics of the european venture capital association evca and cover the period 1984 1989 the characteristics we look at are 1 the sources of the funds flowing into the industry broken down with respect to investor type and geographical location of the investor and 2 the investments broken down with respect to investment stage using the evca definitions of the different stages geographical location degree of syndication and industrial sector of the investee companies in europe as a whole the most important group of investors are the banks 28 the pension funds 17 and the insurance companies 12 banks dominate the swiss industry 48 corporate investors dominate the german swedish and portuguese industries whereas these are nearly completely absent in denmark 2 ireland 4 and the united kingdom 5 eighty percent of all venture capital funds are raised domestically 7 in another european country and the remaining 13 in a non european country almost half of the european investments 44 are made in the expansion stage management buy outs mbos account for another 36 only 14 is invested in seed or start up companies much less than the 30 in the u s half of the venture capital investments in the united kingdom are buy outs the highest start up investment activity takes place in austria and spain on average more than half 54 of the invested amount in europe is syndicated but only 6 internationally while 10 is invested internationally we also search for similarities and dissimilarities in the characteristics of the sources of funds and of the investments the hypothesis is that a growth pattern can be distinguished determining the maturity of the venture capital industry in a particular country the characteristics that we think would discriminate most among the different industry stages are the importance of government agencies pension funds and insurance companies sources of funds of start up later stages or mbo investments and the percentage of international and syndicated investments cluster analyses show that there is a growth pattern but it is less clear than expected characteristics of mature industries are a bigger size relative to the gross national product of the country the presence of pension funds and insurance companies as investors in the industry the syndication of the deals and the absence of the government as an investor in the 1980s investments in management buy outs are mainly done by the mature industries no pattern can be distinguished for the investments in early or later stages the major implication from this study is the fact that the european venture capital industry cannot be approached as a single undifferentiated industry each country has its own structures institutions and policies which make the venture capital industries in the different countries have unique characteristics moreover the european venture capital industry has different characteristics than the american industry this has to be taken into account when comparing both industries

the influence of design dimensions on stated choices in an environmental context discrete choice experiments are increasingly used in the context of environmental valuation however there is still little known about the influence of the complexity of the choice task on model outcomes in this paper we investigate task complexity in terms of the design dimensionality of the choice experiment by systematically varying the number of choice sets alternatives attributes and levels as well as the level range we largely follow a design of designs approach originally introduced in transportation first we analyse the influence of the design dimensionality on participants dropout behaviour finding that the probability to drop out of the survey is influenced by socio demographic characteristics and increases with the number of choice sets attributes as well as with designs having five alternatives second we investigate the impact of the design dimensions on stated choices by estimating a multinomial logit model and heteroskedastic logit models results show that the error term variance is influenced by socio demographic characteristics as well as by all design dimensions moreover we find that accounting for the impact of the design dimension on the error variance does not significantly change willingness to pay estimates

empirical evidence on the relation between stock option compensation and risk taking abstract we examine whether executive stock options esos provide managers with incentives to invest in risky projects for a sample of oil and gas producers we examine whether the coefficient of variation of future cash flows from exploration activity our proxy for exploration risk increases with the sensitivity of the value of the ceo s options to stock return volatility eso risk incentives both eso risk incentives and exploration risk are treated as endogenous variables by adopting a simultaneous equations approach we find evidence that eso risk incentives has a positive relation with future exploration risk taking additional tests indicate that eso risk incentives exhibits a negative relation with oil price hedging in a system of equations where eso risk incentives and hedging are allowed to be endogenously determined overall our results are consistent with esos providing managers with incentives to mitigate risk related incentive problems

preference anomalies preference elicitation and the discovered preference hypothesis there is wide ranging evidence much of it deriving from economics experiments of anomalies in behaviour that challenge standard preference theories this paper explores the implications of these anomalies for preference elicitation methods because methods that are used to inform public policy such as contingent valuation are based on standard preference theories their validity may be called into question by the anomaly data however on a new interpretation these anomalies do not contradict standard theory but are errors in stated preference that can be expected to disappear as people become more experienced in relevant decision environments we explore the evidence for this interpretation and what implications follow for preference elicitation methodology

treatment of don t know responses in contingent valuation surveys a random valuation model abstract this paper provides a utility theoretic interpretation of don t know dk responses in contingent valuation surveys using a referendum elicitation procedure the random valuation model in this paper assumes that each respondent of a contingent valuation survey has an implicit valuation distribution rather than a single true value as traditionally assumed in his her mind if an offered referendum bid is not clearly different from the mean value of one s valuation distribution the respondent may give a dk answer to the cv referendum question based on this model a maximum likelihood procedure is proposed for estimating respondents willingness to pay for a nonmarket good with referendum contingent valuation data which include dk responses an empirical illustration of this estimation procedure is also provided

treating respondent uncertainty in contingent valuation a comparison of empirical treatments this research examines the impact of uncertainty on contingent valuation responses using 1 a survey of canadian landowners about willingness to accept compensation for converting cropland to forestry and 2 a survey of swedish residents about willingness to pay for forest conservation five approaches from the literature for incorporating respondent uncertainty are used and compared to the traditional random utility model with assumed certainty the results indicate that incorporating uncertainty has the potential to increase fit but could introduce additional variance while some methods for uncertainty can be an improvement over traditional approaches it is imperative to exercise caution when making systematic judgments about the effect of uncertainty on contingent valuation responses

internationalization of western venture capitalists into emerging markets risk assessment and information in india this paper provides the first analysis of the internationalization of venture capital firms through an examination of risk assessment and information usage by firms in india personal interviews were conducted with executives in 31 84 of the active venture capital firms the paper extends previous research by comparing perceptions of the behavior of domestic venture capital firms in india foreign primarily u s venture capital firms in india and u s venture capital firms in their domestic markets foreign firms in india place significantly greater emphasis on product market factors and accountants reports than domestic firms in india they place significantly less emphasis on financial contributions of management in assessing risk and own due diligence and information from entrepreneurs than do u s firms in their domestic market they make more use of information from trade publications and relating to production capacity and technology and information from accountants reports than do domestic venture capital firms in india the evidence is consistent with venture capital firms adapting to local market conditions rather than implementing recipes from their domestic markets

reliability of individual valuations of public and private goods choice consistency response time and preference refinement we examined the reliability of a large set of paired comparison value judgments involving public goods private goods and sums of money as respondents progressed through a random sequence of paired choices they were each given their response time decreased and they became more consistent apparently fine tuning their responses suggesting that respondents tend to begin a hypothetical value exercise with relatively imprecise preferences and that experience in expressing preference helps reduce that imprecision reliability was greater for private than for public good choices and greater for choices between a good and a monetary amount than for choices between two goods however the reliability for public good choices was only slightly lower than for the private goods published by elsevier b v

preference refinement in deliberative choice experiments for ecosystem service valuation choice experiments have gained considerable popularity in ecosystem service valuation in a one shot survey respondents are faced with a strenuous task asking them to discover and monetize their preferences for often unfamiliar ecosystem services in a previously unknown hypothetical market situation we present a deliberative choice experiment that aims to generate well rationalized value estimates for policy advice two aspects of deliberation discussion and time to reflect are examined in terms of their effect on preference refinement we find more comprehensive choice motives after deliberation as well as indications for preference adjustment and a slight increase in choice certainty jel q51 q57

towards a fair constructive and consistent criticism of all valuation languages comment on kallis et al 2013 we provide critical notes to the paper by kallis et al 2013 on monetary valuation we evaluate the four criteria they propose for assessing valuation studies we argue that no clear distinction is made between monetary valuation and pricing instruments the selected criteria are more relevant to assessing policy than monetary valuation the examples provided are not representative of the diversity of valuation studies encountered in the literature moreover no clear examples are provided of where valuation and associated cost benefit analysis of environmental policy go wrong we plea for a more fair constructive and consistent criticism of all valuation languages and offer relevant issues for consideration

hedging financing and investment decisions theory and empirical tests abstract in this paper we theoretically and empirically examine the interaction between hedging financing and investment decisions a simple equilibrium model with costly financial distress suggests that as firms become more efficient at risky investments vis a vis low risk investments they will borrow less invest more in risky assets and hedge more the model also predicts a positive relationship between hedging and leverage a result consistent with debt capacity arguments we test the model empirically using a simultaneous equations framework to investigate the determinants of firm level hedging financing and investing decisions the results strongly support the hypothesis that the hedging financing and investment decisions are jointly determined in addition we find strong support for the central hypothesis that firms more efficient investing in risky technologies more aggressively hedge and use less debt financing in order to maximize their comparative advantage

the founding rate of venture capital firms in three european countries 1970 1990 abstract in this article the sectorial and environmental forces that facilitate or inhibit the creation of venture capital companies are studied in the three european countries where the industry is most developed the united kingdom france and the netherlands the focus is on the start up phase of the industry the period from 1970 1990 the founding of firms can be studied on four different levels entrepreneurial organizational population and macroeconomic in this study a population approach is taken this implies that we do not attempt to explain any single founding but rather the aggregate number of foundings that occur in an industry in a certain period in a certain country according to the organizational ecology theory the population density i e the total number of organizations in a population is the major environmental factor that affects the founding rate through two processes initially when the density is low each founding eases new foundings because the simple prevalence of a form tends to give it legitimacy thereby spurring imitations the training ground for qualified personnel grows and the supporting networks are widened and strengthened the legitimation process does not grow forever once enough organizations of a certain kind exist legitimation attains a ceiling as the number of organizations increases the second process becomes dominant the competition for resources raw material personnel customers capital grows leading to a negative relationship between the density and the founding rate everything else being equal thus the founding rate declines as the number of organizations increases once a threshold is reached the major hypothesis that is tested here is that the population density has an inverted u shaped effect on the founding rate of venture capital organizations in addition the effect that the venture capital firms of the three countries have on each other is studied two populations are said to interact when the populations affect each other s growth rate but the interaction need not be symmetrical the second hypothesis tested in this study is that populations in different countries have a positive effect on each other and not a competitive effect because the legitimating effect does not halt at geographical borders yet the competition for resources capital people deals among geographically different populations is limited in this industry this study is valuable because until now the existing ecological studies focus on long established industries testing the theory in a young industry that emerged only in the seventies in europe has merits in its own right because the technological progress after the second world war has altered the organizational environment tremendously the communication and transportation revolutions may have especially influenced the way in which organizations interact with each other and with the environment the venture capital firms are furthermore special in the way they are organized with the dual structure of management company and investment fund s if the theory holds in this young industry important additional evidence will be given that the theory is truly applicable to populations of all types in any time period and in any society carroll 1988 p 18 finally this study extends the theory by giving evidence on how industries in different countries may interact upon each other we show empirically that the major factor that influences the overall founding rate in each of the three countries is the density of the industry i e the number of organizations that already exist in the industry this confirms the population ecology theory when the density is low adding a new organization to the industry raises the probability of a subsequent founding when the density is high the contrary is true the institutional changes considered here such as the establishment of tax transparent legal entities or state guarantees against losses in the netherlands and the establishment of secondary stock markets do not significantly influence the founding rate in any of the three countries moreover the dutch foundings are positively influenced by the british density and the french foundings by the dutch density the british foundings are on the contrary negatively influenced by the dutch density the competitive effects between the netherlands and the u k are thus more important than initially thought the relationship between the density and the founding rate is the strongest most consistent and most significant relationship found in this study thus the number of organizations that already exist in an industry is very important in explaining the founding of organizations apart from for example the personality of the entrepreneur or from the networks in which he or she is involved this indicates that when trying to explain the founding of organizations the industry structure and more specifically the number of organizations that exist at the moment of the founding cannot be ignored

r d and internal finance a panel study of small firms in high tech industries since joseph schumpeter economists have argued that internal finance should be an important determinant of r d expenditures yet almost without exception previous empirical studies have not found evidence of such a relation using newly available data the authors investigate this puzzle with a panel of 179 small firms in high tech industries under each estimation strategy they employ the authors find an economically large and statistically significant relationship between r d investment and internal finance their results are consistent with the view that because of capital market imperfections the flow of internal finance is the principal determinant of the rate at which small high tech firms acquire technology through r d copyright 1994 by mit press

choice certainty and consistency in repeated choice experiments the main objective of this study is to examine how repeated choice affects preference learning in stated preference experiments we test different hypotheses related to preference learning by analyzing response patterns and asking respondents in a choice experiment to report their experienced certainty when going through the choice tasks in a split sample test we show that follow up choice certainty questions are procedural invariant the self reported certainty results indicate that learning occurs but econometric testing procedures do not identify any significant impact of learning effects on parameter estimates or variance across choice tasks additional tests of choice consistency suggest that preferences in the choice experiment are stable and coherent

alternative approaches for incorporating respondent uncertainty when estimating willingness to pay the case of the mexican spotted owl abstract this paper explores the sources and patterns of respondents uncertainty regarding their willingness to pay wtp and presents alternative approaches for incorporating this uncertainty into estimation of the logit model recently proposed approaches are compared to methods proposed in this paper which allows for incorporation of uncertainty regarding both yes and no responses these approaches are evaluated by comparing the goodness of fit and variability of mean wtp extreme recoding of uncertain yes responses as no responses reduces the logit goodness of fit and the precision of the wtp estimate incorporating the degree of uncertainty of yes responses results in the highest goodness of fit and the smallest variability of mean wtp among the various models addressing uncertainty a regression model is used to determine the significant determinants of respondent uncertainty

public versus private venture capital seeding or crowding out a pan european analysis abstract this paper analyzes the relationship between public and private sources of venture capital in europe and the development of the industry controlling for characteristics of the legal systems in 15 european countries over the period 1990 1996 large public participation is correlated with smaller vc industries but analyses do not support the view that public venture capitalists are acting to seed the industry or that are they crowd out private funds on the contrary public involvement seems to cause greater amounts of money to be invested in the industry as a whole we argue that the effects of public intervention whatever the motives are real and probably result from demonstrating sanctioning the social merit of venture capital and from signaling an enduring commitment to it

determinants of required return in venture capital investments a five country study abstract using two complementary theoretical perspectives we develop hypotheses regarding the determinants of the return required by venture capitalists and test them on a sample of over 200 venture capital companies vccs located in five countries consistent with resource based theory we find that early stage specialists require a significantly higher return than other vccs when investing in later stage ventures consistent with financial theory we find that acquisition buyout specialists require a significantly lower return than other vccs when investing in expansion companies furthermore in comparison to specialists highly stage diversified vccs require a significantly higher return for early stage investments independent vccs require a higher rate of return than captive or public vccs in general higher required returns are associated with vccs who provide more intensity of involvement have shorter expected holding period of the investment and being located in the us or uk in comparison to those in france belgium and the netherlands

a comparison of alternative certainty calibration techniques in contingent valuation abstract a field test of two types of certainty calibration techniques in contingent valuation of public lands indicated that a 10 point certainty scale reduced wtp estimates by about half adjusting for uncertainty via a not sure option did not reduce wtp estimates but the variance increased there are several differences between these two ways of accounting for respondents uncertainty which may suggest why they provide different wtp value estimates and variances

reference dependence effects on wta and wtp value functions and their disparity in this study we investigate two reference dependence effects in a choice experiment the first is the effect of the well known distinction between gains and losses the second is the effect of changing the reference value on willingness to pay wtp and willingness to accept wta the latter has to our knowledge not been studied before we hypothesize that there are differences between wta and wtp and that both value functions and their disparity are affected by the absolute value of the reference point we test our hypotheses using a choice experiment with trade offs between changes in flood probabilities and costs the choice experiments elicit wtp and wta using two flood probability reference values yielding four separate value functions our findings show that a substantial wta wtp disparity exists and that this disparity increases when moving away from the reference point also both wta and wtp value functions are affected by the flood probability reference value and the wta wtp disparity increases when the flood probability reference point increases both findings suggest that welfare effects caused by changes in public good provision depend not only on the direction of change loss aversion but also the reference value moreover our results show that the latter effect is larger for losses than for gains we introduce the concept of reference point updating as a possible explanation for these findings

global capital flows and financing constraints firms often cite financing constraints as one of their primary obstacles to investment global capital flows by bringing in scarce capital may ease the financing constraints of host country firms but if incoming foreign investors borrow heavily from domestic banks foreign direct investment may exacerbate financing constraints by crowding host country firms out of domestic capital markets combining a unique cross country firm level panel with time series data on restrictions on international transactions and capital flows harrison love and mcmillan find that different measures of global flows are associated with a reduction in firm level financing constraints first the authors show that one type of capital inflow foreign direct investment is associated with a reduction in financing constraints second they test whether restrictions on international transactions affects the financing constraints of firms the results suggest that only one type of restriction those on capital account transactions negatively affects firms financing constraints the authors also show that multinational firms are not financially constrained and do not appear to be sensitive to the level of foreign direct investment this implies that foreign direct investment eases financing constraints for non multinational firms finally the authors show that 1 foreign direct investment only eases financing constraints in the non g7 countries and 2 other kinds of flows such as portfolio investment have no impact on financing constraints

choice consistency and preference stability in test retests of discrete choice experiment and open ended willingness to pay elicitation formats this study tests the temporal stability of preferences choices and willingness to pay wtp values using both discrete choice experiment dce and open ended oe wtp elicitation formats the same sample is surveyed three times over the course of two years using each time the same choice sets choice consistency is positively correlated with choice certainty and choice complexity the impact of choice complexity fades away in time most likely as a result of learning and preference refinement although the oe wtp values remain stable over a time period of 2 years as in previous stated preference studies dce based wtp measures differ significantly suggesting their use in benefits transfer may be limited

gender specific starting point bias in choice experiments evidence from an empirical study abstract in this paper we test whether preferences and willingness to pay estimates obtained in a choice experiment study are susceptible to starting point bias as is often the case in dichotomous choice contingent valuation studies on the basis of a multinomial probit model we find that preferences are indeed susceptible to starting point bias in a split sample design our results suggest that varying the price levels displayed in a so called instructional choice set presented prior to the actual preference eliciting choice sets significantly impacts respondents preferences and willingness to pay for protecting danish nature areas from new motorway development in particular our results show that the bias is gender specific only female respondents are significantly affected results further reveal that the impact of the starting point bias decays as respondents evaluate more and more choice sets this supports the discovered preference hypothesis and on the basis of this we suggest a number of ways to potentially mitigate the starting point bias

real investment implications of employee stock option exercises this paper examines a real cost of awarding employee stock options based on the observation that managers are extremely concerned about earnings per share dilution in equity related compensation we predict and find that firms experiencing significant employee stock option eso exercises shift resources away from real investments towards the repurchase of their own stocks we further find weak evidence of a decline in subsequent firm performance as measured by return on assets for several years following the cut in discretionary investments as a result of stock option exercises though this result is sensitive to the metric used to measure performance collectively our findings indicate that eso exercises potentially impose a real cost on the firm in terms of foregone investment opportunities

as time goes by examination of temporal stability across stated preference question formats we evaluate the temporal stability of willingness to pay values obtained from two identical stated preference surveys undertaken in 2004 and 2012 the surveys employ two discrete choice elicitation formats to value reductions in two health endpoints related to tap water consumption and are explicitly designed to make direct comparisons between formats we find no significant differences in real willingness to pay between the two surveys for either format a result that is robust to the structure of heterogeneity used to model respondent preferences findings lend support at least within the context of tap water quality to the temporal transfer of nonmarket benefits over extended time periods

estimation of the public benefits of urban water supply improvements in ethiopia a choice experiment improving existing drinking water supply services in developing countries depends crucially on available financial resources cost recovery rates of these services are typically low while demand for more reliable services is high and rapidly growing most stated preference based demand studies in the developing world apply the contingent valuation method and focus on rural areas this study examines household willingness to pay wtp for improved water supply services in a choice experiment in an urban area in ethiopia a country with the lowest water supply coverage in sub saharan africa the design of the choice experiment allows estimation of the value of both drinking water supply reliability and safety the estimated economic values can be used in policy appraisals of improved supply investment decisions despite significant income constraints households are willing to pay up to 80 extra for improved levels of water supply over and above their current water bill women and households living in the

investment cash flow sensitivities are useful a comment on kaplan and zingales arecent paper in this journal by kaplan and zingales reexamines a subset of erms from work of fazzari hubbard and petersen and criticizes the usefulness of investment cash eow sensitivities for detecting enancing constraints we show that the kaplan and zingales theoretical model fails to capture the approach employed in the literature and thus does not provide an effective critique moreover we describe why their empirical classiecation system is eawed in identifying both whether erms are constrained and the relative degree of constraints across erm groups we conclude that their results do not support their conclusions about the usefulness of investment cash eow sensitivities in a recent paper in this journal kaplan and zingales 1997 hereinafter kz argue that investment cash eow sensitivities do not provide useful evidence about the presence of enancing constraints because kz use a subset of the same erms and the same regressions as fazzari hubbard and petersen 1988 hereinafter fhp and claim page 176 that fhp can legitimately be considered the parent of all papers in this literature it is appropriate that we respond based on a simple theoretical model kz reach the provocative conclusion page 211 that the investment cash eow sensitivity criterion as a measure of enancial constraints is not well grounded in theory in section i we show that the kz model does not capture the theoretical approach employed in fhp and many subsequent studies most of the kz paper attempts to show that empirical investment cash eow sensitivities do not increase monotonically with the degree of enancing constraints within the 49 low dividend erms from the fhp sample in section ii we explain why the kz classiecation of the degree of constraints is eawed in identifying both whether or not erms are constrained absolute constraints as well as the relative degree of constraints across erms as a result we argue in section iii that there is no expected ex ante pattern for the

tough and easy choices testing the influence of utility difference on stated certainty in choice in choice experiments respondents in stated preference studies may be uncertain about their preferences for the good presented to them inspired by wang j environ econ manag 32 219 232 1997 we hypothesize that respondents stated certainty in choice increases with the utility difference between the alternative chosen and the best alternative to that we test this hypothesis using data from two independent choice experiments both focusing on nature values in modelling respondents self reported certainty in choice we find evidence that the stated level of certainty increases significantly as utility difference in choice sets increases in addition stated certainty increases with income furthermore there is some evidence that male respondents are inherently more certain in their choices than females and a learning effect may increase stated certainty we find evidence of this in the first study where the good is described in rather broad and generic terms but not in the second study where a more specific description of the good is used

learning and fatigue effects revisited investigating the effects of accounting for unobservable preference and scale heterogeneity using multiple choice tasks per respondent in discrete choice experiment studies increases the amount of available information however respondents learning and fatigue may lead to changes in observed utility function preference taste parameters as well as the variance in its error term scale they need to be controlled to avoid potential bias a sizable body of empirical research offers mixed evidence in terms of whether these ordering effects are observed we point to a significant component in explaining these differences we show how accounting for unobservable preference and scale heterogeneity can influence the magnitude of observed ordering effects

discrete choice under preference uncertainty an improved structural model for contingent valuation abstract this paper is concerned with discrete choice contingent value estimation in the presence of response errors we attempt to extend the theoretical frameworks developed by hanemann 1984 amer j agric econom 66 332 341 and cameron 1988 j environ econom management 15 355 379 by introducing preference uncertainty with individual respondents we assume that respondents have incomplete knowledge about their true valuation of a nonmarket resource and thus may give wrong yes no answers on whether or not to pay a given bid amount for the resource a post decisional confidence measure for each observed yes no answer is elicited for characterizing the degree of preference uncertainty with the help of this confidence measure we develop an improved structural model for deriving value estimates data from a forest environment valuation survey are used for the empirical estimations

cross border private equity syndication institutional context and learning abstract private equity pe has become an increasingly international phenomenon but there is a lack of research that looks at the process by which pe firms invest across borders we aim to fill this gap in the literature by examining the role of institutional context and organizational learning as determinants of cross border pe syndication we examine these issues by studying the international expansion by later stage uk pe investors into continental europe over the period 1990 to 2006 our results indicate that institutional context in terms of the number of pe firms in the local environment and the presence of investment bankers in the local market and organizational learning in terms of the pe firm s experience in the host country the pe firm s multinational experience and the number of investment managers per portfolio company but not the presence of local offices are significantly related to the use of cross border syndicates implications for theory and practice are suggested

investment default propensity score and cash flow sensitivity in six eu member states evidence based on firm level panel data abstractusing a panel data set covering six european countries and 119700 firms 582153 observations over the period 2008 2013 we analyse the cash flow sensitivity of investment spending as most

stability of willingness to pay for coastal management a choice experiment across three time periods a key assumption of stated preference methods is that individuals have well formed preferences that are robust over time both the discovered and constructed preference perspectives imply this is not necessarily the case there can be a large situational component to expressed preferences that add to the uncertainty of sampling error most non market valuation studies only collect data from one point in time so the degree of temporal variability cannot be tested test retest studies that provide data from two points in time generally find significant differences in preference structure and willingness to pay wtp in this study we test stability of wtp for beach erosion management using a fully ranked discrete choice experiment survey with not one but two retests over a six month period we find that stability does not improve with the additional repetition as the preference discovery hypothesis implies it might wtp confidence intervals overlap but the models are significantly different at each point in time even after allowing for variation in choice error either the survey did not facilitate sufficient preference discovery or preferences were reconstructed however respondents with high scores of self reported certainty in their choices in the first survey had significantly more stable wtp estimates

why does the law matter investor protection and its effects on investment finance and growth investor protection is associated with greater investment sensitivity to q and lower investment sensitivity to cash flow finance plays a role in causing these effects in countries with strong investor protection external finance increases more strongly with q and declines more strongly with cash flow we further find that q and cash flow sensitivities are associated with ex post investment efficiency investment predicts growth and profits more strongly in countries with greater q sensitivities and lower cash flow sensitivities the paper s findings are broadly consistent with investor protection promoting accurate share prices reducing financial constraints and encouraging efficient investment in this paper we study how investor protection affects firm level resource allocations our analyses center on two hypotheses our first hypothesis is that stock prices more strongly predict both investment and external finance in countries with stronger investor protection laws tobin 1969 shows in a frictionless setting that marginal q predicts real investment in this framework high marginal q firms should all else equal also raise the most capital as these firms invest more we use average q q as a proxy for marginal q and test whether investment and external finance are more sensitive to q in countries with stronger investor protection laws

dynamic learning and context dependence in sequential attribute based stated preference valuation questions a hybrid stated preference model is presented that combines the referendum contingent valuation response format with an experimentally designed set of attributes a sequence of valuation questions is asked to a random sample in a mailout mail back format econometric analysis shows greater discrimination between alternatives in the final choice in the sequence and the vector of preference parameters shifts lead and lag choice sets have a structural influence on current choices and unobserved factors induce positive correlation across the responses these results indicate that people learn about their preferences for attributebased environmental goods by comparing attribute levels across choice sets

learning design contingent valuation ldcv noaa guidelines preference learning and coherent arbitrariness we extend the contingent valuation cv method to test three differing conceptions of individuals preferences as either i a priori well formed or readily divined and revealed through a single dichotomous choice question as per the noaa cv guidelines k arrow r solow p r portney e e leamer r radner h schuman report of the noaa panel on contingent valuation fed reg 58 1993 4601 4614 ii learned or discovered through a process of repetition and experience j a list does market experience eliminate market anomalies q j econ 2003 41 72 c r plott rational individual behaviour in markets and social choice processes the discovered preference hypothesis in k arrow e colombatto m perleman c schmidt eds rational foundations of economic behaviour macmillan london st martin s new york 1996 pp 225 250 iii internally coherent but strongly influenced by some initial arbitrary anchor d ariely g loewenstein d prelec coherent arbitrariness stable demand curves without stable preferences q j econ 118 1 2003 73 105 findings reject both the first and last of these conceptions in favour of a model in which preferences converge towards standard expectations through a process of repetition and learning in doing so we show that such a learning design cv method overturns the stylised facts of bias and anchoring within the double bound dichotomous choice elicitation format

working capital and fixed investment new evidence on financing constraints this article presents new tests for finance constraints on investment by emphasizing the often neglected role of working capital as both a use and a source of funds the coefficient of endogenous working capital investment is negative in a fixed investment regression as expected if working capital competes with fixed investment for a limited pool of finance this finding addresses a criticism of previous research on finance constraints that cash flows may simply proxy shifts in investment demand in addition previous studies may have underestimated the impact of finance constraints on growth and investment because firms smooth fixed investment in the short run with working capital

designing choice sets for stated preference methods the effects of complexity on choice consistency abstract we vary the complexity of choice sets used in stated preference methods to evaluate the impact on choice consistency we define five measures of complexity that capture either the amount of information or the correlational structure of information in a choice set using these measures as randomly assigned treatments in a large experiment we analyze the consistency of respondents choices using a heteroskedastic multinomial logit model we find that i all of our measures of choice set complexity affect choice consistency ii changes in the correlational structure of information have the largest impact on choice consistency and iii choice complexity significantly distorts welfare estimates our results confirm economists initial worry that moving from contingent valuation to conjoint methods will increase complexity induced choice inconsistency however our analysis also shows that these negative impacts may be mitigated if precautions are taken at the design and estimation stages of stated preference methods

controlling for the effects of information in a public goods discrete choice model this paper develops a reduced form method of controlling for differences in information sets of subjects in public good discrete choice models using stated preference data the main contribution of our method comes from accounting for the effect of information provided during a survey on the mean and the variance of individual specific scale parameters in this way we incorporate both scale heterogeneity as well as observed and unobserved preference heterogeneity to investigate differences across and within information treatments our approach will also be useful to researchers who want to combine stated preference data sets while controlling for scale differences we illustrate our approach using the data from a discrete choice experiment study of a biodiversity conservation program and find that the mean of individual specific scale parameters and its variance in the sample is sensitive to the information set provided to the respondents

corporate structure liquidity and investment evidence from japanese industrial groups this paper presents evidence suggesting that information and incentive problems in the capital market affect investment we come to this conclusion by examining two sets of japanese firms the first set has close financial ties to large japanese banks that serve as their primary source of external finance and are likely to be well informed about the firm the second set of firms has weaker links to a main bank and presumably faces greater problems raising capital investment is more sensitive to liquidity for the second set of firms than for the first set the analysis also highlights the role of financial intermediaries in the investment process

position dependent order effects on the prediction of consumer preferences in repeated choice experiments abstractusing stated choice data collected by experimental design with repeated choice tasks this study developed an approach to quantify the position dependent order effects on the prediction of

changing with the tide semiparametric estimation of preference dynamics we contrast the discovered preference hypothesis against the theory of coherent arbitrariness in a split sample stated choice experiment on flood risk exposure a semiparametric local multinomial logit model is developed as an alternative to the swait and louviere 1993 test procedure controlling for preference dynamics within and between samples the proposed model supports the discovered preference hypothesis by means of a decaying starting point bias the swait and louviere 1993 test procedure reaches a different conclusion it rejects the assumption of stable preferences but most preference dynamics tend to be smoothed out causing a more erratic pattern of preference dynamics

coherent arbitrariness stable demand curves without stable preferences economic theories of valuation generally assume that prices of commodities and assets are derived from underlying fundamental values for example in finance theory asset prices are believed to reflect the market estimate of the discounted present value of the asset s payoff stream in labor theory the supply of labor is established by the tradeoff between the desire for consumption and the displeasure of work finally and most importantly for this chapter consumer microeconomics assumes that the demand curves for consumer products chocolates cds movies vacations drugs and so forth can be ultimately traced to the valuation of pleasures that consumers anticipate receiving from these products because it is difficult as a rule to measure fundamental values directly empirical tests of economic theory typically examine whether the effects of changes in circumstances on valuations are consistent with theoretical prediction for example whether labor supply responds appropriately to a change in the wage rate whether compensated demand curves for commodities are downward sloping or whether stock prices respond in the predicted way to share repurchases however such comparative static relationships are a necessary but not sufficient condition for fundamental valuation e g summers 1986 becker 1962 was perhaps the first to make this point explicitly when he observed that consumers choosing commodity bundles randomly from their budget set would nevertheless produce downward sloping demand curves

exploring group dynamics in deliberative choice experiments abstract deliberative monetary valuation has emerged as a promising alternative to conventional stated preference studies of ecosystem services it promises to give respondents a better basis for decision making by exposing them to a more diverse set of knowledge arguments and opinions through group discussion however under certain conditions small groups may fail to effectively pool the individual knowledge of their members this paper examines the impact of the initial distribution of individual preferences in discussion groups on the outcome of deliberative choice experiments drawing on a deliberative monetary valuation study of forest ecosystem services in west saxony germany it is shown that the initial preference distribution in groups influences both the diversity of arguments exchanged during group discussions and respondents consideration of the costs of environmental policies furthermore results indicate that respondents post discussion willingness to pay is affected by the initial preference distribution in groups though these changes were not statistically significant the choice certainty of respondents was found to remain largely unaffected overall the empirical findings of this study provide preliminary evidence about the need to conduct future deliberative monetary valuation studies with groups with heterogeneous initial preferences as this may provide respondents with a more complete set of decision relevant information

dollars dollars everywhere nor any dime to lend credit limit constraints on financial sector absorptive capacity we exploit an unexpected inflow of liquidity in an emerging market to study how capital is intermediated to firms we find that backward looking credit limit constraints imposed by banks make it difficult for firms to borrow despite readily available bank liquidity healthy aggregate demand and a sharply falling cost of capital the resulting aggregate failure to extend and retain capital in the economy suggests that agency costs that force banks to rely on sticky balance sheet based credit limits prevent emerging economies from effectively intermediating capital

are fast responses more random testing the effect of response time on scale in an online choice experiment scepticism over stated preference surveys conducted online revolves around the concerns over professional respondents who might rush through the questionnaire without sufficiently considering the information provided to gain insight on the validity of this phenomenon and test the effect of response time on choice randomness this study makes use of a recently conducted choice experiment survey on ecological and amenity effects of an offshore windfarm in the uk the positive relationship between self rated and inferred attribute attendance and response time is taken as evidence for a link between response time and cognitive effort subsequently the generalised multinomial logit model is employed to test the effect of response time on scale which indicates the weight of the deterministic relative to the error component in the random utility model results show that longer response time increases scale i e decreases choice randomness this positive scale effect of response time is further found to be non linear and wear off at some point beyond which extreme response time decreases scale while response time does not systematically affect welfare estimates higher response time increases the precision of such estimates these effects persist when self reported choice certainty is controlled for implications of the results for online stated preference surveys and further research are discussed

generating electricity with forest biomass consistency and payment timeframe effects in choice experiments abstract this paper presents a choice experiment analyzing the consumers preferences towards a policy for replacing conventional electricity with electricity generated from forest biomass the results show that consumers specially prefer the effects related to the lower risk of forest fires and to the decrease in pressure on non renewable resources the article also presents a methodological test in relation to the payment timeframe and its effect on marginal willingness to pay and consistency of responses using choice experiments the most frequent and realistic payments are associated with lower presence of inconsistent responses finally we cannot reject the null hypothesis of no effects of payment timeframe on marginal willingness to pay

venture capital in western europe abstract western europe is in the process of an entrepreneurial renaissance an integral part of this renaissance is the emergence of a venture capital industry in europe although the venture capital institution in europe is very much modeled along the lines of its american counterpart it is significantly smaller in size both in absolute terms as well as in relation to the size of the economy substantial differences in venture capital activity are also found to exist within europe it is most prevaient in the united kingdom france and netherlands surprisingly it is less developed in west germany particularly given the size of this country s economy venture capital in western europe shares some characteristics with that in the united states its investment focus is in high technology and syndication between funds is common unlike the united states however banks are a major source of venture capital funds surprisingly in spite of the economic integration to which the european community aspires the mobility of venture capital across national boundaries is low the authors try to explain differences in venture capital activity in several countries of the european community by examining four aspects of each country s environment in particular the size of the technology sector the cultural influence on entrepreneurial risk taking the government s policy to stimulate risk capital and entrepreneurship and finally the ability of venture backed firms to turn to publicly traded markets as a source of future financing one common factor shared by the three countries with the highest level of venture capital activity is the presence of a secondary stock market geared to the needs of a small relatively new venture contemplating an initial public offering the unlisted securities market in the united kingdom the seconde marche in france and the parallel market in the netherlands serve these needs and provide the mechanism by which venture capitalists can liquidate their equity position after the venture is quoted on these financial markets to the venture it provides access to public financing for funding continued growth in the united kingdom and netherlands the business enterprise has historically been regarded as a tradeable entity and hence the concept of ownership by passive investors is well accepted in france where this is a relatively recent phenomenon the government has played a strong role in stimulating an interest in stock market investing in general it has also created some extremely attractive fiscal incentives for investors in venture capital funds

landowner preferences for agri environmental agreements to conserve the montado ecosystem in portugal landowner preferences are elicited for different contractual agri environmental agreements aea using choice experiments in the portuguese montados an agro forestry ecosystem with high conservation value the choice experiment is developed with the help of biologists from local environmental authorities and builds upon existing aea in the portuguese rural development program proder implemented at natura 2000 conservation sites current uptake rates of aea for montado conservation are very low the study s main objective is to assess how varying the institutional economic terms and conditions underlying current contract design can increase this uptake we find demand for aea inside and outside the currently designated protection areas but there exist clear trade offs between willingness to accept financial compensation and opportunity costs measured through varying cattle and oak tree density levels also contract duration plays a significant role minimum willingness to accept financial compensation for a hypothetical scenario representing the current contract conditions in the region is more than six times higher than the actual payment levels under the existing agri environmental agreements