understanding the penalties associated with corporate misconduct an empirical examination of earnings and risk we examine the relationship between allegations of corporate misconduct and changes in profitability and risk of the alleged offender profitability is measured as reported earnings and analysts earnings forecasts risk is measured as stock return volatility and concordance among analysts forecasts decreases in earnings and increases in risk are found to accompany allegations of misconduct and although the results are somewhat sensitive to the earnings and risk metrics used the changes are found to be consistently greater for related party offenses the importance of reputational penalties is underscored by analysis of the association between allegation related changes in firm value and changes in earnings and risk

the role of market forces in assuring contractual performance the conditions under which transactors can use the market repeat purchase mechanism of contract enforcement are examined increased price is shown to be a means of assuring contractual performance a necessary and sufficient condition for performance is the existence of price sufficiently above salvageable production costs so that the nonperforming firm loses a discounted steam of rents on future sales which is greater than the wealth increase from nonperformance this will generally imply a market price greater than the perfectly competitive price and rationalize investments in firm specific assets advertising investments thereby become a positive indicator of likely performance

effects of illegal behavior on the financial performance of us banking institutions this study investigates whether financial performance is affected by corporate violations of laws and regulations in a sample of 128 publicly traded banks that were subject to enforcement actions by us regulatory authorities over a 20 year period we observed a significant negative market reaction pursuant to the violations however the market reaction did not vary meaningfully in accordance with the severity or repetitiveness of the violation the results of this study are in conformity with previous research on industries other than banking notably with regard to negative market reaction this confirms that shareholders in the banking industry react in a manner considerably similar to their counterparts in other industries

operational and reputational risk in the european banking industry the market reaction to operational risk events abstract in this paper i study the stock market reaction to the announcement of operational losses in european financial companies accounting for the effect of the nominal loss amount allows for an examination of the reputational damage caused by operational loss events the analysis is based on a sample of 136 operational losses stemming from a database of the association of german public sector banks bundesverband offentlicher banken vob all operational loss events affect european financial institutions with settlements reported by the press between january 2000 and december 2009 in line with previous literature i find a significant negative stock price reaction to the first press announcement of operational losses results show that the stock market also reacts negatively to the settlement announcement as losses are confirmed and the loss amount is known even after accounting for the nominal loss amount cumulative abnormal returns are negative following the date of the initial news article and the settlement date indicating damages to the reputation of the firm suffering the operational loss multivariate regression results suggest that reputational damages are rather influenced by firm characteristics than characteristics of the operational loss event companies with a high ratio of liabilities to total assets suffer more severe damages to reputation from operational losses than companies with more equity

requiem for the representative consumer aggregate implications of microeconomic consumption behavior macroeconomists pursuing microfoundations for aggregate consumption have generally adopted one of two approaches either to model microeconomic consumption behavior carefully and then to aggregate or to thoroughly understand the behavior of a representative consumer in general equilibrium then to introduce microeconomic risk and heterogeneity the broad conclusion from the bottom up approach has been that precautionary saving and microeconomic heterogeneity can profoundly change behavior stephen p zeldes 1989 angus s deaton 1991 christopher d carroll 1992 the broad conclusion from the top down approach has been that precautionary saving is of little importance in determining the aggregate capital stock s rao aiyagari 1994 per krusell and anthony a smith 1998 leading some economists to conclude that heterogeneity is unimportant for macroeconomic purposes this paper shows that while general equilibrium effects do imply that the aggregate magnitude of precautionary saving is modest nevertheless when a model with uninsurable idiosyncratic risk is modified so that it can match the key micro facts it produces behavior very different in important respects from that produced by the representative agent economy this leads to the conclusion that for many purposes the representative consumer model should be abandoned in favor of a model which matches key microeconomic facts this abstract was borrowed from another version of this item

new wine in old bottles the changing socioeconomic attributes of sprawl during building boom and stagnation abstract european cities are shifting towards scattered urban models with important transformations in the local socioeconomic context with the aim to identify relevant associations with different urban patterns the present study compares the socioeconomic profile of districts with respectively continuous and discontinuous settlements along the urban gradient in rome italy during building boom early 1970s and economic stagnation late 2000s non parametric correlation statistics and multivariate techniques were used to investigate the spatio temporal evolution of 24 indicators population settlement labor market economic structure and 14 land use environmental and topographic indicators at the municipal scale the socioeconomic context discriminating discontinuous from continuous settlements in the early 1970s was significantly different from what was observed in the late 2000s in the early 1970s economic structure and labor market indicators have played a major role while demographic variables and heterogeneity in the natural landscape surrounding discontinuous settlements were particularly important in the late 2000s policies oriented to urban sustainability and sprawl containment may benefit from an in depth understanding of the different socioeconomic contexts associated with scattered settlements in expansion and recession times

a multivariate analysis of the energy intensity of sprawl versus compact living in the u s for 2003 abstract we explore the energy intensity of sprawl versus compact living by analyzing the total energy requirements of u s households for the year 2003 the methods used are based on previous studies on energy cost of living total energy requirement is calculated as a function of individual energy intensities of goods and services derived from economic input output analysis and expenditures for those goods and services we use multivariate regression analysis to estimate patterns in household energy intensities we define sprawl in terms of location in rural areas or in areas with low population size we find that even though sprawl related factors account for about 83 of the average household energy consumption sprawl is only 17 19 more energy intensive than compact living based on how people actually lived we observe that some of the advantages of reduced direct energy use by people living in high density urban centers are offset by their consumption of other non energy products a more detailed analysis reveals that lifestyle choices household type number of vehicles and family size that could be independent of location play a significant role in determining household energy intensity we develop two models that offer opportunities for further analysis

comparison of household consumption and regional production approaches to assess urban energy use and implications for policy assessment of urban energy use may proceed by a number of methods here we derive an energy account from local statistics and compare them with an input output io analysis as applied to melbourne australia these approaches highlight different aspects of urban energy use and comparable outputs are presented together to assess consistency to identify complementarities and discuss the insight each approach brings to understanding urban energy the io method captures the direct and embodied primary energy requirements of local household expenditure 235 8 gj capita year while the regional assessment more directly accounts for local production activity 258 1 gj capita year the parity of these results is unexpected for a developed city with a strong tertiary sector sectoral detail reveals differences between the primary energy required by melbourne s economic structure and that ultimately required through the full supply chain relating to household expenditure this is accompanied by an io analysis of the geography of melbourne s energy catchment it is suggested that the io consumption and regional production approaches have particular relevance to policies aimed at consumption behaviour and economic re structuring respectively their complementarity further suggests that a combined analysis would be valuable in understanding urban energy futures and economic transitions elsewhere

a new approach to business fluctuations heterogeneous interacting agents scaling laws and financial fragility abstract in this paper we discuss a scaling approach to business fluctuations our starting point consists in recognizing that concepts and methods derived from physics have allowed economists to re discover a set of stylized facts which have to be satisfactorily accounted for in their models standard macroeconomics based on a reductionist approach centered on the representative agent is definitely badly equipped for this task on the contrary we show that a simple financial fragility agent based model based on complex interactions of heterogeneous agents is able to replicate a large number of scaling type stylized facts with a remarkable high degree of statistical precision

intertemporal asset pricing with heterogeneous beliefs abstract we examine the behaviour of the interest rate asset prices and asset holdings in an economy with heterogeneous rationally updated beliefs about the expected rate of production growth the equilibrium interest rate is a weighted average of the interest rates that would prevail in economies populated by homogeneous agents with the beliefs of the respective agents in the heterogeneous model the weights are given by the fractions of total wealth held financial innovation affects the dynamics of allocations and prices but preserves the aggregate output process and the structure of equilibrium asset prices also display the wealth weighted average characterization journal of economic literature classification numbers c60 d52 d91 g12

spatially uneven development and low carbon transitions insights from urban and regional planning the ageing of existing energy system infrastructure the threat of climate change and uncertainty in the movement of energy prices have resulted in a widespread agreement on the need for a transition to a low carbon energy system yet the nature of this transition i e what when how and where and its socio economic outcomes at different scales are not well understood the interdependence of the energy sector and economic growth has been mostly studied at the national level via some general equilibrium or econometric models whilst sub national studies at community or urban levels mostly focus on the governance of transitions hence we suggest that a regional perspective to energy policy and research promises to integrate these two approaches by providing a more robust and comprehensive understanding of the implications of low carbon transitions as well as contributing to the development of more effective policies by building on recent ideas on geographical aspects of energy transitions this article offers insights on the changing relationship between the spatial organisation of economic activities and energy systems and identifies tools and methods from urban and regional planning to help with the delivery of efficient and equitable policy outcomes

the environmental impact of sharing household and urban economies in co2 emissions abstract studies find that per capita carbon dioxide co 2 emissions decrease with household size and urban density the demographic trends of declining household size and dense urbanization therefore produce countervailing effects with respect to emissions we posit that both household and urban economies are driven by proximity and realized through sharing carbon intensive goods with detailed data from the united states consumer expenditure survey we construct a dataset of co 2 emissions at the household level and leverage a unique measure of residential density to estimate household and urban economies our estimates show that dense urban areas have per capita emissions roughly 20 lower than rural areas and that adding an additional member to a household reduces per capita emissions by about 6 we also find that household economies are about twice as large in rural areas as in dense urban areas and develop an explanation for this phenomenon in theory the carbon benefits of dense urbanization have the potential to offset the effects of declining household size however using historical us census data and extrapolating from our estimates we find that lost household economies have outpaced increased urban economies over the past fifty years

corporate reputation s invisible hand bribery rational choice and market penalties drawing upon rational choice and investor attention theories we examine how accusations of corporate bribery and subsequent investigations shape market reactions using event study methodology to measure loss in firm value for public firms facing bribery investigations from 1978 to 2010 we found that total market penalties amounted to 60 61 billion we ran moderated multiple regression analysis to examine further the degree to which the unique characteristics of bribery explain variations in market penalties companies committing bribery in less corrupt host countries and with the involvement of compromised executives experienced greater market penalties than did other companies after partitioning share value losses into components for regulatory penalties class action settlements and loss to reputation we found that reputational penalties account for 81 8 of every dollar of share value loss omission of reputational penalties in rational choice calculus underestimates bribery costs by 4 5 times the results suggest that firms should not underestimate the importance of market imposed reputational penalties by merely considering regulator imposed fines and sanctions

operational risk and its impact on north american and british banks abstractthis study examines the financial impact of operational risk and its loss announcements on the value of publicly traded banks in united states uk and canada there are three main findings 1 on average the market reacts more negatively to a loss s initial announcement than its settlement news 2 operational loss events cause strong reputational damage to the announcing banks and 3 the market is particularly sensitive to the announcement of losses caused by internal fraud of a large magnitude resulted in the order of restitution and that are the rulings of a regulatory investigation

energy requirements of consumption urban form climatic and socio economic factors rebounds and their policy implications household consumption requires energy to be used at all stages of the economic process thereby directly and indirectly leading to environmental impacts across the entire production chain the levels structure and determinants of energy requirements of household consumption therefore constitute an important avenue of research incorporating the full upstream requirements into the analysis helps to avoid simplistic conclusions which would actually only imply shifts between consumption categories without taking the economy wide effects into account this paper presents the investigation of the direct and indirect primary energy requirements of australian households contrasting urban suburban and rural consumption patterns as well as inter and intra regional levels of inequality in energy requirements furthermore the spatial and socio economic drivers of energy consumption for different categories of energy requirements are identified and quantified conclusions regarding the relationships between energy requirements household characteristics urban form and urbanization processes are drawn and the respective policy implications are explored

evaluation of the soft measures effects on ambient water quality improvement and household and industry economies abstract various ecological footprint calculators carbon footprint calculators and water footprint calculators have been developed in recent years the basic concepts of ecological behaviour record notebooks and of carbon dioxide emission calculators have been developed since the late 20th century the first carbon dioxide emission calculator was developed in 1991 likewise water pollutant discharge calculators have been developed to estimate the effects of soft measures introduced into households to reduce pollutant discharge since 2004 the soft measures which have been developed in japan may consist of a wider framework household sustainable consumption which has been developed in europe and can be referred to cleaner consumption in this research summarisation of the short history of ecological behaviour record notebooks and ecological footprint calculators in japan since the 1980s was conducted and the soft measures in households to reduce pollutant discharge were evaluated for their effects on ambient water quality improvement as well as household and industry economies effects of the soft measures on related industry economies were investigated using an input output table analysis and the effects of the imported goods were evaluated with an import effect matrix which was developed in this research the effects of the soft measures on household expenditures were estimated to be a decrease by 2 5 or usd 285 person 1 year 1 in 2003 2006 the results show that the soft measures positively affect the chemical fibre industry and significantly affect the detergent industry analysis of the import effect matrix proved that the six industries were tightly related through extensive amounts of imported goods the soft measures in households may lead to household sustainable consumption and thus reduce disadvantageous human impacts on water environments the effects of the measures introduced to improve the environment should be qualitatively and quantitatively evaluated to avoid redundant concerns and discord between the environment and the economy which may be worried when the relationship is not well understood

differential information and security market equilibrium we propose a simple model of equilibrium asset pricing in which there are differences in the amounts of information available for developing inferences about the returns parame ters of alternative securities in contrast with earlier work we show that parameter uncer tainty or estimation risk can have an effect upon market equilibrium under reasonable conditions securities for which there is relatively little information are shown to have relatively higher systematic risk when that risk is properly measured ceteris paribus the initially very limited model is shown to be robust with respect to relaxation of a number of its principal assumptions we provide theoretical support for the empirical examination of at least three proxies for relative information period of listing number of security returns observations available and divergence of analyst opinion

are they efficient in the middle using propensity score estimation for modeling middlemen in indian corporate corruption corrupt regulatory environment encourages firms to deploy middlemen for speedy and assured acquisition of different services from regulatory agencies using a world bank dataset of 2210 indian manufacturing firms this article examines how firms with middlemen deal with corrupt governmental agencies for its operational efficiency our results demonstrate that deployment of middlemen by the firms is often accompanied by a substantial increase in operational delay relatively trigger more consumption of senior management s time on regulatory disentanglement enhance the likelihood tendency to pay bribe and likely to face more court cases as a means of restitution of legal rights as firm specific attributes may contaminate our preliminary results we utilized the propensity score framework to examine relationships among variables of interests our study contributes to the inconspicuous part of the corruption literature by attempting to present a comprehensive but indirect assessment of the functions of middlemen that predominantly remained unattended except some scattered descriptive case based anecdotal presentations

impact of cap and trade policies for reducing greenhouse gas emissions on u s households abstract proposals being considered by the u s congress would establish a cap and trade system to cut greenhouse gas ghg emissions approximately 2 annually through 2050 past cap and trade policies for other pollutants have distributed allowances free to the regulated companies leaving consumers uncompensated for passed through costs needed to achieve the required reductions social equity concerns were not a major issue because the total costs were relatively small however americans currently spend about 1 trillion year on energy directly and indirectly via the goods and services they consume if a cap on carbon emissions results in significant increases in energy prices social equity concerns could quickly dominate the debate over climate policy this paper confirms earlier studies that a traditional cap and trade policy is regressive and would cause the cost of reducing ghg emissions to fall disproportionately on low income households this paper explores ways to ameliorate those effects using highly disaggregated data available on consumer expenditures and energy input output analyses of the u s economy emissions are estimated based on direct and embodied energy use at the household level social equity concerns are taken into account and the consequences of cap and trade policies are assessed by quantifying the extent to which the expenditure patterns of the poor are significantly more energy intensive than those of the rich

to each their own the greenhouse gas impacts of intra household sharing in different urban zones abstract decreasing household size is a global trend driven by urbanization and multiple other socioeconomic trends going solo poses a great environmental challenge as the possibility to benefit from scale economies in consumption and its greenhouse gas impacts is not taken advantage of in other words understanding of intra household sharing patterns of different consumption categories is increasingly important in climate change mitigation this paper explores the relationship between household sizes urban structures and greenhouse gas impacts of lifestyles when urban areas grow outwards the household sizes also grow as a result of this the increase in intra household sharing seems to alleviate the negative ghg implications of urban sprawl which is highly logical but yet not comprehended thus the rise of collaborative consumption offers potential to reduce the greenhouse gas emissions of solo dwellers and compensate for the lower intra household sharing with inter household sharing

the reputational penalties for environmental violations empirical evidence abstract this paper examines the sizes of the fines damage awards remediation costs and market value losses imposed on companies that violate environmental regulations firms that violate environmental laws suffer statistically significant losses in the market value of firm equity the losses however are of similar magnitudes to the legal penalties imposed and in the cross section the market value loss is related to the size of the legal penalty thus environmental violations are disciplined largely through legal and regulatory penalties not through reputational penalties

quantifying the global and distributional aspects of american household carbon footprint abstract analysis of household consumption and its environmental impact remains one of the most important topics in sustainability research nevertheless much past and recent work has focused on domestic national averages neglecting both the growing importance of international trade on household carbon footprint and the variation between households of different income levels and demographics using consumer expenditure surveys and multi country life cycle assessment techniques this paper analyzes the global and distributional aspects of american household carbon footprint we find that due to recently increased international trade 30 of total us household co 2 impact in 2004 occurred outside the us further households vary considerably in their co 2 responsibilities at least a factor of ten difference exists between low and high impact households with total household income and expenditure being the best predictors of both domestic and international portions of the total co 2 impact the global location of emissions which cannot be calculated using standard input output analysis and the variation of household impacts with income have important ramifications for polices designed to lower consumer impacts on climate change such as carbon taxes the effectiveness and fairness of such policies hinges on a proper understanding of how income distributions rebound effects and international trade affect them