the causes of preference reversal observed preference reversal cannot be adequately explained by violations of independence the reduction axiom or transitivity the primary cause of preference reversal is the failure of procedure invariance especially the overpricing of low probability high payoff bets this result violates regret theory and generalized nonindependent utility models preference reversal and a new reversal involving time preferences are explained by scale compatibility which implies that payoffs are weighted more heavily in pricing than in choice copyright 1990 by american economic association

optimal duplication of effort in advocacy systems abstract the paper focuses on the creation of information for decision making when agents effort is non observable and rewards are indirect that is only based on the final decision following dewatripont and tirole dewatripont m tirole j 1999 advocates journal of political economy 107 1 39 the paper shows that the creation of advocates of special interests as opposed to non partisans generates an efficient mechanism of mutual monitoring that reduces the scope for manipulation such monitoring is preferable over imposing penalties for detected manipulation it is also preferable to creating an agency that monitors the non partisan agent applications to transfer price policies and comparative judicial systems are considered

attitudes toward risk and the risk return paradox prospect theory explanations this study attempted to explain bowman s risk return paradox in terms of recent research in behavioral decision theory and prospect theory the research emphasized the role of reference or target

internal capital markets and the competition for corporate resources this article examines the role of corporate headquarters in allocating scarce resources to competing projects in an internal capital market unlike a bank headquarters has control rights that enable it to engage in winner picking the practice of actively shifting funds from one project to another by doing a good job in the winner picking dimension headquarters can create value even when it cannot help at all to relax overall firm wide credit constraints the model implies that internal capital markets may sometimes function more efficiently when headquarters oversees a small and focused set of projects this article analyzes the process by which internal capital markets channel limited resources to different uses inside a company in so doing it seeks to address two related sets of questions first what is the fundamental economic rationale for creating an internal capital market that is under what circumstances can it make sense to combine several technologically distinct projects under one roof and have them seek funding from corporate headquarters as opposed to setting them up as stand alone companies that each raise external financing on their own second given this rationale what is the optimal size and scope of an internal capital market should headquarters be involved in funding a large number of projects or just a few and should these projects be unrelated to one another or in similar lines of business the answers to both sets of questions flow from the insight that in a credit constrained setting where not all positive npv projects can be financed headquarters can create value by actively reallocating scarce funds across projects for example the cash flow generated by one division s activities may be taken and spent on investment in another division where the returns are higher or alternatively one division s assets may be used as collateral to raise financing that is then diverted to the other division simply put individual projects must compete for the scarce funds and headquarters job is to pick the winners and losers in this competition

environmental kuznets curve hypothesis in pakistan cointegration and granger causality abstract the paper is an effort to fill the gap in the energy literature with a comprehensive country study of pakistan we investigate the relationship between co2 emissions energy consumption economic growth and trade openness in pakistan over the period of 1971 2009 bounds test for cointegration and granger causality approach are employed for the empirical analysis the result suggests that there exists a long run relationship among the variables and the environmental kuznets curve ekc hypothesis is supported the significant existence of ekc shows the country s effort to condense co2 emissions and indicates certain achievement of controlling environmental degradation in pakistan furthermore we find a one way causal relationship running from economic growth to co2 emissions energy consumption increases co2 emissions both in the short and long runs trade openness reduces co2 emissions in the long run but it is insignificant in the short run in addition the change of co2 emissions from short run to the long span of time is corrected by about 10 yearly

environmental kuznets curve in romania and the role of energy consumption abstract the aim of present study is to probe the dynamic relationship between economic growth energy consumption and co 2 emissions for period of 1980 2010 in case of romania in doing so ardl bounds testing approach is applied to investigate the long run cointegration between these variables our results confirm long run relationship between economic growth energy consumption and energy pollutants the empirical evidence reveals that environmental kuznets curve ekc is found both in long and short runs in romania further energy consumption is major contributor to energy pollutants democratic regime shows her significant contribution to decline co 2 emissions through effective implementation of economic policies and financial development improves environment i e reduces co 2 emissions by redirecting the resources to environment friendly projects

technological change and the rebound effect in the stirpat model a critical view abstract technological change is key to understand the explanatory variables behind environmental impacts in the context of the stirpat stochastic impacts by regression on population affluence and technology model an adequate representation and analysis of the significance of the technology variable t in the stirpat model becomes crucial even more if one aims to better understand underlying processes such as the environmental rebound effect e re a critical review of the application of the stirpat model has been conducted to understand the diversity and value of the variables scopes assumptions statistical approaches and the environmental impacts commonly studied the findings highlight that despite the multiple applications and the high potential of the stirpat model inconclusive results and or knowledge gaps remain notably 1 a geographical imbalance in the scope of studies 2 the almost exclusive focus on carbon emissions 3 a lack of agreement on the choice of data additional explanatory variables and regression models 4 a lack of consensus on how to approximate t and 5 a lack of explicit analyses of the e re our findings are useful to both policymakers and academics for method design further research and policy evaluation

the impact of natural disaster on energy consumption international evidence abstract this research shows that natural disasters may hurt energy consumption by using data on 123 countries over the period 1990 2015 and classifying them according to their economic development level and region based on world development indicators we employ a two step system gmm method to examine the effect of natural disasters on energy consumption presenting findings that support our hypotheses in the models and show a strong negative effect for low income countries or those in the africa region after considering an alternative proxy for natural disaster we implement quantile regression methods their results find that natural disasters exhibit a negative and significant impact on oil renewable and nuclear energy consumptions the quantile regression models used in the robustness check present that the effects are stronger for low level energy consumption economies

price and authority in inter profit center transactions price and authority have traditionally been regarded as alternative social mechanisms for allocating resources however actual transactions whether inter or intrafirm can be evaluated in terms of the extent to which they combine both of these mechanisms an especially revealing example of this is the exchange of goods between two profit centers in the multi profit center firm three of the most common arrangements or transfer pricing polices for effecting these transactions are examined here exchange autonomy transfers depend primarily on price with no or minimal use of authority mandated full cost transfers involve a substantial exercise of authority relative to the use of price mandated market based transfers use both authority and price in important ways for all three policies the transaction costs of these internal transactions may exceed these costs on external transactions

comparing virtue consequentialist and deontological ethics based corporate social responsibility mitigating microfinance risk in institutional voids due to the nature of lending practices and support services offered to the poor in developing countries portfolio risk is a growing concern for the microfinance industry though previous research highlights the importance of risk for microfinance organizations not much is known about how microfinance organizations can mitigate risks incurred from providing loans to the poor in developing countries further though many microfinance organizations practice corporate social responsibility csr to help create economic and social wealth in developing countries the impact of such csr practices remains an underdeveloped area of inquiry we use a normative ethics lens to develop an ethics based csr theory that differentiates between three forms of ethics based csr virtue consequentialist and deontological we argue that while all three forms can help mitigate risk virtue ethics based csr is potentially the most useful form of csr toward mitigating microfinance portfolio risk we test our hypotheses using a sample of microfinance organizations from across the world our findings suggest that virtue ethics based csr is not just an important philosophical paradigm it can actually help mitigate microfinance portfolio risk when implemented in practice

co2 emissions energy consumption and economic growth in bric countries abstract this paper examines dynamic causal relationships between pollutant emissions energy consumption and output for a panel of bric countries over the period 1971 2005 except for russia 1990 2005 in long run equilibrium energy consumption has a positive and statistically significant impact on emissions while real output exhibits the inverted u shape pattern associated with the environmental kuznets curve ekc hypothesis with the threshold income of 5 393 in logarithms in the short term changes in emissions are driven mostly by the error correction term and short term energy consumption shocks as opposed to short term output shocks for each country short term deviations from the long term equilibrium take from 0 770 years russia to 5 848 years brazil to correct the panel causality results indicate there are energy consumption emissions bidirectional strong causality and energy consumption output bidirectional long run causality along with unidirectional both strong and short run causalities from emissions and energy consumption respectively to output overall in order to reduce emissions and not to adversely affect economic growth increasing both energy supply investment and energy efficiency and stepping up energy conservation policies to reduce unnecessary wastage of energy can be initiated for energy dependent bric countries

energy consumption carbon emissions and economic growth in saudi arabia an aggregate and disaggregate analysis the objective of this study is to examine the relationship among economic growth carbon emissions and energy consumption at the aggregate and disaggregate levels for the aggregate energy consumption model we use total energy consumption per capita and co2 emissions per capita based on the total energy consumption for the disaggregate analysis we used oil gas and electricity consumption models along with their respective co2 emissions the long term income elasticities of carbon emissions in three of the four models are positive and higher than their estimated short term income elasticities these results suggest that carbon emissions increase with the increase in per capita income which supports the belief that there is a monotonically increasing relationship between per capita carbon emissions and per capita income for the aggregate model and for the oil and electricity consumption models the long and short term income elasticities of carbon emissions are negative for the gas consumption model this result indicates that if the saudi arabian economy switched from oil to gas consumption then an increase in per capita income would reduce carbon emissions the results also suggest that electricity is less polluting than other sources of energy

on the causal dynamics between emissions nuclear energy renewable energy and economic growth this paper examines the causal relationship between co2 emissions nuclear energy consumption renewable energy consumption and economic growth for a group of 19 developed and developing countries for the period 1984 2007 using a panel error correction model the long run estimates indicate that there is a statistically significant negative association between nuclear energy consumption and emissions but a statistically significant positive relationship between emissions and renewable energy consumption the results from the panel granger causality tests suggest that in the short run nuclear energy consumption plays an important role in reducing co2 emissions whereas renewable energy consumption does not contribute to reductions in emissions this may be due to the lack of adequate storage technology to overcome intermittent supply problems as a result electricity producers have to rely on emission generating energy sources to meet peak load demand

income inequality and co2 emissions in the g7 1870 2014 evidence from non parametric modelling abstract we examine whether income inequality effected carbon emissions in what are now the world s wealthiest countries over the period 1870 2014 employing a non parametric panel estimation method with cross sectional and time varying coefficients we find that the relationship between income inequality and co2 emissions is highly non linear in terms of signs and significance the nonparametric coefficient function for income inequality is found to vary over the period 1870 2014 income inequality exhibits a significant positive effect from 1870 to 1880 and a significant negative impact from 1950 to 2000 on co2 emissions we also find that for extended periods between 1881 and 1949 and between 2000 and 2014 there is no significant relationship between the two variables

an econometric study of co2 emissions energy consumption income and foreign trade in turkey abstract this study attempts to empirically examine the dynamic causal relationships between carbon emissions energy consumption income and foreign trade in the case of turkey using the time series data for the period 1960 2005 this research tests the interrelationship between the variables using the bounds testing to cointegration procedure the bounds test results indicate that there exist two forms of long run relationships between the variables in the case of first form of long run relationship carbon emissions are determined by energy consumption income and foreign trade in the case of second long run relationship income is determined by carbon emissions energy consumption and foreign trade an augmented form of granger causality analysis is conducted amongst the variables the long run relationship of co2 emissions energy consumption income and foreign trade equation is also checked for the parameter stability the empirical results suggest that income is the most significant variable in explaining the carbon emissions in turkey which is followed by energy consumption and foreign trade moreover there exists a stable carbon emissions function the results also provide important policy recommendations

is aggregate domestic consumption spending adcs per capita determining co2 emissions in south africa a new perspective aggregate domestic consumption spending is one of the prime drivers of economic progress that facilitates the process of industrialization international trade and innovation but its effect on the environment remains underresearched this paper proposes a novel framework to explain the impact of aggregate domestic consumption spending per capita adcsp on carbon dioxide emissions co2e in south africa using the autoregressive distributed lag ardl technique the results indicated that the adcsp determines co2e in the short run sr and long run lr from adcsp to carbon intensity adcsp ci estimations it was observed that an increase 1 in adcsp increases co2e in both the lr 0 31 and sr 0 22 furthermore the nardl estimations showed that the lr effects of positive shocks in the adcsp on co2e are comparatively stronger than the sr effects the paper offers important policy implications for academics theorists and policymakers

myopic corporate behaviour with optimal management incentives existing models in which stock markets lead to corporate short termism rely on an exogenously imposed objective for top managers this paper endogenizes both managers concern for short term stock prices and the resulting distortions we show that when the manager can trade on her own account on the stock market in a way that is observable to market participants but which is not verifiable in court shareholders will choose an incentive contract which induces a bias towards short term returns consistent with recent evidence the short term bias is greater when the optimal contract provides low powered management incentives

being good while being bad social responsibility and the international diversification of us firms this paper contributes to the discussion on international diversification and corporate social responsibility csr by suggesting that firms can be simultaneously socially responsible and socially irresponsible to test our assertions we analyze data from 222 publicly traded us firms from 1993 to 2003 the findings support our hypotheses and have significant implications for the way in which we conceptualize csr

measuring organizational downside risk despite widespread incorporation of risk measures in strategy research there is little consensus regarding the meaning and measurement of risk in contrast to the variability measures widely used in strategy studies this paper draws from behavioral decision theory finance and management theory to present an alternative perspective on organizational risk downside risk the paper explains three categories of organizational downside risk measures based on the concept of lower partial moments the latter sections of the paper present considerations involved in specifying operational measures of downside risk and an empirical comparison of alternative downside risk measures

linking corporate strategy to capital structure diversification strategy type and source of financing this study examines the relationship between corporate strategy and capital structure specifically the diversfication and financing strategies of a firm the results show that equity financing is preferred for related diversification and unrelated diversification is associated with debt financing additionally firms diversifying through acquisitions are more likely to use public sources of financing and those emphasizing internal development of new businesses depend primarily on private sources of financing using simultaneous equation estimation we found a reciprocal relationship between a firm s financial strategy and its corporate diversification strategy mode and nature of diversification are also reciprocally interrelated 1998 john wiley sons ltd

export product diversification and co2 emissions contextual evidences from developing and developed economies abstract ascertaining cleaner production and sustainability is a major issue in the developed and developing world income and international trade are the predominant factors behind this this article explores the heterogeneous impacts of export product diversification extensive margin and intensive margins on the co2 emissions for developing and developed countries to this end the authors analyze the annual data of variables from 1971 to 2014 and employ unrestricted fixed effects and system gmm to solve the research problem the empirics suggest that all three indicators of export diversification significantly reduce co2 emissions in 63 developed and developing countries as a global sample the fixed effect models reveal that product diversification and intensive margin have a negative and significant impact in developed economies the negative impacts of product diversification show that economic sophistication is an important tool to reduce emissions further the chow test proved the statistical difference between developed and developing economies which contributes to policy recommendations based on the empirical outcomes the study suggests innovative policies for cleaner production and industrial manufacturing purposes making the policies more effective in achieving sustainable development goals sdgs

the impact of economic growth on co2 emissions in azerbaijan abstract this paper investigates the relationship between the economic growth and co2 emissions in azerbaijan a cointegration analysis is conducted over the period 1992 2013 for getting more robust results johansen ardlbt dols fmols and ccr methods are employed to explore cointegration and estimate long run coefficients we use cubic quadratic and linear specifications and conclude that the last one is an adequate representation for the impact of the economic growth on co2 emissions in azerbaijan the results from the different cointegration methods are consistent with each other and show that the economic growth has a positive and statistically significant impact on the emissions in the long run implying that the ekc hypothesis does not hold for azerbaijan the income elasticity of co2 emissions using different methods is found to be between 0 7 and 0 8 moreover we find that any short run imbalance can be adjusted towards the long run equilibrium path within less than one year the paper concludes that measures to increase energy efficiency carbon pricing instruments in production and international domestic trade activities and nationwide social awareness programs to instruct about the negative consequences of pollution can be considered as relevant environmental policies aimed at reducing carbon emissions

too risky to hold the effect of downside risk accumulated equity wealth and firm performance on ceo equity reduction although the alignment effect of equity ownership is often studied with emphasis on changes in firm strategy the exposure of ceos firm specific wealth to firm risk is more easily controlled by changing their level of equity holdings than by changing firm strategic risk we rely on prospect theory and the behavioral theory of the firm to examine the antecedents of ceo equity reduction and investigate whether it serves to decouple ceo wealth from firm risk given its central role in loss avoidance we underline the effect of the firm s downside risk and distinguish the total loss potential on equity holdings from the loss potential due to firm specific factors allowing for own performance referents we also consider firm performance and the value of a ceo s equity holdings in the analysis based on a sample of 208 u s ceos for the years 1997 1999 we find empirical support for the role of downside risk and firm performance in ceo equity reductions implications on incentive alignment through equity ownership are presented

environmental kuznets curve for co2 emissions the case of arctic countries abstract the main new contribution of this paper is to examine the environmental kuznets curve ekc hypothesis using time series data at individual country levels empirical focus is on the assessment of income per capita on co 2 emissions in the arctic countries by taking into account the role of energy consumption an autoregressive distributed lag ardl modeling approach to cointegration is applied to annual data for the period 1960 2010 the results provide little evidence of the existence of the ekc hypothesis for the arctic countries we also find that economic growth has a beneficial effect on the environment only in some arctic countries finally energy consumption is found to have a detrimental effect on the environment in most countries

the fit between ceo compensation design and firm risk we examined the effects of unsystematic and systematic firm risk on ceo compensation risk bearing and total pay both the proportion of variable pay in ceo pay packages and their magnitude are curvilinearly related to unsystematic firm risk that is they are highest under conditions of moderate firm specific risk our results are consistent with agency theory predictions that both performance contingent pay and the greater earnings potential associated with that form of pay are highest when an agent has greater control over performance outcomes

the effects of endowment and loss aversion in managerial stock option valuation assuming a positive influence of stock price volatility on stock option value incentive alignment proponents argue that stock option compensation encourages managerial risk seeking and thus aligns managers and shareholders risk preferences our findings show that stock option holders overvalue unexercisable options relative to options being offered and to normative e g black scholes valuations further the influence of stock price volatility on holders subjective valuations depends on stock price trend in sum results suggest that during stock option valuation managers draw on heuristics that financial options theory and models fail to capture we discuss implications for compensation design and research

institutionalizing ethics in institutional voids building positive ethical strength to serve women microfinance borrowers in negative contexts this study examines whether microfinance institutions mfis that serve women borrowers at the base of the economic pyramid are likely to adopt a written code of positive organizational ethics poe using econometric analysis of operational and economic data of a sample of mfis from across the world we find that two contextual factors poverty level and lack of women s empowerment moderate the influence of an mfi s percentage of women borrowers on the probability of the mfi having a poe code mfis that serve more women borrowers are more likely to adopt a poe code especially in negative contexts where women borrowers face poverty and disempowerment and are therefore susceptible to abuse this study provides evidence that mfis can build positive ethical strength in negative contexts

power to the principals an experimental look at shareholder say on pay voting with recent legislation mandating that publicly traded corporations submit their ceos compensation for a nonbinding shareholder vote a systematic understanding of shareholder preferences has neve

the role of trade and fdi for co2 emissions in turkey nonlinear relationships abstract this paper examines the effects of foreign trade and foreign direct investment fdi on co 2 emissions in turkey we consider linear and nonlinear ardl models and find significant asymmetric effects of exports imports and fdi on co 2 emissions per capita however fdi has no statistically significant long run effects in the long run decreases in exports reduce co 2 emissions per capita but increases in exports have no statistically significant effects increases in imports push up co 2 emissions per capita while decreases in imports have no long run effects on the other hand co 2 intensity which measures co 2 emissions per unit of energy is not influenced by exports and imports nor by fdi instead it is affected positively by financial development and urbanization also we find that an environmental kuznets curve is present for both co 2 measures so that increases in real gdp per capita have led to reductions in co 2 emissions for at least the most recent decade controlling for other confounding factors furthermore the sectoral shares of co 2 emissions in total co 2 emissions change asymmetrically with foreign trade for two of four sectors with export increases leading to lower co 2 shares and imports having the opposite effect

toward a model of risk in declining organizations an empirical examination of risk performance and decline scholars who study organizational decline have argued that declining organizations reduce or eliminate their riskier activities such as innovation further they cite reduced risk taking as a primary contributor to further decline scholars with an interest in risk per se come to the opposite conclusion low performing firms often take more risks than other firms and such risks reduce subsequent performance this study attempts to resolve these conflicting views by examining the risk of firms in decline our model based on cyert march s cyert r m j g march 1963 a behavioral theory of the firm prentice hall englewood cliffs nj behavioral theory of the firm includes six basic variables 1 performance 2 slack 3 aspirations 4 expectations 5 risk income stream uncertainty and 6 organization size as a measure of decline the estimated model includes prior levels of risk and performance in the risk and performance equations respectively as controls this study uses data on 34

market structure and organizational form this paper studies the determinants of a firm s organizational form in the context of an imperfectly competitive industry there are two kinds of organizational forms the multi divisional form m form and the unitary form u form an m form firm suffers from ignorance of demand externalities among different products and double marginalization is eliminated in contrast in a u form firm demand externalities are taken into consideration and double marginalization exists a firm s optimal choice of organizational form depends on the market structure

the effect of myopia and loss aversion on risk taking an experimental test myopic loss aversion is the combination of a greater sensitivity to losses than to gains and a tendency to evaluate outcomes frequently two implications of myopic loss aversion are tested experimentally 1 investors who display myopic loss aversion will be more willing to accept risks if they evaluate their investments less often 2 if all payoffs are increased enough to eliminate losses investors will accept more risk in a task in which investors learn from experience both predictions are supported the investors who got the most frequent feedback and thus the most information took the least risk and earned the least money language en

is economic growth good or bad for the environment empirical evidence from korea abstract the effects of economic growth on the environment in korea for a given level of energy consumption and fossil fuels and nuclear energy in electricity production are examined in a dynamic cointegration framework to that end the autoregressive distributed lag ardl approach is used we find empirical evidence supporting the existence of the environmental kuznets curve ekc hypothesis for korea that is economic growth indeed plays a favorable role in influencing environmental outcomes it is also found that in both the short and long run nuclear energy has a beneficial effect on environmental quality whereas fossil fuels in electricity production and energy consumption have a detrimental effect on the environment

co2 emissions energy consumption trade and income a comparative analysis of china and india in order to prevent the destabilisation of the earth s biosphere co2 emissions must be reduced quickly and significantly the causes of co2 emissions by individual countries need to be apprehended in order to understand the processes required for reducing emissions around the globe china and india are the two largest transitional countries and growing economies but are in two entirely different categories in terms of structural changes in growth trade and energy use co2 emissions from the burning of fossil fuels have significantly increased in the recent past this paper compares china and india using the bounds testing approach to cointegration and the ardl methodology to test the long and short run relationships between growth trade energy use and endogenously determined structural breaks the co2 emissions in china were influenced by per capita income structural changes and energy consumption a similar causal connection cannot be established for india with regard to structural changes and co2 emissions because india s informal economy is much larger than china s india possesses an extraordinarily large number of micro enterprises that are low energy consumers and not competitive enough to reach international markets understanding these contrasting scenarios is prerequisite to reaching an international agreement on climate change affecting these two countries

environmental kuznet s curve for india evidence from tests for cointegration with unknown structuralbreaks this study revisits the cointegrating relationship between carbon emission energy use economic activity and trade openness for india using threshold cointegration tests with a view to testing the environmental kuznet s curve hypothesis in the presence of possible regime shift in long run relationship of the variables for the period 1971 to 2008 the article confirms the existence of regime shift or threshold cointegration among the variables and environmental kuznet s curve for india it challenges previous empirical works for india which fail to establish cointegrating relationship among these variables and explains its logical and econometric reasons the study finds that the carbon emission is highly elastic with respect to real per capita income and energy use in india this finding is critical and warns successful design and execution of energy and environmental policy framework which would pave the low carbon sustainable growth path inindia

the econometric consequences of an energy consumption variable in a model of co2 emissions abstract many studies that model the determinants of co 2 emissions treat energy consumption as one of its determinants itkonen 2012 argues that this causes underestimation of both the responsiveness of co 2 emissions to income growth and the turning point of the carbon kuznets curve we first demonstrate that itkonen s 2012 conclusions are sensitive to the assumed form of the relationship between energy consumption and income we then argue that the presence of an energy consumption variable in a model of co 2 emissions can lead to systematic volatility in its coefficients which has the potential to change their magnitude and sign we also argue that misleading cointegration test results can be generated by such a model the potential nature and severity of these effects are illustrated with data for seven countries

impact of post restatement actions taken by a firm on non professional investors credibility perceptions the frequency of earnings restatements has been increasing over the last decade restating previous earnings erodes perceived trustworthiness and competence of management giving firms strong incentives to take actions to enhance perceived credibility of future financial reports farber d b 2005 the accounting review 80 2 539 561 using an experimental case we examine the ability of post restatement actions taken by a firm to positively influence non professional investors perceptions of management s financial reporting credibility our examination considers credibility judgments following two types of restatements those resulting from fraud in which the character ethics and values of an organization may be called into question cf copeland jr j e 2005 accounting horizons19 1 35 43 and those resulting from non fraud i e aggressive accounting

explaining the swollen middle why most transactions are a mix of market and hierarchy why are firms sometimes more efficient than markets at organizing transactions why are most transactions arrayed neither at the pure market nor at the pure hierarchy end of the continuum but rather in the swollen middle incorporating features of both market and hierarchy why don t firms make greater use of price incentives this paper addresses these three questions by developing a model of the choice of institution one key building block is the distinction between organizing methods hierarchy and the price system and institutions firms and markets hierarchy and the price system are two distinct methods for organizing transactions each with particular costs and benefits markets and firms are institutions which use one or both of these methods although markets predominantly use prices and firms rely principally on hierarchy there is not a one to one correspondence between prices and markets or between hierarchy and firms indeed the paper argues that it is generally more efficient to use a mix of both methods than to specialize in either the paper focuses on the enforcement properties of prices and hierarchy hierarchy controls individuals directly by constraining their behavior by imposing behavior constraints while prices do it indirectly by measuring their outputs through price constraints under hierarchy individuals receive a salary to do as told while self employed individuals governed by the price system are rewarded on the basis of their output each system has its own biases using prices maximizes effort minimizes shirking but incites individuals to inflate the price and or reduce the quality of their output it encourages cheating relying on hierarchy results in the opposite bias under hierarchy individuals are not paid in function of their output but instead are rewarded for following directives they have thus strong incentives to minimize effort to shirk unless properly supervised but being paid a fixed sum to follow orders they have few incentives to cheat hence the price system experiences low shirking but potentially high cheating costs while hierarchy faces low cheating but high shirking costs organizing costs are the sum of shirking and cheating costs any given transaction will be organized by the mix of price and hierarchy i e by the mix of price and behavior constraints that minimizes organizing costs a transaction will be organized within a firm if the reduction in cheating costs achieved by replacing price constraints by behavior constraints exceeds the resulting increase in shirking costs and by the market in the opposite case the paper shows that cheating and shirking costs increase more than proportionately as one concentrates in either pure price or behavior constraints hence using a mix of both methods generally minimizes the sum of cheating and shirking costs this explains why most transactions exhibit features of both markets and hierarchy the paper shows clearly the tradeoff involved between price and behavior constraints it explains the costs and benefits of using two types of price incentives in firms piecework and profit centers and predicts when they will be used

the impact of growth energy and financial development on the environment in china a cointegration analysis this article aims to investigate the impact of financial development economic growth and energy consumption on environmental pollution in china from 1953 to 2006 using the autoregressive distributed lag ardl bounds testing procedure the main objective is to examine the long run equilibrium relationship between financial development and environmental pollution the results of the analysis reveal a negative sign for the coefficient of financial development suggesting that financial development in china has not taken place at the expense of environmental pollution on the contrary it is found that financial development has led to a decrease in environmental pollution it is concluded that carbon emissions are mainly determined by income energy consumption and trade openness in the long run moreover the findings confirm the existence of an environmental kuznets curve in the case of china

the economics of earnings manipulation and managerial compensation this article examines managerial compensation in an environment where managers may take a hidden action that affects the actual earnings of the firm when realized these earnings constitute hidden information that is privately observed by the manager who may expend resources to generate an inflated earnings report we characterize the optimal managerial compensation contract in this setting and demonstrate that contracts contingent on reported earnings cannot provide managers with the incentive both to maximize profits and to report those profits honestly as a result some degree of earnings management must be tolerated as a necessary part of an efficient agreement

the nexus between carbon emissions energy consumption and economic growth in middle east countries a panel data analysis abstract the environmental kuznets curve ekc hypothesis assumes that there is an inverted u shaped relationship between environmental degradation and income per capita in other words as a country grows it is assumed that its environmental quality improves in this study we aim to test the ekc hypothesis for 12 middle east countries during the period 1990 2008 by employing recently developed panel data methods our results provide evidence contrary to the ekc hypothesis we found evidence favorable to the u shaped ekc for 5 middle east countries whereas an inverted u shaped curve was identified for only 3 middle east countries furthermore there appear to be no causal links between income and co 2 emissions for the other 4 countries regarding the direction of causality there appears to be a unidirectional causality from economic growth to energy consumption in the short run in the long run however the unidirectional causality chain runs from energy consumption and economic growth to co 2 emissions we also suggest some crucial policy implications depending on these results

the sensitivity of ceo wealth to equity risk an analysis of the magnitude and determinants abstract to control risk related incentive problems equity holders are expected to manage both the convexity and slope of the relation between firm performance and managers wealth i find stock options but not common stockholdings significantly increase the sensitivity of ceos wealth to equity risk cross sectionally this sensitivity is positively related to firms investment opportunities this result is consistent with managers receiving incentives to invest in risky projects when the potential loss from underinvestment in valuable risk increasing projects is greatest firms stock return volatility is positively related to the convexity provided to managers suggesting convex incentive schemes influence investing and financing decisions

the other side of the trade off the impact of risk on executive compensation the principal agent model of executive compensation is of central importance to the modern theory of the firm and corporate governance yet the exiting empirical evidence supporting it is quite wea

co2 emissions energy consumption and economic growth in the asean 5 countries a cross sectional dependence approach abstract we re examine the relationship between co2 emissions energy consumption ec and economic growth gdp for the five main association of southeast asian nations asean 5 countries over the period 1980 2016 our main contention is that the findings in previous studies that have examined the relationship between co2 ec and gdp in the asean 5 are biased because they fail to account for cross sectional dependence cd we show that conventional tests applied to our dataset suggest a misleading conclusion about the environmental kuznets curve ekc and granger causal relationship between co2 ec and gdp in the presence of cd when we apply a new panel test of granger non causality that addresses cd and heterogeneity we find considerable heterogeneity we find unidirectional granger causality running from gdp to co2 for malaysia the philippines singapore and thailand unidirectional causality running from gdp to ec in indonesia malaysia and thailand unidirectional causality running from ec to gdp in singapore and bidirectional causality between gdp and ec in the philippines we also find support for the ekc hypothesis for the asean 5 countries

the economics of organization the transaction cost approach the transaction cost approach to the study of economic organization regards the transaction as the basic unit of analysis and holds that an understanding of transaction cost economizing is central to the study of organizations applications of this approach require that transactions be dimensionalized and that alternative governance structures be described economizing is accomplished by assigning transactions to governance structures in a discriminating way the approach applies both to the determination of efficient boundaries as between firms and markets and to the organization of internal transactions including the design of employment relations the approach is compared and contrasted with selected parts of the organization theory literature

inequality among equals embedding market and authority in league sports in league sports the regulatory authority of leagues is thought to counter market pressures that would otherwise concentrate player talent in smsas with the largest market potential the presumed opposition between authority and markets is not supported by league histories in the four major team sports these histories show that contrary to expectations market potential has the greatest influence on winning when league authority is formally strongest market potential has no influence on performance when league authority is opposed by antitrust law player unions rival leagues or league members to explain this anomaly authority and market relations must both be seen as embedded within the multiplex relations among team owners these relations changed dramatically with the rise of national audiences in the past three decades inequality among equals replaced inequality among unequals as the support of a rootless national audience replaced rooted and unequal local audiences altering the opportunity

a theory of corporate scandals why the usa and europe differ a wave of financial irregularity in the usa in 2001 2 culminated in the sarbanes oxley act a worldwide stockmarket bubble burst over this same period with the actual market decline being proportionately more severe in europe yet no corresponding wave of financial scandals involving a similar level of companies occurred in europe given the higher level of public and private enforcement in the usa for securities fraud this contrast seems perplexing this paper submits that different kinds of scandals characterize different systems of corporate governance in particular dispersed ownership systems of governance are prone to the forms of earnings management that erupted in the usa but concentrated ownership systems are much less vulnerable instead the characteristic scandal in such systems is the appropriation of private benefits of control this paper suggests that this difference in the likely source of and motive for financial misconduct has implications both for the utility of gatekeepers as reputational intermediaries and for design of legal controls to protect public shareholders the difficulty in achieving auditor independence in a corporation with a controlling shareholder may also imply that minority shareholders in concentrated ownership economies should directly select their own gatekeepers copyright 2005 oxford university press

the economics of fraudulent accounting we argue that earnings management and fraudulent accounting have important economic consequences in a model where the costs of earnings management are endogenous we show that in equilibrium low productivity firms hire and invest too much in order to pool with high productivity firms this behavior distorts the allocation of economic resources in the economy we test the predictions of the model using firmlevel data we show that during periods of suspicious accounting firms hire and invest excessively while managers exercise options when the misreporting is detected firms shed labor and capital and productivity improves our firm level results hold both before and after the market crash of 2000 in the aggregate our model provides a novel explanation for periods of jobless and investment less growth

when competition eclipses cooperation an event history analysis of joint venture failure why do so many joint ventures fail despite the fact that their success is the exception rather than the rule the literature on why joint venture performance has been so poor remains fragmentary we address this issue adopting a transaction cost economics perspective and modeling joint ventures as governance structures that blend the advantages and drawbacks of both markets and hierarchies using a data base on electronics industry ventures and event history analysis we identify several predictors of joint venture failure and test for their influences a key finding is that the presence of competition between joint venture partners outside of the agreement significantly impairs chances for the operation s chance of survival we also find clear evidence that the failure rate of joint ventures is nonmonotonic rising to a peak in the middle term and then declining finally we compare and contrast predictors of terminations due to failure to those due to acquisition of the joint venture by one of its partners our overall conclusions highlight implications for strategic choice theory building and the management of joint ventures

panel estimation for co2 emissions energy consumption economic growth trade openness and urbanization of newly industrialized countries abstract this paper empirically examines the dynamic causal relationships between carbon dioxide emissions energy consumption economic growth trade openness and urbanization for the panel of newly industrialized countries nic using the time series data for the period 1971 2007 using four different panel unit root tests it is found that all panel variables are integrated of order 1 from the johansen fisher panel cointegration test it is found that there is a cointegration vector among the variables the granger causality test results support that there is no evidence of long run causal relationship but there is unidirectional short run causal relationship from economic growth and trade openness to carbon dioxide emissions from economic growth to energy consumption from trade openness to economic growth from urbanization to economic growth and from trade openness to urbanization it is found that the long run elasticity of carbon dioxide emissions with respect to energy consumption 1 2189 is higher than short run elasticity of 0 5984 this indicates that over time higher energy consumption in the newly industrialized countries gives rise to more carbon dioxide emissions as a result our environment will be polluted more but in respect of economic growth trade openness and urbanization the environmental quality is found to be normal good in the long run

are ceos really paid like bureaucrats a common view is that there is little correlation between firm performance and ceo pay using a new fifteen year panel data set of ceos in the largest publicly traded u s companies we document a strong relationship between firm performance and ceo compensation this relationship is generated almost entirely by changes in the value of ceo holdings of stock and stock options in addition we show that both the level of ceo compensation and the sensitivity of compensation to firm performance have risen dramatically since 1980 largely because of increases in stock option grants

performance feedback and firm risk taking the moderating effects of ceo and outside director stock options we contribute to the behavioral theory of the firm and the behavioral agency model by developing a theoretical framework that predicts the differential interaction effects of performance feedback and values of stock option grants of multiple agents on firm risk taking we explain how chief executive officers ceos versus outside directors awarded with stock option grants perceive negative or positive deviations from prior performance we argue that in a negative attainment discrepancy context high values of option grants will increase the risk aversion of ceos who already bear excessive employment and compensation risks resulting in less risk taking however it will enhance the risk taking propensity of influential outside directors who increase monitoring and support for risky projects because their risk preferences are better aligned with those of shareholders in a positive attainment discrepancy context high values of option grants will amplify risk aversion in both ceos and outside directors who

carbon emissions energy consumption and output a threshold analysis on the causal dynamics in emerging african economies abstract following the recent global economic downturn attention has gradually shifted towards emerging economies which have experienced robust growth amidst sluggish growth of the world economy a significant number of these emerging economies are in africa rising growth in these economies is associated with surging demand for energy to propel the engines of growth with direct implications on emissions into the atmosphere further these economies are constantly being shaped by series of structural reforms with direct and indirect effects on growth demand for energy etc to this end this paper examines the causal dynamics among energy use real gdp and co2 emissions in the presence of regime shifts in six emerging african economies using the gregory and hansen 1996a j econ 70 99 126 threshold cointegration and the toda and yamamoto 1995 j econometrics 66 225 250 granger causality techniques results confirm the presence of regime shift effects in the long run inter linkages among energy use real gdp and co2 emissions in the countries considered thus indicating that structural changes have both economic and environmental effects hence integration of energy and environmental policies into development plans is imperative towards attaining sustainable growth and development

mythologies of work a comparison of firms in state socialism and advanced capitalism comparative studies of capitalist and state socialist countries have rested on weak empirical bases namely the comparison of ideal type models or comparisons of the realities often distorted of one society with an ideal type of the other this is particularly true of the firm which has remained a black box in conventional analyses of state socialism on the basis of case studies of two comparable firms one in the united states and one in hungary we criticize eight stereotypes that underly the presumption that state socialist firms are necessarily less efficient than capitalist firms we then propose conditions under which capitalistfirms may be less technically efficient than state socialist firms

environment kuznets curve for co2 emissions a cointegration analysis for china abstract this study examines the long run relationship between carbon emissions and energy consumption income and foreign trade in the case of china by employing time series data of 1975 2005 in particular the study aims at testing whether environmental kuznets curve ekc relationship between co 2 emissions and per capita real gdp holds in the long run or not auto regressive distributed lag ardl methodology is employed for empirical analysis a quadratic relationship between income and co 2 emission has been found for the sample period supporting ekc relationship the results of granger causality tests indicate one way causality runs through economic growth to co 2 emissions the results of this study also indicate that the carbon emissions are mainly determined by income and energy consumption in the long run trade has a positive but statistically insignificant impact on co 2 emissions

bounds testing approach to analysis of the environment kuznets curve hypothesis abstract this paper examines the long run and the dynamic temporal relationships between economic growth energy consumption population density trade openness and carbon dioxide co 2 emissions in brazil china egypt japan mexico nigeria south korea and south africa based on the environment kuznets curve ekc hypothesis we employ the ardl bounds test to cointegration and cusum and cusumsq tests to ensure cointegration and parameter stability the estimated results show that the inverted u shaped ekc hypothesis holds in japan and south korea in the other six countries the long run relationship between economic growth and co 2 emissions follows an n shaped trajectory and the estimated turning points are much higher than the sample mean in addition the results indicate that energy consumption granger causes both co 2 emissions and economic growth in all the countries our results are consistent with previous studies that show that there is no unique relationship between energy consumption population density economic growth trade openness and the environment across countries

the influence of unrelated and related diversification on fraudulent reporting this study suggests that unrelated diversification has a positive influence on the probability of fraudulent reporting whereas related diversification has a negative influence on the probability of fraudulent reporting the strength of the influence of these corporate level strategies is contingent on the moral character of the firm unrelated diversification provides opportunity for financial innovation within the firm s internal capital market which can result in fraudulent reporting this is more likely when the moral character of the firm is driven by a conscienceless financial self interest motive as implied by the firm s contempt toward the larger community in terms of damage inflicted on the interests of people outside the firm in contrast related diversification where product divisions focus on mutual sharing and monitoring of operational activities can reduce the probability of fraudulent reporting this is more likely when constituents within the firm view themselves as moral citizens as implied by the firm s benevolence toward the larger community hence while unrelated diversification focuses the energies of managers within the firm on financial manipulation related diversification focuses these energies on productive purposes

can social cohesion be harnessed to repair market failures evidence from group lending in guatemala the success of group lending in developing countries has been attributed to the ability of the institution to mitigate asymmetric information problems in credit markets previous research has offered a number of explanations for this phenomenon social ties between borrowing group members internal group pressure to repay loans and peer monitoring this research presents empirical tests on borrowing group data from guatemala which indicate that peer monitoring significantly effects borrowing group performance through stimulating intra group insurance group pressure is found to have a small effect in deterring moral hazard while the effect of social ties among members is statistically insignificant

large shareholders and the monitoring of managers the case of antitakeover charter amendments this paper examines the role of large shareholders in monitoring managers when they propose antitakeover charter amendments we attempt to distinguish between two competing hypotheses the active monitoring hypothesis and the passive voting hypothesis we find a statistically significant positive relation between institutional ownership and the stockholder wealth effects of various types of amendments after controlling for ownership concentration among institutions managerial ownership and firm size our empirical evidence lends support to the active monitoring hypothesis proposed by demsetz 1983 and shleifer and vishny 1986 that the existence of large shareholders leads to better monitoring of managers

the long run and causal analysis of energy growth openness and financial development on carbon emissions in turkey abstract the aim of this paper is to examine the causal relationship between financial development trade economic growth energy consumption and carbon emissions in turkey for the 1960 2007 period the bounds f test for cointegration test yields evidence of a long run relationship between per capita carbon emissions per capita energy consumption per capita real income the square of per capita real income openness and financial development the results show that an increase in foreign trade to gdp ratio results an increase in per capita carbon emissions and financial development variable has no significant effect on per capita carbon emissions in the long run these results also support the validity of ekc hypothesis in the turkish economy it means that the level of co 2 emissions initially increases with income until it reaches its stabilization point then it declines in turkey in addition the paper explores causal relationship between the variables by using error correction based granger causality models

co2 emissions energy consumption economic and population growth in malaysia abstract this study investigates the dynamic impacts of gdp growth energy consumption and population growth on co2 emissions using econometric approaches for malaysia empirical results from ardl bounds testing approach show that over the period of 1970 1980 per capita co2 emissions decreased with increasing per capita gdp economic growth however from 1980 to 2009 per capita co2 emissions increased sharply with a further increase of per capita gdp this is also supported by the dynamic ordinary least squared dols and the sasabuchi lind mehlum u slm u test tests consequently the hypothesis of the ekc is not valid in malaysia during the study period the results also demonstrate that both per capita energy consumption and per capita gdp has a long term positive impacts with per capita carbon emissions but population growth rate has no significant impacts on per capita co2 emission however the study suggests that in the long run economic growth may have an adverse effect on the co2 emissions in malaysia thus significant transformation of low carbon technologies such as renewable energy and energy efficiency could contribute to reduce the emissions and sustain the long run economic growth

internal versus external capital markets this paper presents a framework for analyzing the costs and benefits of internal versus external capital allocation we focus pritnarily on comparing an internal capital market with bank lending while both represent centralized forms of financing in the former case the financing is owner provided while in the latter ceise it is not we argue that the ownership aspect of internal capital allocation has three important consequences 1 it leads to more monitoring than bank lending 2 it reduces managers entrepreneurial incentives and 3 it makes it easier to efficiently redeploy the assets of projects that are performing poorly under existing management

co2 emissions energy consumption income and foreign trade a south african perspective abstract the effect of trade liberalisation on environmental conditions has yielded significant debate in the energy economics literature although research on the relationship between energy consumption emissions and economic growth is not new in south africa no study specifically addresses the role that south africa s foreign trade plays in this context a surprising fact given trade is one of the most important factors that can explain the environmental kuznets curve this study employs recent south african trade and energy data and modern econometric techniques to investigate this the main finding of interest in this paper is the existence of a long run relationship between environmental quality levels of per capita energy use and foreign trade in south africa as anticipated per capita energy use has a significant long run effect in raising the country s co 2 emission levels yet surprisingly higher levels of trade for the country act to reduce these emissions granger causality tests confirm the existence of a positive bidirectional relationship between per capita energy use and co 2 emissions whilst the study also finds positive bidirectional causality between trade and income per capita and between trade and per capita energy use it appears however that trade liberalisation in south africa has not contributed to a long run growth in pollution intensive activities nor higher emission levels

to steal or not to steal firm attributes legal environment and valuation data on corporate governance and disclosure practices reveal wide within country variation that decreases with the strength of investors legal protection a simple model identifies three firm attributes related to that variation investment opportunities external financing and ownership structure using firm level governance and transparency data from 27 countries we find that all three firm attributes are related to the quality of governance and disclosure practices and firms with higher governance and transparency rankings are valued higher in stock markets all relations are stronger in less investor friendly countries demonstrating that firms adapt to poor legal environments to establish efficient governance practices

variance vs downside risk is there really that much difference abstract the popularity of downside risk among investors is growing and mean return downside risk portfolio selection models seem to oppress the familiar mean variance approach the reason for the success of the former models is that they separate return fluctuations into downside risk and upside potential this is especially relevant for asymmetrical return distributions for which mean variance models punish the upside potential in the same fashion as the downside risk the paper focuses on the differences and similarities between using variance or a downside risk measure both from a theoretical and an empirical point of view we first discuss the theoretical properties of different downside risk measures and the corresponding mean downside risk models against common beliefs we show that from the large family of downside risk measures only a few possess better theoretical properties within a return risk framework than the variance on the empirical side we analyze the differences between some us asset allocation portfolios based on variances and downside risk measures among other things we find that the downside risk approach tends to produce on average slightly higher bond allocations than the mean variance approach furthermore we take a closer look at estimation risk viz the effect of sampling error in expected returns and risk measures on portfolio composition on the basis of simulation analyses we find that there are marked differences in the degree of estimation accuracy which calls for further research

co2 emissions energy consumption and output in france abstract this paper examines the dynamic causal relationships between pollutant emissions energy consumption and output for france using cointegration and vector error correction modelling techniques we argue that these variables are strongly inter related and therefore their relationship must be examined using an integrated framework the results provide evidence for the existence of a fairly robust long run relationship between these variables for the period 1960 2000 the causality results support the argument that economic growth exerts a causal influence on growth of energy use and growth of pollution in the long run the results also point to a uni directional causality running from growth of energy use to output growth in the short run

testing alternative theories of the firm transaction cost knowledge based and measurement explanations for make or buy decisions in information services firms boundary choices have undergone careful examination in recent years particularly in information services while transaction cost economics provides a widely tested explanation for boundary choice more recent theoretical work advances competing knowledge based and measurement cost explanations similar to transaction cost economics these theories examine the impact of exchange attributes on the performance of markets and hierarchies as institutions of governance these theories however offer alternative attributes to those suggested by transaction cost economics or offer alternative mechanisms through which similar attributes influence make buy choices traditional empirical specifications of make buy models are unable to comparatively test among these alternative theories by developing and testing a model of comparative institutional performance rather than institutional choice we examine the degree of support for these competing explanations of boundary choice hypotheses are tested using data on the governance of nine information services at 152 companies our results suggest that a theory of the firm and a theory of boundary choice is likely to be complex requiring integration of transaction cost knowledge based and measurement reasoning 1998 john wiley sons ltd

energy consumption economic growth and co2 emissions in middle east and north african countries this article extends the recent findings of liu 2005 ang 2007 apergis et al 2009 and payne 2010 by implementing recent bootstrap panel unit root tests and cointegration techniques to investigate the relationship between carbon dioxide emissions energy consumption and real gdp for 12 middle east and north african countries mena over the period 1981 2005 our results show that in the long run energy consumption has a positive significant impact on co2 emissions more interestingly we show that real gdp exhibits a quadratic relationship with co2 emissions for the region as a whole however although the estimated long run coefficients of income and its square satisfy the ekc hypothesis in most studied countries the turning points are very low in some cases and very high in other cases hence providing poor evidence in support of the ekc hypothesis co2 emission reductions per capita have been achieved in the mena region even while the region exhibited economic growth over the period 1981 2005 the econometric relationships derived in this paper suggest that future reductions in co2 emissions per capita might be achieved at the same time as gdp per capita in the mena region continues to grow

testing a causal model of corporate risk taking and performance the determinants of organizational risk taking and its impact on economic performance are critical issues in strategic management using a model that included risk performance performance expecta

the saving and investment nexus for china evidence from cointegration tests the saving and investment nexus as postulated by feldstein and horioka fh 1980 is revisited the saving investment correlation for china is estimated over the periods 1952 1998 and 1952 1994 the latter culminating in a period of fixed exchange rate regime amongst the key results it is found that saving and investment are correlated for china for both the period of the fixed exchange rate and the entire sample period with high saving investment correlation the results suggest that the chinese economy is in conformity with the fh hypothesis this is a valid outcome for in china capital mobility was fairly restricted over the 1952 1994 period as indicated by the relatively low foreign direct investment