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--- - |2 The capacity of an organization to innovate, change, and be effective depends on the skills and abilities of employees, highlighting the importance of developing individual capabilities. The 70:20:10 framework is used by practitioners to guide them when developing effective learning and development programs. Although the framework has been adopted globally in both private and public sectors, its effectiveness has not been assessed in relation to the transfer of learning. Using qualitative data from the Australian public sector, this study explores how the framework is being implemented and whether it facilitates the transfer of learning to build middle management capability. Results showed that despite middle managers' awareness of, and willingness to take part in, ongoing skill development, attempts to develop capability through learning transfer by implementing the 70:20:10 framework were not achieving the desired outcomes. The research suggests that learning transfer and managerial capability development was hindered through four misconceptions regarding the framework's implementation. These are: an overconfident assumption that unstructured experiential learning automatically results in capability development; a narrow interpretation of social learning; the expectation that managerial behavior would automatically change following formal training and development activities without the need to actively support the process; and a lack of recognition of the requirement of a planned and integrated relationship of all three aspects of the framework. We suggest future research seeks to explicate the role of social learning in supporting the efficacy of both formal and experiential learning. - Human Resource Development Quarterly, EarlyView.

--- - |2 This study explores how entrepreneurs develop human resources within their firms. Based on an analysis of interviews with entrepreneurs and new venture consultants, we describe entrepreneurs' human resources development (HRD) approaches. We found that entrepreneurs rely on networking and creativity, aim to leverage employees' interest and competencies, and allow cocreation by employees; current requirements and situational conditions shape entrepreneurs' HRD decisions. To elaborate on our findings, we draw on the distinction between causation and effectuation. We describe an entrepreneurial HRD process that combines both a causation‐based and an effectuation‐based HRD approach. - Human Resource Development Quarterly, EarlyView.

--- - |2 Following the 2007/2008 global financial crisis, the UK public sector has experienced major funding cuts resulting in staffing reductions and a dilution in the employment deal. Consequently, the aim of this study is to understand how i‐deals, which are unique conditions of employment negotiated between an individual and their employer (Rousseau, 2005), may be used to accept a new psychological contract and foster employee engagement during austerity. Four qualitative team case studies were conducted comprising senior, middle‐line, and first‐line managers, and either professional or nonprofessional employees, within one English local authority (LA). Methods included 29 × one‐to‐one and three focus group semistructured interviews incorporating the critical incident technique. By examining i‐deals through the lens of social exchange theory (Blau, 1964), this research demonstrates the role of reciprocity in the form of i‐deals to accept the new psychological contract and foster engagement. Here, for some employees, once concrete and universal resources were available to a certain level (e.g., pay), the difference (e.g., universal resources such as a pay rise, external training) was substituted by more particularistic resources (e.g., flexibility and developmental i‐deals) herewith extending Foa and Foa's (1976, 1980, and 2012) resource theory. Furthermore, resultant economic or social exchange may be due to the individual attribution of why the i‐deal was agreed, rather than the i‐deal content. Finally, when i‐deals are denied, action to lower the risk of psychological contract breach is advised. - Human Resource Development Quarterly, EarlyView.

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--- - |2 Extant literature draws numerous links between aspects of human resource development (HRD) activity and organizational creativity/innovation, noting that investments in learning positively impact creative output. Within this research base, studies suggest that the ability to self‐direct learning activity can influence creative performance, but we do not yet understand how such processes operate, particularly in small‐medium enterprise (SME) contexts. Given the positive economic and social impacts generated by SMEs, themselves often being sources of breakthrough product or service innovation, this is an important research problem that requires our collective attention. This article argues that while the ability to self‐direct learning activity does contribute to the generation of ideas in SME contexts, the presence of multiple stakeholder voices in the learning conversation suggests that learning is better conceptualized as codirected rather than self‐directed. This study finds that codirected approaches to learning operate through a mechanism termed “participative dialogue,” whereby both employees and managers contribute to learning conversations. It also highlights the role of employee critical self‐appraisal in driving self‐directedness and contributing to the generation of ideas. Findings ultimately suggest that codirection of learning benefits idea generation because such approaches facilitate the emergence of unexpected patterns of thinking, which drive the divergence that creativity depends upon. - Human Resource Development Quarterly, EarlyView.

--- - |2 This is a methodological presentation of the relationship between semantics and survey statistics in human resource development (HRD) research. This study starts with an introduction to the semantic theory of survey response (STSR) and proceeds by offering a guided approach to conducting such analyses. The reader is presented with two types of semantic algorithms and a brief overview of how they are calculated and how they can be accessed by interested researchers. Subsequently, we use semantic data to reanalyze a previously published study on the relationships between perceptions of a trainee program, intrinsic motivation, and work outcomes. The semantic algorithms can explain between 31 and 55% of the variation in the observed correlations. This article shows how the statistical models originally used to explore the survey data can be replicated using semantics either alone or as an identifiable source of variation in the data. All the steps are presented in detail, and the datasets as well as the statistical syntax necessary to perform the analyses are made available to the readers. Implications for methodology and the improvement of predictive validity in HRD research are discussed. - Human Resource Development Quarterly, EarlyView.

--- - |2 According to the U.S. Department of Justice (2007), over 10,000 formerly incarcerated individuals are released each week from federal and state prisons. The purpose of this study is to draw upon human capital theory to examine the relationships between the types of training programs and gainful employment for formerly incarcerated individuals. Three types of training programs considered in this study are school‐based training programs, pre‐employment training programs, and postemployment training programs. Generalized linear mixed models are used to determine if each type of training program is related to employment status and income. Based on a sample from the National Longitudinal Survey of Youth 1997 (NLSY97), postemployment training programs are positively related to gainful employment for formerly incarcerated individuals. This result emphasizes the pivotal role of employers in addressing mass incarceration through human resources development (HRD). - Human Resource Development Quarterly, Volume 29, Issue 3, Page 263-286, Fall 2018.

--- - |2 This study examined the extent to which the factor structure of the Knowledge‐Creation Practice Inventory (KCPI) is invariant across different occupational groups in South Korea, based on the studies of Song et al in 2011 and 2012. Inspired by Nonaka's (1994) knowledge‐conversion theory, the inventory consists of four dimensions (i.e., knowledge sharing, creating concepts, justifying concepts, and building prototypes), measured by 11 items. A total of 2,364 responses collected from school teachers (n = 1,864), public‐sector employees (n = 214), and private‐sector employees (n = 286) were utilized to examine the measurement invariance, using a series of hierarchical multigroup confirmatory factor analyses. The results indicated that the four‐factor, 11‐item measurement model is equivalent across the three groups, supporting configural invariance, metric invariance, scalar invariance, and factor variance/covariance invariance, except factor mean invariance. A series of post‐hoc tests were additionally conducted to identify the factor mean differences among the three groups. Based on the results of this study, future researchers should use more diverse samples including a wide range of cultures or different subcultural groups (e.g., occupations, genders, and educational backgrounds) to expand the universality of the factor construct. Relevant organizations can utilize the inventory to assess their current capacity of knowledge creation and design for appropriate human resource (HR) or organizational development interventions to nurture and enhance employees' learning‐related behaviors. Since the generalizability and validity of the KCPI were supported in this study, at least among these three groups, more reliable, rigorous group comparisons are available for future research utilizing this inventory. - Human Resource Development Quarterly, Volume 29, Issue 3, Page 243-262, Fall 2018.

--- - |2 Managerial coaching (also known as the leader‐as‐coach model) is becoming prevalent as a new management paradigm to develop and empower employees and help them increase their performance. At the same time, the composition of the workforce has changed, with female employees reaching almost 50% of workers and around 30% of managers. Accordingly, scholars have set out to understand if gender affects managerial behaviors and employee responses. The goal of this study is to evaluate if significant differences in performance should be expected when coaching female and male employees. The results suggest that female and male responses to managerial coaching are more complex than expected. Managerial coaching positively affects female behavioral and result performance and male behavioral performance, but—contrary to expectations—no significant effect was found for coaching on male result performance. Additionally, female and male employees differ in their self‐evaluation of the focal performance constructs, with females evaluating their contribution to performance at lower levels than their male counterparts. The results suggest that, to be an effective developmental tool, the approach taken with coaching should take into consideration the recipient's gender and address different areas of performance. - Human Resource Development Quarterly, Volume 29, Issue 3, Page 219-241, Fall 2018.

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--- - |2 From the perspective of a person‐centered approach, the purpose of this study is to identify and analyze latent profiles of employees according to the employees' levels of work‐to‐family conflict (WFC) and family‐to‐work conflict using latent‐profile analysis. This study utilized work, family, and health study (WFHS) data compiled from 823 employees at select Fortune 500 information technology (IT) companies. The data were examined using multinomial logistic regression analysis to determine whether individuals could be grouped into certain profiles according to their demographic characteristics. The group differences in the outcome variables of the WFC were also considered using the analysis of variance technique. The results suggest that HR/HRD professionals should consider how various types and intensities of conflicts combine to influence employees and should deploy this information when designing strategies and interventions to reduce WFCs. - Human Resource Development Quarterly, Volume 29, Issue 3, Page 203-217, Fall 2018.

--- - |2 The development of leaders and building of leadership capacity are central concerns of HRD research and practice, yet the large and high‐impact area of leadership education provided by U.S. universities to undergraduate students is missing from the domain literature. Over the past 20 years, leadership education has become a common feature at universities and colleges in the United States and is experiencing strong demand and institutional support. Leadership development operates in parallel to the traditional curriculum shaping the career trajectories of university graduates and adding to the talent pool of hiring organizations. This article outlines the status of university‐based leadership education in the United States, offers a critical assessment, and highlights areas in need of investigation and scholarship of relevance to HRD. - Human Resource Development Quarterly, EarlyView.

This paper proposes the adoption of an opportunity egalitarian perspective to assess and compare growth processes and their distributional implications. To this aim, a set of graphical tools are introduced that allow one to evaluate the role of growth and recessions in the evolution of individuals’ opportunities over time. These tools satisfy the ex post principle of equality of opportunity and represent an extension of the “opportunity growth incidence curve,” a framework proposed by the literature to evaluate growth according to the ex ante principle of equality of opportunity. This measurement framework is applied to evaluate the economic dynamic between 2009 and 2011 in Uganda. The results show that despite a reduction in the real value of household consumption and a surge in outcome inequality, its effects appear to be less dramatic when the ex post equality of opportunity perspective is invoked.

This paper looks at the effect schooling has had on household welfare in Sri Lanka during the 1990–2006 period, on average and across the welfare distribution. We account for the endogeneity of schooling using quantile instrumental variable estimation as developed in Chernozhukov, Fernández‐Val, and Kowalski (). We use pooled data from four cross‐sectional Household Income Expenditure Surveys. The results show that an extra year of schooling on the part of the most educated adult member in the household can increase welfare (proxied by real per capita consumption expenditure) by 3.8 percent on average. However, the effect varies considerably across the welfare distribution: At the lower end, around the 20th and 25th quantiles, an extra year of education increases welfare by 6 and 5 percent, respectively, while at the median it is around 3.5 percent. At the higher, 90th quantile it is much less, at 1 percent. Thus the marginal effect of schooling on welfare is significant and positive at all levels of the welfare distribution, but highest at the lower and middle quartiles. This result is different from findings in the literature that tend to show larger effects at higher quantiles, when endogeneity is uncorrected.

We present a theoretical methodology for the pricing of catastrophe (CAT) derivatives with event‐dependent and non‐convex payoffs given the price of a CAT indexed futures contract. We do not assume a fully diversifiable CAT event risk, nor do we assume knowledge of the martingale probability measure beyond the futures price. We derive tight bounds on the contract value and present trading strategies exploiting the mispricing whenever the bounds are violated. We estimate the bounds of the reinsurance contract with data from hurricane landings in Florida. Our method is also applicable when there is no futures market but the price of a CAT‐indexed bond is available.

U.S. firms recorded an unprecedented number of asset impairments during the recent financial crisis. We investigate the timing of these losses in the context of two competing views on how firms use discretion over asset impairments. The first view posits that firms record impairments to convey private information as part of their commitment to a conditionally conservative reporting strategy. The second view argues that firms use their discretion to report opportunistically by delaying the recording of bad news. Consistent with the first view, we find that firms recorded timelier asset impairments during the financial crisis if they reported more conservatively in the five years preceding the crisis. Further tests show this relation is greater for firms with strong corporate governance, industry‐specialist auditors, and high leverage, indicating the importance of monitoring mechanisms in determining how firms handle the discretion involved in impairment decisions. We also test for the consequences of timely asset impairments during the financial crisis and find that firms reporting conservatively both before and during the crisis were able to acquire more debt financing, and their publicly traded bonds suffered smaller increases in illiquidity. Collectively, our study highlights the role of asset impairments in firms’ accounting choices over time. This article is protected by copyright. All rights reserved

This study examines whether directors’ and officers’ insurers and lenders effectively monitor securities litigation and respond through pricing before case outcomes are known. By “monitoring,” we refer to tracking case progress and obtaining information from the insured (defendant) firm and its counsel prior to case resolution. We find that insurers and lenders increase rates, and that this effect is almost completely isolated to firms with cases that eventually settle. We confirm that this response is reasonable as settled cases are associated with lower future earnings, while there is generally no relation between future earnings and dismissed cases. As direct costs appear low, our results suggest that most costs are indirect in the form of reputational damage. Overall, our results suggest that researchers and policymakers interested in litigation should focus on settled cases, which are the only cases with material long‐term costs.

We used Medicare administrative data (2002–2009) and an instrumental variables design that exploits the natural experiment created by the implementation of Medicare Part D to estimate the effect of prescription drug coverage insurance on the use and costs of inpatient services. We find that gaining prescription drug insurance through Part D caused approximately a 4 percent decrease in hospital admission rate, a 2–5 percent decrease in Medicare inpatient payments per person, and a 10–15 percent decrease in inpatient charges. Among specific types of admissions, gaining insurance was associated with significant decreases in admissions for CHF and COPD.

Manuscript Type Conceptual and empirical. Research Question/Issue Many studies of firm‐level corporate governance rely on aggregate “indices” to measure underlying, unobserved governance. But we are not confident that we know how to build these indices. Often we are unsure both as to what is “good” governance, and how one can proxy for this vague concept using observable measures. We conduct an exploratory analysis of how researchers can address the “construct validity” of firm‐level governance indices, which poses a major challenge to all studies that rely on these indices. Research Findings/Insights We assess the construct validity of governance indices for four major emerging markets (Brazil, India, Korea, and Turkey), developed in prior work. In that work, we built country‐specific indices, using country‐specific governance elements that reflect local norms, institutions, and data availability, and showed that these indices predict firm market value in each country. The use of country‐specific indices puts great stress on the construct validity challenge of assessing how well a governance measure matches the underlying concept. We address here how well these four country‐specific indices, and subindices for aspects of governance such as board structure or disclosure, coherently measure unobserved, underlying actual governance. Theoretical/Academic Implications We provide guidance on how researchers can address the construct validity of corporate governance indices. Practitioner/Policy Implications The uncertain construct validity of most corporate governance indices suggests caution in relying on research using these indices as a basis for firm‐level governance changes, or country‐level legal reforms.

Literature examining WTO+ commitments in services trade agreements (STAs) has not considered the role of services regulation. We bridge this gap using a sample of 15 South/South‐East Asian countries, given the burgeoning trend of Asian economies towards services preferentialism and the largely WTO+ nature of their preferential services commitments. Our empirical findings suggest that Asian trading dyads with regulatory frameworks that are more similar and more trade restrictive tend to undertake higher levels of WTO+ commitments in their STAs. There is also evidence in our results, including by modes of supply, for WTO+ commitments in Asian STAs being driven by goods trade complementarities, alluding to supply chain dynamics in the region. Such results support the hypothesis that the heightened “servicification” of production generates a demand to lower services input costs arising from regulatory incidence and heterogeneity.

Are blind spots of public debt spikes sizable? And how do they affect financial stress indicators? This paper tackles these questions empirically, using information from 179 episodes of public debt spikes between 1945 and 2014. We find that large public debt spikes are neither driven by high primary deficits nor by output declines but instead by stock‐flow adjustments. These blind spots in debt dynamics are sizable in both advanced economies and emerging markets and could amount to more than 20% of gross domestic product in the median episode. These public debt spikes increase financial stress indicators significantly, in particular when a large share of public debt is held by domestic commercial banks. Enhanced transparency and better debt forecasting tools could help address financial market tensions resulting from blind spots in debt dynamics.

In this paper, we show theoretically and empirically that the US quantitative easing (QE) policy results in lower exchange rate pass‐through into the destination prices of Chinese exporters. In addition, the more the exchange rate in the export destination appreciates than the Chinese yuan, the stronger this effect becomes. Our model combines various marginal effects of QE policy on the destinations of Chinese exporters and variable markups of export firms due to strategic complementarities. The model predicts that the impact of US QE policy on the pass‐through of Chinese exporters depends on its spillover on the exchange rate between China and the export destination of different firms. We provide strong support for the model predictions using Chinese firm‐product‐level data with information on export destinations. The baseline result and the heterogeneity we find in the response of exchange rate pass‐through of Chinese exporters to US QE policy remain robust to alternative measures of samples and controls.

Banking groups exploit double leverage when “debt is issued by the parent company and the proceeds are invested in subsidiaries as equity” (Board of Governors of the Federal Reserve System (2016)). Financial authorities have frequently raised concerns about the issue of double leverage because this type of intra‐firm financing appears to allow for both the arbitrage of capital and the assumption of risk. This article focuses on the relationship between double leverage and risk‐taking within banking groups. First, we discuss this relationship based on an examination of balance sheet figures. Second, we analyse a large sample of United States Bank Holding Companies (BHCs) from 1990–2014. The results show that BHCs are more prone to risk when they increase their double leverage, namely, when the stake of the parent within subsidiaries is larger than the stand‐alone capital of the parent. This paper's primary implication for policymakers is that the regulators of complex financial entities should more efficiently address the issue of double leverage, thereby limiting the potential negative consequences that arise from corporate instability. This article is protected by copyright. All rights reserved

The world capital asset‐pricing model is the benchmark model in international finance. However, recent research finds that the premium on the world market factor is insignificant. In this paper, we investigate if the world market risk premium is particularly significant on US macroeconomic announcement days. Empirically, we apply the methodology to daily country exchange‐traded funds. Our findings suggest that although the world market risk premium is insignificant on nonannouncement days, it is strongly significant on US macroeconomic announcement days. In addition, we find that US monetary policy announcements are the most important macroeconomic announcements to drive the world market risk premium. Our findings are consistent with the notion of monetary policy uncertainty and the empirical literature that connects policy uncertainty with systematic risk.

This paper presents new evidence on the impact of the preferential treatment of owner‐occupied housing in Europe. We find that tax benefits to homeowners reduce the user cost of housing capital by almost 40 percent compared to the efficient level under neutral taxation. On average, the tax subsidy translates into an excess consumption of housing services equivalent to 7.8 percent of the value of owner‐occupied housing, or about 30 percent of financial asset holdings in household portfolios. The bulk of the subsidies stems from under‐taxation of the return to home equity, while the average contribution of the tax rebate for mortgage interest payments is driven down by relatively low loan‐to‐value ratios in the data. However, at the margin, the tax–induced incentive to use mortgage debt to finance the purchase of the main residence is sizable. This article is protected by copyright. All rights reserved

This paper discusses some limitations of discretionary accruals measures. While discretionary accruals are acknowledged to be noisy proxies for earnings management, they are still widely used in the literature. This paper attempts to explain from basic econometrics how discretionary accruals are estimated, and in doing so why they are inappropriate measures for earnings management. It is shown that decisions of peer firms will influence the regression coefficients, and hence residuals, in accruals models, which may lead to false conclusions about earnings management in other firms. This point is emphasized using an artificially constructed firm with no changes in its fundamental performance, and hence no discretion in its accruals. I also note concerns about the inferences, which are commonly not acknowledged in research. Finally, using Accounting and Auditing Enforcement Releases and Enron as examples, I demonstrate how discretionary accruals do not capture what literature often claims.

In this paper, a panel analysis is employed to investigate the effects of fiscal policies on stock market indexes in 11 members of the Eurozone. Many studies have focused on the effects of monetary policy on the stock market, whereas the number of contributions studying the effects of fiscal policy on the stock market is surprisingly limited. Therefore, we know little, if any, on the sign and stability of the stock market reaction to fiscal policies. Our results show that fiscal policies influence the stock market and that, following an increase (decrease) in public deficit, stock market indexes go down (up). Nevertheless, further analysis shows that the signs of the estimated stock market reactions are not constant over time and that they change according to the surrounding macroeconomic scenario.

This study assesses the performance of the quantitative easing policy implemented by the United States (US) on the stock markets with a framework of structure break. The empirical results show that the business cycle or the value of gross domestic production has a negative impact on the stock markets for most of the countries even if both gross domestic production and many stock prices are procyclical. Moreover, the purchases of US Treasury securities and mortgage‐backed securities respectively affect the stock markets synchronously and laggardly. Notably, they both have a positive impact on the stock markets during the study period. Finally, during the after structure break period, the volatility can be easily affected by bad news, and the investors have the lower profit or even the greater loss and bear the greater risk and variation of risk owing to the global financial crisis caused by the US. On the basis of the above findings, some policy implications are offered in this study.

This paper studies the impact of modelling time‐varying variances of stock returns in terms of risk measurement and extreme risk spillover. Using a general class of regime‐dependent models, we find that volatility can be disaggregated into distinct components: a persistent stable process with low sensitivity to shocks and a high volatility process capturing rather short‐lived rare events. Out‐of‐sample forecasts show that, once regime shifts are accounted for, accuracy is improved compared to the standard generalized autoregressive conditional heteroscedasticity or the historical volatility model. Volatility plays an important role in controlling and monitoring financial risks. Therefore, by means of a risk management application, we illustrate the economic value and the practical implications of risk control ability of the models in terms of value at risk. Finally, tests for predictability in co‐movements in the tails of stock index returns suggest that large losses are strongly correlated, supporting asymmetric transmission processes for financial contagion in the left tail of return distributions, whereas contagion in reverse direction (gains) is weak.

A tension has been identified between the acquisition and participation metaphors for learning, and it is generally agreed that this tension has still not been adequately resolved. In this paper, we offer an alternative to the acquisition and participation metaphors for learning: the metaphor of mastering. Our claim is that the mastering metaphor, as grounded in inferentialism, allows one to treat both the acquisition and participation dimensions of learning as complementary and mutually constitutive. Inferentialism is a semantic theory which explains concept formation in terms of the inferences individuals make in the context of an intersubjective practice of acknowledging, attributing, and challenging one another's commitments. We first introduce the key concepts of inferentialism and consider the perspective on learning that inferentialism inspires. Then, we condense the lessons of the inferentialist concepts into a single mastering metaphor for learning and argue that learning consists in the process by which learners come to master concepts and practices. We conclude by discussing how the mastering metaphor could be put to work in a theoretical reconciliation of the cognitive and sociocultural dimensions of learning.

We propose a bargaining model of tax evasion with a seller that offers a price discount to a buyer in exchange for a cash payment without a receipt, which allows tax evasion. We study the effect on evasion and government revenue of two policy instruments: a tax on cash withdrawals (TCW), that imposes a cost on the buyers who pay cash, and a tax rebate conditional on the receipt. The tax rebate reduces evasion but it is costly if tax evasion is low. The TCW reduces evasion only if it is set at a sufficiently high rate, that must be higher the larger is the mass of cash users. We also show that the implementation of the TCW, which poses several challenges, is easier if the cost of cash hoarding is high.

This study investigates the sourcing patterns of Japanese export‐platform foreign affiliates in Mexico, which mainly export to the United States and Canada. We propose a novel approach to estimate intermediate input elasticities of exports by sourcing country. We find that, on average, Japanese export‐platform foreign affiliates in Mexico source intermediate inputs from third countries, including the United States and Canada, rather than from Japan and Mexico, suggesting that Japanese export‐platform foreign affiliates in Mexico are mainly integrated into the vertical production networks back and forth between Mexico, the United States and Canada. In turn, Japanese foreign affiliates selling domestically in Mexico source intermediate inputs not only within the North American Free Trade Agreement countries but also from Japan. In addition, we find that export‐platform foreign affiliates in Mexico use more labour‐intensive production than do foreign affiliates selling domestically in Mexico. This suggests that saving labour costs is one of the motives for export‐platform foreign direct investment in Mexico.

We conduct the most comprehensive empirical analysis that exists to date of the effect multinationality has on the explanatory power of country and industry factors in international diversification. We investigate the impact the size, scope, and location of a company's international sales has on country versus industry factors, analysing 1,276 firms from Belgium, Canada, France, Germany, Italy, Japan, the Netherlands, Spain, the UK, and the US over the 15‐year period, 1998–2012. We find that the magnitude of the country factor is greater than the magnitude of the industry factor for the period as a whole but that a company's level of international sales has a greater impact on the magnitude of its industry factor than the magnitude of its country factor. Counter‐intuitively, we find stocks with lower sales exposure to their country of origin have a higher country factor, and we show the existence of both a strong local and international industry factor. Our results suggest country‐of‐origin diversification may no longer be sufficient to exploit country‐specific risk and the country factor has become a “country classification” factor.

Survey under‐coverage of top incomes leads to bias in survey‐based estimates of overall income inequality. Using income tax record data in combination with survey data is a potential approach to address the problem; we consider here the UK's pioneering ‘SPI adjustment’ method that implements this idea. Since 1992, the principal income distribution series (reported annually in Households Below Average Income) has been based on household survey data in which the incomes of a small number of ‘very rich’ individuals are adjusted using information from ‘very rich’ individuals in personal income tax return data. We explain what the procedure involves, reveal the extent to which it addresses survey under‐coverage of top incomes, and show how it affects estimates of overall income inequality. More generally, we assess whether the SPI adjustment is fit for purpose and consider whether variants of it could be employed by other countries. This article is protected by copyright. All rights reserved

This paper analyzes the influence of macroeconomic factors on the introduction of antidumping (AD) cases in Brazil and in Argentina. Since this type of research does not have large samples, the relevant variables were selected via Sala‐i‐Martin's () test. The results, estimated using Poisson models, revealed that Brazil and Argentina are influenced by macroeconomic factors. However, the traditional (aggregated) models tend to minimize this influence on Brazil and overestimate it on Argentina. We also found that domestic and foreign income growth, exchange rate devaluation, and a reduction in domestic prices could reduce the number of AD cases in both countries. Therefore, there is evidence that these countries are using the AD law as a political tool, shifting it from its main objective of avoiding unfair trade.

This paper investigates whether there is an S‐curve in Colombia using bilateral and disaggregated quarterly data for the period 1991 to 2014. More precisely, the short‐run effects of a depreciation on the trade balance (TB) are analyzed in 27 industries covered by the Pacific Alliance Group free trade agreement. The S‐curve found in sectors representing 30 percent of total industrial production suggests that in these cases competitive devaluations have a positive effect on the TB in the short run. Our findings have important policy implications: since only large competitive devaluations can restore TB equilibrium, industrial restructuring would appear to be a more sensible strategy, though this cannot be achieved in the short run and is instead a medium‐ to long‐term goal.

A significant part of the global carbon externality stems from the real estate sector. Environmental certification is often hailed as an effective means to resolve the information asymmetry that may prevent markets from effectively pricing the energy performance of buildings. This study analyzes the adoption and financial outcomes of environmentally certified commercial real estate over time. We document that nearly 40 percent of space in the 30 largest U.S. commercial real estate markets holds some kind of environmental certification in 2014, as compared to less than 5 percent in 2005. Tracking the rental growth of 26,212 office buildings, we measure the performance of environmentally certified real estate over time. We document that certified office buildings, on average, have slightly higher rental, occupancy and pricing levels, but do not outperform non‐certified buildings in rental growth over the 2004‐2013 period. Further performance attribution analysis indicates that local climate conditions, local energy prices and the extent of certification lead to significant heterogeneity in market pricing. On aggregate, these findings provide some evidence on the efficiency of the market in the adoption and capitalization of environmental characteristics in the commercial real estate market. This article is protected by copyright. All rights reserved

We study the use of U.S. dollar central bank swap lines as a tool for addressing dislocations in the foreign currency swap market against the USD since the global financial crisis. We find that the use of the Federal Reserve's USD central bank swap lines was mainly related to tensions in U.S. money markets during times of financial crisis, and less to tensions that were confined to foreign exchange swap markets. In particular, we find that the use of USD central bank swap lines did not react significantly to the recent period of persistent deviations of covered interest parity since 2014. These results are consistent with the view that the Federal Reserve was guided by enlightened self‐interest when providing swap lines to foreign central banks, in order to reduce dislocations in U.S. financial markets and support financial stability. In recent years, foreign exchange swap markets have not functioned properly, but it appears that now that the crisis is over, the Federal Reserve and other central banks have decided against trying permanently to fill the gap left by the dysfunction in the commercial foreign exchange swap market.

In this article, I argue that although the Aristotelian ideal of leading a virtuous life for its own sake is admirable, conventional Aristotelian and neo‐Aristotelian accounts of how it might be realised are empirically inadequate: Habituation is unlikely to produce ‘a love of virtue’, practical experience cannot then produce practical judgement or phronesis, and Aristotle's conception of a virtuous life excludes all but an idealised elite. Instead, I argue that two conceptually distinct aspects of moral development can be identified: the ‘Aristotelian’ and the ‘Humean’. In the former, the desire to lead a virtuous life for its own sake is produced through certain forms of challenging experience which, by disturbing and decentring the egoistic self, evoke a personal moral transformation. In the latter, the capacity to act well in specific social situations is the outcome of a process of socialisation, first in upbringing and later through initiation into the practices of adult life. Both aspects should be promoted in moral education for together they produce something akin to full virtue in the Aristotelian sense: Practical wisdom and practical judgement—or phronesis. Moreover, ‘the good life’ is best conceived as encompassing a variety of transcendent goods. To live a virtuous life for its own sake constitutes one good or form of human flourishing; but it is not the only one.

This paper investigates whether the mandatory IFRS adoption has affected the informativeness of analyst recommendation revisions in Europe. Although prior studies document that IFRS adoption improved analyst forecast attributes, the impact of IFRS can't be completely assessed without examining how the market reacts to information‐rich events in an environment with enhanced disclosure. To examine this question we utilize a difference‐in‐differences design using as main control sample firms that had voluntarily adopted IFRS before the EU's mandated switch. Overall, our evidence suggests that after the mandatory adoption of IFRS both analyst upgrades and downgrades are more informative. These results hold after controlling for a number of variables that capture analyst, firm and information environment characteristics and are robust to a number of sensitivity analyses including the use of a US control sample. Finally, we examine whether our results are sensitive to the level of accounting enforcement. We find that analyst downgrades are more informative in the post‐IFRS period for firms in both high and low enforcement environments. Analyst upgrades, however, are more informative only if they are issued for firms in high enforcement countries. This article is protected by copyright. All rights reserved

One of the most important research streams in finance is to understand the determinants of stock market dynamics. Using a large amount of linguistic data regarding 960,808 posts during a 5‐year time period (from March 1, 2008, to August 31, 2013), we develop an economics blogs pessimism indicator (considered as a proxy for either investor sentiment or risk aversion), and we show its validity to build performing trading strategies.

How to discipline managers of cooperative structured financial institutions (co‐ops) is considered a critical issue by the Japanese financial regulatory authorities because co‐ops play a significant role in the domestic banking market, especially for small and medium‐sized enterprises. This paper seeks to clarify whether the effect of the governance‐related variables on firm performance varies across stock and cooperative banks in Japan. We consider regional banks as a proxy of stock banks and Shinkin banks, one of the representative co‐ops, as a proxy of cooperative banks. We use cost and profit efficiency scores obtained from stochastic frontier analysis as performance measures. The results in this paper confirmed that having a large number of board members has negative effects on efficiency measures for both stock and cooperative banks. On the other hand, the presence of outside directors has a significant effect on efficiency measures for cooperative banks, whereas such variables have no significant effect for stock banks. These results suggest that outside directors' discipline is more necessary for cooperative banks than for stock banks, which are under strong pressure from shareholders. For cooperative banks, a high ratio of representative council members, which is the most important decision‐making body for Shinkin banks, has negative effects on efficiency measures. Our findings support the current proposals of the financial regulatory authorities' council to appoint outside directors to the board as a means for strengthening governance of the co‐ops.

The Trans‐Pacific Partnership (TPP) trade agreement, if were it to be successfully implemented, would be one of the largest regional agreements ever seen. It is the only exemplar to date of a “mega‐regional” FTA for which negotiations have been successfully concluded, and a landmark in evolving approaches to Asia–Pacific integration. As such, quantitative assessments of its potential effects are of considerable interest. One of the most widely used techniques for evaluating the economic impact of regional trading agreements is numerical simulation with computable general equilibrium, or CGE, models. There have now been a large number of papers written that use CGE methods to analyse the potential economic impact of the TPP agreement under varying theoretical and policy assumptions. In this paper we provide a synthesis of the key results that have emerged from the literature, and introduce some new simulation results of our own to anchor the discussion.

We show that the weather premium, an anecdotal phenomenon in the U.S. corn futures market, can arise from a convex demand function. We further show that the magnitude of the weather premium depends on the carryout and expected yield at harvest. We use data from 1968 to 2015 to evaluate the accuracy of the December futures price as a forecast of the harvest price. A predictable component in the forecast error is consistent with the existence of a time‐varying weather premium. We demonstrate that a passive strategy of routinely shorting the corn December futures does not provide an attractive risk‐adjusted return.

The potential relationship between time deformation and generalized autoregressive conditional heteroscedasticity (GARCH) is examined. Despite time deformation and GARCH being mean and variance equation phenomena, respectively, they are argued herein to share a common motivation relating to the examination of changes in the temporal evolution of time‐series processes. Via extensive simulation analysis, a close connection between the two concepts is established. It is found that the presence of GARCH can result in the spurious detection of time deformation, particularly when examining the heavy‐tailed distributions and volatile data typically considered in empirical finance. It is shown that although the application of heteroskedasticity corrected covariance matrix estimators often increases, rather than corrects, the detected oversizing of the tests of time deformation, the application of GARCH filters does provide a solution to size distortion. The findings of the experimental analysis are drawn upon to provide a robust empirical examination of the London housing market where evidence of overwhelming and widespread nonlinearity is detected in the form of time deformation. The implications of these findings for the conduct of future, and the interpretation of previous, research are discussed.

This paper reviews parts III and IV of the recent Handbook of Regional and Urban Economics. Many of the surveys within the Handbook relate to two phenomena of interest: the recent boom and bust cycle in U.S. housing markets, and the striking growth of home prices in a few global “Superstar Cities.” Real Estate and Urban economists have made progress in modeling these phenomena. There is considerable room for future research, however. There is no coherent story explaining U.S. home price movements in the 2000s that does not run afoul of important stylized facts. We also have not yet identified the relative importance of supply constraints and demand growth in the rise of Superstar City prices.

The paper investigates the spatial interdependence of US MNE investments in the MENA region. Given the variations in resource endowments, governance structures and degree of infrastructure availability in MENA countries, one would expect these variables to affect an MNE's choice of FDI location. We do find that domestic non‐spatial factors such as own country inflation and governance measured by bureaucratic quality as well as infrastructure affect a host country's inward FDI. We also found that only one measure of natural resource endowment; that is, oil and gas exports were instrumental in attracting FDI. This non‐spatial result is generally robust and invariant to the two methodologies employed in this study, that is the spatially autoregressive (SAR) model and the spatial Durbin model (SDM). We found that neighbouring countries’ infrastructure availability measured either by “electricity used” or “energy used” affected FDI inflows in a host country. However, this spatial impact was found only in the SDM model. The spatial effects of neighbouring countries’ economic and political conditions and resource endowments were, however, not observed on a host country's inward FDI. The insignificance of both the surrounding market potential and the spatially weighted FDI suggests a purely horizontal motive of MNE investments in the MENA region.

This paper examines the relationship between China's exports, export tax rebates and exchange rate policy. It offers an explanation for why China's exports continued to rise under RMB real appreciations during the Asian financial crisis. Based on a traditional export demand model, we test our hypothesis that the counteracting effects of China's export tax rebate policy have diminished the effectiveness of real exchange rates in facilitating the resolution of trade imbalances under the current pegged exchange rate regime. We find evidence that RMB real appreciations during the crisis negatively affected China's exports, but the negative effects were mitigated by the positive effects of export tax rebates. We also find evidence of a long‐run relationship between China's exports and the other explanatory variables. The empirical evidence suggests that under the pegged exchange rate regime with limited adjustments, real exchange rate movements alone cannot resolve China's external imbalances. The policy implication of this study is that China needs to redirect its decades‐long export‐oriented development strategy to one that emphasises domestic demand‐oriented development and to replace the current pegged exchange rate regime with a market‐oriented more flexible exchange rate regime.

The discrepancy between in‐sample and out‐of‐sample predictability of common predictors for asset returns has been widely discussed in the literature. We examine the out‐of‐sample predictability and its economic significance of Variance risk premium (VRP), which recently has shown empirical success in predicting asset returns in‐sample. Extensive analysis indicates strong out‐of‐sample predictability of the VRP for U.S. stock index, currencies, credit index, and equity portfolios. However, we do not find any evidence for predictability of bond and commodity markets. We demonstrate economic significance by providing profitable market timing strategies exploiting the out‐of‐sample forecasting power of the VRP in a real time setting.