Quantile regression for the FDI gravity equation
Abstract Firm-level heterogeneity shapes foreign direct investment (FDI) flows, whereby a few firms are responsible for most of the world's FDI. Aggregate outcomes of FDI are highly skewed, and the estimates of FDI's antecedents vary largely depending on FDI level. The incidence of individual firms, however, varies across FDI's quantiles. To study the individual firms' effect on FDI flows, this study develops a quantile regression method for bilateral FDI panel data. This study estimates the differential incidence of individual firm-level projects on aggregate flows among 161 countries from 2003 to 2012. Results suggest that FDI's determinants vary across quantiles. In particular, the effec…
Do Financial Crises Moderate Entrepreneurial Recipes? A Comparative Fuzzy Analysis
ABSTRACTThis study performs a fuzzy set qualitative comparative analysis (fsQCA) on entrepreneurial recipes. The research focuses on the moderating role of the 2007 financial crisis on the antecedents of entrepreneurship. Standard regressions analysis proves insufficient to uncover asymmetrical and complex relationships that explain the effect of credit constraints on new business. Empirical results on longitudinal data suggest that the crisis moderated entrepreneurial recipes in Spain. This research contributes to QCA analysis by studying moderation effects on time-series data.
Sovereign debt spreads in EMU: The time-varying role of fundamentals and market distrust
Abstract This paper provides further analysis on the determinants of sovereign debt spreads for peripheral Eurozone countries since the start of EMU, paying special attention to episodes that characterized the global financial crisis aftermath starting in 2007. More specifically, the purpose of our research is to disentangle the role of fundamental variables and market perception about variations on risk in order to explain the evolution of sovereign spreads in EMU during the recent crisis. Our results, in line with previous literature, show the importance of three groups of observable variables, namely, changes in risk-aversion of creditors, fiscal indebtedness and liquidity variables. In …
Learning by Teaching and Assessing: A Teaching Experience
This chapter describes a teaching experience whereby students learnt by teaching and assessing other students. A group of students was tasked with explaining a topic from the course and preparing an exam on that topic. The remaining students in the class completed a questionnaire to measure their satisfaction. They also completed an online test on the topic following the presentation by their peers. Assessment was based on a win-win strategy because the average mark on the test counted towards the final assessment of the students who gave the presentation. The methodology allows students to study content in greater depth level and develop skills like responsibility, critical analysis and em…
Corporate governance and financial performance: The role of ownership and board structure
Abstract This study examines how corporate governance and ownership structure relate to the financial performance of firms. We estimated this relationship using fsQCA. We enhanced our analysis using complementary linear and non-linear multiple regression analysis. The panel data used in this study covered 1207 companies from 59 countries across 19 sectors for the period 2013 to 2015. The study makes two main contributions. First, the multiple empirical techniques employed in this study offer a broader approach to the empirical analysis of financial performance. Second, the study aids our understanding of the role of corporate governance and ownership in the financial performance of firms.
Social Determinants of Success: Social Media, Corporate Governance and Revenue
This study examined how social media (Twitter and LinkedIn) relates to the operating revenue by investigating the effect of the use of social media by the board of directors. To tackle this question, we analyzed the mediating and moderating relationship of social media on the effect of board size in operating revenue (turnover). We studied the implications of the use of social media by the board members by using structural equation modeling (SEM). The data consisted of a random sample of 100 companies listed on the NASDAQ. The study makes two main contributions. First, it shows interesting differences in the use of social media for the operating revenue. Our results suggest that while Twitt…
Measuring the shadow economy and its drivers: the case of peripheral EMU countries
We adopt a long-run perspective to investigate the size of the shadow economy and explore the trends in this area. The analysis is based on a panel of peripheral EMU countries over the period 1965-2015. Our empirical approach relies on a multiple indicators and multiple causes (MIMIC) framework. This approach is a variant of structural equation modelling (SEM). We used two sets of variables, (i.e. potential determinants and indicator variables) to estimate an underlying (unobserved) index that measures the evolution of the shadow economy. Ascertaining the relative importance of the shadow economy enabled analysis of its relationship with other institutional and social issues (e.g. corruptio…
Fiscal sustainability in EMU countries: A continued fiscal commitment?
Abstract The aim of this paper is to study the sustainability of public finances in the Eurozone particularly after the 2007 financial crisis. This paper goes beyond the standard analysis of the univariate properties of the fiscal variables through the estimation of a time-varying fiscal reaction function on a 11-country panel for a period spanning from 1970 to 2014. Even if panel unit root or stationary tests may provide a rough first insight on the sustainability of the public finances, they fail to highlight the adjustment mechanisms to debt overhang in recent years. The main advantage of our empirical approach is that it clearly captures the government’s dynamic response to debt accumul…
Is external debt sustainable? A probabilistic approach
Abstract We develop a probabilistic approach to measure a country's external debt sustainability. Using data on international investment position and balance of payments from the International Monetary Fund, we estimate a vector autoregressive model for 38 countries (11 developed and 27 developing). Using the estimated parameters, we perform a Monte Carlo simulation to compute the distribution of the capacity to repay for each country. A large portion of the projected distribution to the right of current debt is a warning indicator, signalling the need for devaluation. We provide simulations for each country. One scenario is where the discount factor is lower than 1. According to the litera…
The influence of transformational and authentic leadership on the satisfaction of hotel customers in the Canary Islands
Leadership provides a strategy to deal with intense competition and high customer expectations in the hotel industry. This paper analyses the ability of managers’ transformational and authentic leadership to predict customer satisfaction. A sample of 18,944 customers and managers of eight hotels in the Canary Islands was used for the analysis. The data were collected using the Multifactor Leadership Questionnaire-6s, the Authentic Leadership Questionnaire and ReviewPro management software. The data were analysed to confirm the ability of transformational and authentic leadership to predict overall customer satisfaction. The results indicate that the transformational subscales of idealised i…
The Effect of Systemic Banking Crises on Entrepreneurship
Economic crises have mixed effects on entrepreneurship. Through demand shocks, credit constraints, and unemployment, systemic banking crises affect the rate of start-up business creation, although the extent of their impact varies. Consequently, previous studies on the effect of crises on Entrepreneurship are inconclusive. The surge of global demand coupled with low credit availability reduces the prospects for new businesses. On the other hand, job losses caused by an economic crisis might lead many entrepreneurs to undertake new projects. These inconsistent conclusions highlight the need for more studies that explore the effect of systemic banking crises on entrepreneurship. This article …
An Analysis of the Time-Varying Behavior of the Equilibrium Velocity of Money in the Euro Area
Recent developments in inflation and M3 velocity in the euro area have raised serious doubts about the reliability of M3 growth as a pillar of the ECB’s monetary policy strategy. We develop a very flexible and comprehensive state-space framework for modeling the velocity of circulation. Our specification allows for the estimation of different autoregressive alternatives and includes control instruments, whose coefficients can be set up either common or idiosyncratic. This is particularly useful to detect asymmetries in the reaction among countries to common shocks. Our findings first suggest that the downward trend of M3 velocity is mainly explained by the evolution of permanent income, pro…
Is social entrepreneurship a greenfield for foreign direct investment? A conceptual and empirical analysis
Building on legitimacy and social strategy theories, this research proposes a conceptual and empirical framework that links social entrepreneurial activity (SEA) with foreign direct investment (FDI). Investing in foreign countries with a high degree of SEA contributes to increasing foreign investors’ legitimacy. Additionally, firms may consider SEA as a constituent of their social strategy. A key contribution of this study is the comprehensive conceptual framework used to analyze the link between social entrepreneurship and international business. The second key contribution is the econometric analysis of SEA's effect on greenfield FDI, foreign employment, and foreign projects. The estimati…
Do credit constraints reduce foreign jobs? A note on foreign direct employment
This article studies the effect of credit constraints on the jobs created by multinational enterprises in host countries. Although most FDI is labour intensive, few studies delve into the determinants of foreign direct employment (FDE). This article constructs a model of limited commitment between the financed and financing parties to explain how FDE is affected by financial frictions. Moreover, this study examines FDE’s determinants empirically on a global data set including FDE data from 161 countries during 2003–2010 by means of the gravity equation. Results show that credit constraints during the Great Recession roughly halved FDE, tripling the effect on FDI and suggesting that domestic…
Business performance and social media: Love or hate?
Abstract The social media space has become a common place for communication, networking, and content sharing. Many companies seek marketing and business opportunities via these platforms. However, the link between resources generated from these sites and business performance remains largely unexploited. Both managers and financial advisors can profit from the lessons learned in this study. We conceptualize four channels by which social media impacts financial, operational, and corporate social performance: social capital, customers’ revealed preferences, social marketing, and social corporate networking. An empirical test of our framework shows that ‘followers’ and ‘likes’ positively influe…