Firms,Destinations, and Aggregate Fluctuations

This paper uses a data base covering the universe of French firms for the period 1990–2007 to provide a forensic account of the role of individual firms in generating aggregate fluctuations. We set up a simple multisector model of heterogeneous firms selling to multiple markets to motivate a theoretically founded decomposition of firms' annual sales growth rate into different components. We find that the firm‐specific component contributes substantially to aggregate sales volatility, mattering about as much as the components capturing shocks that are common across firms within a sector or country. We then decompose the firm‐specific component to provide evidence on two mechanisms that generate aggregate fluctuations from microeconomic shocks highlighted in the recent literature: (i) when the firm size distribution is fat‐tailed, idiosyncratic shocks to large firms directly contribute to aggregate fluctuations, and (ii) aggregate fluctuations can arise from idiosyncratic shocks due to input–output linkages across the economy. Firm linkages are approximately three times as important as the direct effect of firm shocks in driving aggregate fluctuations.     

Factor Structure and Convergent Validity of the Long and Abbreviated Versions of the Multidimensional Students’ Life Satisfaction Scale in an Italian Sample

We examined the psychometric characteristics of the long and abbreviated versions of the Multidimensional Students’ Life Satisfaction Scale (MSLSS) in the Italian contexts. In study 1 we assessed the factorial validity and reliability of the long and abbreviated versions of the MSLSS among Italian adolescents, while in study 2 we assessed the convergent validity of the abbreviated Italian version of the MSLSS by examining the associations between life satisfaction and well-established measures of adjustment. Furthermore, we explored the effect of adolescent gender and age on life satisfaction. Participants in the study 1 were 996 adolescents (48 % males) from 14 to 18 years of age (M = 16.06; SD = 1.51). Participants in study 2 were 380 adolescents (52 % males) from 14 to 19 years of age (M = 15.76; SD = 1.65). Confirmatory factor analyses confirmed the hypothesized five-factor solution of the MSLSS, with a better goodness of fit for the abbreviated version of MSLSS. Moreover, indices of internal consistency revealed acceptable reliability coefficients across the five domains. Convergent validity was confirmed by the expected associations between the domains of the MSLSS and indexes of adjustment. Finally, results evidenced age differences, with oldest adolescents showing the highest levels of satisfaction on most of the domains.     

Assessing corporate governance quality: substance over form

After the 2008 global financial crisis and corporate scandals, assessing and improving corporate governance quality (CGQ) is essential. This paper proposes a different approach to evaluate CGQ, to overcome the conceptual and methodological limits of the previous rating systems. It tries to go beyond the objectives of the existing models by suggesting an alternative operating model, (aligned with the new CG guidelines) that provides a concise index for monitoring and decision-making. Using a Fuzzy Expert System (FES), the authors propose a formalized model that: (1) represents all the factors (structural and behavioral) that affect the quality of corporate governance in terms of practical and objective decision-making procedure; (2) is a flexible and useful management tool for supporting the “Board review” and assessing the increase in CGQ associated with particular decisions; (3) supervisors can use to assess CG adequacy by replacing or integrating the experts’ opinions with interviews/questionnaires filled in by directors and managers or through direct observation, as recently suggested by EBA/ESMA. This paper highlights the importance of behavioral features and group dynamics in corporate governance and represents them in an integrated model together with other structural and organizational elements.     

Financial Instruments for Mitigation of Flood Risks: The Case of Florence

This article analyzes the mechanisms and effects of innovative financial instruments that a central public administration (CPA) may adopt to minimize the flood risk in particularly exposed regions. The pattern we suggest assumes that in risky areas the CPA can issue two financial instruments, called project options and CAT‐bonds, producing a dynamic interaction among three types of agents: the CPA itself, the local public administrations, and private investors. We explore the possible scenarios of such interaction and the conditions under which the CPA's goal of maximal risk reduction is attained. This pattern is proposed for flood risk mitigation in the city of Florence, where the model dynamics are tested assuming parameters obtained from engineering studies.     

Component Criticality in Failure Cascade Processes of Network Systems

In this work, specific indicators are used to characterize the criticality of components in a network system with respect to their contribution to failure cascade processes. A realistic‐size network is considered as reference case study. Three different models of cascading failures are analyzed, differing both on the failure load distribution logic and on the cascade triggering event. The criticality indicators are compared to classical measures of topological centrality to identify the one most characteristic of the cascade processes considered.     

The impact of corporate social performance on the cost of debt and access to debt financing for listed European non-financial firms

This study addresses the controversial issue of how non-financial performance affects the cost of debt capital and access to it. The relationship between corporate social performance and two measures of debt cost (accounting-based and market-based) and the measure of debt access are analysed by means of a multi-theoretical framework combining economics with social theories. By observing a sample of listed European non-financial firms over an 8-year period from 2005 to 2012, we find a negative relationship between corporate social performance and interest rate. Consistent with this result, we find a positive relationship between corporate social performance and debt rating. Thus, corporate social performance has a positive role in reducing the cost of debt capital. Moreover, firms with better corporate social performance are more attractive to lenders in terms of leverage allowance. Overall, our findings provide deeper insight into the reasons why companies should improve their corporate social performance.     

The Dimensions of Agricultural Diversification: A Spatial Analysis of Italian Municipalities

Diversification in agriculture could ensure the survival of farming by broadening the income base of farms and encouraging agricultural sustainability. The diversification of on-farm activities may depend on socioeconomic and environmental characteristics. Although multifunctionality is a hotly debated topic, few papers have focused on the farm characteristics that influence diversification and none have focused on the influence of the spatial pattern. This paper examines the relationship between farm characteristics and the adoption of a specific type of diversification. An econometric model is presented that uses a spatial autoregressive lag model at the municipal scale. The results demonstrate that the activation of each diversification dimension is influenced by both internal and external factors, encompassing farmers’ characteristics, the farm structure, and territorial features, including regional and spatial patterns. Deepening is mainly influenced by the farmer’s age, education, and the presence of small and labor-intensive farms. The key factors for broadening diversification are the presence of small farms and farms with mixed production (breeding and crop cultivation). Regrounding is most affected by the labor-intensive farms in the area and the farms with mixed production.     

The variable parameters T ^{2} chart with run rules

The Hotelling’s \(\textit{T}^{2 }\) control chart with variable parameters (VP \(T^{2})\) has been shown to have better statistical performance than other adaptive control schemes in detecting small to moderate process mean shifts. In this paper, we investigate the statistical performance of the VP \(T^{2}\) control chart coupled with run rules. We consider two well-known run rules schemes. Statistical performance is evaluated by using a Markov chain modeling the random shock mechanism of the monitored process. The in-control time interval of the process is assumed to follow an exponential distribution. A genetic algorithm has been designed to select the optimal chart design parameters. We provide an extensive numerical analysis indicating that the VP \(T^{2}\) control chart with run rules outperforms other charts for small sizes of the mean shift expressed through the Mahalanobis distance.     

Asymptotics for Panel Models with Common Shocks

This article develops a novel asymptotic theory for panel models with common shocks. We assume that contemporaneous correlation can be generated by both the presence of common regressors among units and weak spatial dependence among the error terms. Several characteristics of the panel are considered: cross-sectional and time-series dimensions can either be fixed or large; factors can either be observable or unobservable; the factor model can describe either a cointegration relationship or a spurious regression, and we also consider the stationary case. We derive the rate of convergence and the limit distributions for the ordinary least square (OLS) estimates of the model parameters under all the aforementioned cases.