In-Sample or Out-of-Sample Tests of Predictability: Which One Should We Use?

It is widely known that significant in-sample evidence of predictability does not guarantee significant out-of-sample predictability. This is often interpreted as an indication that in-sample evidence is likely to be spurious and should be discounted. In this paper, we question this interpretation. Our analysis shows that neither data mining nor dynamic misspecification of the model under the null nor unmodelled structural change under the null are plausible explanations of the observed tendency of in-sample tests to reject the no-predictability null more often than out-of-sample tests. We provide an alternative explanation based on the higher power of in-sample tests of predictability in many situations. We conclude that results of in-sample tests of predictability will typically be more credible than results of out-of-sample tests.     

Subjective Well-Being in the European Union during the 90ies

Social Indicators Research -     

Politics and Power within Multinational Corporations: Mainstream Studies,Emerging Critical Approaches and Suggestions for Future Research

Given the increased public interest in the use and misuse of power in multinationals in the aftermath of the financial crisis, it is notable that power relations in multinational corporations (MNCs) have not gained enhanced attention in the academic community. What is missing so far in the study of MNCs is a systematic examination of how power and politics within MNCs have been addressed in mainstream international business (IB) and sociological research studying the MNC. This paper starts by critically reviewing these two mainstream approaches in the study of MNCs as organizations and seeking to understand the shortcomings of former research. Next, it reviews new emergent critical perspectives, which the authors call socio‐political studies of MNCs, where power and politics are addressed not just more prominently, but also differently, from a more bottom‐up and actor‐centred perspective. After reviewing this emergent stream of research, the authors propose that future studies should take a more micro‐political perspective and focus in more detail on the micro‐foundations of power relations. In the concluding section, the authors show how future studies of MNCs can learn from both critical interactionist and discursive theories when analysing organizational politics and power relations. A framework is proposed for the study of micro‐level political game‐playing in MNCs, based on a three‐dimensional framework for organizational power (episodic, rules of the game and domination), and some key research questions for future studies are suggested.     

The effect of outside directors’ and auditors’ incentives on managers’ ability to manage cash bonuses

This paper investigates the impact of outside directors’ and auditors’ monetary incentives on the association between discretionary accounting and managers’ cash bonuses in a two-tier system. For a sample of German stock corporations from 2005 to 2007 we expect and find that outside directors who receive compensation based on accounting income and auditors who receive high non-audit fees have the incentive to tolerate managers’ bonus-increasing accounting choices. More specifically, we show that positive discretionary accruals are more strongly associated with managers’ cash bonuses than negative discretionary accruals if outside directors receive accounting-based compensation and/or if auditors receive high non-audit fees. Our results suggest that executives’ ability to manage their cash bonuses depends on the monitoring institutions’ monetary incentives.     

Analyzing the Efficient Execution of In‐Store Logistics Processes in Grocery Retailing—The Case of Dairy Products

In this article, we examine in‐store logistics processes for handling dairy products, from the incoming dock to the shelves of supermarkets and hypermarkets. The efficient execution of the in‐store logistics related to such fast‐moving, sensitive, and essential items is challenging and crucial for grocery retailers' sales, profits, and image. In our empirical study, we survey in‐store logistics processes in 202 grocery supermarkets and hypermarkets belonging to a major retail chain in central Europe. Using a data envelopment analysis (DEA) and simulation, we facilitate process benchmarking. In particular, we identify ways of improving in‐store logistics processes by showing the performance impacts of different managerial strategies and tactics. The DEA results indicate different efficiency levels for different store formats; the hybrid store format of the small hypermarket exhibits a comparatively worse performance in the analyzed execution of in‐store logistics processes. The process simulation analysis reveals that the strategic and tactical design of in‐store logistics processes (such as store locations/layouts, capacity management, reorder time, order period, and safety stock factors) lead to substantial service performance improvements (such as higher on‐shelf availability combined with reduced inventory obsolescence costs). The results also show marginal improvements in the performance figures when delivery delays and damage to products are reduced.     

Entrepreneurship theories of the non-profit sector

This article summarises the main results of entrepreneurship theories of the non-profit sector and discusses the impact they may have on theory development and on the real world non-profit sector. It is pointed out that the entrepreneurship approach advances our knowledge of the non-profit sector, especially by stressing the supply-side aspect and by focusing on the preferences individuals must have in order to engage in non-profit activities. There is empirical evidence consistent with entrepreneurship theories. Yet most observations do not exclusively support entrepreneurship theories but also provide evidence consistent with other economic theories of the non-profit sector. This illustrates that the various economic theories of the non-profit sector are more complements than substitutes. Furthermore, entrepreneurship theories indirectly help to improve the image non-profit organisations have in the real world; therefore they play a prominent role in teaching programmes which have been established to train non-profit managers. The author gratefully acknowledges the comments of the participants of theVoluntas Symposium at Yale University, especially the comments made by Estelle James, James Ferris and Dennis Young.     

Public Distrust and Hazard Management Success at the Rocky Flats Nuclear Weapons Plant

Based on experience gained while serving a public oversight commission appointed by the governor of Colorado, hazard management at the Department of Energy's Rocky Flats nuclear weapons plant is reviewed. Specific reference is made to the plant's history of controversy, its defense-in-depth strategy of hazard control, occupational health issues, public exposure to plutonium, and the assessment of low-probability, high-consequence risks. This leads to the conclusion that Rocky Flats is, by any objective standard, a hazard management success. It follows that public distrust of Rocky Flats arises as much from fear and loathing of nuclear weapons themselves as from the manufacturing process by which they are made.