Stock investors’ preference for short-term vs. long-term bonuses

Bonuses in the finance sector may be based on too short time intervals for environmental and social factors to be taken into account in investment decisions. We report two experiments to investigate whether investors prefer short-term to long-term bonuses. In Experiment 1 employing 27 undergraduates, preferences were measured for four short-term certain bonuses, evenly distributed across a time interval, and one certain long-term bonus at the end of the time interval. A majority chose the short-term bonuses, and in order for the long-term bonus to be equally preferred it had to be about 40% higher than the four added short-term bonuses. Experiment 2 employing another 36 undergraduates introduced outcome uncertainty that more accurately reflects the choices stock investors face. The participants again choose between a long-term bonus and four distributed short-term bonuses. It was shown that uncertainty made more participants prefer the long-term bonus to the added short-term bonuses than when the outcome was certain. A smaller increase of the long-term bonus of about 20% was now required to make it equally attractive as the four added short-term bonuses.     

Complementary person-supervisor fit: An investigation of supplies-values (S-V) fit,leader-member exchange (LMX) and work outcomes

By applying the supplies-values (S-V) fit approach from the complementary person-environment (P-E) fit literature to the leader-employee perspective, and drawing upon social exchange theory, we examine how fulfillment of different work values is related to Leader-Member Exchange (LMX) and work outcomes. First, polynomial regression analyses combined with response surface analysis of data collected at two time points (N = 316) showed that LMX (Time 2) was higher the more the leader fulfills the employee's work values (Time 1). Second, LMX (Time 2) was higher when leader supplies (Time 1) and employee work values (Time 1) were both high than when both were low. Third, analyses of data from a sub-sample of matched leader-employee dyads (N = 140), showed that LMX (Time 2) played a mediating role on the relation between S-V fit (Time 1) and work outcomes (Time 2). Specifically, we found eight out of 10 relationships between S-V fit (Time 1) and leader-rated task performance and OCB (Time 2) to be fully mediated by LMX (Time 2). LMX (Time 2) partially mediated the relation between S-V fit (Time 1) and job satisfaction (Time 2) as only two out of five relationships were fully mediated.     

The limits of the decentred state: the case of policing insurance claims fraud

Existing research clearly shows that the public–private divide is continuously being challenged, recast and transformed. However, this article argues that a sharp distinction between public and private continues to operate as an important norm for professionals involved in the investigation of insurance claims fraud in Sweden. It shows how power within private insurance companies and the police authority is organized around the public–private divide, which is in turn mobilized to justify repression and to give investigations legitimacy. The article indicates that the formal public–private distinction is far more thoroughly maintained than is suggested by the existing literature. Rather than challenging the centrality of state power, private insurers and the police construct, maintain and have a stake in the reproduction of a state‐centric monopoly of crime control.     

Bootstrap Testing of Hypotheses on Co‐Integration Relations in Vector Autoregressive Models

It is well known that the finite‐sample properties of tests of hypotheses on the co‐integrating vectors in vector autoregressive models can be quite poor, and that current solutions based on Bartlett‐type corrections or bootstrap based on unrestricted parameter estimators are unsatisfactory, in particular in those cases where also asymptotic χ² tests fail most severely. In this paper, we solve this inference problem by showing the novel result that a bootstrap test where the null hypothesis is imposed on the bootstrap sample is asymptotically valid. That is, not only does it have asymptotically correct size, but, in contrast to what is claimed in existing literature, it is consistent under the alternative. Compared to the theory for bootstrap tests on the co‐integration rank (Cavaliere, Rahbek, and Taylor, 2012), establishing the validity of the bootstrap in the framework of hypotheses on the co‐integrating vectors requires new theoretical developments, including the introduction of multivariate Ornstein–Uhlenbeck processes with random (reduced rank) drift parameters. Finally, as documented by Monte Carlo simulations, the bootstrap test outperforms existing methods.     

Oracle Inequalities for Convex Loss Functions with Nonlinear Targets

This article considers penalized empirical loss minimization of convex loss functions with unknown target functions. Using the elastic net penalty, of which the Least Absolute Shrinkage and Selection Operator (Lasso) is a special case, we establish a finite sample oracle inequality which bounds the loss of our estimator from above with high probability. If the unknown target is linear, this inequality also provides an upper bound of the estimation error of the estimated parameter vector. Next, we use the non-asymptotic results to show that the excess loss of our estimator is asymptotically of the same order as that of the oracle. If the target is linear, we give sufficient conditions for consistency of the estimated parameter vector. We briefly discuss how a thresholded version of our estimator can be used to perform consistent variable selection. We give two examples of loss functions covered by our framework.     

Family structure and child outcomes in the USA and Sweden

Previous research shows that living in a non-intact family is associated with educational disadvantages. This paper compares the relationships between childhood family structure, schooling, and earnings in Sweden and the USA. This comparison is interesting because both family structure and public policies differ significantly. We find a negative relationship between living in a non-intact family and child outcomes, and the estimates are remarkably similar in both countries. After using sibling-difference models, the correlation with family structure is no longer significant. These results cast doubt on the causal interpretation of the negative relationship between non-intact family structures and child outcomes.     

OLIGARCHIES AND DEVELOPMENT IN A GLOBAL ECONOMY: A TALE OF TWO ELITES

This paper studies how comparative advantage and the political elites' endowments shape long‐run performance in economies with imperfect political institutions. The trade regime interacts with industrial policy and regulations on capital mobility in governing capital accumulation. In a capital‐scarce economy, capitalist oligarchs striving for import substitution industrialization (ISI) initially shelter the economy from trade, while promoting industrial policies that promote total factor productivity growth in the manufacturing sector. This gradually shifts the comparative advantage toward manufacturing and renders the economy attractive to foreign investors. Allowing for trade and foreign capital inflows are thus complementary policies that spur growth in the capital oligarchy. By contrast, landed oligarchs in a capital‐scarce economy favor openness to trade at an early stage of development, neglect industrial policies, and block foreign capital to maximize extractable rents. The policy mix causes the economy to stagnate. Consistent with the experiences of South Korea and Argentina in the postwar era, the model predicts that the success of ISI policies depends crucially on the conditions governing the incentives for capital accumulation. (JEL F10, F20, P40, P50, O10, O24)