New Innovations in Economics, Business and Management Vol. 3

In a study published recently in the Journal of Risk and Financial Management, the authors of this book chapter assessed whether policy actions to contain the spread of the COVID-19 disease reduce the spread of the disease and save lives and whether mitigation interventions have detrimental effects on the economic conditions of an average citizen and firm in US states. The authors documented that US states with higher death incidences impose stricter policy restrictions to mitigate the spread of the disease and its severity. While death rates are an important determinant of the severity of state actions, case rates alone do not seem to affect the restrictiveness of the state mitigation measures. The lockdown measures implemented in US states to contain the coronavirus pandemic are effective in alleviating disease severity, but yield significant contraction of the local economy. The main channel of impact for the health and economic consequences of state policy actions is through restricting individual behavior and reducing mobility. Higher testing rates similarly lead to significant reductions in mobility. Health gains from stricter policy actions come primarily through reducing incidences of disease cases rather than disease fatalities. Not all state policy measures yield similar outcomes. Among the social distancing measures, state restrictions, stay home, business closures, and gathering bans are identified to be the only effective mitigating interventions that helped slow down disease cases. As for the incidences of disease deaths, the only state policy measure that was identified to be essential was gathering bans. Importantly, both health conditions and lockdown measures are important for the real economy, albeit with varying degrees of importance. The direct impact of disease environments on economic growth is less apparent in the short-term compared to lockdown measures which have strong adverse effects in the near term. For example, state restrictions result in a 0.46 standard deviation drop in real economic output, whereas the corresponding decreases are 0.37 and 0.40 standard deviations with disease cases and deaths, respectively. Put differently, health conditions as captured by the changes in cases and deaths from the coronavirus disease have a significant negative impact on economic outcomes, but are unlikely to be the major reason for the large immediate losses in the economic output. Instead, the heterogeneity in policymaker responses to the health crisis and the severity of the state lockdowns appear more likely to be the main factor behind state income differences. Deteriorating health conditions, on the other hand, are disruptive to the labor supply, financial health, and economic output. For example, disease severity had a profound effect in increasing state unemployment and the number of personal and business bankruptcies. The authors have also undertaken analyzes to shed light on the relative importance of state policy actions and disease severity in forecasting contractions in real economic activity. Specifically, a machine learning assessment of the relative strength of coronavirus disease severity and state policy measures to predict real local economic contraction outcomes indicates that the disease itself has more predictive utility relative to mandatory social distancing policy measures undertaken by the states to slow down the spread of the disease. When a horse-race is run between state policy measures and disease severity, disease severity outperforms social distancing measures in predicting real economic conditions in most specifications. Thus, the adverse economic impact of lockdowns exceeded the economic damage brought by the disease itself, but health conditions better forecasted economic contraction outcomes. The evaluation of the specific channels through which negative economic outcomes occur either due to disease severity and social policy reveals that the impact of disease severity on the real economy comes primarily through increasing state unemployment and the number of personal and business bankruptcies. Social distancing measures, on the other hand, are significant determinants of the general economic activity level as measured by the state coincident index, as well as business earnings and employment within the US states.

The increased use of mobile communication and the rapid development of mobile shopping technologies have significant financial implications, particularly for business-to-consumer retail markets.  The purpose of this study was to examine the interrelationship among the m-consumers’ personality traits, m-communication, m-distribution, and m-accessibility utilities, as well as their willingness to m-shop. This study found that m-communication and m-accessibility utilities were key factors in predicting willingness to m-shop. Our findings demonstrated that more extraverted, more agreeable, and less neurotic m-consumers were likely to perceive high levels of m-communication utility. More conscientious m-consumers were likely to perceive high levels of m-distribution utility and low levels of m-accessibility utility. In addition, this study identified that consumers who were more open to experience, more extraverted, and less conscientious were likely to have high levels of willingness to m-shop. Managerial implications and recommendations for future research were presented.

In a study published recently in the Journal of Risk and Financial Management, the authors of this book chapter assessed leverage and debt maturity targeting in a large international setting. Prior studies have similarly evaluated whether firm actions inferred from various leverage models are consistent with the predictions of the theory. The earlier studies testing the tradeoff theory of capital structure typically regress observed leverage ratios on the proxies for the costs of financial distress and agency conflicts and tax benefits of debt with the idea that the model is a good first order approximation of the equilibrium. This approach is problematic since firms do not typically operate at their optimal leverage due to financial frictions, indicating that the observed capital structure is a noisy proxy of target capital structure. In contrast to this traditional approach, the study proposed a new empirical test of target behavior based on capital structure targets and target deviations. If the estimated capital structure targets are relevant, the influence of factors such as bankruptcy costs, agency costs, and information asymmetry costs on firms’ target capital structures should be congruent with the theory. Furthermore, a firm that is not at the leverage target should take actions that adjust toward the target to close its deviation from the target. These actions should differ across firms depending on their environment, as different conditions require firms to react to shocks differently. The theory would be reliable to the extent that it correctly predicts the determination of the capital structure targets and target deviations based on the institutional, financial, and macroeconomic environment in which the firm operates. Thus, while the prevailing debate about the role of national institutions is focused around observed leverage and observed debt maturity as a proxy for optimal leverage and optimal debt maturity, the study estimated optimal leverage and optimal debt maturity with various reliable empirical models and used these estimates as its key measures in subsequent tests. The authors documented that there are key differences in the relative importance of institutional factors in explaining actual as opposed to target capital structures. Targets and target deviations are plausibly influenced by the institutional environment. Firms from countries with strong legal institutions target lower leverage and higher long-term debt, whereas better-functioning financial systems result in lower target leverage and long-term debt. Financial crisis has shifted the desired structure of the securities toward shorter maturities and has led to more prevalent target deviations. Better institutions significantly decrease the likelihood of target deviations. The variation in external financing costs, as captured by the quality of legal institutions, the financial development of the country, and the financial crisis times, is an important driver of target deviations.

Nanomaterials (NMs) have a significant impact on many industries, such as the cosmetic industry, the biocidal industry, the healthcare industry, and, in particular, the food industry. This study considers the two main applications of NMs in the food chain, as food additives and in food packaging as food contact materials. This study analyses the regulations in force in the European Union to shape the European legislative framework in which NMs are developed and applied, highlighting the possible trade-off occurring between Food Safety and Food Quality. In general, it appears that the European Union takes into account the dimension of nanomaterials, and not their particular toxicity and the importance to carry out case-by-case assessment studies.

The discipline of corporate finance has undergone numerous transformations over the past two-and-a-half decades. A rich body of research in economics, finance, and even psychology has found evidence that managers are sometimes irrational. Driven by certain behavioral biases, it has been reported that managers sometimes make subjective decisions that do not always follow traditional corporate finance norms. One such behavioral influence is overconfidence or optimism. There is a paucity of research on the impact of managerial overconfidence through corporate investments on the general movement of a company’s share price.

The present study sought to bridge this gap by investigating the share price of 10 companies from the JSE/FTSE top 40 index. The objectives were to Estimate managerial overconfidence, determine the relationship between managerial overconfidence and company size, determine the effect of managerial overconfidence on corporate investments, and determine the effect of managerial overconfidence on share price. The results show the presence of managerial overconfidence observed through the investment-cash flow sensitivity of firms. The fixed effects panel regression reveals that Tobin’s Q, which is the proxy measure of the investment-cash flow sensitivity of a firm, does affect the share price. Holding every other explanatory variable constant, an increase in Tobin’s Q causes the share price to rise, thus suggesting that managerial overconfidence does have influences on the stock price.  It is further observed that managerial overconfidence tends to increase with firm size. This is made evident by the weak but positive correlation between the Q ratio and LnTA, and Q ratio and sales.

Coaching is increasing in popularity. Studies have found positive correlations between coaching and employees’ performance, job satisfaction, self-efficacy, and leadership [1,2]. However, the relationship between coaching and self-actualization is not well understood. In addition, little is known of cultural differences in coaching. The success of an organization is connected with employees’ well-being, self-actualization, and their individual needs to develop their full potential [3]. Therefore, understanding the relationship between coaching and self- actualization may be critical to a company’s success. The purpose of this study was to determine if there is a correlation between workplace coaching and self-actualization, and to investigate if there are significant differences between coaching and self-actualization across countries (European Union, North America, and post-USSR countries). The study used a  convenient sample of 135 adults who currently reside in the European Union, North America, or post-USSR countries. The survey was conducted anonymously through the Internet, and participants were asked to answer a researcher-developed questionnaire about their workplace coaching experience, and their level of self-actualization, as well as some demographic information. This study found no significant correlation between workplace coaching and self-actualization.  However, statistically significant difference between workplace coaching and self-actualization across countries was found. In other words, the cultural background of each employee, and their differences play an important role in the workplace management, and the effectiveness of performance depends on the proper application of management skills in regard to cultural dimensions. It is concluded that culture and cultural background of employees directly influence success of an organization. European Union, North America and post-USSR countries consist of many very distinct management cultures that differ by particular country.

Today, with increasing globalization, workforce diversity management is attracting strategic attention. Businesses are under increasing pressure to employ people from diverse backgrounds and different cultures as a survival strategy than as an operational issue. To achieve improved business performance in such environments, the role of diverse workforce management cannot be overemphasized. The critical question that emerging research must address is:” is it even worth managing diverse workforce?” This study partly addresses this question by examining the implication of managed-workforce diversity (MWD) on internal supply chain (SC) integration and business performance. Data was collected from one hundred and twenty-six respondents using mainly questionnaires. Rigorous statistical analysis involving ANOVA, exploratory factor analysis (EFA) and then confirmatory factor analysis (CFA) and Structural Equation Model (SEM) in LISREL 8.5 was carried out to validate the research instrument and the data collected. This study concludes that MWD is beneficial in enhancing internal SC integration and SC responsiveness, which in term enhances business performance; and that SC integration acts as a conduit through which MWD influences business performance. We accordingly argue that effective workforce diversity management (which is creating a positive affective climate where employees do not feel intimidated, looked down upon, or discriminated against just because of background differences) is a very necessary strategy for positively driving business performance through internal SC integration and responsiveness. We also argue that while each focal firm within the supply chain network could benefit individually from managing its diverse workforce, aligning such initiatives or efforts with that of members at either stream could be beneficial for an extended SC integration. The managerial implications and the theoretical relevance of the study’s findings are discussed in detail in the subsequent sections.