Can IMF program design resurrect investor sentiment? An empirical investigation

2019 ◽  
Vol 22 (2) ◽  
pp. 339-382 ◽  
Author(s):  
Krishna Chaitanya Vadlamannati
Keyword(s):  
Empirical Investigation ◽  
Investor Sentiment ◽  
Performance Criteria ◽  
Estimation Methods ◽  
Political Costs ◽  
Ex Post ◽  
Ex Ante ◽  
Imf Programs ◽  
And Performance

AbstractDoes international investor sentiment improve when a crises-ridden country participates in an International Monetary Fund (IMF) program? I argue that merely participating in an IMF program may not revive the sentiments of investors. Rather, investor sentiment would improve when governments enhance the credibility of their commitment to reforms by accepting severe conditions imposed by the IMF, which incur ex ante and ex post political costs. Using panel data on 166 countries during the 1992–2013 period (twenty-two years), I find that countries participating in IMF programs, with conditions attached, specifically prior actions and performance criteria conditions, after controlling for endogeneity concerns using exogeneous instruments, are associated with an increase in long-term investor sentiment. These results are robust to using alternative data, variables and estimation methods. My findings are in stark contrast to those who argue that IMF conditional programs are akin to swallowing a bitter pill. In fact, my results demonstrate that the so-called bitter pill may act as a palliative.

scholarly journals How should we regulate artificial intelligence?

2018 ◽  
Vol 376 (2128) ◽  
pp. 20170360 ◽  
Author(s):  
Chris Reed
Keyword(s):  
Artificial Intelligence ◽  
Neural Networks ◽  
Decision Making ◽  
Current System ◽  
General System ◽  
Fundamental Rights ◽  
Ex Post ◽  
Ex Ante ◽  
Human Decision

Using artificial intelligence (AI) technology to replace human decision-making will inevitably create new risks whose consequences are unforeseeable. This naturally leads to calls for regulation, but I argue that it is too early to attempt a general system of AI regulation. Instead, we should work incrementally within the existing legal and regulatory schemes which allocate responsibility, and therefore liability, to persons. Where AI clearly creates risks which current law and regulation cannot deal with adequately, then new regulation will be needed. But in most cases, the current system can work effectively if the producers of AI technology can provide sufficient transparency in explaining how AI decisions are made. Transparency ex post can often be achieved through retrospective analysis of the technology's operations, and will be sufficient if the main goal is to compensate victims of incorrect decisions. Ex ante transparency is more challenging, and can limit the use of some AI technologies such as neural networks. It should only be demanded by regulation where the AI presents risks to fundamental rights, or where society needs reassuring that the technology can safely be used. Masterly inactivity in regulation is likely to achieve a better long-term solution than a rush to regulate in ignorance. This article is part of a discussion meeting issue ‘The growing ubiquity of algorithms in society: implications, impacts and innovations'.

scholarly journals Applicability of Z-score Models on the Agricultural Companies in the Republic of Srpska (Bosnia and Herzegovina)

2018 ◽  
Vol 18 (4) ◽  
pp. 227
Author(s):  
Tamara Stojanović ◽  
Ljiljana Drinić
Keyword(s):  
Safe Zone ◽  
Z Score ◽  
Financial Variables ◽  
Financial Difficulties ◽  
Ex Post ◽  
Ex Ante ◽  
The Republic ◽  
Near Future ◽  
Ex Post Analysis

The aim of our research was to test the predictability of Altman’s Z-score models in the case of agricultural companies in the Republic of Srpska. Due to the fact that according to these models the companies from the critical zone are supposed to go bankrupt in the near future, while the companies from the safe zone are not supposed to go bankrupt, these two groups of companies have been subject to ex-ante analysis during the period of five years (2011-2015) in order to estimate the predicting efficiency of Z-score models. The authors have also performed the ex-post analysis to see how the bankrupt companies had been classified according to these models in the years preceding their bankruptcy. The results of these analyses show that Z-score models are not reliable in predicting bankruptcy, nor for the creditworthiness analysis, but can be useful in identifying agricultural companies with long-term financial difficulties especially if other, non-financial variables are included.

Portfolio Entrepreneurs’ Behavior and Performance: A Resource Redeployment Perspective

2021 ◽  
Author(s):  
Simone Santamaria
Keyword(s):  
Selection Effect ◽  
Performance Difference ◽  
Data Set ◽  
Ex Post ◽  
Business Opportunities ◽  
Ex Ante ◽  
New Firm ◽  
And Performance ◽  
Termination Decisions ◽  
Over Time

Prior research suggests portfolio entrepreneurs—businesspeople who run more than one firm simultaneously—launch more successful ventures than their single-business counterparts. However, their ventures are less likely to survive. In an attempt to reconcile this paradox, this paper presents a framework in which portfolio entrepreneurs’ main advantage is not a superior ability to select the best business opportunities ex ante, but rather the ability to redeploy human and capital resources across businesses ex post, which reduces the sunkenness of their investments in new projects. This redeployment option facilitates their exit from new businesses that fail initial market tests. Thus, portfolio entrepreneurs’ heterogeneous termination decisions explain a greater portion of new firm performance differential than ex ante opportunity selection. We test these ideas using a longitudinal data set of more than 5,700 entrepreneurs and find consistent evidence. Portfolio companies do not show systematically higher performance at the time of entry; a performance difference emerges only over time, as the selection effect and resource redeployment occur. This paper was accepted by Ashish Arora, entrepreneurship and innovation.

scholarly journals Ready When the Big One Comes? Natural Disasters and Mass Support for Preparedness Investment

2021 ◽  
Author(s):  
Michael M. Bechtel ◽  
Massimo Mannino
Keyword(s):  
Adverse Event ◽  
Natural Disasters ◽  
Disaster Preparedness ◽  
Personal Experience ◽  
Personal Exposure ◽  
Policy Options ◽  
Ex Post ◽  
Ex Ante ◽  
Disaster Exposure

AbstractSocieties can address collective threats such as natural disasters or pandemics by investing in preparedness (ex ante) or by offering compensation after an adverse event has occurred (ex post). What explains which of these options voters prefer? We study how personal exposure and policy knowledge affect mass support for long-term disaster preparedness, a type of long-term investment meant to cope with an increasingly destructive and frequent class of events. We first assess whether support for preparedness reflects personal affectedness and find that neither subjective nor geo-coded measures of disaster exposure predict policy preferences. Second, we explore whether this finding can be explained by misperceptions about the features of the available policy options. We find that revealing the damage reductions associated with preparedness systematically reduces opposition to long-term investment. These results suggest that opposition to preparing for collective threats may depend more on informational deficiencies than on personal experience with realized risks.

scholarly journals The historically realised equity risk premium as a guide to future expectations in an emerging market: The case of South Africa

2008 ◽  
Vol 2 (1) ◽  
pp. 89-104
Author(s):  
Jesse De Beer
Keyword(s):  
Risk Premium ◽  
Emerging Market ◽  
Equity Risk Premium ◽  
Future Expectations ◽  
Investment Performance ◽  
Equity Risk ◽  
Ex Post ◽  
Long Run ◽  
Ex Ante

The concept of an equity risk premium (ERP) is fundamental to modern financial theory and central to every decision at the heart of corporate finance. Efforts to quantify ERP are well rewarded by insights into the stability and dynamics of long-term investment performance. Such efforts require the quantification of both historically realised (ex post) and expected future (ex ante) premiums. Finding an appropriate proxy for the expected (ex ante) ERP remains a challenging aspect. One widely used application is the use of long-term averages of observed market premiums as a proxy for expected returns. The aim of this paper is to analyse the appropriateness of the historical methodology of estimating expected ERP in the South African context. The analysis in this paper suggests that analysing past historical figures remains useful in the SA context. This is supported by the results of the statistical analysis, showing stationarity of the ERP time-series, meaning that the true mean does not change over time. This implies that the historical average mean may be used as a proxy for the long-run expected ERP. However, the well-documented problems relating to large standard errors (predictability problem) and relevance due to changing circumstances are also evident in the SA data. Thus, investors would be well advised to analyse the past and apply informed judgments as to future differences, if any, when attempting to arrive at fair forecasts.

scholarly journals The Optimal Multistage Effort and Contract of VC’s Joint Investment

2015 ◽  
Vol 2015 ◽  
pp. 1-14
Author(s):  
Meng Wu
Keyword(s):  
Capital Investment ◽  
Stackelberg Game ◽  
Decision Making Process ◽  
Game Model ◽  
Venture Capitalists ◽  
Optimal Contract ◽  
Venture Capital Investment ◽  
Ex Post ◽  
Ex Ante

If the venture project has a great demand of investment, venture entrepreneurs will seek multiple venture capitalists to ensure necessary funding. This paper discusses the decision-making process in the case that multiple venture capitalists invest in a single project. From the beginning of the project till the withdrawal of the investment, the efforts of both parties are long term and dynamic. We consider the Stackelberg game model for venture capital investment in multiple periods. Given the optimal efforts by the entrepreneurs, our results clearly show that as time goes, in every single period entrepreneurs will expect their share of revenue paid to shrink. In other words, they expect a higher ex ante payment and a lower ex post payment. But, in contrast, venture capitalists are expecting exactly the opposite. With a further analysis, we also design an optimal contract in multiple periods. Last but not the least, several issues to be further investigated are proposed as well.

scholarly journals The Contested Council: Conflict Dimensions of an Intergovernmental EU Institution

2005 ◽  
Vol 53 (2) ◽  
pp. 403-422 ◽  
Author(s):  
Christina Zimmer ◽  
Gerald Schneider ◽  
Michael Dobbins
Keyword(s):  
European Union ◽  
Quantitative Analysis ◽  
Correspondence Analysis ◽  
Empirical Investigation ◽  
The Political ◽  
The European Union ◽  
Political Space ◽  
Ex Post ◽  
Ex Ante ◽  
Council Of Ministers

Recent research has tried to uncover the political space in which the Council of Ministers of the European Union decides. Rather than the left-right conflict or a cleavage between governments with national and supranational attitudes, this article shows that a redistributive dimension, decisively shapes the interactions in this most important legislative body of the European Union. In contrast to extant studies, we employ ex ante rather than ex post preference data and rely on correspondence analysis as a means to identify the underlying dimensions of contestation. The article concludes with an empirical investigation of how enlargement will affect the emerging political space within the European Union. Our quantitative analysis suggests that the gulf between net-contributors and net-receivers will further deepen.

scholarly journals Investment decisions on quality certifications by hotel chains: differences between ex-ante and ex-post decisions

2018 ◽  
Vol 22 (1) ◽  
pp. 83-102 ◽  
Author(s):  
Victor Iglesias ◽  
Francisco Javier De la Ballina ◽  
Laura Caso
Keyword(s):  
Empirical Investigation ◽  
Investment Decisions ◽  
Content Type ◽  
Geographical Concentration ◽  
Ex Post ◽  
Quality Certification ◽  
Ex Ante ◽  
Hotel Chains ◽  
Two Stages ◽  
Hotel Chain

PurposeThis paper aims to analyze the antecedents of two variables concerning the presence of quality certifications in hotel chains: the (ex ante) decision to become a member of the quality system and the (ex post) trend to increase or decrease the number of certified properties. Six hypotheses are posed and tested.Design/methodology/approachThe empirical investigation is carried out on the Spanish Q for Quality in Tourism using a database including 295 hotel chains and 2,727 hotels.FindingsThe results evidence the presence of differences in the behavior of hotel chains relative to certification depending on their size, market segment, customer origin and the geographical concentration of their establishments.Originality/valueThis research deepens in how the hotel chain characteristics affect the effectiveness of a quality certification. The consideration of two stages in investment decisions allows the authors to identify differences in the ex ante and ex post decision processes. As a result, one factor (geographical concentration) has been detected as being underrated by managers in the first stage.

Outsourcing: reap the fruit; contain the “bad apple”

2018 ◽  
Vol 39 (5) ◽  
pp. 50-55 ◽  
Author(s):  
Nelson Oly Ndubisi ◽  
Setiadi Umar
Keyword(s):  
Asia Pacific ◽  
Content Type ◽  
Provider Perspectives ◽  
Ex Post ◽  
Ex Ante ◽  
Negative Effect ◽  
Conflict Handling ◽  
Destructive Conflict ◽  
Ethical Norms

Purpose The purpose of this study is to show how outsourcing partners can maximise the benefits of outsourcing while containing the negative effect of destructive conflict (the “bad apple”) on trust and commitment. Design/methodology/approach The study reviewed existing literature on the benefits and limitations of outsourcing from the principal’s (outsourcer) and the agent’s (service provider) perspectives. The study further draws on empirical evidence from studies conducted across ten industries in three countries within the Asia–Pacific Rim and the Middle-East, namely, Australia, Malaysia and Saudi Arabia. Findings Long-term orientation and ethical norms are robust ex-ante (i.e. before the destructive conflict) handling strategies, whereas integrative conflict handling style and (to a lesser degree) accommodating and compromising conflict handling styles are effective ex-post (i.e. after the destructive conflict) handling strategies. Forcing and avoidance conflict handling styles can escalate destructive conflict and should be completely avoided by outsourcing partners at all times. Practical implications The benefits of outsourcing outweigh its challenges. Trust and commitment are positively affected by ex-ante and ex-post (destructive conflict) strategies. Destructive conflicts (or the bad apple effect) can be contained through these strategies. Firms should leverage the upsides of outsourcing relationships and contain the downsides by integrating long-term orientation and ethical norms that can help to pre-empt and forestall destructive conflict. They should adopt an integrative conflict handling strategy in the event of a manifest conflict. Other strategies that can be applied to manifest conflict (albeit more sparingly) are accommodating and compromising strategies. Each has the potential to increase trust and commitment in the relationship. Originality/value The authors unveil before and after (the destructive conflict) handling strategies that do not depend on contextual factors or industry/sectoral differences.

Regulatory Quality and Performance in EU Network Industries: Evidence on Telecommunications, Gas and Electricity

2009 ◽  
Vol 29 (3) ◽  
pp. 347-370 ◽  
Author(s):  
Mehmet Ugur
Keyword(s):  
Best Practice ◽  
Network Industries ◽  
Eu Member States ◽  
Regulatory Quality ◽  
Ex Post ◽  
Ex Ante ◽  
Regulatory Failure ◽  
And Performance ◽  
High Level ◽  
The Relationship

ABSTRACTThis article provides empirical evidence on ex ante and ex post indicators of regulatory quality and the relationship between those indicators and market performance in liberalised EU-15 network industries. It finds a low level of regulatory independence and competence, a high level of cross-country variations in regulatory quality, and widespread absence of correlation between ex ante regulatory quality and ex post performance indicators. On the basis of these findings, it suggests that the design of national regulatory agencies (NRAs) in Europe is not optimal and may be conducive to regulatory ineffectiveness or outright regulatory failure. Nevertheless, the existence and strengthening of EU-level regulators could enable EU member states to reduce the risk of regulatory failure by encouraging coordination and adoption of best practice.

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