Human Capital Inequality: Empirical Evidence

2020 ◽  
Author(s):  
Brant Abbott ◽  
Giovanni Gallipoli
Keyword(s):  
Human Capital ◽  
Empirical Literature ◽  
Underlying Distribution ◽  
Discount Factors ◽  
Ex Post ◽  
Ex Ante ◽  
Underlying Stocks ◽  
Lifetime Earnings ◽  
Earnings Dispersion ◽  
The Impact

This article focuses on the distribution of human capital and its implications for the accrual of economic resources to individuals and households. Human capital inequality can be thought of as measuring disparity in the ownership of labor factors of production, which are usually compensated in the form of wage income. Earnings inequality is tightly related to human capital inequality. However, it only measures disparity in payments to labor rather than dispersion in the market value of the underlying stocks of human capital. Hence, measures of earnings dispersion provide a partial and incomplete view of the underlying distribution of productive skills and of the income generated by way of them. Despite its shortcomings, a fairly common way to gauge the distributional implications of human capital inequality is to examine the distribution of labor income. While it is not always obvious what accounts for returns to human capital, an established approach in the empirical literature is to decompose measured earnings into permanent and transitory components. A second approach focuses on the lifetime present value of earnings. Lifetime earnings are, by definition, an ex post measure only observable at the end of an individual’s working lifetime. One limitation of this approach is that it assigns a value based on one of the many possible realizations of human capital returns. Arguably, this ignores the option value associated with alternative, but unobserved, potential earning paths that may be valuable ex ante. Hence, ex post lifetime earnings reflect both the genuine value of human capital and the impact of the particular realization of unpredictable shocks (luck). A different but related measure focuses on the ex ante value of expected lifetime earnings, which differs from ex post (realized) lifetime earnings insofar as they account for the value of yet-to-be-realized payoffs along different potential earning paths. Ex ante expectations reflect how much an individual reasonably anticipates earning over the rest of their life based on their current stock of human capital, averaging over possible realizations of luck and other income shifters that may arise. The discounted value of different potential paths of future earnings can be computed using risk-less or state-dependent discount factors.

Debt Covenants and Corporate Governance

2019 ◽  
Vol 11 (1) ◽  
pp. 197-219 ◽  
Author(s):  
Sudheer Chava ◽  
Shunlan Fang ◽  
Praveen Kumar ◽  
Saumya Prabhat
Keyword(s):  
Empirical Studies ◽  
Empirical Literature ◽  
Future Research ◽  
Debt Covenants ◽  
Corporate Policies ◽  
Ex Post ◽  
Trade Offs ◽  
Ex Ante ◽  
The Impact ◽  
Covenant Violations

We review the recent theoretical and empirical literature on debt covenants with a particular focus on how creditor governance after covenant violations can influence the borrower's corporate policies. From the theoretical literature, we identify the key trade-offs that help explain the observed heterogeneity in covenant types, inclusion, likelihood of violation, and postviolation renegotiation flexibility. Empirically, we first review the literature that deals with ex ante evidence on covenant design and the various factors that influence covenant design; we next review the ex post evidence on the impact of technical covenant violations on the borrower. We then discuss limitations of the existing theoretical and empirical studies and conclude with some directions for future research in this burgeoning area.

scholarly journals Evaluación de dos perturbaciones simultáneas en bosques de Araucaria-Lenga, usando diferencias de índices espectrales

2021 ◽  
Vol 27 ◽  
pp. 5-18
Author(s):  
Marco Antonio Peña ◽  
Patricio Calderón
Keyword(s):  
Spectral Index ◽  
The State ◽  
Landsat 8 ◽  
Southern Andes ◽  
Ex Post ◽  
Composition And Structure ◽  
Ex Ante ◽  
Land Covers ◽  
The Impact

This study assessed the impact produced by a wildfire and an infectious outbreak led by an oomycete pseudofungi, both occurred in 2015, on the state of Araucaria-Lenga forests of the China Muerta Reserve, placed in the southern Andes of Chile. To do this, a greenness vegetation spectral index was calculated over a multitemporal set of Landsat-8 images, acquired biannually on near-anniversary dates, which was subject to subtractions between ex-ante (2013) and ex-post dates (2015, 2017, 2019). Results show the magnitude and temporal progression of both disturbances, highlighting the celerity and aggressiveness of the wildfire. Although the affected vegetation land covers currently show values close to the recovery of the primal biomass, the inclusion of field-based data to deepen the possible composition and structure variations of these forests is needed.

The impact of guaranteed bailout assistance on bank loan overstatement

2016 ◽  
Vol 12 (2) ◽  
pp. 177-210
Author(s):  
Alejandro Hazera ◽  
Carmen Quirvan ◽  
Salvador Marin-Hernandez
Keyword(s):  
Financial Crisis ◽  
Emerging Market ◽  
Balance Sheet ◽  
Bank Loan ◽  
Content Type ◽  
Put Options ◽  
Regulatory Policies ◽  
Ex Post ◽  
Ex Ante ◽  
The Impact

Purpose – The purpose of this paper is to highlight how the basic binomial option pricing model (BOPM) might be used by regulators to help formulate rules, prior to financial crisis, that help prevent loan overstatement by banks in emerging market economies undergoing financial crises. Design/methodology/approach – The paper draws on the theory of soft budget constraints (SBC) to construct a simple model in which banks overstate loans to minimize losses. The model is used to illustrate how guarantees of bailout assistance (BA) (to banks) by crisis stricken countries’ financial authorities may encourage banks to overstate loans and delay the implementation of IFRS for loan valuation. However, the model also illustrates how promises of BA may be depicted as binomial put options which provide banks with the option of either: reporting loan values on poor projects accurately and receiving the loans’ liquidation values; or, overstating loans and receiving the guaranteed BA. An illustration is also provided of how authorities may use this representation to help minimize bank loan overstatement in periods of financial crisis. In order to provide an illustration of how the option value of binomial assistance may evolve during a financial crisis, the model is generalized to the Mexican financial crisis of the late 1990s. During this period, Mexican authorities’ guarantees of BA to the nation’s largest banks encouraged those institutions to overstate loans and delay the implementation of (previously adopted) international “best practices” based loan valuation standards. Findings – Application of the model to the Mexican financial crisis provides evidence that, in spite of Mexico’s “official” 1997 adoption of international “best accounting practices” for banks, “iron clad” guarantees of BA by the country’s financial authorities to Mexico’s largest banks provided those institutions with an incentive to knowingly overstate loans in the late 1990s and early 2000s. Research limitations/implications – The model is compared against only one country in which the BA was directly infused into banks’ loan portfolios. Thus, as conceived, it is directly applicable to crisis countries in which the bailout took this form. However, the many quantitative variations of SBC models as well as recent studies which have applied the binomial model to other forms of bailout (e.g. direct purchases of bank shares by authorities) suggest that the model could be modified to accommodate different bailout scenarios. Practical implications – The model and application show that guaranteed BA can be viewed as a put option and that ex-ante regulatory policies based on the correct valuation of the BA as a binomial option might prevent banks from overstating loans. Social implications – Use of the binomial or similar approaches to valuing BA may help regulators to determine the level of BA that will not encourage banks to overstate the value of their loans. Originality/value – Recent research has used the BOPM to value, on an ex-post basis, the BA which appears on the balance sheet of institutions which have been rescued. However, little research has advocated the use of this type of model to help prevent, on an ex-ante basis, the overstatement of loans on poor projects.

scholarly journals Determinants of Farmers’ Decisions on Risk Coping Strategies in Rural West Java

Climate ◽  
2019 ◽  
Vol 7 (1) ◽  
pp. 7
Author(s):  
Dadang Jainal Mutaqin
Keyword(s):  
Coping Strategies ◽  
Logit Model ◽  
West Java ◽  
Capita Expenditure ◽  
Disaster Experience ◽  
Ex Post ◽  
Ex Ante ◽  
Per Capita ◽  
The Impact ◽  
Risk Coping

The impact of natural hazards on agriculture in Indonesia is becoming increasingly severe. Therefore, improving farmers’ capacity to undertake risk coping strategies is essential to maintaining their prosperity. The objective of this study was to investigate the determinants of farmers’ decisions on ex ante and ex post coping strategies in rural West Java, Indonesia. The study was based on a field survey of 180 farmers conducted in the Garut district from July to October 2017. The study used the protection motivation theory framework and applied three econometric models: binomial logit model, zero truncated Poisson regression model, and multinomial logit model. Most farmers (74.4%) adopted ex ante coping strategies. They were characterized as having higher risk aversion per capita expenditure and disaster experience, but lower discount rates and percentage of damage and locations in downstream and midstream areas. Coping appraisal perceptions were found to be important factors in the risk coping analysis. Four determinants of the decision on the number of ex ante coping strategies adopted were: per capita expenditure, land size, disaster experience, and access to financial institutions. The most common ex post coping strategy adopted by farmers was the middle-stress type.

scholarly journals Integrating ESG Analysis into Smart Beta Strategies

2020 ◽  
Vol 12 (22) ◽  
pp. 9351
Author(s):  
Federica Ielasi ◽  
Paolo Ceccherini ◽  
Pietro Zito
Keyword(s):  
Investment Analysis ◽  
The Other ◽  
Portfolio Rebalancing ◽  
A Value ◽  
Ex Post ◽  
The Us ◽  
Ex Ante ◽  
The Impact ◽  
Smart Beta ◽  
Increase In Risk

Smart beta strategy is an increasingly frequent approach to investment analysis for portfolio selection and optimization and it can be combined with environmental, social, and governance (ESG) considerations. In order to verify the impact of the integration between ESG and smart beta analysis, first we apply a portfolio rebalancing based on ESG scores on securities selected according to different smart beta strategies (ex-post ESG rebalancing approach). Secondly, we apply different smart beta approaches to sustainable portfolios, screened according to the issuers’ ESG scores (ex-ante ESG screening approach). We find that ESG rebalancing and screening are able to impact both on return and risk statistics, but with a different level of efficiency for each smart beta strategy. ESG rebalancing proves to be particularly efficient when it is applied to a “Value” portfolio. On the other hand, when smart beta is applied to ESG-screened portfolios, “Growth” is the strategy which shows the highest increase in risk-adjusted performance, particularly in the US. Minimum volatility proves to be the most efficient smart beta strategy for sustainable portfolios. In general, the increase in the level of sustainability does not deteriorate the risk-adjusted performances of most smart beta strategies.

scholarly journals The Entrepreneurs Random Walk

2012 ◽  
Vol 28 (3) ◽  
pp. 403-410 ◽  
Author(s):  
Robert Fiore
Keyword(s):  
Random Walk ◽  
Economic Value ◽  
Organizational Success ◽  
Economic Success ◽  
Fundamental Attribution Error ◽  
Ex Post ◽  
Ex Ante ◽  
Ex Post Facto ◽  
Attribution Error ◽  
The Impact

The issues of entrepreneurial ex-ante determination and managerial intent are discussed as applied to the ex-post organizational result. Possible errors in over-attribution of success to the celebrity-entrepreneur and the tendency to disregard the impact of endogenous market conditions, randomness on success due to creative destruction free-market mechanisms are discussed.Humans inherently look for correlation as correlations produce useful knowledge. Specifically, investors seek to create cause-effect knowledge in order to enhance returns. Students and researchers of business also attempt to tie causation to effects. Fundamental attribution error psychology posits a tendency to over-weight personality-based explanations and under-value situational factors when assessing what factors are responsible for the ex-post-facto outcome of an organization. In the field of entrepreneurship, this trait of human psychology may manifest in the tendency to credit the leader him/herself of a successful organization vis-a-vis more important external factors which contributed to success such as the temporal status of market demand conditions.The existence of fundamental attribution error may likewise lead to over-weight emphasis of a leaders input to organizational failure, however, the sample of entrepreneurs linked to successful organizations is self-selected as the unsuccessful entrepreneurs are usually not locatable. Therefore, stakeholders show strong tendencies to link the focus-entrepreneur with a resultant successful enterprise. This tendency is observable in the general culture as most students of entrepreneurship believe the knowledge and actions of Ray Kroc were a prime factor in the economic success of McDonalds. The question explored within the present study is to what extent is such ex-post-facto success attributable to the ex-ante entrepreneurial intent appropriate?Most people familiar with business strongly identify; Steve Jobs with Apple, Thomas Watson with IBM, Dave Thomas with Wendys, Bill Gates with Microsoft, Howard Schultz with Starbucks, Harland Sanders with KFC, and Fred Smith with FedEX. Instructors of entrepreneurship teach with these stories. More importantly, researchers of entrepreneurship use these leaders and their associated knowledge and behavior as independent variables when regressing these variables onto the ex-post dependent outcome of the organization. The investing and finance community also correlate these success story celebrity-entrepreneurs with the resulting rate of return on equity. This paper explores a series of archive-based recollections of the entrepreneurs ex-ante thoughts to demonstrate that many legendary-business entrepreneurs did not expect the organizations extraordinary rates of growth and the ex-post-facto market successes. Hence, cause-effect attribution questions arise.One important research question addressed within is; if the entrepreneur did not know of, or expect growth before the growth, then the resulting growth may not be fully attributed to the person as valid intent. More generally, then to what extent can the resulting organizational success be attributed to the identified behavior of entrepreneurship? Are the successes normally attributed to individual-entrepreneurs really organizational successes or even random-walk phenomenon? Are fundamental attribution errors over-weighing the construct of entrepreneurship and obscuring other, organizational-based, effective causes of economic success?The rise of the media-driven, celebrity-entrepreneur leads to a recent strengthening of attribution of organizational success to that leader. Conclusions within the current study lead to a more distinct focus on the time-limited tasks of entrepreneurship that are very limited in proportional impact to a firms total life-span and resulting economic value. We then can attribute much more of the resulting economic value to the impact of organizational dynamics and organizational development.

Ex ante, ex post risk and bank capital ratios: an empirical investigation

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Faisal Abbas ◽  
Adnan Bashir
Keyword(s):  
Generalized Method Of Moments ◽  
Regulatory Capital ◽  
Content Type ◽  
Ex Post ◽  
Ex Ante ◽  
Capital Ratios ◽  
Cooperative Banks ◽  
The Impact ◽  
Practical Implications ◽  
Tier I

PurposeThe purpose of this study is to investigate the impact of leverage, regulatory capital and tier-I capital ratios on the ex ante and ex post risk of Japanese banks.Design/methodology/approachTo test the hypotheses, the authors have implemented a panel of 507 commercial and cooperative banks of Japan over the period extending from 2001 to 2020, using a two-step system Generalized Method of Moments (GMM) framework.FindingsThe overall sample banks' results show that the impact of leverage, regulatory capital and tier-I capital ratios on ex ante and ex post risk is positive. The findings reveal that the effects of regulatory and tier-I capital ratios on ex post risk are negative (positive) for commercial (cooperative) banks, high-liquid, low-liquid and high-growth banks in Japan. In addition, the regulatory capital ratio is more beneficial for risk due to its power to absorb losses. The lagged coefficient indicates that banks require more time to adjust their ex post and ex ante risk during crisis period than during normal economic conditions.Practical implicationsThe heterogeneity in results has practical implications for regulators, policymakers and bank managers in formulating the capital requirement guidelines with respect to ex ante and ex post risk across different categories and characteristics of banks.Originality/valueTo the best of the authors' knowledge, this is the first study investigating the impact of leverage, regulatory capital and tier-I capital ratios on the ex ante and ex-post risk of Japanese commercial and cooperative banks over the period from 2001 to 2020. The insights into the impact of leverage, regulatory capital and tier-I capital ratios on the ex ante and ex post risk of well-capitalized, under-capitalized, high and low-liquid banks are new in the context of Japan.

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