Why is there Resistance to Works Councils in Germany? An Economic Perspective
Steffen Müller, Jens Stegmaier
Abstract
Recent empirical research generally finds evidence of positive economic effects of works councils, for example with regard to productivity and – with some limitations – to profits. This makes it necessary to explain why employers’ associations have reservations against works councils. On the basis of an in-depth literature analysis, we show that beyond the generally positive findings, there are important heterogeneities in the impact of works councils. We argue that those groups of employers that tend to benefit little from employee participation in terms of productivity and profits may well be important enough to shape the agenda of their employers’ organisation and even gained in importance within their organisations in recent years. We also discuss the role of deviations from profit-maximising behaviour like risk aversion, short-term profit maximisation, and other non-pecuniary motives, as possible reasons for employer resistance.
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01.11.2017 • 38/2017
IWH Policy Talk „Risk Sharing and Risk Reduction – The Challenges that Lie Ahead“
The Halle Institute for Economic Research (IWH) – Member of the Leibniz Association is pleased to inform about its next upcoming IWH Policy Talk „Risk Sharing and Risk Reduction – The Challenges that Lie Ahead“ with Andrea Enria, first Chairperson of the European Banking Authority (EBA). The talk will take place on Tuesday, No¬vember 7, 2017, 5:00 p.m., in the IWH conference room. You are hereby cordially invited to attend.
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Nationale Aufsicht versus Europäische Bankenunion: Unterscheidet sich die Beurteilung der Einflussfaktoren systemischen Risikos von Banken?
Thomas Krause, Talina Sondershaus, Lena Tonzer
Wirtschaft im Wandel,
No. 3,
2017
Abstract
Als Reaktion auf die Finanzkrise unterliegt das Finanzsystem zahlreichen neuen regulatorischen Änderungen. Zum einen wurden bestehende mikroprudenzielle Regeln für Eigenkapital und Liquidität verschärft. Zum anderen wurden makroprudenzielle Instrumente eingeführt. Makroprudenzielle Regulierung hat dabei zum Ziel, systemische Risiken im Finanzsystem frühzeitig zu erkennen, zu reduzieren und somit die Finanzmarktstabilität zu erhöhen. Zudem wurde mit der Einführung der Bankenunion die Aufsicht der größten Banken des Euroraums der Europäischen Zentralbank (EZB) übertragen. Diese Studie untersucht, ob das systemische Risiko von Banken unterschiedlich groß ist, wenn eine europäische im Vergleich zu einer nationalen Perspektive eingenommen wird. Im Anschluss wird die Frage geklärt, welche Faktoren systemisches Risiko beeinflussen und ob sich diese Faktoren zwischen der nationalen und europäischen Ebene unterscheiden. Es zeigt sich, dass Banken auf nationaler Ebene im Durchschnitt etwas mehr zum systemischen Risiko beitragen, wobei es große Unterschiede zwischen Banken und Ländern gibt. Zudem haben größere und profitablere Banken sowie Banken, deren Geschäftsmodell durch eine geringere Kreditvergabe geprägt ist, ein höheres systemisches Risiko.
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Do Managerial Risk-taking Incentives Influence Firms' Exchange Rate Exposure?
Bill Francis, Iftekhar Hasan, Delroy M. Hunter, Yun Zhu
Journal of Corporate Finance,
2017
Abstract
There is scant evidence on how risk-taking incentives impact specific firm risks. This has implications for board oversight of managerial risk taking, firms' development of comparative advantage in taking particular risks, and compensation design. We examine this question for exchange rate risk. Using multiple identification strategies, we find that vega increases exchange rate exposure for purely domestic and globally engaged firms. Vega's impact increases with international operations, declines post-SOX, and is robust to firm-level governance. Our results suggest that evidence that exposure reduces firm value can be viewed, in part, as a wealth transfer from shareholders and debt-holders to managers.
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Pricing Sin Stocks: Ethical Preference vs. Risk Aversion
Stefano Colonnello, Giuliano Curatola, Alessandro Gioffré
Abstract
We develop a model that reproduces the return and volatility spread between sin and non-sin stocks, where investors trade off dividends with the ethical assessment of companies. We relax the assumption of boycott behaviour and investigate the role played by the dividend share of sin stocks on their return and volatility spread relative to non-sin stocks. We empirically show that the dividend share predicts a positive return and volatility spread. This pattern is reproduced by our model when dividends and ethicalness are complementary goods and investors are sufficiently risk averse.
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Real Effects of Bank Capital Regulations: Global Evidence
Yota D. Deli, Iftekhar Hasan
Journal of Banking and Finance,
2017
Abstract
We examine the effect of the full set of bank capital regulations (capital stringency) on loan growth, using bank-level data for a maximum of 125 countries over the period 1998–2011. Contrary to standard theoretical considerations, we find that overall capital stringency only has a weak negative effect on loan growth. In fact, this effect is completely offset if banks hold moderately high levels of capital. Interestingly, the components of capital stringency that have the strongest negative effect on loan growth are those related to the prevention of banks to use as capital borrowed funds and assets other than cash or government securities. In contrast, compliance with Basel guidelines in using Basel- and credit-risk weights has a much less potent effect on loan growth.
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How Do Political Factors Shape the Bank Risk-Sovereign Risk Nexus in Emerging Markets?
Stefan Eichler
Review of Development Economics,
No. 3,
2017
Abstract
This paper studies the role of political factors for determining the impact of banking sector distress on sovereign bond yield spreads for a sample of 19 emerging market economies in the period 1994–2013. Using interaction models, I find that the adverse impact of banking sector distress on sovereign solvency is less pronounced for countries with a high degree of political stability, a high level of power sharing within the government coalition, a low level of political constraint within the political system, and for countries run by powerful and effective governments. The electoral cycle pronounces the bank risk–sovereign risk transfer.
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Direct and Indirect Risk-taking Incentives of Inside Debt
Stefano Colonnello, Giuliano Curatola, Ngoc Giang Hoang
Journal of Corporate Finance,
August
2017
Abstract
We develop a model of compensation structure and asset risk choice, where a risk-averse manager is compensated with salary, equity and inside debt. We seek to understand the joint implications of this compensation package for managerial risk-taking incentives and credit spreads. We show that the size and seniority of inside debt not only are crucial for the relation between inside debt and credit spreads but also play an important role in shaping the relation between equity compensation and credit spreads. Using a sample of U.S. public firms with traded credit default swap contracts, we provide evidence supportive of the model's predictions.
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