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Economics, Management, and Financial Markets
VOLUME 1 • NUMBER 1 • AUGUST 2006

Economics, Management, and Financial Markets
VOLUME 1 • NUMBER 2 • OCTOBER 2006

Economics, Management, and Financial Markets
VOLUME 1 • NUMBER 3 • DECEMBER 2006

Economics, Management, and Financial Markets
VOLUME 2 • NUMBER 1 • MARCH 2007

Economics, Management, and Financial Markets
VOLUME 2 • NUMBER 2 • JUNE 2007

Economics, Management, and Financial Markets
VOLUME 2 • NUMBER 3 • SEPTEMBER 2007

Economics, Management, and Financial Markets
VOLUME 2 • NUMBER 4 • DECEMBER 2007

Economics, Management, and Financial Markets
VOLUME 3 • NUMBER 1 • MARCH 2008

Economics, Management, and Financial Markets
VOLUME 3 • NUMBER 2 • JUNE 2008

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Economics, Management, and Financial Markets
VOLUME 1 • NUMBER 1 • AUGUST 2006

RAWLS, LIBERAL LEGITIMACY, AND REASONABLE DISAGREEMENT

Ilie Pascu

ABSTRACT. Rawls addresses in Political Liberalism the idea of the citizen as a moral person with equal claims to participate in the political processes of collective decision making, giving rise to the problem of public justification. The kind of redistribution needed in order to achieve social justice in the Rawlsian sense can be effected only by a much more developed and powerful state than would seem acceptable to those liberals who see strong reasons to improve rather strict limits on the range of legitimate state action. Back to contents

ECONOMIC GLOBALIZATION, FINANCIAL CRISES, AND INEQUALITY

Dorin Dobrisan

ABSTRACT. Global financial markets have few incentives to equip poor countries to be globally productive; on the whole trade is not as unequal as has been widely thought. Some markets appear more integrated (based on flow variables) than one would expect on the basis of statutory restrictions imposed by nation-states. The pressures for financial integration are powerful, bordering on the irresistible. The Asian crisis revealed the dark side of that region's successful development model. Back to contents

DWORKIN AND LAW AS INTEGRITY

Carmen Palacean

ABSTRACT. Dworkin assumes that a conception of law must explain how what it takes to be law "provides a general justification for the exercise of coercive power by the state." Moral principles that cohere with past legal practice are also valid propositions of law, even to the extent that such principles go beyond what existing legal rules and past decisions have uncontroversially decided. Dworkin describes and theorizes about the behavior of legal actors in certain modern legal cultures. Back to contents

EXPLAINING ECONOMIC POLICY

Liliana Cimbrola

ABSTRACT. In the presence of the capital market imperfections that affect the ability of workers to borrow and invest in human capital, the impact of trade liberalization depends on the country's endowment of skilled labor. More market-oriented corporate activities can also be viewed as political; the legitimacy of business activities is a deeply political issue. Attention needs to be paid to the interactions between politics and economics. Back to contents

GLOBALIZATION AND POVERTY REDUCTION

Elena Tudor

ABSTRACT. Globalization has led to substantial economic progress among rich and poor countries alike and may be the principal mechanism for the international convergence of living standards. The fortunes of political communities and peoples can no longer be simply understood in exclusively national or territorial terms. Globalizers among low-income countries have fared badly because they have not yet reached the minimum development threshold to benefit from international openness. Back to contents

THE CHALLENGE OF ECONOMIC GROWTH AND EQUITY

Catalina Craciunescu

ABSTRACT. The intensification of globalization has increased the demand for multilateral cooperation and the provision of global public goods; global politics is anchored not just in traditional geopolitical concerns but also in a large diversity of economic, social and ecological questions. If there are many risky technologies available, financial openness may increase the equilibrium growth rate by leading to a reallocation of savings to projects with high risk and return. Back to contents

FROM GEOPOLITICS TO GLOBAL GOVERNANCE?

Adrian Pandurasu

ABSTRACT. Ideas such as cosmopolitan democracy are contributions to new debates and what these structures will look like; new innovative political arrangements are not only a necessity but also a possibility in the light of the changing organization of regional and global processes. Cosmopolitan democracy will only serve to intensify the enduring tensions between democracy and the protection of individual rights. Back to contents

POLITICAL ECONOMY AND THE MANAGEMENT OF GLOBALIZATION

Ovidiu Ciogescu

ABSTRACT. The notion of cosmopolitan democracy recognizes certain problems and policies as appropriate for local governments and national states. Deliberative and political decision-making centres beyond national territories are justified when cross-border or transnational groups are affected significantly by a public matter. The task of the political theorist is to rethink our political concepts and to create new conceptual resources which can be reflexively applied in the contemporary world. Back to contents

MATHEMATICS AND ECONOMIC ANALYSIS

Sorin Manole

ABSTRACT. Real economic phenomena cannot be investigated insulated from other potential influences falling outside the theoretical domain. The growth rate of manufacturing firms and their volatility is negatively associated with their initial age and size. The new image of mathematics shaped an emergent mathematical economics. The firm's production plan is financed with funds borrowed from a financial intermediary. Microeconomic models are usually difficult to understand for people without appropriate training in the relevant mathematics. Back to contents

RAWLS, MORALITY, AND PUBLIC REASON

Sevastian Blendea

ABSTRACT. Rawls considers the conflict between the value of appealing to the "whole truth" and the political values which are realized only when we do not appeal to the whole truth. What democracy is ultimately about is not majority rule but political equality, which in turn is based on the more fundamental idea of the citizen as a moral person with the capacities necessary for an autonomous life and fair social cooperation. Back to contents

HART'S DISTINCTION BETWEEN THE CORE AND PENUMBRA OF CONCEPT WORDS AT THE BASIS OF JUDICIAL REASONING

Ilie Pascu

ABSTRACT. Hart holds that the Rule of Recognition is a social rule, meaning that it is constituted by a customary practice of convergent behavior among judges, where the rule describing the pattern of behavior is accepted by those officials from an internal point of view. Hart explores the variety of rules which serve distinctive functions and which collectively explain much of the phenomenon of law. Hart characterizes much of legal language as ascribing legal consequences to actions rather than describing those actions. Back to contents

MONETARY POLICY AND CAPITAL MARKET EFFICIENCY

Dorin Dobrisan

ABSTRACT. The concept of capital market efficiency has not gained widespread appreciation among the general investing public. Subjective discount rates decrease with time delay and monetary sum, and are higher for postpone-a-receipt than for a postpone-a-payment scenario. Differences in corporate dividend smoothing are documented by estimating the sensitivity of corporation' dividend payout ratios to changes in earnings. Back to contents

DWORKIN'S THEORY OF EQUALITY

George Hodorogea

ABSTRACT. Dworkin claims that there may well be a set of legal rules recognized by a rule of recognition. Dworkin aims to find a plausible conception of equality that can be used to guide the state's redistribution of resources and justify the state's interference with individual liberty in that redistribution. According to equality of resources, the rights to liberty we regard as fundamental are a part or aspect of distributional equality. Back to contents

DWORKIN'S CONCEPTION OF LEGAL THEORY

Mihaela Chircusi

ABSTRACT. Dworkin argues for a universal healthcare system, a more generous welfare scheme, greater regulations on campaign expenditures and contributions, and race-sensitive admissions policies. Dworkin's notion of undeserved wealth presupposes the nonentrepreneur for whom wealth is immediately consumed or invested for future consumption. The equality of resources forbids that people should be allowed to retain the benefits of superior talent because it is just brute luck that one person should be endowed with more productive talent than another. Back to contents

TRADE OPENESS AND FINANCIAL INTEGRATION

Carmen Palacean

ABSTRACT. The impact of globalization on market concentration is in need of more empirical investigation; even if the issue is validated empirically, protesters should be lobbying for better anti-trust laws, not more trade restrictions (Bardhan). Firm heterogeneity is an important channel of transmission for monetary policy; small firms are much more responsive to monetary shocks than large firms. A large fraction of the changes in aggregate output induced by monetary shocks derives from the reaction of small firms (Cooley and Quadrini). Back to contents

DEREGULATED TRADE AND CAPITAL FLOWS

Liliana Cimbrola

ABSTRACT. Trade flows provide a conduit through which advanced production techniques and technological knowledge are transmitted across countries (Coe). By inducing rapid structural change and shifting employment within industrializing countries that liberalize, trade leads to falling real wages and declining working conditions and living standards. Back to contents

ABSTRACT. Back to contents

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Economics, Management, and Financial Markets
VOLUME 1 • NUMBER 2 • OCTOBER 2006

COST AND BENEFITS OF INTEGRATION IN THE EUROPEAN UNION AND IN THE ECONOMIC MONETARY UNION (EMU)

ARISTIDIS BITZENIS • ANDREAS ANDRONIKIDIS

ABSTRACT. The paper discusses the advantages (associated benefits) and disadvantages (potential and realized costs) of entering the EU and the EMU for country members, accession and potential for accession countries. The benefits from integration are multidimensional: political, economical and cultural, while the EU entrance is not considered to be without costs; for example, expenses related to the adoption of all EU norms and standards by enterprises, threatens to domestic producers' market position, and reduced autonomy in countries' decision making process. The benefits for entering the EMU are mainly connected with the five Maastricht criteria (low interest rates, low inflation, stable monetary policy, stable exchange rate policy when we utilize one common monetary policy and one currency, strict budgetary policy - limited debt/GDP and deficit/ GDP ratios), while EMU participation is related with costs for improvement of legislature, costs of compliance with European principles, and costs for total modernization of the industrial potential. The authors come to the conclusion that realized and/or perceived benefits from EMU and EU membership depend mainly on special characteristics of each country member. Back to contents

ON ECONOMY

ALEXANDRU W. POPP

ABSTRACT. The rules and laws of economy govern all types of interactions between any interactors. There is an acute need for the clear distinction between economics and politics. We provide the reasons for this necessity, and we also present a solution. In order to better understand the different aspects of economy, we divide the latter in two categories: abstract and concrete. Economic Darwinism, accompanied by Maslow's hierarchy of needs, explains better than Homo Economicus the mentality of the economic agents. Back to contents

THE BEHAVIOR OF STOCK MARKET PRICES

LUMINITA IONESCU

ABSTRACT. In an attempt to capture the buying and selling behaviour of different investors in the vicinity of interim earnings announcements, Vieru et al. separate the individuals into five trading frequency (activity) classes. Shivakumar disaggregates the commonly used proxy for earnings surprise into cash flow and accrual components and evaluates the ability of each of these components in predicting future stock returns. Ekholm investigates how different types of investors react to new earnings information. González analyzes the relevance of two different reasons for banks to acquire firms' stock: the increase of agency costs in the lending relationship, and participation in the expected profits of undervalued firms. Back to contents

CAPITAL MARKET RESEARCH AND BANK EFFICIENCY

DORIN DOBRISAN

ABSTRACT. Banks often demand greater levels of excess balances when flows in and out of their accounts are in greater volumes, and thus a greater uncertainty attends their end-of-day balance. Beccalli et al. use the natural log of total assets as a proxy of the influence of bank size. Carpenter and Demiralp note that, beginning in January 2004, banks were allowed to adjust the level of contractual clearing balances each maintenance period, but the level may not be adjusted within a maintenance period. Back to contents

ANTICIPATIONS OF MONETARY POLICY IN FINANCIAL MARKETS

GHEORGHE LEPADATU

ABSTRACT. Gruen et al.'s results highlight the stringent informational requirements inherent in an activist policy approach to handling asset-price bubbles. Europe's economy is highly developed and diversified, and its financial markets are deep; the debates provoked by the EMS crisis parallel those stimulated by its emerging-market successors (Eichengreen). Wennerlind claims that Hume used different analytical models when considering exogenous and endogenous money. Back to contents

THE GEOPOLITICS OF CAPITALISM AND NEOLIBERALISM AS AN EMERGENT SYSTEM OF GLOBAL HEGEMONY

STEFAN PAUN

ABSTRACT. Globalization of trade, foreign direct investment, and production are not just about an emerging geography of flows but how flows fit into and adapt to existing territorial or place-based patterns of economic development (Agnew). Roberts et al. highlight how the neoliberal geopolitics of the war planners illustrated the contradictory dependency of multilateral neoliberal deregulation on enforced re-regulation. New forms of economic coordination are indispensable to overcome the fragmentation of state-based policy-making in solving the problems of a global economy (Held). Back to contents

THE INVESTMENT BEHAVIOR AND PERFORMANCE

ALEXANDRA-MADALINA CIUTEANU

ABSTRACT. Ekholm seeks to consider what investor overconfidence would imply for the trading behaviour of different types of investors, when new public information arrives on the stock market. Gil-Bazo analyzes empirically the effect of the investor's time horizon on his optimal asset allocation. The institutional trading class is less affected by the announcement than the active investor classes, suggesting that institutions utilize a broader information set than individual investors. Back to contents

RATIONAL EXPECTATIONS AND PERFORMANCE OF MONETARY POLICY

LILIANA CIMBROLA

ABSTRACT. Pryor defines economic systems of developing nations in terms of clusters of complementary institutions, using 31 indicators of economic institutions to derive four quite different economic systems. Christiano et al. describe their model economy and display the problems solved by firms and households, and describe the behavior of financial intermediaries and the monetary and fiscal authorities. The transition countries have needed to contend with the problems faced in the 1990s by all developing economies that opened themselves up to the world's financial markets (Kalyuzhnova and Taylor). Back to contents

CAPITAL MARKET EQUILIBRIUM AND CORPORATE FINANCE

ELENA DIACONU

ABSTRACT. In completely integrated financial markets, securities with identical risk command the same expected return irrespective of the market of trading; barriers to international capital flows exist that can cause segmentation of capital markets along national boundaries. If banks expect the funds rate to be higher tomorrow, and funds are perfectly substitutable across days, there is an incentive to bid aggressively for the funds rate today in order to avoid borrowing funds when interest rate are expected to be high. Back to contents

MONETARY POLICY, CRISES, AND TODAY'S GLOBAL ECONOMY

ELENA-MARIA TUDOR

ABSTRACT. The task of monetary theory is a much wider one than is commonly assumed (Hayek). Beccalli et al. shift the focus from the traditional framework to the relationship between share prices and efficiency measures. Countries that open the capital account before eliminating severe macroeconomic imbalances are courting disaster (Eichengreen). Global economic difficulties have been exacerbated by a series of financial crises that have spread havoc and produced sharp recessions throughout much of the world (J.B. Rosser and M.V. Rosser). Back to contents

LEARNING ABOUT MONETARY POLICY RULES

CATALINA CRACIUNESCU

ABSTRACT. Preston considers a potentially important source of model misspecification in the design of instrument rules: the assumed manner in which expectations are formed. Losses in one state enterprise would be made good by surpluses generated elsewhere in the system, the distribution between surplus and loss taking place across the balance sheet of the monobank system (Kalyuzhnova and Taylor). After an expansionary policy shock, investment increases; in the presence of investment adjustment costs, this implies that the marginal cost of physical capital rises (Christiano et al.). Back to contents

WHAT MAKES INVESTORS TRADE?

LUMINITA IONESCU

ABSTRACT. Gil-Bazo provides a theoretical analysis that relates the evolution of the risky asset return distribution over time to the optimal portfolio of a utility-maximizing investor. Gervais and Odean state that investors become less overconfident as they gain more experience in investment activities. Kritzman and Rich study the problem of an investor who must choose between investing all his wealth in a safe asset and investing it in a risky asset. Rational investors should not trade unless they have market timing ability and/or security selection ability (Merton). Back to contents

INTEREST AND PRICES

CATALINA CRACIUNESCU

ABSTRACT. The problem of a weak domestic financial sector intermediating international capital flows is common to both the transition and developing economies (Kalyuzhnova and Taylor). Christiano et al. describe how they estimate a monetary policy shock, report estimates of how major macroeconomic variables respond to a monetary policy shock, and report the fraction of the variance in these variables that is accounted for by monetary policy shocks. González includes in the empirical analysis the ratio of tangible assets to total assets at the end of the acquisition year, with tangible assets including property, plant and equipment (TANG). Back to contents

ECONOMIC GLOBALIZATION AND THE CHALLENGES TO GOVERNANCE

STEFAN PAUN

ABSTRACT. Gray holds that the global free market is created by specific policies based on ideological commitment to economic liberalism, rather than being spontaneously generated. Storper distinguishes four dynamics that work differentially across economic sectors and world regions. Waltz fears that a world government would stifle freedom, become a terrible despotism, and finally collapse into chaos. Ackerman claims that the equal worth and dignity of individuals are observed in any society. Back to contents

OPTIMAL MONETARY POLICIES AND MACROECONOMIC STABILITY

DORIN DOBRISAN

ABSTRACT. To avoid conditioning their estimation on whether or not there was a policy change, a fact that is only known ex post, Carpenter and Demiralp focus exclusively on anticipation of policy changes that took place at FOMC meetings. González remarks that bank investment in borrowing firms is driven by two different factors: the wish to reduce agency costs in the lending relationship and the aim to buy undervalued firms, obtaining capital gains by exploiting inside information. Preston postulates a framework where agents optimally make forecasts of macroeconomic conditions many periods into the future when making current decisions. Back to contents

MARKET EFFICIENCY AND BEHAVIORAL FINANCE

GHEORGHE LEPADATU

ABSTRACT. By applying the collective wisdom on relative pricing of accruals and cash flows, Shivakumar's study helps sharpen strategies that are designed to take advantage of the post-earnings-announcement drift. Gruen et al. state that different views about the appropriate role of monetary policy in the presence of asset-price bubbles do not arise primarily because of differences about the objectives of monetary policy. Gale and Stokoe focus on accounting for internal managerial decision making rather than accounting for reporting to external shareholders and other stakeholders. Back to contents

UNDERSTANDING THE DETERMINANTS OF MANAGERIAL OWNERSHIP

ELENA DIACONU

ABSTRACT. Chen et al. treat Japenese managerial ownership, firm investment and firm valuation as endogenous to the firm and model them in a three-equation simultaneous equation system. Elsinger et al. see that for the analysis of systemic risk, defined as the probability assessment of joint default events, the analysis of both corrections and interlinkages is important. Demsetz suggests that rather than representing inefficient contracting, low levels of management ownership occur in firms where agency problems are low. Back to contents

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Economics, Management, and Financial Markets
VOLUME 1 • NUMBER 3 • DECEMBER 2006

FACTORS THAT INFLUENCE MANAGEMENT'S SELECTION OF ACCOUNTING POLICIES

LUMINITA IONESCU

ABSTRACT. Watts and Zimmerman utilize size to proxy for a firm's political sensitivity and thus the incentive of managers to select income-decreasing accounting choices. Davis-Friday et al. examine the impact of the interaction between the economic environment and corporate governance on the value relevance of book value and earnings. Back to contents

ON THE COST OF A BANK-CENTERED FINANCIAL SYSTEM

DORIN DOBRISAN

ABSTRACT. González predicts a negative relationship between the probability of a bank equity stake in the firm and the age of the firm. Gallagher and Looi's study examines the ability of active Australian equity managers to earn superior risk-adjusted returns. Beccalli et al. combine the capital market research in accounting and the bank efficiency literature by linking bank cost efficiency to stock market performance. Back to contents

EFFICIENCY OF FINANCIAL INSTITUTIONS

GHEORGHE POPESCU

ABSTRACT. Kester attributes the portion of a firm's capitalization not explained by assets-in-place to the present value of its growth options. John and Lang adopt a sequential structure to analyze the stock price response to dividend announcements depending on prior insider trading. Andrés-Alonso et al. test whether stock prices reflect investor's expectations regarding the value of real options. Back to contents

CONTEXTS OF IMPRISONMENT

ELENA-MARIA TUDOR

ABSTRACT. Criminology has become a resource plundered by policy entrepreneurs. Countries that are very punitive rely on both high levels of imprisonment as well as the death penalty. Differences in the attitudes of the upper-level administrators and in the institutional history of the facilities help explain why the values and attitudes of prison staffs vary so decisively between prisons. Local communities are often suckered into becoming boosters for a prison and the purported economic windfall does not materialize (Gilmore). Back to contents

INVESTMENT OPTIONS AND GROWTH OPPORTUNITIES

CRISTIAN GRADINARU

ABSTRACT. Gallagher and Looi find consistency in performance according to a fund manager's investment philosophy, in that growth managers exhibit a competitive advantage in trading stocks that have low book-to-market ratios. According to Gruen et al., if an activist policymaker believes asset prices to be currently overvalued, she will necessarily judge the expected value of the change in these prices next period to be negative. Back to contents

UNBIASEDNESS AND RATIONALITY OF INFLATION EXPECTATIONS

NICOLAE MOROIANU

ABSTRACT. Thirlwall and Barton report a positive relationship between inflation and growth in a cross section of industrial countries and a negative relationship in a cross section of seven developing countries. Visco evaluates the estimate of inflation expectations for both wholesale and consumer price changes, comparing them with those held by respondents to other surveys for different countries and with the forecasts generated by alternative predictors of the inflation process. Back to contents

THE IMPACT OF FINANCIAL CRISIS ON THE VALUE RELEVANCE OF BOOK VALUE AND EARNINGS

LILIANA CIMBROLA

ABSTRACT. Desai et al. examine cash flow and accrual inefficiencies with respect to stock prices, and focus on total accrual mispricing. Davis-Friday et al. examine whether differences in corporate governance influence the relative value relevance of the book value of equity and earnings of firms in these countries during the financial crisis. Back to contents

HIGH INVOLVEMENT MANAGEMENT AND HUMAN RESOURCE SUSTAINABILITY

ELVIRA NICA

ABSTRACT. Kanata remarks that training is considered an investment for the future and companies do not perceive the training of temporary workers as beneficial. Peterson says that the growth of contingent work in a lot of ways is the hand-maiden of corporate downsizing. Back to contents

FIRM SIZE AND INCOME EFFECT OF THE FIRM'S ACCOUNTING METHODS

LUMINITA IONESCU

ABSTRACT. Ahmed et al. test whether the cash flow and working-capital accrual effects can be explained by common risk factors documented in empirical finance literature. Davis-Friday et al. examine the effect of the interaction between corporate governance and the economic situation on the value relevance of equity book value and earnings. Back to contents

DEMOCRACY AND THE LIMITS OF CRIMINAL PUNISHMENT

ELENA-DANIELA STANCIU

ABSTRACT. Many of the characteristic practices of adjudication and decision making of contemporary western penal systems increasingly make express reference to vocabularies of risk assessment and risk reduction (Sparks). Improvement in accuracy of prediction risk assessments is contingent upon a determination of the characteristics of offenders and their circumstances that are subject to change during the sentence (Andrews). Risk knowledges are fluid and flexible and capable of supporting a range of penal strategies (Hannah-Moffat). Back to contents

ASSESSING THE FINANCIAL BENEFITS OF HUMAN RESOURCE DEVELOPMENT

ELVIRA NICA • GHEORGHE POPESCU

ABSTRACT. Plott and Chen maintains that reflecting on every day notions about the way that people learn from observing other people can form a common sense impression of how an aggregation mechanism might work. Becker contends that workers increase productivity by learning new skills and perfecting old ones while on the job. Back to contents

STRUCTURAL CHANGE IN THE ECONOMIC SYSTEMS AND ASSOCIATED ECONOMIC PROCESSES

LILIANA CRACIUN

ABSTRACT. Many theoretical models show that redistribution causes low growth or capital outflows even though empirically redistribution and growth are often found to be positively associated across countries. The government of a technologically superior economy may attract foreign and domestically owned capital and may have relatively higher GDP growth and more resources for redistribution than in a closed economy. Back to contents

CORPORATE GOVERNANCE PRACTICES AND STOCK MARKETS

DORIN DOBRISAN

ABSTRACT. Ownership concentration varies systematically with respect to certain firm-specific economic variables and country characteristics in ways that are consistent with value maximization and predictions of agency theory. Markets for high-growth stocks offer venture capitalists a valuable exit opportunity for their investments; this allows them to re-invest their money in other start-up companies and may spur the rate of new business creation and technological innovation. Back to contents

FISCAL DECENTRALIZATION AND ECONOMIC GROWTH

DORIN DOBRISAN

ABSTRACT. Gonzalez et al. identify bull and bear market turning points using a formal turning-point identification procedure: the bull and bear market phases are associated with distinct and persistent mean return shifts. Jin and Zou use a panel dataset for 30 provinces in China in order to examine the relationship between fiscal decentralization and economic growth over two phases of fiscal decentralization in China: (i) 1979-1993 under the fiscal contract system, and (ii) 1994-1999 under the tax assignment system. Back to contents

CAN LABOR STANDARDS IMPROVE UNDER GLOBALIZATION?

DORIN DOBRISAN

ABSTRACT. Given that developed countries dominate the international economic system and generally have high labor standards, we can expect that their higher standards provide the role model to which countries with lower standards are moving toward. Chun and Kim examine strategic competition behavior in heterogeneous market structure where both conventional offline and online firms coexist in equilibrium and draws strategic implications with some remarks on welfare. Back to contents

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Economics, Management, and Financial Markets
VOLUME 2 • NUMBER 1 • MARCH 2007

THE IMPACT OF CONSTITUTIONAL PHILOSOPHY ON ECONOMIC REGULATION

JAMES SAGNER • DAVID ROSNER

ABSTRACT. This article addresses the intentions of the framers with regard to governmental participation in and control of business activity. This topic is particularly timely today as the U.S. defends its international position and considers the relevance of economic regulation enacted as long ago as the late 19th century. We review what worked in the past and consider whether the same solutions can work in the future. As America is governed by the Constitution, we argue that the framers would have chosen the preservation of our economic security and therefore would have disapproved of the current overregulated business environment on pragmatic grounds. Back to contents

REMITTANCES AND REAL INVESTMENT: AN APPRAISAL ON SOUTH AND SOUTH EAST ASIAN ECONOMIES

MD. HABIBUR RAHMAN • NOURIN SHABNAM

ABSTRACT. This research analyzes the relationship between remittances and economic development in the context of South and South East Asian economies by using simultaneous equations model under the concept of panel data least-squares dummy variable regression model. Finally this paper comes out with an inverse relationship between remittances and real GDP in the perspective of Thailand, Sri Lanka, India and Indonesia. Back to contents

THE MONOTONICITY OF ASSET PRICES TOWARD CHANGES IN RISK

MASAMITSU OHNISHI • YUSUKE OSAKI

ABSTRACT. The goal of this paper is the examination of the conditions on preferences to guarantee the monotonicity of asset prices, when their returns change in the sense of first- and second-order stochastic dominances Back to contents

ACCOUNTING MEASUREMENT AND FINANCIAL REPORTING

LUMINITA IONESCU

ABSTRACT. Accounting management typically refers to the firm's discretionary choices which affect the firm's reported performance by altering the accounting measurement process; in their model, Liang and Wen interpret investment deviations from the first-best as an example of real earnings management and accounting manipulation of y into w as accounting earnings management. Salvary notes that investments constitute the observable phenomena in financial accounting and recoverable cost, which is grounded in measurement and not prediction. Back to contents

ENVIRONMENTAL MARKETING AND NATURE PROTECTION

AURELIAN A. BONDREA

ABSTRACT. Todd claims that environmentally aware individuals are already guided by their personal ethics; in trying to attract new consumers, environmentally minded businesses attach an aesthetic quality to environmental goods. According to Lozada, marketers should be encouraged to assess the cost of new laws and regulations, the cost of endless litigation, and the potential loss of competitive position(s) as integral and critical components of an ecological approach Schaefer says that sustainable development can be called the most significant and yet the most difficult problem that marketing face at the beginning of this millennium. Back to contents

FINANCIAL INCLUSION VERSUS FINANCIAL EXCLUSION

ELENA-DOINA DASCALU

ABSTRACT. McKillop et al. remark that credit unions, which embrace an income mix of members, may result in more sustainable credit unions in the longer term. Byrne et al. find that a significant number of people who borrow from money-lenders also borrow from mainstream sources of credit, and explain why new policy is needed which must not only focus on access to financial services but equally on financial education and regulation. Collard reviews the progress that has been made in promoting financial inclusion in three areas of financial services provision (banking, consumer credit and insurance) and the challenges that remain; transactional banking services are the bedrock of financial inclusion. Back to contents

FINANCIAL INTEGRATION AND MONETARY POLICY OPERATING PROCEDURES

DAN-RADU RUSANU

ABSTRACT. Andersen and Moreno claim that financial integration has been evident in frequently high correlations between asset yields or prices. Mohanty and Scatigna discuss the choice of exchange rate regime in the context of greater global financial integration, review recent movements of exchange rates. Hawkins discusses the influence of globalization on operating procedures. Mihaljek discusses two complications for domestic monetary policy stemming from greater international integration of the emerging market economies. Back to contents

COMPARING MONETARY POLICY OPERATING PROCEDURES IN ASIA

DORIN DOBRISAN

ABSTRACT. McCauley remarks that the transmission of the policy interest rate out the yield curve can be strongly affected by exchange rate expectations. Camen presents the current status of the reform of monetary policy in the context of economic and financial sector developments in Vietnam. Ito reviews critically policy actions of the Bank of Japan under a deflationary environment from 1998 to 2005. Bhattacharya contends that what makes India an especially attractive case to examine the generality of the theory is the fact that the monetary policy framework in India has changed twice since the 1980s. Back to contents

MEASURING AGRICULTURAL POLICIES

ROZI-LILIANA BEREVOIANU • ELENA TOMA • ANA URSU • ADRIAN RAHOVEANU TUREK

ABSTRACT. Hediger claims that the understanding and interpretation of the multifunctionality of agriculture and the goals of sustainable development substantially depends upon the historical development and cultural context. Botterill argues that since the introduction of agriculture into the international trade debate in the Uruguay Round of Multilateral Trade Negotiations, there has been increased focus on the nature of agricultural support policies in the developed countries. Mundlak determines whether the structural adjustment and liberalization process is enhancing or impairing the economic and institutional conditions conducive to technological innovation and greater productivity. Bonnen writes that current distributional issues differ greatly from the past. Back to contents

SUSTAINABLE DEVELOPMENT IN ECOLOGICAL MARKETING

CONSTANTIN ZAHARIA • IOANA ZAHARIA • NICOLAE TUDORESCU

ABSTRACT. Lozada contextualizes marketing within current environmental views, proceeds to explore some specific issues that have been levied regarding a key marketing function (product development and management), and examines the strategic repercussions of contemporary marketing approaches to ecological concerns. Schaefer claims that if all is not well with green marketing from a conceptual viewpoint, problems also arise with the spread of green marketing practice. Hiremath writes that the consequences of management for NTFP are determined by the political and socio-economic context in which such management occurs. Back to contents

CRIME, PUNISHMENT, AND SOCIETY

ELENA-MARIA TUDOR

ABSTRACT. Criminal punishment should be understood in retributive terms as a response to wrongdoing that seeks to communicate deserved censure and to induce repentant understanding (Duff). Punishment invokes a primordial understanding of state power that remains highly credible (Caplow and Simon). Large surplus labour populations are threatening to market economies, and economic elites within these nations use imprisonment to manage the underclass when unemployment increases (Rusche and Kirchheimer). Back to contents

FINANCIAL PERFORMANCE AND REGULATION

CRISTIAN GRADINARU

ABSTRACT. Atkinson et al. argue that increasing complexity of financial services provision has made it more difficult for the average consumer to be sure they have made appropriate provision. Fujiwara et al. review how monetary policy should be conducted in a liquidity trap caused by the zero nominal interest rate bound. Collard notes that, in recent decades, access to financial services has become much more widespread in the UK. Carbo et al. outline the nature and causes of financial exclusion, highlights the extent of exclusion across Europe and discusses the various policy/industry responses to tackling financial exclusion. Back to contents

THE DETERMINATION OF UNEMPLOYMENT BENEFITS

NICOLAE MOROIANU

ABSTRACT. Roed and Zhang use a flexible hazard rate model with unrestricted spell duration and calendar time effects to analyse a dataset including all Norwegian unemployment spells during the 1990s. Starrin and Larsson's study contributes to the understanding of women's unemployment with emphasis on individual reactions in terms of their significance and context, and it was carried out within the methodological tradition of grounded theory. Raaum and Roed remark that labor market conditions at the time and place of potential entry into the labor market are shown to have a substantial and persistent effect on adult employment prospects. Back to contents

CONCEPTS AND MEASUREMENTS IN FOOD AND AGRICULTURAL POLICY

ELENA TOMA • ROZI-LILIANA BEREVOIANU • ANA URSU • ADRIAN RAHOVEANU-TUREK

ABSTRACT. Bonnen says that economic welfare is a function not only of the amount of goods and services available but also of their distribution. Mundlak develops a conceptual framework for analyzing the ways in which changes in the economic environment modify factor productivity, and focuses on the technology actually used in production (implemented technology) rather than the generation of technology. Botterill proposes a means for identifying the nature of the balance that is struck by governments between different values competing for support through agricultural policy settings, focuses on the different values that commonly arise in the development of agricultural policy, and suggests an approach which may clarify why different governments arrive at different policy settings in attempting to achieve an acceptable balance between competing interests. Back to contents

INVESTMENT OPPORTUNITY, CORPORATE FINANCE, AND MANAGEMENT DISCLOSURES

ADELA MARCULESCU

ABSTRACT. Lai studies the association between investment opportunity and audit quality: high investment opportunity firms bear high agency cost that requires a higher level of audit quality, which will more likely constrain earnings management of those firms. Ruffino and Treussard contend that pursuing optimal life-cycle portfolio policies is technologically feasible but it represents a significant burden for individuals and financial firms acting as fiduciaries. Aivazian et al. write that managerial control issues may be less severe in bank centric market characterized by constant monitoring of corporate activities by lending officers. Back to contents

MANAGEMENT EARNINGS FORECASTS, FINANCIAL PERFORMANCE, AND INVESTMENT DECISIONS

ALEXANDRA-MADALINA CIUTEANU

ABSTRACT. Soffer et al. examine the stock price effects of various earnings preannouncement strategies: regardless of the sign of total earnings news, the optimal disclosure strategy from a stock price perspective is to always report a positive earnings surprise. Nelson et al. observe a dependence between the flexibility in accounting standards and the type of earnings management technique employed by managers (managers tend to use operational variables when standards are precise, and accounting variables when standards are imprecise). McConnell and Servaes examine the relation between a firm's ownership structure and its performance by estimating a non-linear relation between insider stock ownership and Tobin's q. Back to contents

AN ANALYSIS OF INVESTMENT OPPORTUNITY

NICOLAE TUDORESCU • CONSTANTIN ZAHARIA

ABSTRACT. Becker-Blease and Paul investigate whether these abnormal expenditures are due to declines in information asymmetry following addition that result in enhanced access to external financing. Aggarwal and Kyaw examine how cross-border variations in institutional factors and financial development influence the role of debt in addressing agency problems and enhancing firm value for firms with different growth opportunities. Adam and Goyal define the concept of a firm's investment opportunity set, discuss the proxy variables, and their theoretical relations among each other and with the investment opportunity set, and discuss examples of investment opportunities in the mining industry. Back to contents

FINANCIAL CONSTRAINTS, FINANCIAL CAPABILITY, AND CORPORATE POLICIES

ELENA-DOINA DASCALU

ABSTRACT. Chang et al. maintain that the patterns of lower investment-cash flow sensitivities and higher cash-cash flow sensitivities of financially constrained firms are necessarily interrelated because investment and the change in cash balance are two major competing uses of funds. Ahmed and Goodwin claim that there is little empirical evidence on the market's valuation of earnings restatements because of other reasons, such as accounting policy changes, and the effect of restatements on financial performance measures other than market returns. Tee et al. write that although managers consider accurate, timely and relevant information as critical to the quality of their decisions, evidence of large variations in data quality abounds. Back to contents

THE EFFECTS OF FINANCIAL GLOBALIZATION AND MACROECONOMIC VOLATILITY

DAN-RADU RUSANU

ABSTRACT. Hawkins claims that globalization has encouraged a convergence of monetary policy operating procedures in emerging market economies towards market-based instruments. Mohanty and Scatigna remark that growing global financial integration has influenced monetary policy in important ways. Andersen and Moreno state that the extent of the jure financial integration, as gauged by measures of financial liberalization, has been uneven. Mihaljek discusses why foreign exchange inflows from privatization receipts and large swings in export earnings differ from other capital inflows. Back to contents

QUALITATIVE RESEARCH METHODS IN MARKETING

AURELIAN A. BONDREA

ABSTRACT. Gummesson contends that quantitative techniques are mostly used to try to pinpoint causality, usually between two or a few variables where the independent and dependent variables are defined. According to Milliken, in reviewing the management literature, especially marketing management, it is evident that little attention has been paid to qualitative research in the discipline. Varki et al. hold that, in marketing, qualitative data are used in theory development for investigating marketing phenomena in more depth. Whitehead claims that organizations achieve success by building strong, loyal and enduring relationships with their customers. Back to contents

ACCOUNTING DISCRETION AND EARNINGS MANAGEMENT

LUMINITA IONESCU

ABSTRACT. Bowen et al. examine the cross-sectional relation between an aggregate index of accounting discretion and governance quality after controlling for other economic determinants of accounting discretion such as firm size, leverage, growth opportunities, risk, performance and stakeholder claims. Tan and Jamal conduct an experiment in which opportunistic and value-maximizing managers are given different levels of accounting discretion to report smooth increasing earnings over time. Back to contents

ACCOUNTING'S EFFECTS ON MANAGERIAL BEHAVIOR

ION SUIU

ABSTRACT. Bonner et al. present an extensive review of laboratory studies on financial incentives and examine the relations between type of task and type of incentive scheme, respectively, and task performance. Davila and Foster examine the association between the time-to-adoption of operating budgets and company performance, and find a significant increase in the number of employees of the company around the adoption of operating budgets (faster adoption of operating budgets is associated with faster growing companies). Back to contents

MONETARY POLICY RULES AND MACROECONOMIC PERFORMANCE

CRISTIAN GRADINARU

ABSTRACT. Goodfriend and Prasad asserts that the fraction of reserves sterilized by the central bank has varied over the last few years, and it is not even straightforward to assess exactly how much sterilization has taken place. Gerlach and Gerlach-Kristen contend that the Hong Kong Monetary Authority (HKMA) and the Monetary Authority of Singapore (MAS) have been strikingly successful in delivering on their monetary policy objectives. Bhattacharya says that the most important part of the monetary policy framework in a country is the task mandated to the monetary authorities; the relative emphasis on price stability versus growth is subject to interpretation. Ito reviews Japanese monetary policy from 1998 to the present. Back to contents

INTERNATIONAL TRADE AND ECONOMIC DEVELOPMENT

LILIANA CRACIUN

ABSTRACT. Kandil examines channels of interaction between exchange rate shifts and the macroeconomy. Exchange rate shifts are differentiated into anticipated and unanticipated components. Goldin and Reinert consider the development benefits and costs of four kinds of capital flows: foreign direct investment, equity portfolio investment, bond finance, and commercial bank lending. Kandil and Mirzaie examine determinants of private consumption in a sample of developing countries. Back to contents

INTERNATIONAL LIQUIDITY AND MONETARY CONTROL

DORIN DOBRISAN

ABSTRACT. Mohanty and Scatigna contend that in a number of countries volatility in capital flows has been associated with speculative currency attacks, resulting in large changes in the exchange rate, high inflation and substantial loss of output. Andersen and Moreno remark that there is strong empirical evidence that external shocks are far more important in developing economies than in developing countries. Mihaljek says that standard monetary tools to deal with capital inflows may have to be supplemented by unconventional policy tools such as special privatization accounts and export earnings stabilization funds. Hawkins argues that the progressive easing of capital controls and the development of debt markets have undermined interest rate controls. Back to contents

A MARKET-BASED SYSTEM OF MONETARY MANAGEMENT AND MONETARY POLICY OPERATING PROCEDURES

DORIN DOBRISAN

ABSTRACT. Hawkins claims that financial innovation and globalization have led most central banks to operate monetary policy by influencing conditions in the market for bank reserves. Moreno and Villar contend that foreign bank entry may enhance financial stability by permitting greater diversification of exposures and by improving risk management. Mihaljek says that if foreign exchange earnings from oil exports are converted into domestic currency and spent on non-tradables, this can lead to exchange rate appreciation and weaken a country's export competitiveness. Andersen and Moreno state that even with a systematic examination of the evidence, it is difficult to establish a robust relationship between financial integration and growth. Back to contents

FISCAL DEFICIT, EXTERNAL BALANCE AND MONETARY GROWTH

DORIN DOBRISAN

ABSTRACT. Bhattacharya says that, among country-specific studies on monetary policy frameworks, a study on India would be important. Gerlach and Gerlach-Kristen write that even though monetary policy makers in both economies have enviable records in delivering on their objectives, macroeconomic outcomes have differed and have at times been adverse. Ito holds that the Japanese financial system was stabilized by the second capital injection to large banks at the end of March 1999. Mariano and Villanueva claims that the last 15 years have seen extensive use of monetary policy approaches that are rules-based, but with considerable judgments factored in. Back to contents

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Economics, Management, and Financial Markets
VOLUME 2 • NUMBER 2 • JUNE 2007

FREE MARKETS AND MORALITY

TIBOR R. MACHAN

ABSTRACT. A bona fide morality favors a consistent free market capitalist system of law. If there are dangers, if there are dangers and temptations arising from such a society, let the various institutions that can develop amongst free people respond to them. Individuals and their various voluntary organizations-not governments that have the unique responsibility to use force judiciously-ought to take care of our souls, our medical needs, our preservation of monuments, historical buildings, wild parks and the rest. Let those things be taken care of by people in their voluntary interaction, not by some elite that thinks itself to be above the rest of us - even if they do it democratically. Back to contents

A COMPARATIVE STUDY OF THE EFFICIENCY OF TREASURY BILL AUCTIONS AS MEASURED BY EXPECTATION THEORY OF TERM STRUCTURE OF INTEREST RATES IN KENYA, TANZANIA AND USA

NELSON MAINA WAWERU • BASINDIKE L. SAYI

ABSTRACT. Extensive Treasury bills studies on the information in the term structure of interest rates have been done in USA and Canada. Unfortunately, literature reveals limited studies in developing countries. This study compared the efficiency of Treasury bill auctions as measured by the expectation theory of term structure of interest rates in Kenya, Tanzania and USA. The C-G findings in Tanzania and USA indicated that the value of the yield spread was near the median where the expectation theory appears to hold. The hypothesis failed to hold for large absolute values of the yield spread. These findings were in harmony with those obtained by Campbell and Galbraith. Through logit regression and non-parametric test, the study found that only for extreme levels of yield dispersion does a positive relation exist between extreme absolute yield spread and the yield dispersion as suggested by Godbout et al. This shows that there are unusual activities in Treasury bill auction whenever there is a high degree of yield spread. Back to contents

MONITORING INTERNAL CONTROL SYSTEMS

LUMINITA IONESCU

ABSTRACT. PCAOB argues that the evidence provided by the auditor's tests of the effectiveness of controls depends upon the mix of the nature, timing, and extent of the auditor's procedures. Sullivan & Cromwell LLP holds that in the case of a financial reporting element that has a relatively high risk characteristic but the associated control has a very low risk of failure, the required level of evidence may be lower. INTOSAI maintain that entities that actively identify and manage risks are more likely to be better prepared to respond quickly when things go wrong and to respond to change in general. Back to contents

MONETARY POLICY, INFLATION, AND OUTPUT GROWTH DYNAMICS

DORIN DOBRISAN

ABSTRACT. Berger et al. study the nexus between globalization and the optimal monetary policy response to asset prices. Watanagase contends that in light of the diminished pressure on prices, the Bank of Thailand responded by shifting to an accommodative monetary policy stance. Reddy says that a factor that complicates the transmission mechanism of monetary policy is the limited size of the Indian financial system. Gnan and Valderrama explain that globalization includes the liberalization of the international flow of capital, and that it may have dampened inflation expectations, in turn reducing actual inflation. Back to contents

COMPETING IN THE GLOBAL MARKETPLACE

CONSTANTIN ZAHARIA • IOANA ZAHARIA • NICOLAE TUDORESCU • GEORGE C. ZAHARIA

ABSTRACT. Wind and Mahajan argue for the recognition of the process of "marketing hype", a set of prelaunch activities leading to the creation of a supportive market environment. Ockenden and Franklin state that the CAP provides evidence that agriculture carries a cultural and social significance far in excess of its economic importance. Anwander Phan-huy et al. point out that the dual character of non-commodity outputs with private and public good attributes: the former are strongly linked to commodity outputs, whereas public-good attributes are referred to as non-commodity outputs for which market failure has to be assumed. Back to contents

DETERMINANTS OF THE BUSINESS CYCLE, INFLATION PROCESS, AND UNCERTAINTY ON MONETARY POLICY TRANSMISSION

ELENA-MARIA TUDOR

ABSTRACT. Reddy contends that there is now widespread recognition of the adverse implications of high fiscal deficits on the conduct of monetary policy. Gnan and Valderrama argue that the effect of the domestic output gap on inflation in the euro area weakened markedly over time (the influence of the deviation of the global from the domestic output gap increased slightly). Fischer defines intermediate currency regimes as the ones where the government is viewed as being committed to defending a particular value of the exchange rates. Back to contents

INFLATION DYNAMICS, MONETARY POLICY, AND ASSET PRICES

CRISTIAN GRADINARU

ABSTRACT. Carlsson and Westermark assert that downward nominal rigidity implies that there is a potential relationship between wage negotiations today and in the future. Berger et al. show that a globalization-induced flattening of the Phillips curve raises the maximum level of the real interest rate that central bankers are willing to endure in order to avoid a future financial market crisis. Reddy writes that there is greater coordination between central banks, fiscal authorities and regulatory bodies governing financial markets. Back to contents

TRANSNATIONAL MANAGEMENT AND ENVIRONMENTAL MARKETING

CONSTANTIN ZAHARIA • IOANA ZAHARIA • NICOLAE TUDORESCU • GEORGE C. ZAHARIA

ABSTRACT. Lozada explores the impacts that present day environmentalism is having on the marketing function, and surveys how contemporary ecological tenets may be reshaping traditional marketing tactics or even triggering alternative approaches. Haley argues that corporate managers must take international socio-cultural considerations into account to represent adequately their shareholders' interests. Prakash points out that firms could adopt management systems that create conditions for reducing the environmental impact of value-addition processes. Back to contents

INTERNAL CONTROL, HUMAN RESOURCE MANAGEMENT, AND RISK ASSESSMENT

LUMINITA IONESCU

ABSTRACT. INTOSAI contends that there is a direct relationship between the general objectives (which represent what an entity strives to achieve), and the internal control components (which represent what is needed to achieve the general objectives). Sullivan & Cromwell LLP write that risk relating to a financial reporting element includes both the materiality of the financial reporting element and the susceptibility of the underlying account balances and other information to material misstatement. PCAOB explains that the auditor's objective in an audit of internal control over financial reporting is to express an opinion on the effectiveness of the company's internal control over financial reporting. Back to contents

OPTIMAL MONETARY POLICY AND THE CONTINUING VOLATILITY OF ASSET PRICES

DORIN DOBRISAN

ABSTRACT. Wagner analyzes a channel of influence on monetary policy, which is based on an increase in competition through global economic integration. Davig assesses the implications for optimal discretionary monetary policy if the slope of the Phillips curve changes. Carlsson and Westermark develop a New Keynesian model with staggered price and wage setting where downward nominal wage rigidity (DNWR) arises endogenously through the wage bargaining institutions: the optimal (discretionary) monetary policy response to changing economic conditions then becomes asymmetric. Back to contents

OPTIMAL DISCRETIONARY MONETARY POLICY, INFLATION RISK, AND STICKY PRICES

DORIN DOBRISAN

ABSTRACT. Barseghyan and DiCecio think that if sticky-prices firms are allowed to pay menu costs to reoptimize, such costs have to be implausibly high to support multiple equilibria. Carlsson and Westermark study the implications for monetary policy in situations where declining nominal wages are not a viable margin for adjustment to adverse economic conditions. Gavin et al. show that the optimal monetary policies recommended by New Keynesian models still imply a large amount of inflation risk: when the monetary policy rules are modified to include some weight on a price path, the economy achieves equilibria with substantially lower long-run inflation risk. Back to contents

PRICE-LEVEL TARGETING, INFLATION TARGETING, AND OPTIMAL MONETARY POLICY

DORIN DOBRISAN

ABSTRACT. Barseghyan and DiCecio generalize Albanesi et al.'s model by allowing sticky-price firms to revise their price in response to the monetary authority's action by paying a menu cost. Yellen asserts that global factors may impact inflation in the medium term, just as higher productivity growth is now widely recognized to have put downward pressure on inflation during the second half of the 1990. Wagner argues that for certain emerging market economies, pegged exchange rate regimes can be workable, despite substantial involvement with global financial markets. Gavin et al. point out that policymakers closely monitor long-term interest rates because they reflect expectations about future policy (investors pay to insure against long-run risks). Back to contents

THE MANAGEMENT OF WRITING IN CONTEMPORARY FRENCH CRITICISM

CARMEN PETCU

ABSTRACT. Derrida believes that it is necessary to account for the stability of interpretive contexts; to account for a certain stability is precisely not to speak of eternity or of absolute solidity. Foucault elucidates the bases for understanding how the subject was constituted in and through a dispositif that included technologies of domination. Deleuze says that sense is the fourth dimension of the proposition. Sartre points out that the word "image" could only indicate the relation of consciousness to the object. Back to contents

ONTOLOGICAL INFRASTRUCTURE OF NEWS MEDIA

GEORGE LAZAROIU

ABSTRACT. Aust remarks that bad news often deals with unpleasant, unfortunate, conflict-laden, and otherwise aversive events, circumstances, and conditions. Hughes-Freeland focuses on mass-media based on technology, in particular the products of broadcast and print technologies, and revisits the interface between ritual and media previously explored in relation to performance. Altheide argues that social life consists of a process of communication and interpretation regarding the definition of the situation. Back to contents

THE PROCESS OF DECODIFICATION IN THE CIVIL LAW

MOISE BOJINCA

ABSTRACT. Murillo considers the fundamental transformation that has been taking place in the civil law tradition due to the influence of the decodification and recodification processes during the 20th century and their perspective on the future. According to Kedar, the story of civil codification in Israel demonstrates that beyond the common-law - civil-law "mixedness" within Israeli law, the Israeli legal system is also mixed in a more profound sense. Merryman contends that the movement towards "constitutionalism" in civil law tradition displays a number of common features. Back to contents

HARMONIZATION IN CRIMINAL LAW

SEVASTIAN BLENDEA

ABSTRACT. Tadic holds that a clear understanding of the meaning and nature of "harmonization" makes it possible to judge the implications of harmonization efforts in relation to other goals and processes in the field of criminal justice. Zaibert writes that, in the continental scheme, justifications are constituted by facts, states of affairs which render a certain behavior which at first sight might appear to violate the norms of a society. Klip observes that uniformity requires a common institutional structure (a common legislator, a common government and a common judiciary). Back to contents

CYBERJOURNALISM, MEDIA IMAGES AND THE MARKET FOR NEWS

GEORGE LAZAROIU

ABSTRACT. Bandura remarks that the evolving information technologies will increasingly serve as a vehicle for building social network. Dahlgren notes that journalism is carried out in specific institutional circumstances, within concrete organizational settings and under particular technological conditions. Bolter and Grusin contend that a medium is that which mediates. According to Singer, newspapers have struggled with a potential transition from their role as guardians of what enters the public to builders of a virtual commons. Back to contents

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Economics, Management, and Financial Markets
VOLUME 2 • NUMBER 3 • SEPTEMBER 2007

EARNINGS MANAGEMENT, DISCRETIONARY ACCRUALS, AND ACCOUNTING MEASUREMENT

LUMINITA IONESCU

ABSTRACT. Caylor et al.'s study bridges a gap between results documented in financial accounting experimental studies and studies that use archival data within natural settings. Bowen et al. measure accounting discretion in three ways: (i) abnormal accruals usage; (ii) smoothing of earnings via accruals; (iii) avoiding earnings decreases by reporting small quarterly positive earnings surprises. Tan and Jamal stress that a reduction in discretion is predicted to lessen a manager's ability to communicate with shareholders. Back to contents

ON CAPITAL MARKET DEVELOPMENT

DORIN DOBRISAN

ABSTRACT. Antràs et al. examine how costly financial contracting and weak investor protection influence the cross-border operational, financing and investment decisions of firms. Buch and Kleinert hold that economic theory provides two main explanations why changes in exchange rates can affect foreign direct investment (FDI). Nakagawa reveals several common features of the development of securities markets in nine Asian economies. Back to contents

FIRM INVESTMENT AND THE ECONOMICS OF PRIVATE SECTOR TRAINING

LUMINITA IONESCU

ABSTRACT. Gilchrist et al. claim that firms, unlike investors, can exploit stock market bubbles by issuing new shares at inflated prices. Baum et al. investigate the analytical and empirical linkages between firms' capital investment behavior and financial market frictions. Almeida and Carneiro estimate the rate of return to firm investments in human capital in the form of formal job training, using a panel of large firms with unusually detailed information on the duration of training, the direct costs of training, and several firm characteristics such as their output, workforce characteristics and capital stock. Back to contents

MONETARY POLICY, INFLATION PERSISTENCE, AND DYNAMICS OF MARKET STRUCTURE

ELENA-MARIA TUDOR

ABSTRACT. Goodfriend and Prasad state that money would not constitute a good stand-alone nominal anchor for an economy that is undergoing major structural changes and financial innovations. According to Mariano and Villanueva, for inflation targeting emerging market economies, given (i) the deflationary force of China's recent developments, (ii) globalization, and (iii) the increased sophistication of modern monetary policy in controlling inflation, the efficacy of IT used in small open economies is an open question. Taylor maintain that central banks, reflecting a greater focus on inflation, started adjusting their policy interest rates in response to inflation by much larger amounts and more quickly. Back to contents

MONETARY OPERATIONS, EXCHANGE RATES, AND DISINFLATION

MIHAELA CHIRCUSI

ABSTRACT. Goodfriend and Prasad hold that an inflation objective would provide a firm and credible nominal anchor that would contribute to overall macroeconomic stability. Mariano and Villanueva assert that the three prerequisites for a successful inflation targeting are: (i) central bank independence; (ii) the absence of fiscal dominance; and (iii) the presence of clear transmission channels from monetary policy instruments to market-determined interest rates. Mohanty and Scatigna argue that resisting appreciation pressures and building reserves in response to a rise in short-term capital inflows can cushion the economy against volatile exchange rate movements. Back to contents

MONETARY POLICY OPERATING PROCEDURES AND GLOBALISED CAPITAL MARKETS

CALIN DOBRISAN

ABSTRACT. Goodfriend and Prasad maintain that monetary policy has a particularly important role to play in buffering the economy from domestic and external shocks. Mihaljek stresses that since monetary policy in Mexico is conducted within an inflation targeting framework, the central bank has to sterilize foreign exchange inflows related to oil revenues. Bhattacharya points out that the major uncertainty on monetary policy transmission in India is on the relative roles of the quantum channel. Back to contents

MONETARY STABILITY AND INFLATION TARGETING

MADALINA NICOLOF

ABSTRACT. Mariano and Villanueva note that some discussions on inflation targeting suggest that inflation targeting is an alternative framework to monetary targeting. According to Taylor, a monetary policy rule, at its most basic level, is a contingency plan that lays out how monetary policy decisions are, or should be, made; policy rules turned out to be pretty accurate at predicting future interest rates. Bhattacharya says that country-specific studies indicate that switching to inflation targeting (IT) has sometimes been followed by a dramatic reduction in inflation. Back to contents

INVESTMENT AND UNCERTAINTY

CRISTIAN GRADINARU

ABSTRACT. Fuss and Vermeulen examine whether firms experience stronger financial constraints in periods of adverse cash flows shocks, analyse directly the restoration of liquidity after an adverse cash flow shock, and investigate the determinants of the probability of obtaining extra bank debt. Gilchrist et al. develop a simple model of firm behavior when investors with heterogeneous beliefs face short-selling constraints in the equity market. Baum et al. state that any attempt to evaluate the effects of uncertainty on the firm investment behavior requires specification of a measure of risk. Back to contents

THE EUROPEAN COMMON MARKET AND THE HARMONIZATION OF AGRICULTURAL POLICY

CONSTANTIN ZAHARIA • NICOLAE TUDORESCU • IOANA ZAHARIA • GEORGE C. ZAHARIA

ABSTRACT. Schäfer et al. highlight how European Union (EU) policies can be assessed and reformed to improve the nutrition and public health of Europe's citizens. Warner holds that the EU's 90 billion euro annual budget reflects the EU's hybrid nature and the extent to which the member states try to retain control over the supranational organization and institutions they have created. Hasha points out that the EU is the world's largest agricultural importer, and the world's second largest exporter. Delayen writes that during the 1960s and 1970s, the CAP led to increased agricultural production in Europe and was generally considered a positive vision for growth in the post-war region. Back to contents

ON INTERNATIONAL ACCOUNTING HARMONIZATION

LUMINITA IONESCU

ABSTRACT. d'Arcy explores the impact of accounting harmonization on the comparability of financial reporting information in differing national contexts focusing on goodwill accounting in Germany and Japan. Uddin explains that harmonization of accounting standards is now at the forefront of consideration for financial reporting. Liu investigates the comparative usefulness of CAS-based and IAS-based earnings and book value to the performance of A-shares (issued to domestic investors) and B-shares (issued to international investors), measured by value-relevance, under China's market segmentation. Chand and White remark that the globalization of the world's economies has inevitably brought with it moves to establish a single set of financial reporting standards. Back to contents

CAPITAL MARKETS AND ECONOMIC GROWTH

DORIN DOBRISAN

ABSTRACT. Kousis and McCulloch put it that a strong, well-functioning capital market is essential to the economic prospects of New Zealand. Agarwal's study supports the Levine and Zervos's argument that well-developed stock markets may be able to offer a different kind of financial services than the banking system, and provide an extra impetus to economic activity. Antràs et al. remark that with verifiable monitoring equity shares are not an optimal mechanism for transferring utility from the entrepreneur to the inventor. Back to contents

INEFFICIENCIES FROM FINANCIAL MARKETS

DORIN DOBRISAN

ABSTRACT. Buch and Kleinert provide a unified theoretical framework of two main explanations (why changes in exchange rates can affect foreign direct investment) and test the model using German sectoral data derived from detailed firm-level data, and find greater support for the goods market friction hypothesis. Kousis and McCulloch observe that the main financial markets in New Zealand relate to debt instruments, foreign exchange, equities, managed funds, and non-foreign exchange derivatives. Nakagawa presents a comparative analysis of the development of securities markets in Asian economies. Back to contents

LIQUIDITY OF CAPITAL MARKETS, FINANCIAL INTEGRATION, AND MONETARY POLICY REGIMES

DORIN DOBRISAN

ABSTRACT. Andersen and Moreno assert that financial integration involves some well known trade-offs: policymakers must weigh possible gains from faster growth and the opportunity to smooth consumption from country-specific shocks against the greater exposure to external shocks. On Hawkins's reading, the liberalization of foreign borrowing has made quantitative loan limits on domestic banks less effective in restraining overall borrowing by firms. Mariano and Villanueva contend that for those monetary policy approaches that use the interest rate as the policy instrument, expectations of future short rates influence long rates right away via term structure effects. Back to contents

APPROACHES TO THE MIND IN EVOLUTIONARY PSYCHOLOGY

AUREL PERA

ABSTRACT. Buller contends that the kind of evolutionary arms race within a single species would have characterized all of human psychological evolution that was responsive to the human social environment. Feest distinguishes between two notions of functional analysis: (i) functional analysis is an explanatory strategy, which explains the behavioral capacities of a system by reference to the behavioral capacities of its parts; (ii) functional analysis is an investigative strategy, which identifies those parts. Futuyma holds that two seeming characters may be just two aspects of a single feature if they are consistently correlated. Back to contents

ON NEWSWORTHINESS

GEORGE LAZAROIU

ABSTRACT. Canavilhas affirms that the access becomes global as the information is available on the web; databases enable search processes to accelerate and become more refined. Emery and Emery claim that whenever a mass of people has been neglected too long by the established organs of communication, agencies have been devised to supply that want. Korten writes that television has been wholly colonized by corporate interests. Curran and Seaton point out that many items of news are not "events" at all. Back to contents

THE HARMONISATION OF CONSTITUENT ELEMENTS OF CRIME IN EUROPE

SEVASTIAN BLENDEA

ABSTRACT. Lacey holds that the criminal law can be conceived as a set of norms backed up by the threat and imposition of sanctions. Spencer takes "harmonization" as covering three distinct but related processes: (i) making the rules of criminal law and criminal procedure in different countries similar, although not necessarily identical; (ii) making some of the rules across the different countries identical: (iii) replacing a portion of the different rules by a single supra-national rule, enforced by a supra-national authority. Beken notices that the mere existence of differences in the various criminal justice systems throughout Europe has very few formal implications for those crimes without any link to other systems. Back to contents

ANALYZING MEDIA PERFORMANCE AND OBJECTIVE NEWS REPORTING

GEORGE LAZAROIU

ABSTRACT. Shenk explains that journalists are more necessary in the information glutted world. Curran notices that the political culture of liberal democracies is very alert to the threat posed by governments to the freedom of public media. Rezende asserts that while on the press news is the most important genre, on TV the news has to dispute a space on the programming. Franklin observes that journalism's editorial priorities have changed. Back to contents

CONCEPTUAL KNOWLEDGE AND COGNITIVE NEUROSCIENCE

AUREL PERA

ABSTRACT. Rao remarks that awareness is reportable knowledge of some particular objects, events or phenomena and necessarily assumes consciousness. Nagel observes that it is not clear what one should do about central features of the mentalistic idea of persons which resist assimilation to an understanding of human beings as physical systems. Sterelny contends that the right psychology for humans is a functionalist psychology: our behavior is the result of perceptual inputs, our learning history, and very complex interactions between distinct psychological mechanisms. Back to contents

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Economics, Management, and Financial Markets
VOLUME 2 • NUMBER 4 • DECEMBER 2007

MERGER RESTRUCTURING AND FINANCIAL PERFORMANCE OF COMMERCIAL BANKS IN KENYA

ANGELA M. KITHINJI • NELSON MAINA WAWERU

ABSTRACT. This study investigated the effects of merger restructuring on the financial performance of commercial banks in Kenya. The research compared the pre-merger and post merger financial performance of twenty Kenyan banks that had merged between 1993 and 2000. The results indicate that the financial performance ratios that have legal implications (capital adequacy and solvency ratios) improved after the merger. However profitability ratios indicate that the majority of the merged banks reported a decline in financial performance. Back to contents

ORGANIZATION CULTURE, LEADERSHIP, AND HUMAN RESOURCE MANAGEMENT

LUMINITA IONESCU

ABSTRACT. Hofstede et al. find shared perceptions of daily practices to be the core of an organization's culture. Schein holds that organizational culture is a pattern of shared basic assumptions that the group learned as it solved its problems of external adaptation and integral integration. Johnson and Goetz stress that executives with a good enough understanding of security risks can make informed, risk-based decisions and actually sign off on accepting the risks a decision brings with it. Newberry and Pallot claim that New Zealand's new public management (NPM) financial management reforms were widely hailed as ground-breaking. Back to contents

EFFICIENT RELATIONAL STORAGE AND RETRIEVAL OF COMPLEX XML DOCUMENTS

DAN-MIRCEA TRANA

ABSTRACT. Bohannon et al. claim that XML is becoming the predominant data exchange format in a variety of application domains. Altinel and Franklin hold that the advent of XML as a standard for information exchange and the development of query languages for XML data enable the development of more sophisticated filtering mechanisms that take structure information into account. Shanmugasundaram et al. develop algorithms and implement a prototype system that converts XML documents to relational tuples, translates semi-structured queries over XML documents to SQL queries over tables, and converts the results to XML. Quint and Vatton review the main innovations of XML and consider their impact on the editing techniques for structured documents. Back to contents

FOREIGN DIRECT INVESTMENT AND PRODUCTIVITY GROWTH

DORIN DOBRISAN

ABSTRACT. Javorcik et al. use a firm-level panel data set from Romania to examine whether the nationality of foreign investors affects the degree of vertical spillovers from FDI. Desmet and Rojas provide a novel rationale for the gradual liberalization of inward FDI. Tekin-Koru and Waldkirch investigate the effect of NAFTA on the location of FDI in North America: NAFTA has led to an increase in FDI in Mexico from the U.S., but not from other countries. Antràs et al. note that the horizontal FDI view represents FDI as the replication of capacity in multiple locations in response to factors such as trade costs. Back to contents

CORPORATE GROWTH OPPORTUNITIES, OWNERSHIP STRUCTURE, AND THE THEORY OF INVESTMENT

CONSTANTIN ZAHARIA • NICOLAE TUDORESCU • IOANA ZAHARIA • GEORGE C. ZAHARIA

ABSTRACT. Aggarwal and Kyaw hold that optimal debt structure minimizes net total agency and other costs of debt including its ability to deal with under- and over-investment problems. Becker-Blease and Paul put it that the increase in liquidity effectively expands the set of viable investments because it decreases the cost of capital. Baum et al. indicate that even in the presence of important firm-specific variables, uncertainty is an important determinant of firms' investment behavior. Gilchrist et al. derive a model to investigate the effect of exogenous changes in the dispersion of investor beliefs on equilibrium stock prices, financing behavior, and real investment. Back to contents

THE DYNAMICS OF INVESTMENT UNDER UNCERTAINTY AND STOCK MARKET DEVELOPMENT

CATALINA CRACIUNESCU

ABSTRACT. Baum et al. show that firm-specific and macroeconomic uncertainty along with their interaction have a significant effect on investment even in the presence of Q, cash flow and the debt-to-capital ratio. Almeida and Carneiro emphasize that the study of firm investments in physical capital is much more developed than the study of firm investments in human capital. Fuss and Vermeulen investigate whether developing a single bank relationship helps firms to circumvent exceptional liquidity shortages. Back to contents

RICARDO'S THEORY OF RENT, AGRICULTURAL IMPROVEMENTS, AND THE PRICING OF GOODS

GABRIELA MOLANESCU

ABSTRACT. Gehrke et al. claim that Ricardo could only be criticized for having changed the definition of rent. Ricardo's theory of rent was tied directly to the marginal productivity of land. Formaini contends that Ricardo laid out the so-called law of diminishing returns as it applied to labor and capital: increasing the quantities of inputs will increase total production up to a point, but then output must decline, given that the land used is fixed in size. Peach affirms that the claim that the labor theory appealed to Ricardo because he thought it was a good empirical approximation is an inversion of the truth. Back to contents

EXCHANGE RATE UNCERTAINTY, STOCK RETURNS, AND INVESTMENT OPPORTUNITIES

ELENA-MARIA TUDOR

ABSTRACT. Adam and Goyal argue that the mix of assets-in-place and investment opportunities affects a firm's capital structure, the maturity and covenant structure of its debt contracts, a firm's dividend policy, its compensation contracts, and its accounting policies. Fuss and Vermeulen hold that in periods of adverse cash flow shocks the probability of obtaining extra bank debt becomes more sensitive to the size and leverage of the firm. Aggarwal and Kyaw examine how cross-border variations in the environment of finance and institutional factors influence the role of debt in addressing agency problems for firms with different growth opportunities. Back to contents

ECONOMIC DEVELOPMENT AND FOREIGN DIRECT INVESTMENT

MADALINA NICOLOF

ABSTRACT. Antràs et al. develop and test a model of the operational and financial decisions of firms as they exploit their technologies in countries with differing levels of investor protections. Using a comprehensive data set of firms operating in Romania, Javorcik et al. test whether there exists a difference in the magnitude of vertical spillovers associated with multinationals from different regions of the world (Europe, America and Asia). Desmet and Rojas remark that learning spillovers are a pure externality, nonappropriable by firms, and affecting the whole economy. Back to contents

FIRMS' INVESTMENT DECISIONS AND PRICE UNCERTAINTY

CRISTIAN GRADINARU

ABSTRACT. Baum et al. investigate the empirical linkages between firms' capital investment behavior and three forms of uncertainty. Fuss and Vermeulen contend that multiple bank relationships should be costly as banks need to somehow charge the firm for the information gathering, screening and monitoring, in the credit process. Almeida and Carneiro use a census of large manufacturing firms in Portugal between 1995 and 1999 with detailed information on investments in training, its costs, and several firm characteristics. Adam and Goyal note that leverage itself is a function of investment opportunities; current earnings proxy for cash flows received from assets in place. Back to contents

FINANCIAL UNCERTAINTY, INVESTMENT DYNAMICS, AND GROWTH OPTIONS

ION SUIU

ABSTRACT. Becker-Blease and Paul investigate the relation between stock liquidity and corporate decision-making, and test the hypothesis that, ceteris paribus, an increase in stock liquidity would result in higher capital investment intensity. Gilchrist et al. rule out speculative investment opportunities are likely to be highly misleading. Adam and Goyal note that although both the market-to-book equity and the earnings-price ratios are related to investment opportunities, they do not contain information that is not already contained in the market-to-book assets ratio. Back to contents

FOREIGN DIRECT INVESTMENT, FINANCIAL INTERMEDIATION, AND MARKET IMPERFECTIONS

CATALINA CRACIUNESCU

ABSTRACT. Javorcik et al. affirm that while for European investors intermediate inputs sourced from home country suppliers comply with the rules of origin and thus can be exported to the EU on preferential terms, this would not be the case for home country suppliers of American or Asian multinationals. Aysan provide a model to account for the empirical evidence that volatility reduces growth: greater volatility increases the cost associated with capital market imperfections and induces the financial intermediaries to charge higher interest rates. Fernald and Neiman note that the newly industrialized economies (NIEs) of Asia are the fastest-growing economies in the world since 1960. Back to contents

THE PRICE SYSTEM IN THE EUROPEAN UNION

GABRIELA MOLANESCU

ABSTRACT. Through a simulation model, Rickard and Sumner show quantitatively how the removal of EU production subsidies would reduce EU production and exports, and raise prices in the global market. OECD claims that the EU economy is enjoying a strong cyclical rebound: employment has risen, and the decline in the EU's sustainable growth rate seems to have halted. Parker explains that the EC chose a trading system with limited coverage rather than a comprehensive system covering all sources and gases. According to Basile and Tenderich, we have entered a new era in which global economic growth is clearly impacting the global environment. Back to contents

INTERNAL CONTROL MECHANISMS, OWNERSHIP STRUCTURE, AND MANAGEMENT TURNOVER

LUMINITA IONESCU

ABSTRACT. INTOSAI holds that as information technology has advanced, organizations have become increasingly dependent on computerized information systems to carry out their operations and to process, maintain, and report essential information. PCAOB maintains that the components of a potential significant account or disclosure might be subject to significantly differing risks. DiNapoli says that management has a role in making sure that the individuals performing the work have the skills and capacity to do so. COSO observes that no system of internal control can guarantee that all control weaknesses that may result in material errors will be prevented and detected. Back to contents

COMMON MARKET ORGANIZATION AND MULTIFUNCTIONAL AGRICULTURE

CONSTANTIN ZAHARIA • NICOLAE TUDORESCU • IOANA ZAHARIA • GEORGE C. ZAHARIA

ABSTRACT. Rickard and Sumner remark that the United States and European Union each supply approximately one-third of the world's processing tomatoes. OECD writes that the internal market needs to be supported by better regulation, strong enforcement of competition rules and less and better-targeted state aid. Delayen stresses that in 2003 the EU initiated a directive to expand production of biofuel feedstocks to support its overall goal of decreasing greenhouse emissions. Redžepagi? explains that among the EU's policies, the CAP is regarded as one of the most important policy areas. Back to contents

REGULATION OF FINANCIAL SYSTEMS AND CAPITAL MARKET IMPERFECTIONS

DORIN DOBRISAN

ABSTRACT. Buch and Kleinert claim that changes in real exchange rates affect the probability that domestic firms win bids over foreign firms if the acquisition of a (foreign) firm depends on the net worth of the investor. Kousis and McCulloch argue that registered banks are the main type of financial institution, dominating deposit-taking, provision of credit and financial risk management products, and the money market and payment system. Antràs et al. contend that investigating how global firms make operational and financing decisions in a world of heterogeneous institutions promises to provide a novel perspective on observed patterns of flows and firm activity. Back to contents

CAPITAL MARKET IMPERFECTIONS, FINANCIAL DEVELOPMENT, AND ECONOMIC GROWTH

DORIN DOBRISAN

ABSTRACT. Fernald and Neiman assess implications of heterogeneous user costs of capital in the newly industrialized economies (NIEs) and, in the case of Singapore, large but declining pure economic profits. Aysan contends that countries with high growth volatility are characterized with lack of well-developed financial markets and high degree of capital market imperfections. Agarwal notes that there might exist some correlationship between the financial sector and capital market development, and the growth of real GDP. Back to contents

WHY DOES FOREIGN DIRECT INVESTMENT REACT TO EXCHANGE RATE CHANGES?

DORIN DOBRISAN

ABSTRACT. Fernald and Neiman provide empirical support for the quantitative importance of profits and heterogeneous user costs. Aysan holds that high growth performances experienced by many developing countries may not bring high level of development by taking proceeding slow down of their economies into account. Buch and Kleinert state that through cheaper imported inputs (less dependence on the home market for input sourcing), the effect on profits is strengthened further. Javorcik et al. find a statistically significant and positive association between the presence of American and Asian companies in downstream sectors and the productivity of Romanian firms in the supplying industries. Back to contents

HISTORICAL REPRESENTATION AND RETHINKING INTERNATIONAL RELATIONS

STEFAN PAUN

ABSTRACT. Naidu highlights two important dimensions of international relations of East Asia: the changing nature of great power relations and the genesis of regional multilateralism. Mallaby remarks that a new imperial moment has arrived, and that by virtue of its power America is bound to play the leading role. Palmisano puts it that the emerging business model of the 21st century is not "multinational" (this new kind of organization is very different in its structure and operations. Harvey says that accumulation by dispossession re-emerged from the shadowy position it had held prior to 1970 to become a major feature within the capitalist logic. Back to contents

TABLOIDIZATION, NEWS CONTENT, AND THE POWER OF JOURNALISM

GEORGE LAZAROIU

ABSTRACT. Sparks claims that popular journalism is headed in directions where even the urge to extrapolate from the individual experience to the social totality is declining. Martin maintains that "news" often is more like entertainment than information or education. Shoemaker points out that news is a social construct, a thing, a commodity, whereas newsworthiness is a cognitive construct, a mental judgment. Stempel et al. stress that those who use the Internet as a source of news are clearly information seekers. Back to contents

CRIMINAL LAW, THE HARMONIZATION CLAIM AND THE EFFECTIVENESS OF ITS IMPLEMENTATION

SEVASTIAN BLENDEA

ABSTRACT. La Jacobs and Potter hold that the only thing that distinguishes a crime in which assailants cause physical injury based on greed, anger, or some unknown criminal impulse, and a crime in which assailants cause physical injury based on their perception that the victim is black is the assailants' wrong-headed bias. Zaibert show some advantages that the application of rigorous conceptual analysis holds for the understanding of the criminal law and for the drafting of penal codes. Tadi? notices that with respect to harmonization of parts of different legal systems or legal systems as a whole we are faced with the problem that there is no common standard. Back to contents

POSTMODERN GEOPOLITICS AND THE EPISTEMOLOGY OF BORDERS

STEFAN PAUN

ABSTRACT. Harvey says that the fundamental point is to see the territorial and the capitalist logic of power as distinct from each other. Barber emphasizes that neither Jihad, nor McWorld promises a remotely democratic future. Hardt and Negri write that empire establishes no territorial center of power and does not rely on fixed boundaries or barriers. Mallaby affirms that the logic of neoimperialism is too compelling to resist. Harvey thinks that the Cold War provided the US with a glorious opportunity. Back to contents

THE CONCEPT OF SPACE IN HUMAN GEOGRAPHY

MADALINA T. ANDREI

ABSTRACT. Zierhofer says that traditional geography took space as a container, as a cause, and as a consequence of activities. Sauer argues that the geographic bent rests on seeing and thinking about what is in the landscape, what has technically been called the content of the earth's surface. Proctor observes that geography embodies tensions central to the paradoxical nature of human dwelling on earth from which questions of environmental ethics arise. Morikawa analyzes the present situation of reconsidering the space concept, with special reference to German-speaking countries characterized by somewhat unique development of geographical thoughts since World War II. Back to contents

TABLOID JOURNALISM AND NEWS QUALITY

GEORGE LAZAROIU

ABSTRACT. Örnebring and Jönsson hold that tabloid journalism positions itself, in different ways, as an alternative to the issues, forms and audiences of the journalistic mainstream. Djupsund and Carlson maintain that media should arouse interest, present topical and upcoming issues, and inform about the standpoints of different groups of actors. Mayes writes that emotional indulgence and sentimentalism are replacing informative, facts-based news reporting. McDonald holds that watching television is deeply implicated in the literal collapse of positive civic participation in almost all of its forms. Back to contents

GLOBAL CAPITALISM AND THE POST-CORPORATE WORLD

STEFAN PAUN

ABSTRACT. By geopolitics or geopolitical competition, Klare means the contention between great powers and aspiring great powers for control over territory, resources, and important geographical positions. Hardt and Negri state that war has become a regime of biopower and a permanent social relation. Palmisano holds that the globally integrated enterprise fashions its strategy, management and operations to integrate production worldwide. Harvey argues that the circulation of capital is increasingly imprisoned within immobile physical and social infrastructures which are crafted to support certain kinds of production. Back to contents

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Economics, Management, and Financial Markets
VOLUME 3 • NUMBER 1 • MARCH 2008

THE NEURAL NETWORK ANALYSIS OF INTERNATIONAL ORGANIZATIONAL PERFORMANCE

KARL ROBERTS

ABSTRACT. The analysis of organizational performance is the most important focus facing international investment whereas the means by which such assessment can be undertaken is varied. Neural Network (NN) and multivariate analysis are the two most vital financial modeling techniques in the assessment of multinationals, which are compared in this important research paper. The assessment of financial success or otherwise is undertaken of 60 global multinationals over a ten year period. The results determine that both models are unique in their immense ability to predict international organizational performance where the NN model has an almost perfect level of performance prediction and assessment. Back to contents

STEPS IN STRATEGIC SUSTAINABLE DEVELOPMENT

GANESH NARASIMHAN

ABSTRACT. For most, the concept of Strategic Sustainable Development remains abstract and theoretical. If sustainable development is to achieve its potential, it must be integrated into the planning and measurement systems of business enterprises. For that to happen, the concept must be articulated in terms that are familiar to business leaders. Back to contents

INTERNATIONAL STOCK MARKET INTEGRATION: EVIDENCE FROM CANADA, CHINA AND THE UNITED KINGDOM

PANAGIOTIS E. DIMITROPOULOS

ABSTRACT. The present paper analyses the relationship between three international stock markets: London, Toronto and Hong-Kong. The non-overlapping trading periods in those three stock markets determine the results of cross-correlations and regressions of the daily returns. In order to deal with problems of autocorrelation a new model proposed by Peiro et al. (1998) is being estimated. This model allows the division of the influencing ability and sensitivity of each market to specific innovations and in global innovations as well. Under this framework, London found to be the most influential market with Hong-Kong the most sensitive. Back to contents

MANAGEMENT AND BLACK PEOPLE: THE THEORY B

SAMUEL OWUSU-YEBOAH

ABSTRACT. A well managed Black worker can give the best results in every field of endeavor. As the world integrates into a single monolithic entity, a singular management theory is fast evolving and Black workers are now found everywhere on the globe and must work with people of diverse racial backgrounds. Though a lot of people do not know how to cope with Black people, the potentials of Black workers can be harnessed with a set of techniques and management tools which can be incorporated conveniently into all organizations. Back to contents

OPTIMAL MONETARY POLICY AND FISCAL RESTRICTIONS

DORIN DOBRISAN

ABSTRACT. According to Bordo, many monetary economists have come to regard the monetary aggregates as obsolete measures of the monetary policy stance. Orphanides examines the performance and robustness of monetary policy rules when the central bank and the public have imperfect knowledge of the economy and continuously update their estimates of model parameters. Gaspar et al. show that, when private sector expectations are determined in line with adaptive learning, optimal policy responds persistently to cost-push shocks. Leith and Wren-Lewis show that fiscal shocks have limited impact on output and inflation provided the fiscal authorities meet the (weak) requirements of fiscal solvency. Back to contents

TOWARD ESTABLISHING EFFICIENT INTERNAL CONTROLS

LUMINITA IONESCU

ABSTRACT. Hong Kong Institute of CPA contends that control is not synonymous with managing and does not constitute everything involved in the management of a company. PricewaterhouseCoopers affirms that the Internal Control System (ICS) is one of the key management instruments at an organization's disposal. Iwasaki writes that one of the most distinguishing features of the Russian corporate sector is the preponderance of "closed joint-stock companies" over "open joint-stock companies". Himeno says that it is a matter of urgency for every company to place the highest priority on ensuring that all of its employees are well aware of the importance of information security. Back to contents

ROMANIA'S STANDARD OF LIVING AFTER THE ACCESSION TO THE EU

GABRIELA MOLANESCU

ABSTRACT. Hoek writes that immediately after the fall of communism in Central and Eastern Europe there were high hopes for a favorable economic development in the region. Bilefsky maintains that Romania and Bulgaria (the European Union's poorest members) hope that membership helps them raise their per capita wealth (one-third of the Union average). Gallagher maintains that the key sectors of Romania's economy are controlled by foreign capital, much of the middle-class emigrates. Back to contents

THE CONCEPTUAL BASIS OF ACCOUNTING FOR REPORTING ENTITIES

ELENA DIACONU

ABSTRACT. Faux and Wise write that to cope with the increasing globalization of capital markets, financial regulators in Australia have embarked on an ambitious program to converge national accounting standards with IFRS. Jones and Wolnizer consider the current the current and future role and direction of the conceptual framework (CF) under the CLERP proposals and a potential IAS reporting environment after January 2005. Walker reviews Australia's differential reporting arrangements so as to highlight the extent to which reliance is placed on practitioners to apply the "reporting entity" rule for entities other than publicly listed corporations or borrowing corporations. Back to contents

KNOWLEDGE PRODUCTION AND PRODUCTION SYSTEMS

NICOLAE TUDORESCU • CONSTANTIN ZAHARIA • IOANA ZAHARIA

ABSTRACT. Tassey maintains that both macroeconomic and microeconomic growth models have made technology an endogenous explanatory variable. Amoroso notes that global governance is legitimized by the policies imposed on the world scale by the IMF, WB and WTO. Geiser asserts that cleaner production has long been aligned with the development of new technologies. Back to contents

THE ROLE OF ORGANIZATIONAL CULTURE AS A POTENT ENVIRONMENTAL STIMULUS

CATALINA CRACIUNESCU

ABSTRACT. Willmott points out that corporate culturism seeks to promote and achieve an outcome that is ethically dubious and inconsistent with the practical autonomy that it aspires to engender. Marinova explicates the relationship between culture and a variety of employee behaviors, focusing on the competing values model of organizational culture, which depicts organizations as having to manage competing demands. Gray and Densten examine the implications of the differences identified in organizational cultures in terms of knowledge generation and transfer. Back to contents

CHANGING AGRICULTURAL STRUCTURE AND POLICIES IN ROMANIA

MARIA MAGDALENA TUREK RAHOVEANU • LETITIA ZAHIU • ADRIAN TUREK RAHOVEANU • ANCA DACHIN

ABSTRACT. ECD-GA notices that in the period 1991-97 about 14-15% of total foreign direct investment (FDI) in Romania was invested in the food industry. Scrieciu argues that the inclusion of agro-food trade into the regional integration agreement is likely to bring benefits to Romanian producers of mainly live (bovine) animals and meat products, sugar, and cereal grains. Heilmayr claims that since the first regulations regarding organic agriculture in Romania were issued in 2000, the country has seen a steady and rapid rise in the amount of land and number of processing facilities adhering to organic standards. Back to contents

ON KNOWLEDGE PROCESS OUTSOURCING

MADALINA NICOLOF

ABSTRACT. Baker et al. write that an outsourcing decision is generally strategic and made by top management. Morgan Chambers claims that in a maturing market, clients become more demanding. McIvor stresses that the drive for greater efficiencies and cost reductions has forced many organizations to increasingly specialize in a limited number of key areas. Mierau writes that developed countries are facing a shortage of highly trained and specialized professionals in some knowledge-intensive, high-skill sectors. Back to contents

EU INTERNAL MARKET DYNAMICS

GHEORGHE H. POPESCU

ABSTRACT. Campa and González Mínguez focus on the pass-through of exchange rate changes into the prices of imports made by euro area countries originating outside the area. Nautza and Offermanns argue that while forecast accuracy tests confirm the usefulness of synthetic European data for Euro exchange rate analysis. As Bucha et al. put it, standard neoclassical models of economic integration are based on the assumptions that capital and labor are substitutes and that the geography of factor market integration does not matter. Back to contents

PRICE-SETTING PRACTICES AND INFLATION PERSISTENCE IN THE EURO AREA

ALEXANDRA-MADALINA CIUTEANU

ABSTRACT. Eickmeiera investigates the transmission of US macroeconomic shocks to Germany using a large-dimensional structural dynamic factor model, and investigate many transmission channels simultaneously, including "new" channels such as stock markets, foreign direct investment, bank lending and the confidence channel. Petroulas examines the recent effect of the European Monetary Union on inward FDI-flows using a difference-in-differences approach. Romalis uses detailed international trade data to examine whether the rapid growth of Ireland in the 1990s and its accompanying substantial increase in trade in goods and services might have been spurred by an interaction of low taxation of capital and declining international trade costs. Back to contents

AGRITOURISM MARKET AND PRODUCT DEVELOPMENT IN ROMANIA

MARIA MAGDALENA TUREK RAHOVEANU • SILVIU BECIU • MIRELA STOIAN

ABSTRACT. Gangu et al. hold that, after the 1989 political changes, many changes have occurred in Romanian agriculture. Heilmayr observes that one of the biggest problems facing Romanian organic producers is an inability to add value to their products. Scrieciu focuses only on trade integration aspects - the extension of EU's customs union in terms of tariff barriers to include Romanian agriculture and food processing industries. ECD-GA says that while Romania has made progress in alignment with several aspects of the agricultural acquis, restructuring of the agricultural sector has barely begun. Back to contents

MANAGING HUMAN RESOURCE CAPABILITIES

ELVIRA NICA

ABSTRACT. Wei notes that strategic human resource management (SHRM) is a strategic approach to manage human resources of an organization. Geare et al. affirm that the reliance on data from only one HRM constituency can produce misleading performance assessment results. Chatterjee argues that a primary role of Indian managers is to forge new employment and industrial relationships through purposeful HRM policies and practices. Back to contents

THE APPROPRIATENESS OF AN INTERNAL CONTROL SYSTEM

LUMINITA IONESCU

ABSTRACT. PCAOB asserts that an important aspect of performing an audit of internal control is the process of identifying and evaluating entity-level controls. Hong Kong Institute emphasizes that good internal controls can help to provide a reasonable assurance that a sound business in the hands of decision makers with good sense and judgment will succeed in its objectives. PricewaterhouseCoopers contends that more and more companies are realizing that taking a good look at their internal processes and controls is a great opportunity to make their internal organization more efficient. Back to contents

THE IMPORTANCE OF OUTSOURCING FOR COMPANIES

ELENA DIACONU

ABSTRACT. Mierau holds that outsourcing first appeared in the IT industry in the 1980s: companies recognized the benefits of having IT service partners in order to develop complex systems, and enhance the way that a business process or service is managed. Djavanshir points to political and legal issues as the top risk concerns: offshoring can create more jobs (most companies consider offshore outsourcing as a way to reduce cost and increase efficiencies). Quélin and Duhamel report the results of a study on the motives of corporate headquarters in large European manufacturing firms for engaging in outsourcing and the risks they perceive to be associated with strategic outsourcing operations. Back to contents

EFFECTIVE MANAGERIAL LEADERSHIP, ROLE THEORY, AND CORPORATE CULTURE

ELENA-MARIA TUDOR

ABSTRACT. Mukama et al. affirm that the problems of development, implementation and use of information systems concern interactions between human, organizational and technical factors. Marinova maintains that organizational culture provides a blueprint for eliciting and supporting the types of employee behaviors which the organization has developed to cope with its problems of external adaptation and internal integration. Johnson and Goetz state that many organizations find it challenging to stay in compliance with various government laws and regulations. Back to contents

PRODUCTION TECHNOLOGY AS A FACTOR IN THE CHARACTERISTICS OF THE HORTICULTURE SECTOR IN THE EUROPEAN UNION

NICOLAE TUDORESCU • CONSTANTIN ZAHARIA • IOANA ZAHARIA

ABSTRACT. Franco et al. present some economic and social implication of horticultural, floricultural and nursery based rehabilitation programs for people with intellectual and psychological disabilities. According to the EC-DGA, production in the EU is characterized by rapid and significant fluctuations in supply and demand for products which are highly perishable. On Cook's reading, in order to compete on a global scale, GE produce must meet the challenges of the quickly evolving market for fruits and vegetables. Kuiseu argues that a decade ago, 80% of Senegal's horticulture produce originated from small and medium producers. Back to contents

THE ROLE ORGANIZATIONAL LEADERS PLAY IN SHAPING THE ROLE ORIENTATIONS OF EMPLOYEES THROUGH CREATING THE RIGHT CULTURE ENVIRONMENT

CATALINA CRACIUNESCU

ABSTRACT. Willmott stresses that corporate culturism seeks to construct consensus by managing the culture through which employee values are acquired. Marinova states that the process through which employees contribute to organizational effectiveness has received a great deal of attention. Willcoxson and Millett identify and discuss some of the significant issues relating to the management of an organization's culture. Densten and Gray claim that military leaders are the agents of change who facilitate organizational effectiveness or readiness. Back to contents

THE MONETARY TRANSMISSION MECHANISM AND OPEN MARKET OPERATIONS

DORIN DOBRISAN

ABSTRACT. Bar-Ilan and Seidmann analyze the co-determination of monetary policy and the labor contracts chosen by members of the public, who can either fix or index their nominal wages. Mateut et al. investigate the role of trade credit in the transmission of monetary policy: most models of the transmission mechanism allow firms to access only financial markets or bank lending according to some net worth criterion. Gerlach-Kristen shows that it is preferable for monetary policy to be conducted by a committee instead of a single policy maker if there is uncertainty about potential output. Back to contents

THE TRANSMISSION MECHANISM OF MONETARY POLICY AND THE RISKS POSED BY THE GLOBAL IMBALANCES

DORIN DOBRISAN

ABSTRACT. Gnan and