Air Passengers and Tourism Flows: Evidence from Sicily and Sardinia

Tourism plays an important role in the economies of many Mediterranean countries, since it is a crucial driver of economic growth, job creation, and income. For this reason many countries set up a wide variety of programs and policies to support the development of this economic sector. It is therefore very important, for scholars and policy makers, explaining and forecasting tourism demand. Using air passengers flows as proxy variables for tourist arrivals, we set up some VAR model specifications in order to investigate the monthly time series 2003-2008 of arrivals to the most important Italian islands, Sardinia and Sicily. Our results show a significant inter-temporal relationship among tourism flows. Furthermore, our findings reveal that both meteorological variables (atmospheric temperatures and raining days) and exchange rates (Dollar-to-Euro and Yen-to-Euro) can improve the explanatory and forecasting power of VAR models.Airports, Air transportation, VAR model

Tribal Art Market. Signs and Signals

In this paper, we present a model for the marketability of a Tribal artwork and we test this model empirically using a unique hand-collected dataset, which comprises the worldwide Tribal art market auctions between 1999 and 2008. Our results show a significant relationship between the probability of an artwork to be sold and several signs and signals. The effect of the auction estimated prices on the probability of sales is nonlinear, and allows us to divide the Tribal art market into two price regimes. In the low-price regime, the effect of the auction estimated price on the probability of sales is negative. In the high-price regime, the effect of the auction estimated price on the probability of sales is positive.Tribal art, Signs, Signals, Veblen effect, Conspicuous consumption

Fee Structure, Financing, and Investment Decisions: The Case of REITs

We propose a model to show how the fee structure of listed Real Estate Investment Trusts (REITs) can increase instead of decrease Management Company opportunistic behaviors. Distinguishing between performance fees paid on the fund market value and management fees paid either on the Net Asset Value (NAV) or on the Gross Asset Value (GAV), we show that only the former aligns the Management Company and shareholder interests. In particular, we demonstrate that management fees lead Management Companies to make suboptimal financing and investment decisions in order to maximize their own wealth at the expense of shareholders. We test the predictions of the model empirically using a panel of Italian listed REITs.Real Estate Investment Trusts, Fees, Debt, Investment

Abnormal Returns of Soccer Teams: Reassessing the Informational Value of Betting Odds

We analyse the links between soccer match results, bets and stock returns of all listed European soccer teams. Using an event study approach, we measure abnormal returns following wins, ties and losses. Wins are associated with positive abnormal returns, and ties and losses with negative abnormal returns. Additionally, we analyse the role of bets in shaping market reactions to unexpected results, which we find to be non-significant. We propose an alternative econometric approach, using seemingly unrelated regression models, to take into account the problem of overlapping events. While our results concerning match results are confirmed, abnormal returns following unexpected results are found to be statistically significant and to magnify the positive (negative) effects of wins (losses).Soccer and Bets; Information and Market Efficiency; Event Studies; Event Clustering; Seemingly Unrelated Regression Equation (SUR)

Event Clustering and Abnormal Returns: Reassessing the Informational Value of Bets

An avalanche of empirical studies has addressed the validity of the rank-size rule (or Zipf’s law) in a multi-city context in many countries. City size in most countries seems to obey Zipf’s law, but the question under which conditions (e.g. sample size, spatial scale) this ‘law’ holds remained largely underinvestigated. Another complementary question is whether socio-economic networks in space also show a similar hierarchical pattern. Against this background, the present paper investigates – from a methodological viewpoint – the relationship between network connectivity and the rank-size rule (or Zipf’s law) in an urban-economic network constellation. After a review of the literature, we address in particular the following methodological issues: (i) the (aggregate) behavioural foundation underlying the rank-size rule/Zipf’s law in the light of spatial-economic network theories (e.g. entropy maximization, spatial interaction theory, etc.); (ii) the nature of the analytical relationship between social-spatial network analysis and the rank-size rule/Zipf’s law. We argue that the rank size rule is compatible with conventional economic foundations of spatial network models. Consequently, a spatial-economic interpretation – as well as a network connectivity interpretation – of the rank-size rule coefficient is provided. Our methodological contribution forms the foundation for the subsequent empirical analysis applied to spatial networks in a socio-economic context. The aim here is to test the sensitivity of empirical findings for changes in scale, functional forms, time periods, and network structures. Our application is concerned with an extensive spatio-temporal panel database related to the evolution of urban population in Germany. We test the relevance of the rank-size rule/Zipf’s law, and its evolution over the years, and – in parallel – the related ‘socio-economic’ connectivity in these urban networks. In particular, we will show that Zipf’s law (i.e., with the rank-size coefficient equal to 1) is only valid under particular conditions of the sample size. The paper concludes with some retrospective and prospective remarks

The effectiveness of insider trading regulations: The case of the Italian tender offers

This study analyzes the effectiveness of the Market Abuse Directive (MAD) in reducing the possible profits of insider trading during voluntary tender offers with the purpose of delisting initiated by controlling shareholders in Italy. Our results suggest that the introduction of the MAD did not produce appreciable effects on the magnitude of abnormal returns and volumes noted in the period preceding the announcement of a tender offer. However, a regression analysis reveals that the MAD has changed the manner in which certain corporate characteristics influence the capacity of insiders to achieve profits. In particular, in the post-MAD period, the market reaction to tender offer announcements tends to be greater for bigger firms. On the other hand, the effect of ownership concentration has become virtually null. We interpret the results in light of the economic problem of the potential insider who chooses the optimal level of insider trading by considering the marginal costs and benefits of the illegal activity.This study analyzes the effectiveness of the Market Abuse Directive (MAD) in reducing the possible profits of insider trading during voluntary tender offers with the purpose of delisting initiated by controlling shareholders in Italy. Our results suggest that the introduction of the MAD did not produce appreciable effects on the magnitude of abnormal returns and volumes noted in the period preceding the announcement of a tender offer. However, a regression analysis reveals that the MAD has changed the manner in which certain corporate characteristics influence the capacity of insiders to achieve profits. In particular, in the post-MAD period, the market reaction to tender offer announcements tends to be greater for bigger firms. On the other hand, the effect of ownership concentration has become virtually null. We interpret the results in light of the economic problem of the potential insider who chooses the optimal level of insider trading by considering the marginal costs and benefits of the illegal activity

Market Abuse Directive and Insider Trading: Evidence from Italian Tender Offers

This study analyzes the effectiveness of the Market Abuse Directive (MAD) in reducing possible profits from insider trading during voluntary tender offers with the purpose of delisting initiated by controlling shareholders. Exploiting the quasi-experimental setting provided by the introduction of the MAD, our event-study analysis on the Italian market suggests that the new regulation did not produce appreciable effects on the magnitude of abnormal returns and volumes noted before the announcement of a tender offer. Multivariate econometric analyses based on regression and matching methods confirm this result. However, poolability tests reveal that the MAD has changed the manner in which corporate characteristics influence the capacity of insiders to make profit. We interpret our results considering the choice problem of the optimal amount of insider trading, when comparing the marginal costs and benefits of the illegal activity

Technical Trading, Predictability and Learning in Currency Markets

This paper studies predictability of currency returns over time and the extent to which it is captured by trading rules commonly used in currency markets. We consider the strategies that an investor endowed with rational expectations could have pursued to exploit out-of-sample currency predictability and generate abnormal returns. We find a close relation between these strategies and indices that track popular technical trading rules, namely moving average cross-over rules and the carry trade, implying that the technical rules represent heuristics by which professional market participants exploit currency mispricing. We find evidence that such mispricing reflects initially wrong investors’ beliefs (wrong priors), but information is efficiently processed as it becomes available. Predictability is highest in the mid ’90, subsequently decreases sharply, but increases again in the final part of the sample period, especially for the Euro and other emerging currencies

Air Passenger Flows: Evidence from Sicily and Sardinia

Tourism plays an important role in the economies of many Mediterranean countries, since it is a crucial driver of economic growth, job creation, and income. For this reason many countries set up a wide variety of programs and policies to support the development of this economic sector. It is therefore very important, for scholars and policy makers, explaining and forecasting tourism demand. Using air passenger flows as proxy variables for tourist arrivals, we set up some VAR model specifications in order to investigate the monthly time series 2003-2008 of arrivals to the most important Italian islands, Sardinia and Sicily. Our results show a significant inter-temporal relationship among tourism flows. Furthermore, our findings reveal that both meteorological variables (atmospheric temperatures and raining days) and exchange rates (Dollar-to-Euro and Yen-to-Euro) can improve the explanatory and forecasting power of VAR models

Corporate social responsibility and cost of financing- The importance of the international corporate governance system

Research Question/Issue Our study examines whether international corporate governance systems shape the relationship between a firm's engagement in corporate social responsibility (CSR) and their cost of financing (both equity and debt). Research Findings/Insights Using a large international sample, our findings reveal that although the link between CSR performance and the cost of equity is negative in a shareholder-oriented system, this relationship is positive in a stakeholder-oriented system. Furthermore, the link between CSR performance and the cost of debt is negative for firms that are close to default in both systems. Theoretical/Academic Implications Our study highlights the importance of considering the shareholder/stakeholder orientation at the country level to explain the link between CSR performance and the cost of financing. Our findings help to explain and place into context the previous mixed findings on the relationship between CSR and the cost of equity and debt and add to the debate about whether CSR is beneficial or detrimental to corporate governance. Practitioner/Policy Implications The analysis of how the country corporate governance system influences the effect of CSR performance on the cost of financing allows for a deeper understanding of how investors respond to CSR initiatives worldwide and offers managers, directors, and policy makers context-specific recommendations. Our analysis also highlights the limitations of transferring insights regarding CSR from one corporate governance system to another.The authors acknowledge support from the Projects FEDER UNC315-EE-3636, 2018-00117-001, 2016-00454-001, and 2016-00463-001 financed by the Spanish Ministry of Economy