"Periodic crises": Clément Juglar between theories of crises and theories of business cycles

Business cycle theory is normally described as having evolved out of a previous tradition of writers focusing exclusively on crises. In this account, the turning point is seen as residing in Clément Juglar's contribution on commercial crises and their periodicity. It is well known that the champion of this view is Schumpeter, who propagated it on several occasions. The same author, however, pointed to a number of other writers who, before and at the same time as Juglar, stressed one or another of the aspects for which Juglar is credited primacy, including the recognition of periodicity and the identification of endogenous elements enabling the recognition of crises as a self-generating phenomenon. There is indeed a vast literature, both primary and secondary, relating to the debates on crises and fluctuations around the middle of the nineteenth century, from which it is apparent that Juglar's book Des Crises Commerciales et de leur Retour Périodique en France, en Angleterre et aux États-Unis (originally published in 1862 and very much revised and enlarged in 1889) did not come out of the blue but was one of the products of an intellectual climate inducing the thinking of crises not as unrelated events but as part of a more complex phenomenon consisting of recurring crises related to the development of the commercial world - an interpretation corroborated by the almost regular occurrence of crises at about 10-year intervals.

Venture capital financing : screening and contracting under assymetric information

Structure of the Thesis This thesis consists of 5 sections. Section 1 starts with the problem definition and the presentation of the objectives of this thesis. Section 2 introduces a presentation of the theoretical foundations of Venture financing and a review of the main theories developed on Venture investing. It includes a taxonomy of contracting clauses relevant in venture contracting, the conflicts they address, and presents some general observations on contractual clauses. Section 3 presents the research findings on the analysis of a European VC's deal flow and investment screening linked to the prevailing market conditions. Section 4 focuses an empirical study of a European VC's investment process, the criteria it uses to make its investments. It presents empirical findings on the investment criteria over time, business cycles, and investment types. It also links these criteria to the VC's subsequent performance. Finally, section 5 presents an empirical research on the comparison of the legal contracts signed between European and United States Venture Capitalists and the companies they finance. This research highlights some of the contracting practices in Europe and the United States.

Essays in equilibrium asset pricing

Introduction This dissertation consists of three essays in equilibrium asset pricing. The first chapter studies the asset pricing implications of a general equilibrium model in which real investment is reversible at a cost. Firms face higher costs in contracting than in expanding their capital stock and decide to invest when their productive capital is scarce relative to the overall capital of the economy. Positive shocks to the capital of the firm increase the size of the firm and reduce the value of growth options. As a result, the firm is burdened with more unproductive capital and its value lowers with respect to the accumulated capital. The optimal consumption policy alters the optimal allocation of resources and affects firm's value, generating mean-reverting dynamics for the M/B ratios. The model (1) captures convergence of price-to-book ratios -negative for growth stocks and positive for value stocks - (firm migration), (2) generates deviations from the classic CAPM in line with the cross-sectional variation in expected stock returns and (3) generates a non-monotone relationship between Tobin's q and conditional volatility consistent with the empirical evidence. The second chapter proposes a standard portfolio-choice problem with transaction costs and mean reversion in expected returns. In the presence of transactions costs, no matter how small, arbitrage activity does not necessarily render equal all riskless rates of return. When two such rates follow stochastic processes, it is not optimal immediately to arbitrage out any discrepancy that arises between them. The reason is that immediate arbitrage would induce a definite expenditure of transactions costs whereas, without arbitrage intervention, there exists some, perhaps sufficient, probability that these two interest rates will come back together without any costs having been incurred. Hence, one can surmise that at equilibrium the financial market will permit the coexistence of two riskless rates that are not equal to each other. For analogous reasons, randomly fluctuating expected rates of return on risky assets will be allowed to differ even after correction for risk, leading to important violations of the Capital Asset Pricing Model. The combination of randomness in expected rates of return and proportional transactions costs is a serious blow to existing frictionless pricing models. Finally, in the last chapter I propose a two-countries two-goods general equilibrium economy with uncertainty about the fundamentals' growth rates to study the joint behavior of equity volatilities and correlation at the business cycle frequency. I assume that dividend growth rates jump from one state to other, while countries' switches are possibly correlated. The model is solved in closed-form and the analytical expressions for stock prices are reported. When calibrated to the empirical data of United States and United Kingdom, the results show that, given the existing degree of synchronization across these business cycles, the model captures quite well the historical patterns of stock return volatilities. Moreover, I can explain the time behavior of the correlation, but exclusively under the assumption of a global business cycle.

Safety Traps

Fear of risk provides a rationale for protracted economic downturns. We develop a real business cycle model where investors with decreasing relative risk aversion choose between a risky and a safe technology that exhibit decreasing returns. Because of a feedback effect from the interest rate to risk aversion, two equilibria can emerge: a standard equilibrium and a "safe" one in which investors invest in safer assets. We refer to the dynamics of this second equilibrium as a safety trap because it is self-reinforcing as investors accumulate more wealth and show it to be consistent with Japan's lost decade.

Best practice report on policy learning infrastructures in innovative labour market policies

This report synthesizes the findings of 11 country reports on policy learning in labour market and social policies that were conducted as part of WP5 of the INSPIRES project, which is funded by the 7th Framework Program of the EU-Commission. Notably, this report puts forward objectives of policy learning, discusses tools, processes and institutions of policy learning and presents the impacts of various tools and structures of the policy learning infrastructure for the actual policy learning process. The report defines three objectives of policy learning: evaluation and assessment of policy effectiveness, vision building and planning, and consensus building. In the 11 countries under consideration, the tools and processes of the policy learning, infrastructure can be classified into three broad groups: public bodies, expert councils, and parties, interest groups and the private sector. Finally, we develop four recommendations for policy learning: Firstly, learning processes should keep the balance between centralisation and plurality. Secondly, learning processes should be kept stable beyond the usual political business cycles. Thirdly, policy learning tools and infrastructures should be sufficiently independent from political influence or bias. Fourth, Policy learning tools and infrastructures should balance out mere effectiveness, evaluation and vision building.

Raising the Level of Moral Thinking among Managers Will Not Help. Kohlberg's Conventionality and Systemic Ethical Flaws in Business

Business ethicists often assume that unethical behavior arises when individuals deviate from the norms and responsibilities that are institutionalized to frame economic activities. People's greed motivates them to violate the rules of the game. In Kohlberg's terms, it is assumed that such actors make decisions in a preconventional way and act opportunistically. In this article, we propose an alternative interpretation of deviant behavior, arguing that such behavior does not result from a lack of conventional moral guidance but rather from the fact that characteristics attributed to preconventional morality by Kohlberg - the purely incentive and punishment driven opportunistic morality - have become the conventionalized morality. The prevailing norms that economic actors have internalized as their yardstick are those of the preconventional Homo economicus. Not the deviation from, but the compliance with the rules of the game explains many forms of harmful and illegal decisions made in corporations.

Business research, self-fulfilling prophecy, and the inherent responsibility of scholars.

Business research and teaching institutions play an important role in shaping the way businesses perceive their relations to the broader society and its moral expectations. Hence, as ethical scandals recently arose in the business world, questions related to the civic responsibilities of business scholars and to the role business schools play in society have gained wider interest. In this article, I argue that these ethical shortcomings are at least partly resulting from the mainstream business model with its taken-for granted basic assumptions such as specialization or the value-neutrality of business research. Redefining the roles and civic responsibilities of business scholars for business practice implies therefore a thorough analysis of these assumptions if not their redefinition. The takenforgrantedness of the mainstream business model is questioned by the transformation of the societal context in which business activities are embedded. Its value-neutrality in turn is challenged by self-fulfilling prophecy effects, which highlight the normative influence of business schools. In order to critically discuss some basic assumptions of mainstream business theory, I propose to draw parallels with the corporate citizenship concept and the stakeholder theory. Their integrated approach of the relation between business practice and the broader society provides interesting insights for the social reembedding of business research and teaching.

The Corrosion of Career? - Occupational Trajectories of Business Economists and Engineers in Switzerland

Achievement careers are regarded as a distinctive element of the post-war period in occidental societies. Such a career was at once a modal trajectory of the modern parts of middleclass men and a social emblem for progress and success. However, if the achievement career came to be a biographical pattern with great normative power, its precise sequential course remained vague. Theories of the 1960s and 1970s described it as an orderly advancement within large firms. By the 1990s, scholars postulated an erosion of the organizational structures that once contributed to the institutionalization of careers, accompanied by a weakening of the normative weight of the achievement career by management discourse. We question the thesis of the corrosion of achievement career by analysing the trajectories of 442 engineers and business economists in Switzerland in regard to their orderliness, loyalty, and temporal rhythm. An inspection of types of careers and cohorts reveals that even if we face a decline of loyalty over time, hierarchical orderliness is not touched by those changes. Foremost, technical-industrial careers fit the loyal and regular pattern. Hence, this trajectory-type represents only a minority and is by far the slowest and least successful in terms of hierarchical ascension.

Toward a comprehensive conceptualization of business organizations and their members from a sensemaking perspective. Lessons learned from Picassoâeuro?s cubism

Until recently, much of the discussion regarding the type of organization theory needed in management studies focused on normative vs. descriptive roles of management science. Some authors however noticed that even a descriptive theory can have a normative impact. Among others, management theories are used by practitioners to make sense of their identity and roles in given contexts, and so guide their attitude, decision process, and behavior. The sensemaking potential of a theory might in this view represent an important element for predicting the adoption of a theory by practitioners. Accordingly, theories are needed which better grasp the increased complexity of today's business environment in order to be more relevant for practitioners. This article proposes a multi-faceted perspective of organizations. This implies leaving a simplistic view of organizations and building a 'cubist' conception. Picasso's cubism paintings are characterized by the use of multiple perspectives within a single drawing. Similarly, I argue here that managers must learn not only to add multiple responsibilities in their work, but to develop an integrated conception of their managerial identity and of their organizations in which the multiple social and economic dimensions are enmeshed. Social entrepreneurship is discussed as illustration of typical multi-faceted business.