Essays on regulatory risk issues

Most studies around that try to verify the existence of regulatory risk look mainly at developed countries. Looking at regulatory risk in emerging market regulated sectors is no less important to improving and increasing investment in those markets. This thesis comprises three papers comprising regulatory risk issues. In the first Paper I check whether CAPM betas capture information on regulatory risk by using a two-step procedure. In the first step I run Kalman Filter estimates and then use these estimated betas as inputs in a Random-Effect panel data model. I find evidence of regulatory risk in electricity, telecommunications and all regulated sectors in Brazil. I find further evidence that regulatory changes in the country either do not reduce or even increase the betas of the regulated sectors, going in the opposite direction to the buffering hypothesis as proposed by Peltzman (1976). In the second Paper I check whether CAPM alphas say something about regulatory risk. I investigate a methodology similar to those used by some regulatory agencies around the world like the Brazilian Electricity Regulatory Agency (ANEEL) that incorporates a specific component of regulatory risk in setting tariffs for regulated sectors. I find using SUR estimates negative and significant alphas for all regulated sectors especially the electricity and telecommunications sectors. This runs in the face of theory that predicts alphas that are not statistically different from zero. I suspect that the significant alphas are related to misspecifications in the traditional CAPM that fail to capture true regulatory risk factors. On of the reasons is that CAPM does not consider factors that are proven to have significant effects on asset pricing, such as Fama and French size (ME) and price-to-book value (ME/BE). In the third Paper, I use two additional factors as controls in the estimation of alphas, and the results are similar. Nevertheless, I find evidence that the negative alphas may be the result of the regulated sectors premiums associated with the three Fama and French factors, particularly the market risk premium. When taken together, ME and ME/BE regulated sectors diminish the statistical significance of market factors premiums, especially for the electricity sector. This show how important is the inclusion of these factors, which unfortunately is scarce in emerging markets like Brazil.

Financial constraints on economic development: Theory and policy for developing countries

This article contains a theoretical and policy analysis of the financial constraints on economic development in developing countries. Following a Keynesian interpretation, it concludes that financial policies are needed to relieve these constraints, given the natural tendency of financial systems to operate in ways that are dysfunctional to economic development. It then proposes three lines of policy that take account of the special characteristics of developing countries: resource allocation policies targeted at segments of strategic importance for economic and financial development; policies to control financial and external fragility; and compensatory policies of a more interventionist cast, in particular directed credit programmes for both public- and private-sector lending to complement resource allocation policies, and countercyclical regulatory barriers so that fragility can be better controlled.

Sustainable Development and Collective Learning: Theory and a European Case Study. Bruges European Economic Policy (BEEP) Briefing 7/2004

Network governance of collective learning processes is an essential approach to sustainable development. The first section of the article briefly refers to recent theories about both market and government failures that express scepticism about the way framework conditions for market actors are set. For this reason, the development of networks for collective learning processes seems advantageous if new solutions are to be developed in policy areas concerned with long-term changes and a stepwise internalisation of externalities. With regard to corporate actors’ interests, the article shows recent insights from theories about the knowledge-based firm, where the creation of new knowledge is based on the absorption of societal views. This concept shifts the focus towards knowledge generation as an essential element in the evolution of sustainable markets. This involves at the same time the development of new policies. In this context innovation-inducing regulation is suggested and discussed. The evolution of the Swedish, German and Dutch wind turbine industries are analysed based on the approach of governance put forward in this article. We conclude that these coevolutionary mechanisms may take for granted some of the stabilising and orientating functions previously exercised by basic regulatory activities of the state. In this context, the main function of the governments is to facilitate learning processes that depart from the government functions suggested by welfare economics.

Mixed Public-Private Enterprises in Europe: Economic Theory and an Empirical Analysis of Italian Water Utilities. Bruges European Economic Research (BEER) Papers 4/July 2006

Mixed enterprises, which are entities jointly owned by the public and private sector, are spreading all over Europe in local utilities. Well aware that in the vast majority of cases the preference of local authorities towards such governance structure is determined by practical reasons rather than by the ambition to implement new regulatory designs (an alternative to the typical “external” regulation), our purpose is to confer some scientific value to this phenomenon which has not been sufficiently investigated in the economic literature. This paper aims at proposing an economic analysis of mixed enterprises, especially of the specific configuration in which the public partner acts as controller and the private one (or “industrial” partner) as service provider. We suggest that the public service concession to mixed enterprises could embody, under certain conditions, a noteworthy substitute to the traditional public provision and the concession to totally private enterprises, as it can push regulated operators to outperform and limit the risk of private opportunism. The starting point of the entire analysis is that ownership allows the (public) owner to gather more information about the actual management of the firm, according to property rights theory. Following this stream of research, we conclude that under certain conditions mixed enterprises could significantly reduce asymmetric information between regulators and regulated firms by implementing a sort of “internal” regulation. With more information, in effect, the public authority (as owner/controller of the regulated firm, but also as member of the regulatory agency) can stimulate the private operator to be more efficient and can monitor it more effectively with respect to the fulfilment of contractual obligations (i.e., public service obligations, quality standards, etc.). Moreover, concerning the latter function, the board of directors of the mixed enterprise can be the suitable place where public and private representatives (respectively, welfare and profit maximisers) can meet to solve all disputes arising from incomplete contracts, without recourse to third parties. Finally, taking into account that a disproportionate public intervention in the “private” administration (or an ineffective protection of the general interest) would imply too many drawbacks, we draw some policy implications that make an equitable debate on the board of the firm feasible. Some empirical evidence is taken from the Italian water sector.

Is Regulatory Convergence Efficient? CES Germany & Europe Working Papers, No. 02.3, May 1992

One of the important themes in the new institutionalism is the convergence of market regulations in a world with three powerful clusters of countries (Western Europe, North America, and East Asia) on a small number of regimes, like disorganized capitalism, free market capitalism, and coordinated market capitalism. This paper examines the political-economic theory of regulatory convergence. It reconstructs and compares three welfarist approaches: the optimal regulatory regime (Tinbergen), the rule of constitutional law (Buchanan), and regulatory rivalry (Hayek). The paper concludes that most plausible results of convergence theory are completely opposite to the expressed political intentions of the theorists. Tinbergen's theory predicts neoliberalism, not social democracy. The theories of Buchanan and Hayek predict respectively a consensual or spontaneous formation of corporatist regulations, not the return of classical constitutionalism or liberalism. The paper summons new institutionalists to repair the weak scientific elements of convergence theory and to make a distinction between the ideological origins of this theory and its unintended ideological consequences.

Evolving noisy oscillatory dynamics in genetic regulatory networks

We introduce a genetic programming (GP) approach for evolving genetic networks that demonstrate desired dynamics when simulated as a discrete stochastic process. Our representation of genetic networks is based on a biochemical reaction model including key elements such as transcription, translation and post-translational modifications. The stochastic, reaction-based GP system is similar but not identical with algorithmic chemistries. We evolved genetic networks with noisy oscillatory dynamics. The results show the practicality of evolving particular dynamics in gene regulatory networks when modelled with intrinsic noise.

Regulatory foci and organisational commitment

We use regulatory focus theory to derive specific predictions regarding the differential relationships between regulatory focus and commitment. We estimated a structural equation model using a sample of 520 private and public sector employees and found in line with our hypotheses that (a) promotion focus related more strongly to affective commitment than prevention focus, (b) prevention focus related more strongly to continuance commitment than promotion focus, (c) promotion and prevention focus had equally strong effects on normative commitment. Implications of these findings for the three-component model of commitment, especially the ‘dual nature’ of normative commitment, as well as implications for human resources management and leadership are discussed.

When do firms conform? The effect of regulatory control processes on compliance and opportunism

The authors use social control theory to develop a conceptual model that addresses the effectiveness of regulatory agencies’ (e.g., Food and Drug Administration, Occupational Safety and Health Administration) field-level efforts to obtain conformance with product safety laws. Central to the model are the control processes agencies use when monitoring organizations and enforcing the safety rules. These approaches can be labeled formal control (e.g., rigid enforcement) and informal control (e.g., social instruction). The theoretical framework identifies an important antecedent of control and the relative effectiveness of control’s alternative forms in gaining compliance and reducing opportunism. Furthermore, the model predicts that the regulated firms’ level of agreement with the safety rules moderates the relationships between control and firm responses. A local health department’s administration of state food safety regulations provides the empirical context for testing the hypotheses. The results from a survey of 173 restaurants largely support the proposed model. The study findings inform a discussion of effective methods of administering product safety laws. The authors use social control theory to develop a conceptual model that addresses the effectiveness of regulatory agencies’ (e.g., Food and Drug Administration, Occupational Safety and Health Administration) field-level efforts to obtain conformance with product safety laws. Central to the model are the control processes agencies use when monitoring organizations and enforcing the safety rules. These approaches can be labeled formal control (e.g., rigid enforcement) and informal control (e.g., social instruction). The theoretical framework identifies an important antecedent of control and the relative effectiveness of control’s alternative forms in gaining compliance and reducing opportunism. Furthermore, the model predicts that the regulated firms’ level of agreement with the safety rules moderates the relationships between control and firm responses. A local health department’s administration of state food safety regulations provides the empirical context for testing the hypotheses. The results from a survey of 173 restaurants largely support the proposed model. The study findings inform a discussion of effective methods of administering product safety laws.

Workplace duties or opportunities? Challenge stressors, regulatory focus, and creativity

Previous research has produced contradictory findings about the impact of challenge stressors on individual and team creativity. Based on the challenge-hindrance stressors framework (LePine, Podsakoff, & LePine, 2005) and on regulatory focus theory (Higgins, 1997), we argue that the effect of challenge stressors on creativity is moderated by regulatory focus. We hypothesize that while promotion focus strengthens a positive relationship between challenge stressors and creativity, prevention focus reinforces a negative relationship. Experimental data showed that high demands led to better results in a creative insight task for individuals with a strong trait promotion focus, and that high demands combined with an induced promotion focus led to better results across both creative generation and insight tasks. These results were replicated in a field R&D sample. Furthermore, we found that team promotion focus moderated the effect of challenge stressors on team creativity. The results offer both theoretical insights and suggest practical implications. © 2013 Elsevier Inc.

An actor-network theory study of public sector inter-organisational collaboration

EMBARGOED The literature on inter-organisational collaboration, although wide-ranging, offers little guidance on collaboration as process. It focuses in the main on human attributes like leadership, trust and agency, but gives little consideration to the role of objects in the development of inter-organisational collaborations. A central aim of this thesis is to understand the interaction of objects and humans in the development of a particular health and social care partnership in the North East of England. This socio-material perspective was achieved through actor-network theory (ANT) as a methodology, in which the researcher is equally sensitised to the role of human and non-human entities in the development of a network. The case study is that of the North East Lincolnshire Care Trust Plus (CTP). This was a unique health and social care collaboration arrangement between North East Lincolnshire Council and North East Lincolnshire Primary Care Trust, setup to address heath inequalities in the region. The CTP was conceived and developed at a local level by the respective organisation’s decision makers in the face of considerable opposition from regional policy makers and national regulators. However, despite this opposition, the directors eventually achieved their goal and the CTP became operational on 1st September 2007. This study seeks to understand how the CTP was conceived and developed, in the face of this opposition. The thesis makes a number of original contributions. Firstly, it adds to the current body of literature on collaboration by identifying how objects can help problematize issues and cement inter-organisational collaborations. Secondly it provides a novel account describing how two public sector organisations created a unique collaboration, despite pressing resistance from the regulatory authorities; and thirdly it extends Callon’s (1996) notion of problematization to examine how, what is rather vaguely described as ‘context’ in the literature, becomes enmeshed in decisions to collaborate. UNTIL 03/02/2016 THIS THESIS IS ONLY AVAILABLE FOR CONSULTATION AT ASTON UNIVERSITY LIBRARY WITH PRIOR ARRANGEMENT

The new institutionalism in the context of Kosovo's transition:regulatory institutions in contested states

This article explores the new institutionalist literature in political economy in the context of Kosovo's contested statehood, focusing on institutional arbitrage and legitimacy. This article considers both the consequences of institutions for actors' behaviour and the norms that shape this, as well as the factors determining the legitimacy of institutions. In doing so, it combines the new institutionalist theory with documentary and interview material collected during research on energy regulation in one contested state, Kosovo. Rather than singling out one particular variety of "new institutionalism", the article attempts to blend insights from historical (or "political"), rational choice, and sociological institutionalism. © 2014 © 2014 Taylor & Francis.

Corporate social responsibility reporting in the mining sector of Tanzania:(Lack of) government regulatory controls and NGO activism

Purpose – The purpose of this paper is to contribute to the ongoing debate on governance, accountability, transparency and corporate social responsibility (CSR) in the mining sector of a developing country context. It examines the reporting practices of the two largest transnational gold-mining companies in Tanzania in order to draw attention to the role played by local government regulations and advocacy and campaigning by nationally organised non-governmental organisations (NGOs) with respect to promoting corporate social reporting practices. Design/methodology/approach – The paper takes a political economy perspective to consider the serious implications of the neo-liberal ideologies of the global capitalist economy, as manifested in Tanzania’s regulatory framework and in NGO activism, for the corporate disclosure, accountability and responsibility of transnational companies (TNCs). A qualitative field case study methodology is adopted to locate the largely unfamiliar issues of CSR in the Tanzanian mining sector within a more familiar literature on social accounting. Data for the case study were obtained from interviews and from analysis of documents such as annual reports, social responsibility reports, newspapers, NGO reports and other publicly available documents. Findings – Analysis of interviews, press clips and NGO reports draws attention to social and environmental problems in the Tanzanian mining sector, which are arguably linked to the manifestation of the broader crisis of neo-liberal agendas. While these issues have serious impacts on local populations in the mining areas, they often remain invisible in mining companies’ social disclosures. Increasing evidence of social and environmental ills raises serious questions about the effectiveness of the regulatory frameworks, as well as the roles played by NGOs and other pressure groups in Tanzania. Practical implications – By empowering local NGOs through educational, capacity building, technological and other support, NGOs’ advocacy, campaigning and networking with other civil society groups can play a pivotal role in encouraging corporations, especially TNCs, to adopt more socially and environmentally responsible business practices and to adhere to international and local standards, which in turn may help to improve the lives of many poor people living in developing countries in general, and Tanzania in particular. Originality/value – This paper contributes insights from gold-mining activities in Tanzania to the existing literature on CSR in the mining sector. It also contributes to political economy theory by locating CSR reporting within the socio-political and regulatory context in which mining operations take place in Tanzania. It is argued that, for CSR reporting to be effective, robust regulations and enforcement and stronger political pressure must be put in place.

Transatlantic regulatory divergence in pharmaceuticals: exploring economic and cultural explanations

The analysis delves into the regulatory divergence between the EU and the US in the pharmaceutical sector. Through law and economics, political science, and cultural theory perspectives, the study explores how collective preferences within each jurisdiction shape regulations. By identifying cultural orientations such as individualism in the US and hierarchy in the EU, the research suggests that underlying cultural factors play a significant role in regulatory decisions. Despite calls for regulatory harmonization, the recognition of legitimate differences in preferences due to cultural diversity emphasizes that uniformity may not always be the best solution, showcasing the importance of understanding cultural influences in shaping regulatory landscapes.

[the Teaching Of Social Sciences In Health: Between Practice And Theory].

The models of teaching social sciences and clinical practice are insufficient for the needs of practical-reflective teaching of social sciences applied to health. The scope of this article is to reflect on the challenges and perspectives of social science education for health professionals. In the 1950s the important movement bringing together social sciences and the field of health began, however weak credentials still prevail. This is due to the low professional status of social scientists in health and the ill-defined position of the social sciences professionals in the health field. It is also due to the scant importance attributed by students to the social sciences, the small number of professionals and the colonization of the social sciences by the biomedical culture in the health field. Thus, the professionals of social sciences applied to health are also faced with the need to build an identity, even after six decades of their presence in the field of health. This is because their ambivalent status has established them as a partial, incomplete and virtual presence, requiring a complex survival strategy in the nebulous area between social sciences and health.