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Volume XIX, Spring, Issue 1(83), 2024
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Beginning of 2020, the COVID-19 crisis holds for firms all over the world. Under these circumstances, the purpose of this paper is to evaluate the landscape of the European countries in terms of the earnings manipulation in COVID-19 era. Therefore, we compared companies from 15 European countries. The results show that the deteriorating economic conditions caused by COVID-19 are reflected in the managers’ activity for earnings management in the context of European companies. Moreover, the panorama of earnings management activities in Europe is quite heterogeneous and inconsistent as we observe significant differences between European countries in the practice of earnings management. Additionally, rather than a single incentive or factor, we find a wide range of variables that affected managers’ decisions to engage in earnings manipulation in COVID-19 times. Indeed, the results show that lack of growth opportunity caused by the pandemic, increased amount of debt, volatility of cash flow or sales, even size, age, or book value, were variables that influenced managers’ decisions to manipulate earnings in pandemic. In addition, the industry effect cannot be separated from the impact of COVID-19. Surprisingly, institutional mechanisms of control, including audit quality or board monitoring, which are widely documented in the literature as limiting earnings management, were ineffective in the COVID-19 period. The presence of mechanisms of control is considered essential variables that limit the practices of earnings management, but even these can occasionally fail, as confirmed our study.
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The major aim of the article is to identify the framework of regulatory policy in which Regulatory Impact Assessment (RIA) is an effective tool supporting the process of making good law and used to reduce risks associated with drafting regulations, that, with relatively small benefits, cause a disproportionately large burden on public finances, often leading to a breach of budgetary constraint. Secondly, this article attempts to identify both strengths and weaknesses of the Polish regulatory system and includes recommendations toward the appropriate framework of regulatory policy. The methodology assumed in the article is based on the well-correlated reports of OECD and European Commission. The Polish Regulatory Policy System fails to meet the main OECD recommendations. It requires stronger legal mandate for the RIA and stronger central oversight unit tasked with quality control, upstream support and guidance but first of all it has to change the status quo in which the units responsible for analysing the impact of regulations are often practically identical to those that draft these regulations. It is suggested by OECD that governments should improve how they assess, communicate, and manage risks – including by more systematically reviewing regulations to ensure they correspond to the latest evidence and science. These implications remain extremely justified in relation to the Polish system of regulatory policy.
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We investigated whether export activity is correlated with innovation in a large sample of European companies. We explicitly considered five types of innovation: a) process innovation; b) product innovation; c) process and product innovation; d) product innovation new to the firm; and e) product innovation new to the market. We considered innovation as endogenous and determined by R&D through a process characterized by the regional technological environment. Our analysis enabled us to propose an integrated model incorporating R&D, innovation, and export in a scheme of simultaneous decisions which considers their mutual correlations.
Econometric results showed that product and process innovation positively affect the export intensity of manufacturing firms in Europe. The results also indicated complementarity effects between process and product innovation. The average effect on export intensity from engaging in process innovation is larger than that found for product innovation, except in cases where the product is new to the market. When both types of innovation have been carried out, a larger effect results than that observed for product or process innovation alone. Furthermore, the average marginal effect on export intensity from innovation of any kind is highly positive and significant.
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We employ a multivariate multiplicative error model (MMEM) to explore the interplay between high-frequency return volatilities, trading volume, and trading intensities within the Italian Electronic Interbank Credit Market (e-MID). Our research question also aims at analysing the e-MID and, more specifically, the behaviour of traders in relation to the financial crisis. For this purpose, we consider four time periods: the first period before the first intervention by the ECB, the second period before the collapse of Lehman Brothers, and finally, the last intervention by the ECB. Utilising five-minute intervals, our analysis reveals a robust causal relationship among volatilities, volumes, and trading intensities in this electronic market, yielding highly significant coefficient estimates of the multivariate multiplicative error model (MMEM). However, these relationships change qualitatively, showing a shift in e-MID market behaviour before, during, and after the outbreak of the financial crisis. Notably, we find evidence that trading was in a Pareto optimum in the first period, but as soon as uncertainties hit the market, this Pareto optimum becomes unstable and breaks down completely in the last period of an extremely illiquid market state. To the best of our knowledge, this paper represents the first and inaugural empirical application of MMEM to an interbank credit market, contributing valuable insights into its intricate dynamics.
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This paper highlights the dual nature of advertising: while its purpose is to increase sales and profit, some practices within it can be unethical. Ethical advertising practices build trust, enhance reputation, and foster long-term customer relationships, leading to loyalty and sustained success. Despite the pervasive influence of advertising on consumer behaviour, it's crucial to critically evaluate messages to make informed choices. Manipulative tactics in advertising can be subtle, requiring consumers to develop discernment to protect against impulsive decisions. Additionally, in a society promoting excessive consumption, being mindful of its impact on individuals and the environment is vital. Cultivating responsible consumption habits can lead to a more balanced life and mitigate negative societal and environmental effects.
