Mark Vancauteren

Nonfinancial Goals, Governance, and Dividend Payout in Private Family Firms

This paper uses insights from behavioral economics to explain dividend policy in private family firms. Based on a sample of 501 elgian firms, our results indicate that dividend payout is low when a family chief executive officer () leads the business and in the presence of a family‐dominated board. The tendency of a family or family‐dominated board to retain earnings appears to be stronger in earlier generational stages compared with later generational stages. The findings are consistent with (1) socioemotional objectives being important drivers of funding decisions in private firms where families possess important decision and control power and (2) these objectives being more predominant in early generational stages.

Determinants of risk behaviour: effects of perceived risks and risk attitude on farmer’s adoption of risk management strategies

The importance of risk perception and risk attitude for understanding individual’s risk behaviour are independently well described in literature, but rarely combined in an integrated approach. In this study, we propose a model assuming the choice to implement certain risk management strategies to be directly driven by both perceptions of risks and risk attitude. Other determinants influence the intention to apply different risk strategies mainly indirectly, mediated by risk perception and risk attitude. This conceptual model is empirically tested, using structural equation modelling, for understanding the intention of farmers to implement different common risk management strategies at their farms. Data are gathered in a survey completed by 500 farmers from the Flanders region in Belgium, investigating attitudes towards farming, perceived past exposure to risk, socio-demographic characteristics, farm size, perceptions of the major sources of farm business risk, risk attitudes and the intention to apply common risk management strategies. Our major findings are: (i) perception of major farm business risks have no significant impact on the intention of applying any of the risk strategies under study, (ii) risk attitude does have a significant impact. Therefore, rather than objective risk faced and the subjective interpretation thereof, it is the general risk attitude that influence intended risk strategies to be implemented. A distinction can be made between farmers willing to take risk, who are more inclined to apply ex-ante risk management strategies and risk averse farmers who are less inclined to implement ex-ante risk management strategies but rather cope with the consequences and diminish their effects ex-post when risks have occurred.

Farm-level evidence on risk balancing behavior in the EU-15

Purpose - – The purpose of this paper is to present empirical evidence of risk balancing behavior by European farmers. More specifically, the authors investigate strategic adjustments in the level of financial risk (FR) in response to changes in the level of business risk (BR). Design/methodology/approach - – The authors conducted a correlation relationship analysis and run several linear fixed effects regression models using the European Union (EU)-15 FADN panel data set for the period 1995-2008. Findings - – Overall, the paper finds EU evidence of risk balancing. The correlation relationship analysis suggests that just over half of the farm observations are risk balancers whereas the other (smaller) half are not. The coefficient in our fixed effects regression suggests that a 1 percent increase in BR reduces FR by 0.043 percent and has a standard error so low that the existence of non-risk balancers is doubtful. The results reject evidence of strong-form risk balancing – inverse trade-offs between FR and BR keeping total risk (TR) constant – but cannot reject weak-form risk balancing – inverse trade-offs between FR and BR with some observed changes in TR. Furthermore, the extent of risk balancing behavior is found to differ between different European countries and across farm typologies. Practical implications - – This study provides European policy makers a first insight into risk balancing behavior of EU farmers. When risk balancing occurs, BR-reducing agricultural policies induce strategic upwards leverage adjustments that unintentionally reestablish or even increase total farm-level risk. Originality/value - – Making use of the large and unique FADN database, to the best of the authors knowledge, this study is the first that provides European (EU-15) evidence on risk balancing behavior, is conducted at an unprecedented large scale, and presents the first risk balancing evidence across countries and farming systems.

Environmental Policy and Trade of Manufacturing Goods in the Central and Eastern Enlargement of the European Union

We investigate empirically the link between environmental policy and trade with particular reference to the single market and enlargement. Incorporating the methodology of endogenous protection, we question if countries should wish to weaken their environmental policies in response to more trade integration; in particular, we look at the effect of harmonizing product regulations and the level of imports. The empirical answer suggests that harmonizing product regulations leads to more trade; domestic environmental regulations have a larger negative effect on trade when they are treated as endogenous; and EU countries relax domestic environmental regulations due to the harmonization of regulations, whereas the Central and Eastern European countries that joined or will join the European Union set more stringent environmental regulations.

Farm household risk balancing: implications for policy from an EU perspective

Purpose - – Building on the risk balancing theory and on recent discussions the appropriateness of using farm income maximization as behavioural assumption, this paper extends the risk balancing framework by accounting for business-household interactions. The purpose of this paper is to theoretically introduce the concept of farm household risk balancing, a theoretical framework in which the farm household sets a constraint on the total household-level risk and balances farm-level and off-farm-level risk. Design/methodology/approach - – The paper argues that the risk behaviour of farmers is better understood by considering risk at the household level. Using an analytical framework, equations are derived linking the farm activities, off-farm activities, consumption and business and private liquidity. Findings - – The framework shows that a farm household that wants to minimize the risk that total household cash flow falls below consumption needs, may exhibit a wide variety of behavioural responses to changes in the policy and economic environment. Social implications - – The framework suggests multiple ways for policy makers and individual farmers to support risk management. Originality/value - – Risk management is at the core of the agricultural policy and it is of paramount importance to be able to understand behavioural responses to market and policy instruments. This paper contributes to that by suggesting that the focus of current risk analysis and management studies may be too narrowly focused at the farm level.

Productivity, Price- and Wage-Markups: An Empirical Analysis of the Dutch Manufacturing Industry

This paper examines the interaction between productivity growth, firms’ monopolistic market power, and workers’ wage bargaining power. Our study contributes to several strands of literatures. First, we examine a monopolistic framework which accounts for wage bargaining. In addition to the other studies, along with the parameters characterizing a production function and the price-cost margins, we derive a measure of wage markup without relying on trade union participation data, and we study the correlation of the estimated parameters and markups with the firm-level productivity growth. Second, the paper contributes to literature on the structural identification of production functions in two ways. As a first step, it reviews the different estimation techniques that have been tackling the endogeneity issues concerning the simultaneity, the omitted output price, and the collinearity among input factors of production. Additionally, we propose an identification strategy that relies on the presence of imperfect competition in the flexible input market, namely, the labor market.