Abstract
Details
Keywords
Andreas G. Merikas and Anna A. Merika
This is a research paper aiming to re‐examine Fama's proxy hypothesis which states that inflation is negatively related to real economic activity and the negative relationship…
Abstract
Purpose
This is a research paper aiming to re‐examine Fama's proxy hypothesis which states that inflation is negatively related to real economic activity and the negative relationship between stock returns and inflation reflects the positive impact of real variables on stock returns.
Design/methodology/approach
Two issues are addressed, first if there is a relationship between the real and financial sectors and once this is established the next step is to investigate the type of relationship present. The study uses annual data covering the years 1960‐2000, on the German economy, and builds a VAR model to test the hypothesis of the negative impact of real economic activity on stock returns.
Findings
The findings suggest that in Germany employment growth has a negative effect on stock returns and influences positively inflation. The rational lies in the fact that employment growth forecasts inflation which is expected to erode firm's profits. This is expressed through falling stock returns.
Research limitations/implications
Germany is the largest economy in the European Union, the findings suggest that over the period under examination, the economy operated close to its potential level of output and this has implications for policy formulation. It would have been of interest to use quarterly data, so that the unification factor could be tested. More case studies to this direction should be undertaken.
Originality/value
It adds to the understanding and knowledge on a debate that is as current as ever from the point of view of the macroeconomist as well as the politician.
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Andreas Andrikopoulos, Andreas Georgakopoulos, Anna Merika and Andreas Merikas
This paper aims to explore the effect of interlocking directorates on agency conflicts and corporate performance in the shipping industry.
Abstract
Purpose
This paper aims to explore the effect of interlocking directorates on agency conflicts and corporate performance in the shipping industry.
Design/methodology/approach
The authors use social network analysis to discover central nodes in the network of personal and corporate connections in an international sample of 110 listed shipping companies.
Findings
Assessing network structure, the authors find that the network of corporate leaders is denser than the network of shipping companies. The network of shipping companies is populated with many isolated nodes; the network of shipping executives and directors is populated with many cohesive groups in which the longest distance between two corporate leaders is two companies. The authors find that interlocking corporate leadership can help resolve agency conflicts in the shipping industry, bearing a negative effect on the magnitude of agency costs. The extent of leadership overlaps is associated with board size, financial leverage and profitability. The relationship between profits and interlocks is bidirectional, implying that interlocking directorates bear a positive effect on asset returns.
Originality/value
The authors map the relational structures in the social networks of companies and company leaders in the shipping industry and discover the cross-sectional determinants of interlocks in the shipping industry. The finding about the effect of interlocks on profitability and agency costs bears policy implications for the design of corporate governance in the shipping industry.