Ekonomika 2021-11-29T12:21:26+00:00 Vincentas Giedraitis Open Journal Systems <p>Founded in 1960 and dedicated to analysing the issues in the current economy, sectoral situation and development of business development strategies for local and foreign markets in the context of Central and Eastern European economic development. Indexed in the <em>Scopus</em> (Q4) database since 2020.&nbsp;</p> The Impact of Environmental, Social, and Governance (ESG) Performance on Financial Reporting Quality: International Evidence 2021-11-29T12:21:26+00:00 Yasin Şeker Evren Dilek Şengür <p>This study investigates the relationship between environmental, social, and governance (ESG) performance and financial reporting quality (FRQ) through the use of data from Datastream, Refinitive Eikon and ASSET4 databases. The initial sample of the study covers all available firms in ASSET4. After eliminating firms with missing data, the final sample of the study consists of 16,072 firm-year observations from 35 countries, covering the years from 2010 to 2017. Several FRQ proxies and firms’ ESG performance indicators are used in the study. The panel regression findings reveal that firms’ ESG performance has a positive impact on FRQ. In other words, it has been found that improving the ESG performance of firms yields higher FRQs. As for ESG pillars, this study finds a positive and statistically significant relationship between FRQ and environmental and governance pillars. The study extends the literature by providing international evidence not only about the aggregate effects of firms’ ESG performance on FRQ but also the effects of each of the three ESG pillars on FRQ.</p> 2021-11-25T06:44:46+00:00 Copyright (c) 2021 Yasin Seker | Evren Dilek Şengür About the Calculation of the Compliance Value and its Practical Relevance 2021-11-17T09:30:17+00:00 Hans-Ulrich Westhausen <p>Corporate investment in compliance in general and compliance management systems (CMS) in particular, follow the cardinal management obligation to always obey the law (so-called “management duty to legality”). But does the compliance function as any other corporate investment really add value favoring all shareholders? The socially desired answer should be probably “yes”, but the business reality shows a different picture: the measurement of the compliance value is a “blind spot” in the scientific theory and research as well as in the corporate practice. This paper analyzes reasons for that “blind spot” and explores the systematization of the compliance value drivers setting up a practical model that monetarizes these effects as well as calculating the added value and ROI of compliance. The author concludes that this quantification is particularly relevant to practice, as the compliance function must be able to measure the quantified impact(s) of the compliance function in order to demonstrate its value to management, shareholders, as well as all interested parties, and to justify and strengthen its role increasing the effectiveness of the CMS as part of the company’s “second line of defense”.</p> 2021-11-17T06:45:15+00:00 Copyright (c) 2021 Hans-Ulrich Westhausen Editorial Board and Table of Contents 2021-11-29T12:18:08+00:00 Algirdas Miškinis 2021-11-17T00:00:00+00:00 Copyright (c) 2021 Authors Author Guidelines and Bibliographical Data 2021-11-29T12:20:40+00:00 Algirdas Miškinis 2021-11-17T00:00:00+00:00 Copyright (c) 2021 Authors The Symmetric and Asymmetric Time-Varying Causality Relationships Between the COVID-19 Outbreak and the Stock Exchange: The Case of Selected Countries 2021-10-21T09:29:30+00:00 Cuma Demirtaş Munise Ilıkkan Özgür Esra Soyu <p>In this study, the effects of COVID-19 (mortality rate, case rate, and bed capacity) on the stock market was examined within the framework of the efficient market hypothesis. Unlike other studies in the literature, we used the variable of bed capacity besides the mortality rate and case rate variables. The relationship between the mentioned variables, using daily data between December 31 of 2019 and November 10 of 2020, has been analyzed with time-varying symmetric and asymmetric causality tests for China, Germany, the USA, and India. Considering that the responses to positive and negative shocks during the pandemic process may be different and that the results may change depending on time, time-varying symmetric and asymmetric causality tests were used. According to the time-varying symmetric causality test, stock markets in all countries were affected in the period when the cases first appeared. A causal relationship between COVID-19 and country stock markets was found. The results showed that the effects of the case rate and bed capacity on the stock market occurred around the same time in Germany and the United States; however, these dates differed in China and India. According to time-varying asymmetric causality test findings, the asymmetric effect of the pandemic on the stock market in countries emerged during the second wave. The findings showed that the period during which positive and negative information about the pandemic intensified coincided with the period during which the second wave occurred; besides, the results show the effect of this information on the stock market differed as positive and negative shocks.</p> 2021-10-21T07:49:21+00:00 Copyright (c) 2021 Cuma Demirtaş | Munise Ilıkkan Özgür | Esra Soyu Poverty Dynamics in Turkey: A Multinomial Logit Model 2021-10-14T09:29:14+00:00 Senem Çakmak Şahin İbrahim Engin Kılıç <p>The availability of longitudinal data allows researchers to analyse the dynamics of poverty. By using the Turkish Statistical Institute’s (TurkStat) Income and Living Conditions Survey micro dataset, we analyse the households’ long-term monetary poverty conditions. We categorise poverty as transitory and chronic and employ the multinomial logit method to analyse determinants of each types of poverty. Results indicate that education and household size are the most effective factors for reducing transitory poverty, and for chronic poverty, the most effective factors are having a regular job and having a skilled occupation; insurance, home ownership, and number of children are important determinants for both types of poverty.</p> 2021-10-13T13:34:18+00:00 Copyright (c) 2021 Senem Çakmak Şahin | İbrahim Engin Kılıç Evaluation of Stackelberg Leader-Follower Interaction Between Policymakers in Small Open Economies 2021-10-09T09:29:06+00:00 Metin Tetik Reşat Ceylan <p>The problem of coordination between policymakers seems to have created fundamental problems related to economic and social costs, targeted inflation, potential growth, and a high budget deficit. To resolve these problems in this framework, it is important to see the results of the interaction between policymakers and to propose an optimal policy strategy. In this study, the interactions between monetary and fiscal policymakers are examined game theoretically within the framework of the New Keynesian model. The strategic interaction between these policymakers is assessed using the DSGE (Dynamic Stochastic General Equilibrium) model for a small open economy. From this point of view, the interaction between policymakers is assessed within the framework of hypothetical scenarios. The optimal monetary and fiscal policies for a small open economy are derived from the leader-follower mechanism solution known as the Stackelberg solution. Optimal Stackelberg policy rules derived for a small open economy contribute to the literature of economics. The performance of the game theoretically derived optimal policy rules is evaluated through dynamic simulation within the framework of counterfactual experiments. The parameters developed for the model are calibrated for the Turkish economy. Dynamic simulation of the models, the impulse response functions, and the social loss analysis shows that the optimal policy mix for the Turkish economy is when the monetary policymaker is the leader, and the fiscal policymaker is the follower.</p> 2021-10-08T11:04:50+00:00 Copyright (c) 2021 Metin Tetik | Reşat Ceylan Estimates Of Russia’s Potential Output 2021-10-09T09:29:07+00:00 Martin Janíčko Petr Maleček Pavel Janíčko <p>Taking into consideration the specifics of the Russian economy such as dependency on oil and gas drilling &amp; production, and including the current context of the Western sanctions, COVID-19 pandemic, as well as somewhat idiosyncratic potential output development, the main aim of this paper is to quantify recent output gap for Russia. We use three mainstream methodologies: the Hodrick-Prescott filter as a benchmark, the Kalman filter to follow, and the Cobb-Douglas production function. The sample time span ranges from 1995Q1 until 2020Q3, while all calculations are performed on quarterly frequencies. The analysis suggests that given low fixed investment ratios, limited R&amp;D spending in non-military sectors, and adverse demographic development, under a “no policy change” scenario there might soon be even more downward pressures on the country’s potential output growth, and the economy may continue increasing only at a snail’s pace even after a possible withdrawal of the Western sanctions and the end of the COVID-19 pandemic.</p> 2021-10-08T10:56:26+00:00 Copyright (c) 2021 Martin Janíčko | Petr Maleček | Pavel Janíčko Fiscal Policy as a Solution to Involuntary Unemployment 2021-10-09T09:29:09+00:00 Yasuhito Tanaka <p>We show the existence of involuntary unemployment based on consumers’ utility maximization and firms’ profit maximization behavior under monopolistic competition with increasing, decreasing or constant returns to scale technology using a three-periods overlapping generations (OLG) model with a childhood period as well as younger and older periods, and pay-as-you-go pension for the older generation, and we analyze the effects of fiscal policy financed by tax and budget deficit (or seigniorage) to achieve full-employment under a situation with involuntary unemployment. Under constant prices we show the following results. 1) If the realization of full employment will increase consumers’ disposable income, in order to achieve full-employment from a state with involuntary unemployment, we need budget deficit (Proposition 1). 2) If the full-employment state has been achieved, we need balanced budget to maintain full-employment (Proposition 2). We also consider fiscal policy under inflation or deflation. Additionally, we present a game-theoretic interpretation of involuntary unemployment and full-employment. We also argue that if full employment should be achieved in equilibrium, the instability of equilibrium can be considered to be the cause of involuntary unemployment.</p> 2021-10-08T10:47:53+00:00 Copyright (c) 2021 Yasuhito Tanaka Financial Innovation and Technology after COVID-19: a few Directions for Policy Makers and Regulators in the View of Old and New Disruptors 2021-10-09T09:29:11+00:00 Maurizio Pompella Lorenzo Costantino <p>Innovation and technology have led to the redefinition of business models and development of new ones in many bricks and mortar sectors.&nbsp; Similarly, blockchain and fintech have impacted the finance and banking industries and are expected to further affect them in the future, leading some media to coin the expression “Uberization of banking”.&nbsp; The authors extrapolate from sharing economy models to conclude that while blockchain and fintech are poised to advance finance and banking, there are no disruptive features that corroborate the term.&nbsp; By analogy and successive approximations, this article identifies the limitations of the arguments for disruption in finance and banking.&nbsp; Besides, hinging upon stylized facts, the article establishes similarities with sharing economy models to identify potential threats stemming from financial innovations such as Tokenomics, tagged as “no-ABSs”.&nbsp; Eventually, the authors identify entry points and ways forward arising from the COVID-19 pandemic for policy makers and regulators to regain their pivotal role in policing the market and ensuring transparency while driving innovation.</p> 2021-10-08T10:37:36+00:00 Copyright (c) 2021 Maurizio Pompella | Lorenzo Costantino