Vol. 3, No. 4, December 2019

posted in: Volumes 2019 | 0

Editor-in-chief: Prof. Johannes Platje

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Vol. 3, No. 4, 7-51, December 2019

Do mergers and acquisitions increase default risk? Evidence from the European market

Authors: Wolfgang BESSLER, Hidde STEENBEEK, Wim WESTERMAN, University of Groningen, The Netherlands

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Aim: In this study, we examine the changes in default risk of the bidder over the course of a merger or acquisition. The data set consists of 531 deals in which the acquirers are European firms. We employ a general set of determinants to analyse the change in default risk and extend the literature by providing new empirical evidence for the European capital market.

Research design: Abnormal returns are analysed to provide preliminary insights into the merger induced valuation effects. All hypothesized relationships on the changes in default risk are tested via a regression analyses. We differentiate these results further by analysing which factors determine the increase in default risk.

Findings: Previous research on this issue reported mixed results. The main finding of our empirical analysis is that, on average, mergers and acquisitions of European bidders significantly increase default risk during the post-merger period.

Originality: This study adds to the mergers and acquisitions literature for European bidders and targets. The empirical findings suggest that some observed relationships and determinants are different in Europe than in the United States.

Implications: This research introduces a default risk model that could be applied to predict bidder performance subsequent to a merger or acquisition by analysing possible changes in default risk of the bidder. It also provides some possible explanations for the average increase in default risk. This study may help practitioners to better assess the potential risks when acquiring other firms.

Key words: mergers & acquisitions, abnormal returns, default risk, Europe

JEL: G32, G34

DOI: http://dx.10.29015/cerem.861


Vol. 3, No. 4, 53-89, December 2019

The Islamic economy: its origin, its world view and its claims

Author: Hans VISSER
Vrije Universiteit Amsterdam, The Netherlands

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Aim: This article takes a critical look at the claims made by advocates of an Islamic economy, in particular that it differs fundamentally from capitalism and socialism because it is built “on a superior ethical basis. The aim is to find out whether this claim can be creditably sustained and why it is made.

Design: The world view behind the Islamic economy is probed into by means of a literature study encompassing publications by prominent students of Islam and Islamic economics, predominantly themselves Muslims, which have appeared in a wide range of professional books, magazines and paper series.

Conclusions: It is concluded that an Islamic economic system does not differ fundamentally from mixed-economy non-Islamic ones and that there is little reason for non-Muslims to accord Islamic ethics special status. Further, it is found that important drivers of the attempts to Islamize the economy are frustration about the sorrow state of the Islamic world at least since the early nineteenth century and a wish to regain something of its former glory. In other words, identity politics is at play. There may an element of subjectivity in this conclusion, as it depends on interpretations that are hard to prove or disprove conclusively, but statements by leading Muslim advocates of Islam economists give it weight. The conclusion may help to interpret developments in the Muslim world, which is an indispensable step in finding a way to deal with them.

Key words: Relation of Economics to Social Values, History of Economic Thought since 1925, Financial Economics, Monetary Systems, Financial Institutions and Services, Comparative Financial Markets and Institutions, Comparative Economic Systems, Religion)

JEL: A13, B26, E42, G20, N20, P50, Z12

DOI: http://dx.doi.org/ 10.29015/cerem.765


Vol. 3, No. 4, 91-102, December 2019

Teaching and mindsets regarding sustainable development – a Mexican case study

Authors: David S. ZEPEDA QUINTANA, Javier ESQUER, Carlos ANAYA
University of Sonora, México

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Aim: The world has become increasingly interconnected and complex, posing serious challenges to sustainable development, which may be easily ignored as they are often of a low probability nature. This creates the need to identify and deal with these challenges. This research aims to identify if teaching interventions, applied to engineering students, produces changes in students’ perceptions and mindset about business sustainability and sustainable development and, as consequence, support the creation of necessary cognitive capabilities for dealing with complex problems.

Design / Research methods: Questionnaires were applied in a Mexican university to students of a course in sustainable development. The experiment consists of three phases: (1) a pre-test (n=337), (2) intervention and (3) a post-test (n=329) in order to assess the differences after the interventions.

Conclusions / findings: Changes in the students’ perception were observed. While this on the one hand shows that teaching supports the creation of students’ cognitive capabilities necessary to contribute to business sustainability, effects may also be contrary to what was intended. The results must be threated carefully; nevertheless, they provide the basis for further research.

Originality / value of the article: This paper provides a new perspective on the conditions for teaching sustainable development and sustainable business. It presents a case study on the development of students’ awareness of and capacities to solve the complex problems of sustainable development

Keywords: Sustainable development, complexity, teaching interventions, education for sustainable development, functional stupidity

JEL: Q01, D81, A20

DOI: http://dx.doi.org/10.29015/cerem.860


Vol. 3, No. 4, 103-111, December 2019

Sustainability of the Bulgarian food processing industry

Authors: Nadka KOSTADINOVA, Nadezhda PETROVA, Georgi ALEKSIEV
Trakia University, Stara Zagora, Bulgaria

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Aim: The Bulgarian agricultural sector underwent a transformation during the last decade of the 20th century, reducing its economic importance. After accessing the European Union in 2007, Bulgarian producers gained access to this market and reoriented their production. This created important challenges in the supply chain. The aim of this article is to investigate the sustainability of the functioning and development of the food processing industry in Bulgaria. In order to achieve this goal, the following issues are addressed: the state and development of the Bulgarian food industry, the problems and prospects for its sustainable functioning.

Design / Research methods: The methods used to solve the tasks are: analysis and synthesis, systematic and structural approach, statistical calculations.

Conclusion / findings: While the Bulgarian food processing industry is developing seems to be more sustainable that other industries, scale enlargement and intensification take place. Besides positive and negative tendencies, the authors identify recommendations to foster sustainable development of the industry.

Originality / value of the article: The prospects for the sustainable development of the food processing industry are important for the opportunities for development of foreign markets as a result of the liberalization and globalization of trade, as well as the preservation of the position of the industry in the national market.

Keywords: sustainable development, processing industry, economic relevance

JEL: Q13, Q18, Q57

DOI: http://dx.10.29015/cerem.745


Vol. 3, No. 4, 113-134, December 2019

The impact of inflation on the cost of adjustable-rate mortgages

Author: Tomasz MUSIAŁOWSKI
Wrocław University of Economics, Poland

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Aim: To assess how inflation affects the cost of adjustable-rate mortgage from the perspective of personal finances.

Design / Research methods: Adjustable-Rate Mortgage simulations were carried out, showing both the nominal and real costs of a mortgage loan. The behavior and the relationship between the inflation rate and WIBOR 3M rate were compared.

Conclusions / findings: The analysis shows that the real cost of mortgage decreases with an increase in inflation. During the period under review, inflation declined, reducing both the real and nominal cost of the loan. There was a strong positive correlation between the WIBOR 3M rate and the inflation rate. Equally strong, although a negative correlation was observed between the inflation rate and the real interest rate. With the decline in inflation, real mortgage rates increased, and vice versa. Particular attention was paid to the periods in which inflation was rising. WIBOR 3M rate reacted to this increase to a much lesser extent and with a lag compared to the inflation rate.

Originality / value of the article: Considering that forecasts presented by the National Bank of Poland predict inflation growth in the coming years, a thorough examination of the inflation impact on the mortgage costs is an important issue for risk management in households with mortgage.

Key words: inflation, adjustable- rate mortgage, debt management, personal finance

JEL: D140

DOI: http://dx.doi.org/10.29015/cerem.356


Vol. 3, No.4, 135-147, December 2019

The impact of foreign trade on the Netherlands’ real CO2 emissions

Author: Bartosz FORTUŃSKI
University of Opole, Poland

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Aim: CO2 emissions and the related climate change are a global problem, where the direct impact of actions of individual countries depends on their total share in CO2 emissions. In order to assess the potential for policy measures, the openness of an economy, and the related import and export and their impacts on emissions should be considered. The aim of this paper is the attempt to show the real CO2 emissions of the Netherlands as well as the impact of its trade on CO2 emissions in other countries in the world and in the EU in 2015.

Design / Research methods: This study was conducted on the group of countries that are the major emitters of CO2 in the world including most of the EU members. Countries with negligible CO2 emissions were omitted. Actual CO2 emissions were obtained by applying the actual emission factor. This takes into account the transfer of CO2 in export products and services as well as those imported by particular countries.

Conclusions / findings: The real CO2 emissions in the Netherlands are significantly different from the gross values, which represent the CO2 emissions in the particular countries. It is also important to indicate that isolated actions of a single country within the European Union itself do not deliver the intended global and regional target – significant CO2 emissions reduction. The approach proposed in this study, when applied, may have serious implications for individual EU member states in implementing their energy policy objectives.

Originality / value of the article: The article shows a different approach to the issue of CO2 emission, including the importance of international trade in a globalizing world.

Keywords: EU energy policy, CO2 emissions, exports and imports, the Netherlands, climate policy

JEL: Q37, Q40, Q53, Q56

DOI: http://dx.doi.org/10.29015/cerem.780


Vol. 3, No. 4, 149-183, December 2019

Towards a Sustainable Circular Economy – Remarks on plastics and wood-waste sector

Author: Markus WILL
University of Applied Sciences Zittau/Görlitz, Germany

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Aim: As the traditional approach towards entering a path of sustainable development based on a “efficiency, consistency, sufficiency approach” is questionable, This article discusses opportunities and challenges for the circular economy to become a “last chance” for the current capitalistic and market based system to become more sustainable.

Design / Research methods: Two case studies of material (waste) streams of plastics and wood-waste are presented in order to identify challenges in the development and functioning of the circular economy.

Conclusions / findings: While the circular economy can deal with threats to sustainability embraced in an efficiency and sufficiency approach, it refers to a technology-driven consistency approach, not questioning the consumption and production patterns in the capitalist economy, and the functioning of the market economy as such.

Key words: Circular economy, recycling, sustainability

JEL: Q53, Q56

DOI: http://dx.10.29015/cerem.862