Experts Matter. Find Yours.
Connect for media, speaking, professional opportunities & more.
Brexit caused a large negative effect on UK trade pre-pandemic - new Aston University research
Professor Jun Du and Dr Oleksandr Shepotylo analysed the causal effect of Brexit on the UK’s services trade between 2016 and 2019 They found the UK experienced an average shortfall of £18.5 billion worth of services exports for each of those years Transport, Travel, Insurance and Telecom sectors experienced significant decline post-2016 No significant decline was found in other services including intellectual property, construction and financial. New research from economics experts at Aston University has found Brexit has caused a largely negative effect on UK services trade since the EU referendum. Professor Jun Du and Dr Oleksandr Shepotylo, from Aston Business School, analysed the causal effect of the Brexit referendum on UK’s services trade over the period between 2016 and 2019, in comparison to other major services exporters. They found the uncertainty associated with the UK-EU trade negotiations following the referendum caused harms to the UK services economy as a whole, reducing firms’ exports of services. This damages the competitiveness of services sectors which make up a lion’s share of the UK economy in terms of gross output, value-added and jobs. Professor Du and Dr Shepotylo used a Synthetic Difference in Differences (SDID) estimator to construct a counterfactual of the UK, had it not voted leave in 2016, to compare its services exports performance. This was done by comparing the actual performance of the UK with the modelled performance of a country that looks much like the UK, but did not vote to leave the European Union. They found Brexit resulted in the UK experiencing an average shortfall of £18.5 billion worth of services exports every year between 2016 and 2019 relative to what it would have been, had the UK remained in the EU. The impact varied considerably between different types of services. The UK’s exports in the category of transport, travel, insurance and telecom services saw a statistically significant decline following the referendum. No significant decline was found in business, intellectual property, construction, financial or personal, cultural and recreational services. In addition, Professor Du and Dr Shepotylo did not find evidence to suggest that UK businesses have redirected exports in services from the EU markets to those outside the EU, which is in contrast to exports in goods. The research suggested that Ireland has benefited significantly during this period, with growth in post-Brexit services exports up by £24 billion annually over 2016 to 2019 in the country compared to the counterfactual scenario if Brexit did not occur. This translates to 14.75% of Ireland’s 2019 total services exports, with growth clustered largely in the telecoms, business, intellectual property, and insurance sectors. Jun Du, professor of economics at Aston Business School, said: “Brexit marked a rupture in the highly integrated UK-EU services markets that had been developed during the UK’s membership of the single market. However, the UK’s strength in services was not reflected in the government’s ambitions for the sector in the EU-UK trade negotiations that followed the referendum. “There are other winners besides Ireland in some post-Brexit services areas. The Netherlands have increased considerably in ‘Business’ and ‘Intellectual Property’ exports. “Spain has seen growth in ‘Travel and transport’ services exports. Germany has gained in ‘Transport’, ‘Insurance’, ‘Telecom’ and ‘Intellectual Property’ services exports. While Ireland seems to have done exceptionally well in relation to the export of ‘Telecom’ services, a sharp contrast emerges to the lost exports not just from the UK, but also from the Netherlands, Switzerland and France.” Dr Oleksandr Shepotylo, a senior lecturer in economics, finance and entrepreneurship at Aston University, co-wrote the working paper and said: “UK services exports are 5.7% lower than they would be without Brexit. It reflects an overall decline of the UK as a place for doing business. “What economists tend to agree on is that the UK’s exit from the EU’s custom union and single market may have more significant impacts on services than goods, and more severe impact on post-Brexit regulated services than unregulated services. “It will take some time for the full impact of Brexit on UK services to emerge. Freedom of movement and data flow in some areas between the UK and EU could remain restricted. Stability, transparency and regulatory consistency in financial markets could be challenged. But new opportunities might surface. “Continued trade negotiations and dialogues regarding trade liberalisation are essential with the EU and large, fast-growing markets beyond Europe. Crucial to understanding these impacts will be reliable data and rigorous analysis. Our modelling of marked losers and winners in post-Brexit services trade provides new evidence for an open discussion of the post-Brexit trade in services.” You can read the full working paper HERE
Environmental economics expert Dr Brock on COP26
A number of climate experts from the University of East Anglia will be available for interview during the COP26 climate conference in Glasgow. Their areas of expertise range from the impact of climate change on biodiversity, climate geoengineering and carbon removal, to the impact of climate change on sovereign credit ratings, carbon uptake by the oceans, and gender and climate change. Among them is Associate Professor in Microeconomics, Dr Mike Brock, from UEA's School of Economics. His research areas and expertise cover environmental and behavioural economics, recycling and environmental valuation. He explores how (and why) people behave in a more sustainable or environmental way. Particular projects include financial incentives to encourage recycling through lottery techniques and the use of competitive rankings on personal use of energy to stimulate energy reduction. Mike has also explored people’s behaviours towards wildlife – for example why people flock to see newly-identified species of birds and the environmental of that behaviour.
Economic benefits of hosting a sporting mega event are overestimated, new research finds
Experts from Aston University and New York University (NYU) studied how industrial firms in Beijing fared in the run-up to the 2008 Olympics Dr Johan Rewilak and Ted Hayduk (NYU) looked at whether industrial firms in Beijing disproportionately increased their investment ahead of the Games compared to similar Chinese firms The results are interesting for academics, policy makers, businesses and entrepreneurs. Economic experts from Aston University and New York University (NYU) have found that host cities do not receive any disproportionate economic benefits from hosting a sporting mega event. Dr Johan Rewilak from Aston Business School and Ted Hayduk (NYU) studied how industrial firms in Beijing fared in the run-up to the 2008 Summer Olympics. Most studies of this kind focus on the service sector, but this is one of the first examining industrial firms. They looked at whether industrial firms in Beijing disproportionately increased their investment ahead of the Games compared to similar Chinese firms, and explored how those firms compared when it came to profitability. The study found that hosting the 2008 Olympic Games did not provide disproportionate benefits in terms of capital investment or earnings relative to other comparable cities in China. Dr Johan Rewilak, lecturer in economics at Aston Business School, said: “One criticism of having cities host the Olympics is that it funnels public funds into a specific region or area of a country. However, our findings do not support that hypothesis. “Specifically, manufacturing firms in the host city did not receive greater economic benefits compared with firms in similar cities across China, and we found evidence that complements previous arguments that SMEs typically have limited to no disproportional positive impact on the local economy. Ted Hayduk, clinical assistant professor at New York University, said: “In terms of capital investment, we found that the host region had no differential effect for both the Summer and the Winter Games. Given that we found no significant result in 2008, it is somewhat unsurprising to find an insignificant result for the 2022 Winter Games. “This is because the budget for Beijing 2022 is only 10% of what was spent in 2008, and/or alternatively, as the necessary infrastructure has already been built, it has yet to depreciate sufficiently to warrant investment in its replacement.” You can find out more about the study HERE. You can also listen to Dr Rewilak on Aston University’s podcast series, EURO 2020: The Business and Science of Football. He joined journalist Steve Dyson, Dr Danny Fitzpatrick and Dr Robert Thomas to discuss the benefits of holding EURO 2020 across the continent, and whether it was likely to bring an economic spike in a world still living through Coronavirus.
UCI scholars discuss how 9/11 changed America
In recognition of the 20th anniversary of the Sept. 11, 2001, terrorist attacks in the U.S., we asked UCI scholars a single question: How did 9/11 change America? They responded according to their expertise – which ranges from collective trauma, media, air travel, foreign relations, false narratives, political divisiveness, and the war on terror. Contact Tom Vasich at 949-285-6455, tmvasich@uci.edu, to arrange interviews. Roxane Cohen Silver, Distinguished Professor of psychological science, public health and medicine E. Alison Holman, professor of nursing Topic: Media and collective trauma Quote: “The Sept. 11 terrorist attacks – which hijacked our television screens that Tuesday morning as people who sought to do us harm hijacked four airplanes – captured people’s attention throughout the days and weeks that followed. It also ushered in 24/7 media attention to what has become known as a “collective trauma,” transmitting the horrible events of that day throughout the country and, indeed, throughout the world in a matter of seconds. …The 9/11 attacks were tragic for American residents, but they also taught us that the media can broadcast distress alongside the news it’s covering.” Jan K. Brueckner, Distinguished Professor of economics Topic: Air travel Quote: “In response to the revenue shock of 9/11 and to new competition from low-cost carriers, the major airlines behaved conservatively in adding back capacity as traffic returned, so that the carriers eventually offered fewer seats to an ultimately larger number of passengers, leading to fuller flights and today’s less comfortable flying experience. Even though 9/11 is long past, the airline industry continues to operate in a climate of fear of terrorism from the air.” Erin Lockwood, assistant professor of political science Topic: U.S. foreign policy Quote: “The attacks – and the U.S. response – set in motion decades of war, anti-Arab and anti-Islamic bias and violence, and a willingness to sacrifice military and civilian lives and civil liberties for the perception of security. As we mark the withdrawal of U.S. forces from Afghanistan this month, it’s all too apparent that many of those trends continue to reverberate today.” David Kaye, clinical professor of law Topic: National security Quote: “Despite my hopes for something better that might emerge, the attacks reinforced a cult of national security that the United States transformed into the torture of terrorism suspects, drone warfare, the invasion of Iraq, Guantanamo Bay’s indefinite detentions, anti-Muslim discrimination at home and the emergence of the contemporary surveillance state. … The predominance of national security as an ideology and apologia remains among the most significant legacies of that day, a feature of American political life that continues to constrain creativity and a return to normalcy in American law and policy.” Matthew Beckmann, associate professor of political science Topic: War on terror Quote: “To understand the legacy of 9/11 is to define the legacy of George W. Bush. For after the deadliest terrorist attacks on U.S. soil in our nation’s history, American citizens and lawmakers gave President Bush broad support and broader authority to wage the “war on terror” as he saw fit. … Twenty years after the attacks, having seen those lofty aspirations dashed in Afghanistan and Iraq, disregarded in Guantanamo Bay and black site prisons, and discounted even by our staunchest allies, the biggest legacy of Sept. 11 for the United States is that the “shining city on a hill” has less luster and a shorter reach.” David Theo Goldberg, professor of comparative literature Topic: Rise of false narratives Quote: “The events of 9/11 lent themselves to make-believe. The smoke hadn’t yet cleared when conspiracies began to abound, from “weapons of mass destruction” to “the deep state.” That the Trump administration adopted this as its own playbook while insisting on “draining the swamp” required cooking the rules. … Fabrication had become the rule book of the game. Invention and inventedness, disruption and innovation fueled the movement. The “truth” was, well, oh so yesterday.”
There’s billions of dollars flowing into Georgia – and with that economic development, comes good paying jobs. It’s getting a lot of attention and that means news coverage on local, state and national levels. Recently, media have been looking for expert perspective and opinion on the economic boom – and to help with their questions, Georgia Southern University’s Michael Toma is the go-to expert for reporters looking to break down the investments, the opportunities and the jobs that are coming with them. The SK Battery America plant is, appropriately, located in the city of Commerce, Georgia. The $1.6 billion project – expected to employ 2,000 – was finalized in early January 2019, but without investment from the state and local government, it might not have been built in Georgia. "They were looking at several other states, especially in the southeastern U.S.," said John Scott, director of economic development for Jackson County. "When we were working with them the final two sites were between here and somewhere in Tennessee." … According to Michael Toma, Ph.D., Fuller E. Callaway Professor of Economics at Georgia Southern University, a new project creating 1,000 jobs can have a huge impact, while 500 jobs is a significant project for medium-sized cities. How good the jobs are is a matter of debate, although state and local officials emphasize that they look for jobs that pay well. July 27 – USA Today/Savannah Morning News If you’re a reporter looking to know more about why business is booming in Georgia – then let us help. Michael Toma, Ph.D., is Georgia Southern University's Fuller E. Callaway professor of economics and is available to speak with media about this topic – simply click on his icon to arrange an interview today.
UK inflation rate jumps to 2.1%: University of Warwick experts comment
The Office of National Statistics reports that the inflation rate in the UK has risen to 2.1%, passing the Bank of England target of 2%. Professor Abhinay Muthoo of the University of Warwick Department of Economics and Professor Nigel Driffield of Warwick Business School comment here on what factors could have caused this jump. Professor Abhinay Muthoo of the Department of Economics at the University of Warwick said: "Figures released by the UK’s Office for National Statistics (ONS) show UK inflation has jumped to 2.1% in the year to May. This means inflation is now above the Bank of England target of 2%. There is concern amongst some economists that inflation will rise further, and more importantly, that these higher levels of inflation are permanent. Hence, for example a call by some that the Bank of England should quickly raise interest rates. "I believe this higher than target inflation is very likely to be temporary. This current increase is driven by a few factors. One being a sudden and sharp increase in consumer spending as consumers are rushing to spend their savings from the past year of lockdown, and supply cannot, at the moment, keep up with that strong demand. I expect inflation to return to under Bank of England’s 2% target by around early next year." Professor Nigel Driffield of Warwick Business School said: “Supply of various goods and services is or has been constrained by Covid, and while many people have suffered financially because of Covid there is also a high level of pent up demand. This pertains not only to goods and services made here, but also imported. So for a while we are going to see pressure on inflation as the economy opens up.”
Queen's Speech: Measures to tackle obesity and food advertising bans
Two University of Warwick experts comment on measures to tackle obesity and food advertising that have been announced in the Queen’s Speech at the State Opening of the UK Parliament today. Dr Paul Coleman (pictured), from Warwick Medical School and the Warwick Obesity Network, said: We welcome the government's intention to tackle rising rates of obesity by restricting the advertising of products high in fat, sugar or salt (HFSS) shown on TV before 9pm and a total online advertising ban However, the government must focus on all forms on online advertising, not simply traditional commercials. This ban must cover online ‘advergames’, which encourage children to win points by placing branded food item in the mouth of children’s characters. These games are notoriously difficult for the government to regulate. While we also welcome the decision to incentivise individuals to both eat better and exercise more, the government must recognise that increased wages, rather than one-off payments, are needed to ensure all families can access healthy food For many families the main barrier in purchasing healthy food is cost, with families regularly limiting the amount of money spent on food to cover the cost of other essentials. All families require the financial means to purchase healthy food. We would like to see new targets to end household food insecurity by the year 2030. Dr Thijs van Rens of the University of Warwick Department of Economics and the Warwick Obesity Network, said: Required calorie labelling for large out-of-home businesses is a welcome start to address the restaurant and take-away sector, where many people get a large and increasing share of their food. A ban on "junk food" advertising on TV and online is long overdue. While we welcome the government renewed commitment to announce a ban on advertising, it is now time to take action. We are still waiting on the government to publish the result of its consultation on this matter, which was announced in November of last year. In the meantime, overweight and obesity are set to overtake smoking as the biggest cause of preventable death in the UK. Overweight is the silent killer that we can do something about, just as deadly as Covid-19 and much more under our control. Advertising is one of the elements of an environment that nudges, forces and tricks parents and children into buying and consuming food that makes them unhealthy, overweight and eventually kills them. Effective action against HFSS food advertising means banning advertising anywhere where children are likely to see it, which means both on telly and online
News of the newly proposed European Super League has left a storm of concern, criticism, threats and even political intervention in its wake. The announcement of a mid-week league consisting of a dozen of the top-tiered clubs from across Britain and Europe would rival the popular UEFA Champions League. No doubt, more football to watch is good for fans, and for club owners – but the backlash has been harsh from other stakeholders and teams left on the sidelines. The media coverage has been intense. Meanwhile, UK Prime Minister Boris Johnson met with the Football Association, Premier League officials and fans' representatives on Tuesday, after which the government said it will take "whatever action necessary", including legislative options, to ensure the proposals were stopped. Downing Street added: "No action is off the table." In other developments: Uefa president Aleksander Ceferin called on the English clubs to "come to your senses" Everton criticised the "preposterous arrogance" of the clubs involved Real Madrid president Florentino Perez said that the new league was needed to "save football" The proposed tournament would see teams play one another in midweek games in an attempt to have more matches between the big-name clubs. The other clubs involved are AC Milan, Atletico Madrid, Barcelona, Inter Milan, Juventus and Real Madrid. The plans have been heavily criticised by fans, pundits, football's governing bodies and members of the UK government. "It is our task to protect the European sport model. If some elect to go their own way, they must live with the consequences of their choices," said Infantino, the president of world football's governing body. "They are responsible for their choice completely. This means you are either in or you are out. You cannot be half in and half out." April 20 – BBC If you are a journalist covering this emerging story – then let us help with your questions by providing expert opinion, perspective, and analysis. Peter Dawson from the University of East Anglia is a Professor of Economics and an expert in sports economics. Peter is available to speak with media about this topic – simply click on his icon now to arrange an interview today.
Why customers hold the key to a company’s true valuation
When determining a fair valuation for a company—especially in anticipation of an initial public offering (IPO)—investors often rely heavily on “top down” approaches focusing primarily on traditional financial measures to do so. But what if this approach doesn’t paint the full picture? Daniel McCarthy, assistant professor of marketing at Emory’s Goizueta Business School, is building the case that augmenting traditional data sources with customer behavior data gives investors a more accurate company valuation. For the past several years, McCarthy and Peter Fader, professor of marketing at the Wharton School of the University of Pennsylvania, have worked to refine a customer-driven investment methodology they created. “Customer-based corporate valuation (CBCV) simply brings more focus to how individual customer behavior drives the top line,” they explained in “How to Value a Company by Analyzing Its Customers,” an article published in the Harvard Business Review (HBR) earlier this year. “This approach is driving a meaningful shift away from the common but dangerous mindset of ‘growth at all costs,’ towards revenue durability and unit economics—and bringing a much higher degree of precision, accountability, and diagnostic value to the new loyalty economy.” Fader, McCarthy’s PhD advisor while he was at Wharton, had done some of the seminal work on forecasting customer shopping/purchasing behaviors. This helped build baseline expertise for how one could go about the customer-level modeling. McCarthy recognized that this behavioral modeling could be put to good use in a financial setting, if done the right way. “There was this untapped source of intellectual property that’s been accumulating within marketing over the last 30 years,” McCarthy said. While other academics have done some conceptual work in the area, none, McCarthy noted, had done so in a way that was consistent with how financial professionals go about performing corporate valuation. McCarthy and Fader merged these well-validated customer-level models with standard corporate valuation methods, then put their resulting valuation tool head-to-head with alternative approaches. They found that their CBCV model subsequently outperformed. A full article on this subject is attached, within it, you will find key CBCV highlights such as: Using unit economics to more accurately predict revenue forecasts Gaining access to the right data The CBCV model is also good for managers and for customers Working to have publicly traded companies adopt CBCV McCarthy’s work on the CBCV methodology has earned him a number of awards, including the MSI Alden G. Clayton, American Statistical Association, INFORMS, and the Shankar-Spiegel dissertation awards. If you are a journalist covering this topic or if you want to learn more about this work or customer-based corporate valuation – then let our experts help. Daniel McCarthy is an Assistant Professor of Marketing at Emory University's Goizueta School of Business where his research specialty is the application of leading-edge statistical methodology to contemporary empirical marketing problems. If you are looking to contact Daniel – simply click on his icon now to arrange an interview today.
Heads up CFOs: The capital asset pricing model still rules
Firms invest in various things: bonds, stocks or other assets—new stores, new premises or even other firms. And they do so to earn maximum value from available cash that would otherwise be idle. For example, for the last five years Walmart generated an annual cash flow of more than $25 billion from its operations. The retailer has the option to channel this cash into opening new stores, ultimately growing its business and profits. Alternatively, Walmart can pay the cash out to its shareholders in the form of dividends, or through share repurchases. So far, it’s been productive. However, this win-win scenario is contingent on successfully navigating a number of complexities. Primary among these is that to invest optimally, you first need to determine the correct hurdle rate for that investment. Hurdle rates are the minimum rates of return that firms seek on their investments. The hurdle rate is the appropriate compensation commensurate with the investments’ risk. Therefore, the higher the risk, the higher the hurdle rate needs to be. For instance, a hurdle rate of 10% means that for every $100 invested, you would expect to earn an average of $10 average per year. But it’s tricky. You have to calculate the right hurdle rate that would add the most value for your shareholders—the optimal rate of return for you and your business. Too high and there’s risk of missing out on a good investment. If your right hurdle rate is 10%, but you mistakenly opt for 15%, you’re likely to ignore any investment that is projected to earn you less than 15%, but more than 10% is likely to be missed. As a result, you’ll end up leaving money on the table. Too low a hurdle rate and you’re in danger of burning money. Again, supposing your hurdle rate should be 10%, but you set it at 5%, you’re likely to end up investing in things with a suboptimal return. In the end, you’re wasting your cash on low value investments when you could be paying it directly to your shareholders in dividends and giving them the chance to earn 10% return on their own. For the last 50 years, the financial world has built models to calculate hurdle rates and rates of return. But which one works best? Shedding critical new light on this is a recently published paper by Narasimhan Jegadeesh, Dean’s Distinguished Chair of Finance at Goizueta, entitled “Empirical tests of asset pricing models with individual assets.” Jegadeesh and his co-authors developed new statistical methods to differentiate among a raft of new models that have been developed in recent years and to compare their efficacy to that of the Capital Asset Pricing Model (CAPM), a model introduced in the 1960s. What they found is that none of the newer models work any better than the CAPM in determining the appropriate hurdle rate or rate of return of an asset. That paper is attached and is required reading for CFOs and anyone interested in the Capital Asset Pricing Model. If you are looking to know more, or if you are a journalist interested in covering this important aspect of business and investing – then let our experts help. Narasimhan Jegadeesh is Dean’s Distinguished Chair of Finance at Goizueta. He is a renowned expert in this field and has been published extensively in the Journal of Finance, the Journal of Financial Economics, the Review of Financial Studies and other leading academic finance journals. His research has been discussed in several publications including Businessweek, The Economist, Forbes, Kiplinger's Personal Investments, Money, New York Times, and Smart Money.
