re examination of uniform commodity taxes under a non linear income tax system and its implication for production efficiency abstract this paper shows that the result of uniform commodity tax under nonlinear income taxation by atkinson and stiglitz 1976 no longer holds if the production side of an economy is taken into the consideration in particular imposing a non uniform commodity tax can pareto improve welfare even under nonlinear income taxation in addition the paper shows that if the government uses a nonlinear income tax system for income redistribution then the introduction of distortions in the public sector can pareto improve welfare contrary to the results in diamond and mirrlees 1971

operating flexibility global manufacturing and the option value of a multinational network the multinational corporation is a network of activities located in different countries the value of this network derives from the opportunity to benefit from uncertainty through the coordination of subsidiaries which are geographically dispersed we model this coordination as the operating flexibility to shift production between two manufacturing plants located in different countries a stochastic dynamic programming model treats explicitly this flexibility as equivalent to owning an option the value of which is dependent upon the real exchange rate the model is extended to analyze hysteresis effects and within country growth options we show that the management of across border coordination has led to changes in the heuristic rules used for performance evaluation and transfer pricing

the interplay of national distances and regional networks private equity investments in emerging markets integrating social network theory with the literature on national distance we examine how the investment strategy followed by a private equity pe firm in an emerging market is affected by the interplay between two important types of national distances institutional and geographic and the firm s centrality in the regional syndication network covering over 5 000 investment transactions we use a dataset of more than 500 pe firms based in both developed and emerging markets targeting three emerging market regions latin america southeast asia and eastern europe from 1996 to 2011 the results show that depending on the level of centrality of pe firms in regional syndication networks institutional and geographic distances can have differing effects both in magnitude and direction on their investment strategies in emerging markets moreover these effects are contingent on whether the pe firm is from a developed market or an emerging market we conclude that different types of national distances can operate in dissimilar ways depending on 1 firm level factors defined at the regional level such as centrality in the regional syndication network and 2 the developed market or emerging market nature of the pe firm

angel investors around the world we document that the choice between disintermediated individual angel investments and intermediated private equity and venture capital investments depends on legal economic and cultural differences we find evidence of this using pitchbook s comprehensive data on more than 5000 angel and 80 000 private equity and venture capital investments in 96 countries from 1977 to 2012 the data further indicate that investee firms funded by angels are less likely to successfully exit through either an ipo or an acquisition these findings are robust to propensity score matching methods as well as to clustering standard errors and excluding u s observations among other approaches

the kogut and singh national cultural distance index time to start using it as a springboard rather than a crutch this counterpoint investigates the continued relevance of the 30 year old kogut and singh ks index of cultural distance ks was a seminal contribution highlighting the relevance of cultural differences in ib however since then simplistic replications of the original arguments and index have prevented us from progressing towards a better understanding of how cross national differences matter we discuss the mechanisms underlying the construct and how they relate to the algorithm data and its critiques we call for more theoretically informed approaches highlighting the underlying mechanisms and specifying which data and algorithms best capture those mechanisms in each research context

national and organizational culture differences and international joint venture performance this study examines the effect of dimensions of national and organizational culture differences on international joint venture ijv performance based on data from a survey of executives from joint ventures between indian partners and partners from other countries we found that the presumed negative effect from culture distance on ijv performance originates more from differences in organizational culture than from differences in national culture

optimal commodity taxation and tax reform under unemployment this paper derives the optimal commodity tax formula and the tax reform rule which should be used in a situation of orthodox keynesian unemployment the setting considered is a four good one individual model with fixed real wage implying an excess supply of labor the presentation is very simple and based on intuitive and graphical arguments the emphasis is on comparing our results with the more traditional results derived under full employment

legal protection corruption and private equity returns in asia this article examines how private equity returns in asia are related to levels of legal protection and corruption we utilize a unique data set comprising over 750 returns to private equity transactions across 20 developing and developed countries in asia the data indicate that legal protections are an important determinant of private equity returns in asia but also that private equity managers are able to mitigate the potential for corruption the quality of legal system including legal protections is positively related to returns inefficient legal protections negatively impact transaction structures and economic certainty when exiting investments we also find that private equity managers irrespective of the quality of legal system they are operating within can mitigate the potential impact of corruption private equity returns are higher in countries with higher levels of corruption controlling for legal systems this finding is consistent with the view that private equity managers bring about organizational change to alleviate the costs of corruption our findings are robust to inclusion of controls for hofstede cultural variables economic conditions and transaction specific characteristics as well as consideration of econometric sample selection methods for unexited investments

balancing exploration and exploitation in alliance formation do firms balance exploration and exploitation in their alliance formation decisions and if so why and how we argue that absorptive capacity and organizational inertia impose conflicting pressure

on optimal non linear taxation and public good provision in an overlapping generations economy abstract using the self selection approach to tax analysis within an olg framework the paper examines optimal non linear labour and capital income taxation and the provision of a durable public good under endogenous wages the marginal tax rules depend on the influence of the tax instruments on self selection and on the income earning abilities of the households in particular we found that production inefficiency occurs in the model justifying capital income taxation for the public good the paper derives a dynamic analogue of the second best samuelson rule encompassing both inter and intragenerational redistributive considerations furthermore the usual conditions guaranteeing the efficiency of the first best samuelson rule are not sufficient in the present model

linguistic gender marking and its international business ramifications darwin 1859 considered language a form of memory that stores information in a genome like mode grammar according to cognitive science research boroditsky schmidt phillips 2003 impacts a speakers cognitive framework and mental representation of social reality gender is among the most stable grammatical features wichmann holman 2009 and comparing languages is valuable for understanding their social role corbett 2011 such research should have significant value for international business ib where national variations are of focal interest but where the study of linguistics has mostly been relegated to a subset of culture culture based research currently relies on aggregate values based measures of culture e g hofstede 1980 1998 hofstede hofstede minkov 2010 house hanges javidan dorfman gupta 2004 making it susceptible to endogeneity problems and contemporaneous to gender outcomes in contrast a language s grammatical structure is a stable feature inherited from the distant past unbiased by present social political and economic forces

foreign entry cultural barriers and learning this paper examines the longevity of foreign entries hypotheses are developed on the mode start ups vs acquisitions and ownership structure wholly owned vs joint ventures in relation to cultural distance the hypotheses are tested within a framework of organizational learning using data on 225 entries that 13 dutch firms carried out from 1966 onwards results show that the presence of cultural barriers punctuates an organization s learning cultural distance is a prominent factor in foreign entry whenever this involves another firm requiring the firm to engage in double layered acculturation we also identify locational paths of learning the longevity of acquisitions is positively influenced by prior entries of the firm in the same country similarly the longevity of foreign entries in which the firm has a majority stake improves whenever the expanding firm engaged in prior entries in the same country and in other countries in the same cultural block

do venture capital firms benefit from international syndicates this paper examines the benefits of syndicating with foreign venture capital vc firms for domestic vc firms in emerging markets we find that the vc firms that are domestic to their invested companies and previously syndicated with foreign partners invest proportionately more frequently in riskier ventures after gaining syndication experience with foreign vc firms a larger number of their portfolio companies are successfully exited thereby suggesting improved performance we hypothesize that this outcome is due to the organizational learning effects while the previous research has shown benefits for foreign vc firms our results show that domestic vc firms also benefit from international syndication through improved investments

mars venus marriages culture and cross border m a using a sample of over 800 cross border acquisitions during 1991 2004 we find that contrary to general perception cross border acquisitions perform better in the long run if the acquirer and the target come from countries that are culturally more disparate we use mainly the hofstede measure of cultural dimensions to measure cultural distance but also examine alternative proxies the positive relationship of performance to cultural distance persists after controlling for several deal specific variables and country level fixed effects and is robust to alternative specifications of long term performance cash and friendly acquisitions tend to perform better in the long run there is also some evidence of synergies when acquirers are from stronger economies relative to the targets

cross border venture capital investments the impact of foreignness on returns against the background of the growing internationalization of venture capital vc investing this is the first global comparison of the returns generated by individual domestic and cross border deals we examine investments worldwide during 1971 2009 and find that cross border investments significantly underperform compared with equivalent domestic investments returns are negatively affected by geographic distances cultural disparities and institutional differences between the home and host countries returns on cross border and domestic deals also decline after the late 1990s international portfolio diversification and the saturation of domestic markets may explain why vc investors make cross border investments despite poor expected returns

optimal redistribution when different workers are indistinguishable using the standard non linear income and commodity taxation framework this paper examines the optimal policy to be adopted when the same labor disutility can receive two opposite interpretations taste for leisure and activity limitation in the absence of complete information about individual characteristics an income tax does not allow to distinguish lazy from handicapped individuals one may however rely on a combination of commodity and income taxes to redistribute from the former to the latter when they differ in their preferences for commodities

venture capital investment cycles the impact of public markets abstract it is well documented that the venture capital industry is highly volatile and that much of this volatility is associated with shifting valuations and activity in public equity markets this paper examines how changes in public market signals affected venture capital investing between 1975 and 1998 we find that venture capitalists with the most industry experience increase their investments the most when public market signals become more favorable their reaction to an increase is greater than the reaction of venture capital organizations with relatively little industry experience and those with considerable experience but in other industries the increase in investment rates does not affect the success of these transactions adversely to a significant extent these findings are consistent with the view that venture capitalists rationally respond to attractive investment opportunities signaled by public market shifts

the effects of asset forfeiture on policing a panel approach i introduction asset forfeiture laws allow police and prosecutors to declare private assets forfeit to a government agency with judicial approval sometimes necessary asset forfeiture has grown rapidly in the united states with about 4 7 billion in deposits to federal forfeiture funds in 2012 and amounts likely in excess of a billion dollars directly seized by state and local government annually 1 many of the seizures are small especially at the state and local levels leading to increasing civil liberty concerns over the large numbers of individuals affected by forfeiture s wide reach at the same time proponents of forfeiture argue that it is a vital weapon in the war against crime and provides crucial funding for law enforcement the chief conditions for forfeiture at the federal level are that the assets have been used in or derived from a suspected criminal activity most states have adopted similar approaches however forfeiture is linked not to criminal activity generally but to particular types of crime especially drug related crime further and controversially police agencies often can retain the assets that they seize given the discretion inherent in policing and prosecutorial decisions this suggests that police arrest patterns may be influenced by the presence of asset forfeiture opportunities police may choose to focus more on forfeiture related arrests due to the income that they generate proponents of asset forfeiture argue that it provides an effective tool in the fight against drug crime and provides vital funding for fighting a broader range of crime critics argue that the use of asset forfeiture creates an intrusion upon civil liberties at odds with american tradition and the understanding of the ordinary citizen both proponents and critics often accept without question the idea that police retention of forfeit assets achieves its goals of encouraging additional arrests for drug crimes the dispute then centers on whether the benefits are worth the costs however the effectiveness of asset forfeiture is an empirical claim that must be judged against evidence we address the empirical questions directly does police access to forfeiture funds lead to greater policing of crimes not associated with forfeiture an income effect argument and does such access lead to changes in arrest patterns we demonstrate that police retention of funds does have statistically measurable effects on crime clearances and arrest patterns but that these effects are immaterial in economic terms section ii describes asset forfeiture and its institutional setting section iii explains the relationship of our work to the existing literature section iv provides our modeling of police agency behavior based on the institutional nature of policing and of forfeiture section v discusses the data and the testing approaches and section vi provides the results of our empirical analysis section vii provides a concluding assessment ii asset forfeiture asset forfeiture is a complex set of laws and practices here we explain the elements important to understanding our empirical research and its place in the broader controversies surrounding forfeiture american asset forfeiture occurs at the federal state and local levels and may be a criminal or a civil proceeding criminal asset forfeiture occurs when property used in the commission of a crime or property gained illegally through crime is forfeit to a government upon criminal conviction of the owner criminal asset forfeiture usually requires judicial due process and proof beyond reasonable doubt with respect to the underlying crime and a demonstration that the forfeit assets facilitated or were the fruits of that crime civil asset forfeiture includes non judicial summary and administrative actions as well as judicial civil seizures edgeworth 2008 summary actions involve property that has no lawful purpose contraband and in general lead to the destruction of the seized material

cultural differences and cross border venture capital syndication we examine cross border syndication in investments led by foreign venture capitalists vcs focusing on the potential correlation between cultural differences and the formation of vc syndicates contrary to the risk sharing motive we find that a greater cultural disparity between the countries of investors and their companies is actually associated with smaller vc syndicates this is driven largely by lesser local investor representation in foreign vc led syndicates however certain cultural disparity related syndication strategies such as the involvement of locally experienced foreign vcs or syndicate members from culturally similar countries are associated with greater presence of local vcs who provide valuable monitoring services we further show that these culture linked syndication approaches are significantly correlated with vc financing and monitoring strategies in cross border investments and their eventual success

finite sample bias in iv estimation of intertemporal labor supply models is the intertemporal substitution elasticity really small the empirical literature on intertemporal labor supply behavior documents that the intertemporal elasticity of substitution of labor supply is very low with a plausible range of zero to 0 2 drawing upon the literature on the distribution of instrumental variables iv estimators this paper demonstrates that this conventional wisdom is erroneous because it does not take into account the severe finite sample bias in these estimates that arise from weak instruments this paper adopts several approaches to adjust for the problems induced by these weak instruments the empirical results show that when uncorrected for finite sample bias the two stage least squares 2sls estimate of the elasticity is essentially zero as in most of the previous studies with its valid confidence interval being open ended however when corrected for finite sample bias the estimate becomes approximately 0 5 with a much tighter confidence interval

bureaucratic discretion or congressional control regulatory policymaking by the federal trade commission this paper extends stigler and peltzman s approach to regulation by incorporating a legislature the model yields comparative statics results and hence testable implications the paper then tests between two opposing approaches about regulatory agency behavior the first assumes agencies operate independently of the legislature and hence exercise discretion the second assumes that congress controls agency decisions the recent behavior of the federal trade commission provides the empirical setting substantial evidence is found for the specific predictions of the model including the hypothesis of systematic congressional influence over ftc decisions

explaining ijv survival in a transitional economy through social exchange and knowledge based perspectives in this study we combine social exchange and knowledge based perspectives to develop a general path model of ijv survival we further refine our expectations by considering the transitional economic context of our study and the somewhat unique managerial values resulting from the legacy of marxist ideology results from structural equation modeling suggest that an imbalance in the management control structure between the parents leads to parental conflict and an increased likelihood of ijv failure an imbalance in the ownership control structure however had no influence on conflict or survival in general support from the foreign parent is positively related to ijv learning and ijv survival however higher levels of technical support provided by the foreign parent to the ijv reduced the level of parental conflict whereas management support had no effect on conflict our results suggest some dilemmas for firms pursuing ijvs in transitional economies although the foreign parent often contributes critical resources to the ijv providing it with bargaining power and a high level of influence an imbalance in management control between the partners may ultimately be detrimental to ijv survival copyright 2000 john wiley sons ltd

individualism and stock price crash risk employing a sample of 26 473 firms across 42 countries from 1990 to 2013 we find that firms located in countries with higher individualism have higher stock price crash risk furthermore individualism can be transmitted by foreign investors from overseas markets to influence local firms crash risk and can exacerbate the impact of firm risk taking and earnings management on crash risk moreover the positive relation between individualism and crash risk is amplified during the global financial crisis and attenuated by enhanced country level financial information transparency and the adoption of international financial reporting standards

indivisible labor and the business cycle abstract a growth model with shocks to technology is studied labor is indivisible so all variability in hours worked is due to fluctuations in the number employed we find that unlike previous equilibrium models of the business cycle this economy displays large fluctuations in hours worked and relatively small fluctuations in productivity this finding is independent of individuals willingness to substitute leisure across time this and other findings are the result of studying and comparing summary statistics describing this economy an economy with divisible labor and post war u s time series

lost in translation the effect of cultural values on mergers around the world we find strong evidence that three key dimensions of national culture trust hierarchy and individualism affect merger volume and synergy gains the volume of cross border mergers is lower when countries are more culturally distant in addition greater cultural distance in trust and individualism leads to lower combined announcement returns these findings are robust to year and country level fixed effects time varying country pair and deal level variables as well as instrumental variables for cultural differences based on genetic and somatic differences the results are the first large scale evidence that cultural differences have substantial impacts on multiple aspects of cross border mergers

stabilization syndication and pricing of ipos we argue that in the after market trading of an ipo the underwriting syndicate by standing ready to buy back shares at the offer price price stabilization compensates uninformed investors ex post for the adverse selection cost they face in bidding for ipos this domi nates ex ante compensation by underpricing the reason is that stabilization exploits ex post information about investor demand whereas underpricing must be based on ex ante infor mation however liquidity and syndication costs constrain the use of stabilization which in equilibrium generates some underpricing as well we develop a model that formalizes this intuition and generates several empirical implications

wage differentials across labor markets and workers does cost of living matter wage differentials studies rarely account for interarea differences in cost of living owing both to data limitations and theoretical ambiguity this study develops a price index for 185 metropolitan areas comprising about 70 of the u s labor force current population survey data for 1985 95 and data on sitespecific amenities are used to estimate earnings differentials based on nominal wages wages fully adjusted for measured cost of living and a simple approximation of real wages with partial adjustment for pricelevel differences dispersion in approximate real wages across 185 labor markets and differentials by region and city size are substantially lower than dispersion in nominal or full adjustment wages estimates of racial and ethnic differentials display moderate sensitivity to choice of a wage measure whereas other standard differentials do not both nominal wages and wages fully adjusted for cost of living may provide misleading estimates of real wage differentials absent data on interarea prices and amenities researchers should include detailed controls for region and city size in nominal wage equations jel j31 r23

towards a theory of the direct indirect tax mix despite the fact that all developed economies levy broadly based indirect taxes alongside direct taxes little theory is devoted to explaining the direct indirect tax mix our purpose is to show that if different taxes have different evasion characteristics some optimal tax mix emerges naturally assuming that only income tax can be evaded and focusing on a two class economy we analyse the case for supplementing optimal non linear income taxation with commodity taxation and we develop conditions under which the latter should or should not be uniform

national culture and expatriate deployment we hypothesize that expatriate deployment is a control function predicted by home country culture dimensions with transaction cost and agency repercussions rather than culture in the aggregate this departure from the traditional conceptualization and measurement of cultural impact also yields a hypothesized asymmetrical effect which is tested for a multi country sample of 236 multinational subsidiaries using multiple measures of national culture hypotheses are supported with assertiveness and power distance confirmed as prime predictors of expatriate deployment

the effects of linguistic distance and lingua franca proficiency on the stake taken by acquirers in cross border acquisitions we study the effects of linguistic distance and lingua franca proficiency on the equity stake taken by acquirers from 67 countries in 59 092 acquisition targets in 69 host countries we theorize and find that acquirers take lower equity stakes in foreign targets when linguistic distance and differences in lingua franca proficiency between them are high and take higher stakes when the combined lingua franca proficiency of the parties is high we also find that linguistic and cultural distance reduce the impact of the combined lingua franca proficiency of the parties on the level of equity taken which shows that the effective use of a lingua franca is affected by the native tongues and cultures of the parties our results clearly demonstrate that governance research and international business studies can benefit from incorporating language into their explanatory models

direct versus indirect taxation the design of the tax structure revisited this article studies the optimal direct indirect tax mix problem when individuals differ in several unobservable characteristics productivity and endowments it presents general expressions for the optimal commodity tax rates and proves that contrary to atkinson and stiglitz s 1976 result differential commodity taxation remains a useful instrument of tax policy even if preferences are separable between labor and produced goods when cross substitution effects are zero the expressions resemble traditional many households ramsey rules in a cobb douglas illustration where endowments differ only in good 1 interpreted as wealth the tax on good 2 provides an indirect way to tax the unobservable wealth

knowledge transfer capacity and its implications for the theory of the multinational corporation this study updates and extends research on foreign entry modes by examining the impacts of knowledge transfer capacity and knowledge tacitness research on international corporate expansion has long emphasized that deploying intangible knowledge based assets is required for successful international expansion more recently research from a knowledge based perspective has addressed the role of tacitness in constraining a firm s ability to transfer knowledge internationally we combine these perspectives to describe how knowledge tacitness affects the relative suitability of four archetypal entry modes exporting licensing establishing an alliance and wholly owned entry we then examine and develop conceptually a seldom studied firm characteristic knowledge transfer capacity we offer predictions that describe the combined effects of knowledge tacitness and transfer capacity on entry mode choice we distinguish between the transfer capacity of the organization that develops knowledge source transfer capacity and that of the organization that seeks to access that knowledge recipient transfer capacity the discussion addresses how our model generalizes to knowledge seeking strategies and to the study of ongoing multinational networks the study enriches and reconciles multiple theoretical perspectives on entry strategy it brings together the study of knowledge characteristics and firm heterogeneity in the theory of the multinational corporation and in international and strategic management more generally journal of international business studies 2003 34 356 373 doi 10 1057 palgrave jibs 8400037

the economic case against drug prohibition this paper discusses the costs and benefits of drug prohibition it offers a detailed outline of the economic consequences of drug prohibition and a systematic analysis of the relevant empirical evidence the bottom line is that a relatively free market in drugs is likely to be vastly superior to the current policy of prohibition

the effect of national culture on the choice of entry mode characteristics of national cultures have frequently been claimed to influence the selection of entry modes this article investigates this claim by developing a theoretical argument for why culture should influence the choice of entry two hypotheses are derived which relate culture to entry mode choice one focusing on the cultural distance between countries the other on attitudes towards uncertainty avoidance using a multinomial logit model and controlling for other effects the hypotheses are tested by analysing data on 228 entries into the united states market by acquisition wholly owned greenfield and joint venture empirical support for the effect of national culture on entry choice is found

interfirm diversity organizational learning and longevity in global strategic alliances organizational theorists have correctly argued that the emergence and maintenance of robust cooperation between global strategic alliance partners is related to the diversity in the partners characteristics yet previous research has failed to systematically delineate the important dimensions of interfirm diversity and integrate the dimensions into a unified framework of analysis this paper develops a multilevel typology of interfirm diversity and focuses on organizational learning and adaptation as critical processes that dynamically moderate diversity s impact on alliance longevity and effectiveness

the stampede toward hofstede s framework avoiding the sample design pit in cross cultural research we propose a method to design better multi country samples for international business studies using hofstede s framework and aimed at determining the effects of national culture on various business phenomena we describe typical research scenarios then develop sets of algorithms that calculate indexes reflecting the power of different samples for hypotheses testing the indexes were computed from hofstede s data then rank ordered the top multi country samples are presented in tables for selection when designing studies

on the job human capital investment and intertemporal substitution new evidence on intertemporal substitution elasticity abstract this paper argues that estimates of intertemporal elasticity of substitution ies obtained from standard life cycle models are subject to a downward bias because they neglect the life cycle and demographic patterns of on the job human capital investment taking into account the fact that part of a worker s time at work goes to acquiring human capital in addition to his main task of producing goods we extend the standard life cycle model to include time spent on investing in on the job human capital and propose a new framework for identifying the ies we obtain statistically significant evidence that conventional estimates of ies for total hours at work are biased downward about 20 at the intensive margin the corresponding ies estimates for production hours are biased downward even more which provides an explanation for why output fluctuation is greater than hours employment fluctuation over the business cycle

uncertainty optimal taxation and the direct versus indirect tax controversy this paper examines how the presence of uncertainty affects the design of tax policy when both indirect taxes and a general income tax are available to the government there are two categories of goods the consumption levels in one group are committed to before the resolution of uncertainty and those of the other after the paper proves that contrary to a b atkinson and j e stiglitz s 1976 result differential commodity taxation remains a useful instrument of optimal tax policy even if preferences are separable between labor and produced goods copyright 1995 by royal economic society

entrepreneurial police and drug enforcement policy the hypothesis that drug enforcement is relatively high in local jurisdictions where state laws dictate that police retain seized assets is tested in the context of a reduced form equation of the supply and demand for drug enforcement the results are robust across model specifications some of which directly control for the level of drug use legislation permitting police to keep seized assets raises drug arrests as a portion of total arrests by about 20 percent and drug arrest rates by about 18 percent police bureaucrats apparently desire discretionary budget increases and they have considerable discretion in determining resource allocation

cross border private equity syndication institutional context and learning abstract private equity pe has become an increasingly international phenomenon but there is a lack of research that looks at the process by which pe firms invest across borders we aim to fill this gap in the literature by examining the role of institutional context and organizational learning as determinants of cross border pe syndication we examine these issues by studying the international expansion by later stage uk pe investors into continental europe over the period 1990 to 2006 our results indicate that institutional context in terms of the number of pe firms in the local environment and the presence of investment bankers in the local market and organizational learning in terms of the pe firm s experience in the host country the pe firm s multinational experience and the number of investment managers per portfolio company but not the presence of local offices are significantly related to the use of cross border syndicates implications for theory and practice are suggested

is property crime caused by drug use or by drug enforcement policy the relationships among drug offenses prorperty crime and the allocation of police resources are investigated in a structural model using data from florida countries law enforcement resources are scarce and as efforts to combat drug crime increase the amount of these resources allocated to property crime is reduced this reallocation of police resources results in reduced deterrence for property crime and as a result an increase in these crimes the evidence presented suggests that rising property crimes in florida are at least partially the result of drug enforcement policy

what differences in the cultural backgrounds of partners are detrimental for international joint ventures an international joint venture implies that a firm has to cooperate with a partner with a different cultural background in this study hypotheses about which differences in national culture are most disruptive for international joint ventures were developed and tested using hofstede s five dimensions the study focused on how these dimensions affect the survival of international joint ventures as well as their incidence relative to wholly owned subsidiaries the hypotheses were tested on longitudinal data about 828 foreign entries of twenty five dutch multinational in seventy two countries between 1966 and 1994 the database which spans almost three decades was also used to provide new evidence on a key assumption of hofstede s work that cultural values are stable over time

finders keepers forfeiture laws policing incentives and local budgets to encourage anti drug policing the federal government and many state governments have enacted laws that allowpoliceagencies tokeepasubstantial fractionofthe assets thattheyseizeindrugarrests weuserich new data on police seizures and local spending to explore the reactions of both governments and police to the incentives created by these policies we find that local governments offset police seizures by reducing their other allocations to police partially undermining the incentives laid out in statute and diverting the earmarked funds to other purposes police in turn respond to the real net incentives for seizures once local offsets are takenintoaccount byincreasingthedrugarrestrate heroinpricesalsoincrease suggestingthattheincreased emphasis on anti drug policing raises the supply costs of illicit drugs these findings highlight both the promise and pitfalls of using financial incentives to solve agency problems in a federal system both local agents and intervening governments have sophisticated responses to financial incentives and these responses must be taken into account in both designing effective policies and evaluating their consequences 2007 elsevier b v all rights reserved

unemployment insurance and unemployment spells this paper tests the effects of the level and length of unemployment insurance benefits on unemployment durations the paper particularly studies individual behavior during the weeks just prior to when benefits lapse higher unemployment insurance benefits are found to have a strong negative effect on the probability of leaving unemployment however the probability of leaving unemployment rises dramatically just prior to when benefits lapse individual data are used with accurate information of spell durations and the level and length of benefits the semiparametric estimation techniques used in the paper yield more plausible estimates than conventional approaches and provide useful diagnostics copyright 1990 by the econometric society

efficiency wage models of unemployment keynesian economists hold it to be self evident that business cycles are characterized by involuntary unemployment but construction of a model of the cycle with involuntary unemployment faces the obvious difficulty of explaining why the labor market does not clear involuntarily unemployed people by definition want to work at less than the going wage rate why don t firms cut wages thereby increasing profits

estimating the economic model of crime with panel data previous attempts at estimating the economic model of crime with aggregate data relied heavily on cross section econometric techniques and therefore do not control for unobserved heterogeneity this is even true of studies that estimated simultaneous equations models using a new panel data set of north carolina counties the authors exploit both single and simultaneous equations panel data estimators to address two sources of endogeneity unobserved heterogeneity and conventional simultaneity their results suggest that both labor market and criminal justice strategies are important in deterring crime but that the effectiveness of law enforcement incentives has been greatly overstated copyright 1994 by mit press

capital income taxation when inherited wealth is not observable this paper extends the atkinson stiglitz model of direct and indirect taxation to a dynamic setting with two unobservable characteristics productive ability and inherited wealth bequests are motivated by the joy of giving a child s inheritance is a random variable with a probability distribution that depends on his parent s investment in a bequest technology public borrowing is assumed and implies the modified golden rule we study the optimal tax policy when two instruments are available a non linear wage income tax and a proportional tax on capital income we show that the second instrument ought in general to be used but that the tax rate is not necessarily positive however a positive tax rate is more likely when there is a positive correlation between inherited wealth and innate ability

information costs and location of fdis within the host country empirical evidence from italy the literature on foreign direct investments fdis has analysed the location strategies of multinational enterprises across national borders but there have been few studies of location decisions by foreign investors within the borders of a single country the paper argues that the driving factors of these location choices have differing influences on indigenous and foreign investors specifically foreign investors suffer from a condition of adverse asymmetry in information costs compared to insiders thus foreign investors decisions on the location of their activities within a host country mainly reflect a rational responses to the existence of information costs

venture capital and management led leveraged buy outs a european perspective abstract management and leveraged buy outs became phenomena of the 1980s from beginnings in the u s they quickly traversed the atlantic spreading first to the u k and then throughout europe the venture capital industry has played a crucial role in the development of buy outs in europe particularly in smaller deals in the u k the netherlands and france this paper examines three aspects of the market for venture and development capital funded management led buy outs in europe it provides a framework for analysis of the different levels of development of each country s market it examines performance of u k buy outs and addresses the extent and nature of exits throughout the paper use is made of the extensive database of european buy outs developed by the authors the main conclusions to emerge are as follows european experience can not be compared to that in the u s as a single economy there are important differences between european countries in respect of the level of buy out activity and the extent to which conditions are or will be favourable for the development of such transactions conceptually a buy out market may be considered as requiring three main factors to be present if it is to develop the generation of buy out opportunities the infrastructure to complete a transaction and opportunities for the investors in a buy out to realise their gains these broad groups may be further sub divided the generation of opportunities will be heavily influenced by attitudes to entrepreneurial risk and hence willingness of managers to buy the ownership structure of industry and hence the generation of entities which are for sale and the state of development of mergers and acquisition markets the infrastructure to complete transactions includes sources of funding both in respect of venture capital availability and the ability of banks to fund transactions the nature of legal and taxation regimes and the existence of intermediaries and advisors who can both identify and negotiate buy outs the existence of suitable exit routes comprises stock market flotation sale to another group and recapitalisation possibly through a secondary buy out many of these factors are similar to the conditions necessary for venture capital deals to develop the generation of entities for sale may take various forms with succession issues in family firms divestment of unwanted divisions privatization of public sector activities and going privates of companies quoted on a stock market being the most important this framework was used to analyze european buy out markets through a combination of interview and desk research the evidence shows that the most highly developed buy out markets and those with the greatest short term potential are not necessarily to be found in the largest economies u s investors who turn towards europe to develop their markets at a time when the u s buy out market is experiencing a downturn and european investors seeking to broaden their activities need to be aware of these differences as in comparable studies in the u s u k lbos on the evidence from our survey of 182 buyouts on average produce performance improvements u k lbos appear to undertake a greater level of new product development and asset purchase after buy out than do their counterparts in the u s and have placed less emphasis on asset disposals than u s lbos managers buying out frequently tightened up their control of working capital the results of our survey indicate support for both the entrepreneurial and agency cost reduction perspectives about buy outs with the former perhaps being somewhat more in evidence exit routes are an important aspect of the buy out market but evidence presented here indicates that buy outs are unlikely to exit in the way in which they originally envisaged in particular buy outs that initially were aiming for flotation on a secondary tier stock market have almost invariably been sold to third parties

the governance impact of a changing investor landscape within the backdrop of comparative corporate governance research we draw on the managerial reporting and impression management literatures to examine how the type level and nature of foreign shareholders infused with their own governance logic influence initial managerial earnings optimism and how foreign ownership shapes earnings guidance in a stakeholder oriented setting drawing on japanese data and addressing endogeneity concerns our results show that under the presence of foreign owners managers are more optimistic in their initial earnings forecasts but that in subsequent revisions they are more likely to provide timely adjustments of their earnings forecast and avoid making last minute adjustments this research illustrates how foreign practices travel across borders and contributes to understanding triggers to governance and strategic changes

the effect of cocaine prices on crime the relationship between cocaine prices and crime has critical implications for u s drug policy but is theoretically indeterminate because cocaine price changes affect crime through changes in both cocaine consumption and expenditures this paper investigates this relationship in annual data from 1981 95 on 29 large u s cities accounting for simultaneity by using two stage least squares with measures of wholesale supply factors and retail enforcement intensity as instruments for cocaine prices controlling for prices of other drugs deterrence socioeconomic factors and city and year specific effects a strong negative relationship exists between cocaine prices and six of seven fbi index crimes

why do increased arrest rates appear to reduce crime deterrence incapacitation or measurement error this paper attempts to discriminate between deterrence incapacitation and measurement error as explanations for the negative empirical relationship between arrest rates and crime measurement error cannot explain the observed patterns in the data incapacitation suggests that an increase in the arrest rate for one crime will reduces all crime rates deterrence predicts that an increase in the arrest rate for one crime will lead to a rise in other crimes as criminals substitute away from the first crime empirically deterrence appears to be the more important factor particularly for property crimes jel k42

from the editors what makes a study sufficiently international journal of international business studies 2008 39 180 183 doi 10 1057 palgrave jibs 8400351 from the flow of submissions that arrive on the desk of the jibs editors it appears that the issue of what makes a study sufficiently international to be of potential interest to jibs and its readership is perhaps not so obvious to some contributors to the journal one of the top reasons for desk rejection is a misunderstanding by authors of jibs s position on what studies are sufficiently international some leading journals in the business and management domain such as academy of management journal amj consider studies to be sufficiently international if they either involve a non us setting or a non us co author this is definitely not the case in jibs in the following discussion which includes specific examples we clarify what makes a study sufficiently international for jibs and provide advice to help authors to determine in advance the suitability of their potential submissions to jibs as the leading journal in international business ib in short jibs entertains only submissions that are intrinsically international in nature as noted in the jibs statement of editorial policy that can be found on http www palgrave journals com jibs jibs statement html

commodity taxation in welfare states i introduction while the nature of unemployment is diverse a substantial part of unemployment in many developed countries it is argued stems from generous social welfare systems meyer 1990 nickell and layard 1999 and see figure 1 1 in fact the organization for economic cooperation and development oecd data show that countries with generous unemployment insurance ui face high unemployment rates and tend to have high commodity tax rates see figure 2 this paper attempts to account for these empirical patterns in the optimal taxation framework in a general equilibrium context the unemployment mentioned above can be viewed as a result of a a low work incentive induced by generous social insurance welfare benefits combined with b the subsequent employment adjustment by firms e g not renewing employment contracts or hiring a portion of temporary part time workers as regular workers to raise labor productivity to deal with this type of unemployment the government may need to seek reforms of social insurance welfare systems including a reduction in unemployment benefits but the public s redistributive motives often do not permit implementation of such reforms 2 under this socioeconomic constraint this paper raises a question can commodity taxation help reduce unemployment and improve efficiency perhaps a slightly different but equally interesting question that concerns many welfare states in recent decades may be suppose that a society agreed on the expansion of welfare programs in financing the increased welfare expenditure which tax increase consumption taxes or income taxes is more relevant figure 1 omitted figure 2 omitted to address these questions we examine the role of commodity taxation in a general equilibrium model where a taking into account wage unemployment benefits and taxes workers choose work effort that the firm can observe only through costly monitoring and b firms use both wage and monitoring as effort eliciting devices and they fire those caught shirking therefore the chosen level of a worker s effort affects the probabilities of employment and unemployment and thus involuntary unemployment arises from moral hazard 3 in this contractual setting with imperfect information we consider the government s problem of maximizing the representative worker s expected utility using income and commodity taxes we derive new results on commodity taxation and present supportive results using quantitative analysis our key results suggest that commodity taxation can be used to alleviate moral hazard and hence unemployment which can account for why countries with generous social welfare systems tend to adopt high commodity tax rates see figure 2 this main result is based on the following feature of the model given the aforementioned environment optimal commodity and income tax rates can be determined in contrast to the indeterminacy result of atkinson and stiglitz 1976 henceforth as 4 therefore our results provide an explanation for the widely observed coexistence of direct and indirect taxation to illustrate the intuition behind our results consider a situation where a a society provides liberal unemployment benefits for unemployed workers and b the government sets the levels of income and commodity tax rates so as to finance the expenditures for ui and public goods liberal unemployment benefits are equivalent to treating the consumption of unemployed workers favorably i e between states consumption choice distortion which creates moral hazard in the supply of effort under imperfect information about effort obviously drastic reforms in social insurance systems e g cutting benefits can correct moral hazard but the public s redistributive motives do not permit such reforms in this setting we show that strengthening commodity taxation while lessening income taxation penalizes moral hazard which lowers the between states consumption choice distortion leading to a greater supply of effort