union coverage and profitability among u s firms this paper utilizes unique survey data on labor union coverage at the firm level to examine union effects on the profitability of 705 u s companies during the 1970s market value and earnings are estimated to be about 10 15 percent lower in an average unionized company than in a nonunion company following extensive control for firm and industry characteristics deleterious union effects on firm profitability are sizable throughout the 1972 80 period but vary considerably across industries the relatively poor profit performance of unionized companies may help explain the recent decline in u s union membership the author thanks the w e upjohn institute for employment research for financial support elizabeth gregory for assistance with the union coverage survey zvi griliches for providing access to the rd donald deere terry seaks and anonymous referees for helpful suggestions and seminar participants at connecticut florida state harvard texas a m and william and mary for comments on earlier versions of this research

earnings surprise materiality as measured by stock returns ranked earnings surprise portfolios formed from first call files for 1992 97 are used to assess the annual earnings surprise magnitude for an individual firm sufficient to expect a significant market reaction we find that for an individual firm the maximum probability of a gain from trading on prior knowledge of any surprise magnitude is 622 the lack of probable trading gains is due to the s shaped surprise return relation and the large variance of returns for a given magnitude of surprise in turn we find that the s shape is related empirically to the dispersion of analyst forecasts thus factors underlying dispersion differences are related to the importance or materiality of earnings surprise as measured by stock returns and explain at least part of the s shaped surprise return relation

efficient mechanisms for bilateral trading we consider bargaining problems between one buyer and one seller for a single object the seller s valuation and the buyer s valuation for the object are assumed to be independent random variables and each individual s valuation is unknown to the other we characterize the set of allocation mechanisms that are bayesian incentive compatible and individually rational and show the general impossibility of ex post efficient mechanisms without outside subsidies for a wide class of problems we show how to compute mechanisms that maximize expected total gains from trade and mechanisms that can maximize a broker s expected profit journal of economic literature classification number 026

intensive and extensive margins of exports what can india learn from china we decompose india s export performance in manufactured products during 2000 15 into changes at the intensive and extensive margins india s performance along different margins is compared and contrasted with that of china the results show that while china outperforms india at both the margins the gap is particularly wide at the intensive margin decomposition of intensive margin along quantity and price margins shows that chinese products are generally sold cheaper than indian products higher price margin however has not translated into high intensive margin for india due to its abysmally low quantity margin we examine different explanations for china s superior performance relative to india along different margins using a gravity model our results suggest that china s exchange rate policy was not the prime reason for its export success neither do we find that fdi inflows were significant in explaining the export performance gap between them the results show that china s export relationship bias towards high income partner countries holds the key in understanding its superior performance this bias is a natural consequence of china s high degree of specialization in labor intensive activities india by contrast due to an idiosyncratic pattern of specialisation has failed to exploit its export potential in high income countries

transfer fee regulations in european football abstract we analyze the impact of three different transfer fee systems on payoffs contract lengths training and effort incentives in european football the different regimes being used until 1995 pre bosman currently in use bosman and recently approved monti differ with respect to the transfer fee an initial club is entitled to depending on whether a player has a valid contract or not we show that the different systems differ only with respect to the contract length if the contract which maximizes the expected joint surplus of the initial club and the player is feasible under each system otherwise regime p is strictly dominated by regime b in terms of expected social welfare regime m leads to higher effort but lower incentives to invest in training compared to system b

costly arbitrage evidence from closed end funds arbitrage costs lead to large deviations of prices from fundamentals using a sample of closed end funds i find that the market value of a fund is more likely to deviate from the value of its assets 1 for funds with portfolios that are difficult to replicate 2 for funds that pay out smaller dividends 3 for funds with lower market values and 4 when interest rates are high these factors are related to the magnitude of the deviation as opposed to the direction i e whether discount or premium and explain a quarter of cross sectional mispricing variation these findings are consistent with noise trader models of asset pricing

contracts as a barrier to entry it is shown that an incumbent seller who faces a threat of entry into his or her market will sign long term contracts that prevent the entry of some lower cost producers even though they do not preclude entry completely moreover when a seller possesses superior information about the likelihood of entry it is shown that the length of the contract may act as a signal of the true probability of entry

union negotiations and corporate policy a study of labor concessions in the domestic steel industry during the 1980s abstract this paper studies managerial compensation financial reporting and dividend policies of the seven major domestic steel producers during requests for union concessions substantial layoffs reported losses and sacrifices by nonunion stakeholders buttressed managers case for union concessions from 1980 to 1988 sample firms reduced their work force by about 300 000 almost two thirds and annual wage payments from 16 1 to 8 6 billion reported income is lower during union negotiations controlling for cash flows as is managerial pay with average ceo salary plus bonus declining 18 dividend reductions and white collar pay cuts are substantial pervasive and clustered during union negotiations

compensating differentials for cyclical and noncyclical unemployment the interaction between investors and employees risk aversion this paper integrates the labor and assets markets equilibria to determine and evaluate the wage differentials generated for cyclical and noncyclical risks of unemployment the relative wage differential is a linear function of unemployment risk measured by the covariance of an index of employment with the rate of change in aggregate output seniority and the hoarding of skilled labor are characteristics of minimum cost contracts because employees with more human capital prefer safer jobs empirical results suggest that a 14 41 wage differential can be explained by interindustry differences in unemployment risks

financial statement comparability and expected crash risk this study examines the impact of financial statement comparability on ex ante crash risk using the comparability measures of de franco et al 2011 we find that expected crash risk decreases with financial statement comparability and this negative relation is more pronounced in an environment where managers are more prone to withhold bad news we also provide evidence that comparability can mitigate the asymmetric market reaction to bad versus good news disclosures our results suggest that financial statement comparability disinclines managers from bad news hoarding which reduces investors perceptions of a firm s future crash risk

implied volatility functions empirical tests derman and kani 1994 dupire 1994 and rubinstein 1994 hypothesize that asset return volatility is a deterministic function of asset price and time and develop a deterministic volatility function dvf option valuation model that has the potential of fitting the observed cross section of option prices exactly using s p 500 options from june 1988 through december 1993 we examine the predictive and hedging performance of the dvf option valuation model and find it is no better than an ad hoc procedure that merely smooths black scholes 1973 implied volatilities across exercise prices and times to expiration

unionization and profitability evidence of spillover effects ruback and zimmerman s 1984 event study which showed that formal union organizing activity significantly lowers a firm s market value provides compelling evidence that unionization reduces a firm s profitability union organizing activity may also have sizable cross firm or spillover effects on the performance of neighboring firms thus the total impact of union organizing on the wealth of firm owners may be substantially understated by focusing only on the firm in which the union organizing activity occurs this paper presents an alternative approach for estimating union spillover effects on profitability using a data set and methodology similar to ruback and zimmerman s we find that the total negative effects of unionization on profits after cross firm or spillover effects are included are nearly three times as large as the own firm effects reported by ruback and zimmerman the hypothesis that changes in unionization have spillover effects on nonunion firms is well known formal union organizing activity at one firm may increase the threat of unionization at other firms neighboring firms may respond to the greater threat of unionization

the impact of transfer fees on professional sports an analysis of the new transfer system for european football we evaluate the effect of the recently approved transfer system for european professional football which will replace the current system implemented by the bosman judgment in 1995 the focus is on the comparison of wages profits the length of contracts and investment incentives our main findings are that i the new regime reduces a player s overall payoff because it increases the new club s renegotiation payoff and ii since training generates a general skill the new regime will also diminish incentives to invest in the education of young talents because a new club benefits more from the initial club s investment

golden cages for showy birds optimal switching costs in labor contracts under what circumstances do workers sign contracts with high quitting penalties our answer points to market transparency when the worker s performance is privately observed by the incumbent 4rm alternative employers face an adverse selection problem as a result e7cient separations can only take place through involuntary layo8s and there is no role for quitting fees in contrast when performance is public quitting fees are useful devices to appropriate the surplus from workers reallocation separations are amicable and take the form of quitting after downwardly renegotiating the fees qualitative features of contracts are independent of the distribution of ex post bargaining power the impact of switching costs on total welfare and its distribution depends on the degree of market transparency and the ex ante distribution of market power c

the value of active investing can active institutional investors remove excess comovement of stock returns this study uses cremers and petajisto s 2009 method to separate active institutional investors from passive ones and shows that active investors can alleviate the anomalous comovement of stock returns focusing on 2 events linked to the excess comovement anomaly standard poor s 500 index additions and stock splits i find that if an event stock has more active institutional investors trading in the post event period the anomalous comovement effect disappears in contrast if an event stock experiences a massive exit of active investors this anomaly persists the exit of active institutional investors also results in a strong price synchronicity effect

human capital bankruptcy and capital structure we derive a firm s optimal capital structure and managerial compensation contract when employees are averse to bearing their own human capital risk while equity holders can diversify this risk away in the presence of corporate taxes our model delivers optimal debt levels consistent with those observed in practice it also makes a number of predictions for the cross sectional distribution of firm leverage consistent with existing empirical evidence it implies persistent idiosyncratic dierences in leverage across firms an important new empirical prediction of the model is that ceteris paribus firms with more leverage should pay higher wages

rational asset price movements without news this paper argues that an important part of movements in asset prices may be caused by neither external news nor irrationality but by the revelation of information by the trading process itself two models are developed that illustrate this general idea one model is based on investor uncertainty about the quality of other investors information the other is based on dispersion of information and small costs to trading the analysis is used to suggest a possible rational explanation of the october 1987 crash copyright 1993 by american economic association

the excess sensitivity of layoffs and quits to demand excessive layoffs in bad times and excessive quits in good times both stem from the same weakness in practical employment arrangements the specific nature of worker firm relations creates a situat

the impact of labor unions on investment cash flow sensitivity abstract this paper empirically examines how labor unions affect investment cash flow sensitivity using samples from the us covering the period of 1984 2009 we find a significant positive union effect using a q model of investment the capital expenditures of firms are 1 71 times more sensitive to internal cash flows when unionization rates increase one standard deviation from the mean this effect holds when we control for other proxies of financial constraints in addition unionized firms are associated with lower cash cash flow sensitivity which suggests that the higher investment cash flow sensitivity in unionized firms is primarily driven by the incentive of these firms to reduce liquidity and enhance bargaining power against the union we also show that the above union effects become more pronounced during labor contract negotiation years

up or out contracts a signaling perspective a firm will typically gather information concerning its own workers that is not available to other potential employers while other firms will attempt to reduce this information asymmetry by observing the actions of the initial employer i argue that this process can be important in environments characterized by up or out contracts in that the retention decision can serve as a signal of productivity the article investigates this argument in an environment where up or out contracts are employed because they provide workers with an incentive to accumulate general human capital and where learning takes place in a diffuse fashion

short interest and stock price crash risk abstract using a large sample of u s public firms we find robust evidence that short interest is positively related to one year ahead stock price crash risk the evidence is consistent with the view that short sellers are able to detect bad news hoarding by managers additional findings show that the positive relation between short interest and future crash risk is more salient for firms with weak governance mechanisms excessive risk taking behavior and high information asymmetry between managers and shareholders empirical support is provided showing that the relation between short interest and crash risk is driven by bad news hoarding

labor unions and tax aggressiveness abstract we examine the impact of unionization on firms tax aggressiveness we find a negative association between firms tax aggressiveness and union power and a decrease in tax aggressiveness after labor union election wins this relation is consistent with labor unions influencing managers in one or both of two ways 1 constraining managers ability to invest in tax aggressiveness through increased monitoring or 2 decreasing returns to tax aggressiveness that arise from unions rent seeking behavior we also find preliminary evidence that the market expects these reductions around union elections and discounts firms that likely add shareholder value via aggressive tax strategies

public information and uninformed trading implications for market liquidity and price efficiency abstract we develop a rational expectations equilibrium model in which noise trading comes from discretionary liquidity traders the equilibrium quantity of aggregate noise trading is endogenously determined by the population size of liquidity traders active in the financial market by improving market liquidity public information reduces the expected trading loss of liquidity traders and thus attracts more such traders to the market which negatively affects information aggregation analyzing an alternative setting that models noise trading as coming from hedgers yields similar insights in a setting with endogenous information public information can harm information aggregation both through crowding out private information and through attracting noise trading

india and china contrasts in economic liberalization abstract it is argued that in both india and china despite some important differences 1 a similar cultural and political imperatives led to similar systems of dirigisme and economic outcomes with the chinese growth higher than the indian because of higher investment 2 b crises engendered by their dirigiste regimes impelled reform 3 c their attempts to replace the plan by the market have striking similarities but 4 d ultimately because of continuing atavistic attitudes to toward trade and commerce the reforms remain insecure

anti poaching agreements in labor markets we analyze competition for experienced workers among wage setting firms the firms can design poaching offers with higher wages to workers who switch from rivals relative to wages paid to their own existing employees we evaluate the profit and welfare effects of anti poaching agreements that eliminate poaching offers as a recruiting method anti poaching agreements increase industry profits whereas workers are made worse off we show that the effects of anti poaching agreements on total welfare are determined by the magnitude of workers switching costs and the productivity change associated with switching employers jel l41 l40 j42

optimal labour contracts under asymmetric information an introduction the review of economic studies has instituted a new series of lectures to be given annually by a younger british economist at the association of university teachers of economics meetings the choice of lecturer is determined by a panel whose members are currently professors hahn mirrlees and nobay this paper is a revised version of the first lecture in the series it was presented at the aute meeting held at the university of surrey in april 1982 and was refereed in the usual way mak

insiders incentives for asymmetric disclosure and firm specific information flows abstract recent research suggests that insiders incentives for capturing cash flows affect price formation process in which insiders are inclined to withhold good news and to accelerate the release of bad news jin and myers 2006 we investigate whether insiders incentives for private control benefit proxied by control ownership wedge affect firm specific return characteristics we find that control ownership wedge is negatively related to the likelihood of positive return jumps and positively related to the extent of asymmetric market reaction to good news rather than to bad news overall our results support the notion that corporate insiders increase opaqueness and withhold good news in order to capture unexpected cash flow

high frequency trading and comovement in financial markets abstract using the staggered entry of chi x in 12 european equity markets as a source of exogenous variation in high frequency trading hft we find that hft causes significant increases in comovement in returns and in liquidity about one third of the increase in return comovement is due to faster diffusion of market wide information we attribute the remaining two thirds to correlated trading strategies of hfts the increase in liquidity comovement is consistent with hft liquidity providers being better able to monitor other stocks and adjust their liquidity provision accordingly our findings suggest a channel by which hft impacts the cost of capital

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

auditor gender and stock price crash risk evidence from china stock price crash risk is attributed to agency problems and information asymmetry auditors generally play a more important governance function in countries with weak legal institutions previous s

compensating wage differentials and the duration of wage loss a formal model of occupational choice is developed that shows the extent to which the compensation for increased duration exceeds that for increased risk using the panel study of income dynamics linked to industry data on injuries and unemployment we find nearly all the compensating wage differential for losses due to workplace injuries is for increases in the duration of loss and similarly for losses due to cyclical unemployment the compensating differentials for risk of injury are larger for union than for nonunion workers while those for cyclical unemployment are smaller for union workers

contract costs and financing decisions like bondholders most agents contract for fixed payoffs thus corporate capital structures which are less than 50 percent debt are less levered than overall contract structures in which about 90 percent of total flows are fixed payoffs the hypothesis analyzed here is that loans and bonds lower contract costs by delegating the monitoring and bonding of the default risks of fixed payoffs to credible specialists financial intermediaries bond holder trustees rating agencies and auditors other agents can then focus on their specialties that is efficient supply of labor materials and other services and the contract problems of these specialties copyright 1990 by the university of chicago

labor market reforms job instability and the flexibility of the employment relationship we endogenize separation in a search model of the labor market and allow for bargaining over the continuation of employment relationships following productivity shocks to take place under asymmetric information in such a setting separation may occur even if continuation of the employment relationship is privately efficient for workers and firms we show that reductions in the cost of separation owing for example to a reduction in firing taxes lead to an increase in job instability and when separation costs are initially high may be welfare decreasing for workers and firms we furthermore show that in response to an exogenous reduction in firing taxes workers and firms may switch from rigid to flexible employment contracts which further amplifies the increase in job instability caused by policy reform

bank valuation and accounting discretion during a financial crisis this paper shows that banks overstate the value of distressed assets and their regulatory capital during the us mortgage crisis real estate related assets are overvalued in banks balance sheets especially those of bigger banks compared to the market value of these assets banks with large exposure to mortgage backed securities also provision less for bad loans furthermore distressed banks use discretion over the classification of mortgage backed securities to inflate their books our results indicate that banks balance sheets offer a distorted view of the financial health of the banks and provide suggestive evidence of regulatory forbearance and noncompliance with accounting rules

opaque financial reports r2 and crash risk abstract we investigate the relation between the transparency of financial statements and the distribution of stock returns using earnings management as a measure of opacity we find that opacity is associated with higher r2s indicating less revelation of firm specific information moreover opaque firms are more prone to stock price crashes consistent with the prediction of the jin and myers 2006 r2 around the world new theory and new tests journal of financial economics 79 257 292 model however these relations seem to have dissipated since the passage of the sarbanes oxley act suggesting that earnings management has decreased or that firms can hide less information in the new regulatory environment

empirical relevance of the hillman condition for revealed comparative advantage 10 stylized facts the theoretically necessary and sufficient condition for the correspondence between revealed comparative advantage and pre trade relative prices derived by hillman 1980 is analysed empirically for virtually all countries of the world over an extended period of time this yields 10 stylized facts including that i violations of the hillman condition are small as a share of the number of observations but substantial as a share of the value of world exports ii violations occur relatively frequently in the period 1970 1984 and more rarely in the period 1985 1997 and iii violations occur foremost in primary product and natural resource intensive sectors and for countries in africa the middle east latin america and central and eastern europe an additional bonus of verifying the hillman condition in empirical research is its ability to identify erroneously classified trade flows

involuntary layoffs in a model with asymmetric information concerning worker ability this paper examines the contract between a risk neutral firm and its risk averse employees assuming that worker ability is privately learned by the firm after a period of employment employers in an external spot labour market attempt to infer worker quality from the observable actions taken by the firm such as the number of workers it lays off the threat of spot market raids distorts the optimal contract layoffs may be involuntary and can exceed efficient levels a seniority layoff rule may be included in the contract to avoid the adverse selection problems that arise if layoffs are conducted on the basis of ability

union rent seeking intangible capital and market value of the firm abstract this study considers the effect of unions on intangi ble capital investment and profitability within the context of a market value rather than a more traditional accounting based approach theory is provided suggesting unions are able to affect profitability by sharing in the economic returns to firm specific intangible capital in support of this hypothesis we find unionization reduces the returns to r d and produces a corresponding limiting influence on r d investment at the firm level i introduction a n extensive literature in economics has ex amined the determinants of profitability with much of the focus centering on the role of market structure only recently however have the effects of labor unions on profitability been analyzed ths is surprising since labor economists long have emphasized union influences on wages and productivity that in turn may affect profitabil ity in recent studies freeman 1983 and karier 1985 report a significant limiting influence of unions on price cost margins in high concentra tion manufacturing industries using firm level data and the market based tobin s

mutual fund herding and stock price crashes abstract we investigate the impact of mutual fund herding behaviours on stock price crashes there are competing hypotheses with respect to how investors herding behaviours are associated with information processing our empirical evidence shows that mutual fund herding is associated with a poor information environment and low disclosure quality more importantly mutual fund herding amplifies stock price crash risk afterwards the main finding is concentrated on buy herding rather than sell herding to mitigate the endogeneity concern we use the 2004 sec mutual fund disclosure regulation change as an exogenous shock and the results hold we further use propensity score matching to alleviate the impact of information asymmetry finally additional analysis reveals that our results are not driven by the price impact hypothesis

can big bath and earnings smoothing co exist as equilibrium financial reporting strategies we study a model of financial reporting where investors infer the precision of reported earnings reporting a larger earnings surprise reduces the inferred earnings precision dampening the impact on firm value of reporting higher earnings and providing a natural demand for smoother earnings we show that for sufficiently bad news the manager under reports earnings by the maximum preferring to take a big bath in the current period in order to report higher future earnings if the news is good the manager smoothes earnings with the amount of smoothing depending on the level of cashflows observed he either over reports or partially under reports for slightly good news and gradually increases his under reporting as the news gets better until he is under reporting the maximum amount for sufficiently good news this result holds both when investors are naive and ignore management s ability to manipulate earnings or sophisticated and correctly infer management s disclosure strategy

dynamic labor market competition and wage seniority abstract we design an overlapping generations model of the labor market experienced workers bear costs of switching employers whereas the segment for junior workers is horizontally differentiated the literature typically explains wage seniority premia with reference to productivity gains generated by the accumulation of worker experience or mechanisms associated with incomplete information in contrast this paper characterizes how the wage seniority premium depends on the relative intensities of competition in the markets for junior and senior workers in particular we show that a wage seniority premium may prevail even under circumstances where senior workers are less productive than junior workers

job discrimination market forces and the invisibility hypothesis the invisibility hypothesis holds that the job skills of disadvantaged workers are not easily discovered by potential new employers but that promotion enhances visibility and alleviates this problem then at a competitive labor market equilibrium firms profit by hiding talented disadvantaged workers in low level jobs consequently those workers are paid less on average and promoted less often than others with the same education and ability as a result of the inefficient and discriminatory wage and promotion policies disadvantaged workers experience lower returns to investments in human capital than other workers

do political factors affect stock returns during presidential elections abstract this study investigates whether or not political factors such as government policy and political connections affected stock returns during the 2008 taiwanese presidential election we find that firms that benefitted from were threatened by the proposed three links policy of the winning party experienced positive negative stock returns during the election we use the sensitivities of firms returns to bilateral trade flows between taiwan and china to measure the government policy effect our results show that the effects of political connections weakly exist but they become more significant when the support ratio of the winning party increased in polling data we also find that only the government policy effect holds for different crash risk and corporate governance levels finally investment strategies based on both political factors can generate positive abnormal returns with respect to the fama french three factor model

do unions affect innovation we examine the effect of unionization on firm innovation using a regression discontinuity design that relies on locally exogenous variation generated by elections that pass or fail by a small margin of votes passing a union election results in an 8 7 12 5 decline in patent quantity quality three years after the election a reduction in r d expenditures reduced productivity of inventors and departures of innovative inventors appear to be plausible underlying mechanisms through which unionization impedes firm innovation in response to unionization firms move their innovation activities away from states where union elections win our paper provides new insights into the real effects of unionization this paper was accepted by gustavo manso finance

workers trust funds and the logic of wage profiles this paper defines a concept a worker s trust fund which is useful in analyzing optimal age earnings profiles the trust fund represents what a worker loses if dismissed from a job for shirking in considering whether to work or shirk a worker weighs the potential loss due to forfeiture of the trust fund if caught shirking against the benefits from reduced effort this concept is used to show that the implicit bonding in upward sloping age earnings profiles is not a perfect substitute for an explicit up front performance bond or employment fee it is also shown that the second best optimal earnings profile in the absence of an up front employment fee pays total compensation in excess of market clearing in a variety of stylized cases

earnings manipulation pension assumptions and managerial investment decisions managers appear to manipulate firm earnings through their characterizations of pension assets to capital markets and alter investment decisions to justify and capitalize on these manipulations managers are more aggressive with assumed long term rates of return when their assumptions have a greater impact on reported earnings firms use higher assumed rates of return when they prepare to acquire other firms when they are near critical earnings thresholds and when their managers exercise stock options changes in assumed returns in turn influence pension plan asset allocations instrumental variables analysis indicates that 25 basis point increases in assumed rates are associated with 5 percent increases in equity allocations

why india lags behind china and how it can bridge the gap though india has been growing at six per cent annually since the late 1980s it trails behind china which has been growing at ten per cent per annum since 1981 the single most important factor explaining this difference is the relatively poor performance of indian industry whereas the share of industry in china s gdp rose from 42 per cent in 1991 to 51 per cent in 2001 it remained virtually stagnant in india by contrast services grew rapidly in india expanding from 42 per cent in 1991 to 48 per cent in 2001 with the information technology sector less than two per cent of the gdp services growth was largely in the informal sector approximately 77 per cent of india s workers live in rural areas to bring a large chunk of this workforce into the modern sector india must achieve a much higher growth in the traditional unskilled labour intensive industry growth in the information technology sector gives india an extra lever but cannot be the main engine of transformation therefore the right approach is to walk on two legs traditional labour intensive industry and the modern it industry both legs need strengthening through further reforms the paper suggests four specific reforms three for industry and one for it necessary to achieve the transformation to a modern economy

sluggish institutions in a dynamic world can unions and industrial competition coexist during the 1930s and 1940s collective bargaining emerged as the workplace governance norm in much of the u s industrial sector following its peak in the 1950s union density in the u s private sector fell steadily to only 7 4 percent in 2006 governance shifted from a formalized union norm to one of constrained managerial discretion in competitive and dynamic economic environments a union tax on company earnings and slow response to economic shocks combine to produce poor performance by union companies two industries automotives and airlines are used to illustrate these points if worker based institutions are to flourish they must add value and permit companies to perform at levels similar to those obtained under evolving nonunion governance norms

investment and union certification using data on union certification elections we estimate the impact of unionization on firms investment behavior employing both a standard q model and an investment surprises technique we find that union certification significantly reduces investment in the year following the election we find that a winning certification election has on average about the same effect on investment in the year following the event as would given the elasticity measures taken from the public finance literature a 33 percentage point increase in the corporate tax the magnitude of the response in years further away from the election is less certain

contracts as rent seeking devices evidence from german soccer recent theoretical research has identified many ways how contracts can be used as rent seeking devices vis a vis third parties but there is no empirical evidence on this issue so far to test some basic qualitative properties of this literature we develop a theoretical and empirical framework in the context of european professional soccer where incumbent teams and players sign binding contracts which however are frequently renegotiated when other teams entrants want to hire the player because they weaken entrants in renegotiations long term contracts are useful rent seeking devices for the contracting parties however they reduce the likelihood of mutually beneficial transfers which generates a trade off in the spirit of aghion and bolton 1987 using a data set from the german bundesliga our model predictions are broadly confirmed jel l14 j63 l40 l83

the economic consequences of labor unionization evidence from stock price crash risk this study investigates the impact of labor unionization on stock price crash risk we find that labor unionization is negatively associated with stock price crash risk such negative relation is more pronounced when firms can intimate more credible evidence on unfavorable prospects and when firms face more powerful labor unions our findings are consistent with the notion that firms take strategic actions to reduce the bargaining advantages enjoyed by labor unions and that labor unions force firms to take less risky investments and discontinue underperformed projects more timely which leads to lower stock price crash risk

bidding for talent in sport we present a realistic and novel micro structure for the market for athletes in league sports in our trading mechanism the clubs bid for individual players internalizing the effect that a player not hired might play for the competition for inelastic talent supply our wage minimizing equilibrium supports the coasian results of rottenberg 1956 and fort and quirk 1995 talent allocation is independent of initial ownership and revenue sharing arrangements when talent supply is elastic revenue sharing decreases the aggregate amount of talent hired this negative effect on the talent level may be efficiency enhancing when the competition for talent results in excess talent being hired for the first time in the literature we carry out our entire analysis using a newly formulated unified club objective incorporating both pecuniary and non pecuniary benefits

do star analysts know more firm specific information evidence from china abstract using a unique database in china we extend the literature to further distinguish the information production role of star vs non star analysts we confirm the general conclusion of a positive association between analyst coverage and stock return synchronicity measured by a firm s r2 in china the findings from star analysts however show that star analyst coverage actually decreases stock return synchronicity we contend that the firm specific human capital in star analysts helps the analysts overcome the challenges of information production in an emerging market the superior firm specific human capital argument of star analysts is further supported by the negative association of star analysts firm specific experiences and stock return synchronicity our conclusions are robust to different specifications of star analyst presence and different definitions of analysts firm specific experiences we also find that star analysts exhibit a more accurate earnings forecast than non star analysts