myopic investment decisions and competitive labor markets this paper analyzes an agency problem where managers are able to control an unobservable variable that affects the time distribution of returns on a firm s investments managers have an incentive to select myopic investments in order to convince the labor market that they have relatively high ability the authors demonstrate that if employment terms are determined in competitive labor markets and there are lower bounds on compensations then at the principal s second best contract managers make a myopic investment choice they also characterize the structure of the principal s second best contract and conduct comparative statics at this solution copyright 1994 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

explaining patterns of candidate competition in congressional elections the low probability of defeating incumbent members of congress deters potentially strong rivals from challenging them yet almost all incumbents are challenged usually by opponents who lack previous experience in office and run underfinanced ineffectual campaigns but if strong challengers are deterred from challenging incumbents why are not weak challengers who have even less chance of unseating an incumbent the model developed in this paper indicates that there is a simple reason why weak candidates choose to run against incumbents they do so in order to maximize their probability of getting elected to congress together with the findings of previous researchers the results of our analyses of congressional primary data from 1980 through 1984 provide strong support for the major hypotheses derived from our model

market share market value and innovation in a panel of british manufacturing firms this paper examines the empirical relationship between technological innovations market share and stock market value new developments in the estimation of dynamic count data models are used to control for unobserved firm specific heterogeneity we find a robust and positive effect of market share on observable headcounts of innovations and patents although increased product market competition in the industry tends to stimulate innovative activity furthermore the impact of innovation on market value is larger for firms with higher market shares we argue that our results are consistent with models where high market share firms have incentives to pre emptively innovate

women don t run election aversion and candidate entry to study gender differences in candidate emergence we conduct a laboratory experiment in which we control the incentives potential candidates face manipulate features of the electoral environment and measure beliefs and preferences we find that men and women are equally likely to volunteer when the representative is chosen randomly but that women are less likely to become candidates when the representative is chosen by an election this difference does not arise from disparities in abilities risk aversion or beliefs but rather from the specific competitive and strategic context of campaigns and elections thus we find evidence that women are election averse whereas men are not election aversion persists with variations in the electoral environment disappearing only when campaigns are both costless and completely truthful

entrepreneurship selection and performance a meta analysis of the impact of education in developing economies this meta analytical review of empirical studies of the impact of schooling on entrepreneurship in selection and performance in developing economies looks at variations impact across specific characteristics of the studies a marginal year of schooling in developing economies raises enterprise income by an average of 5 5 percent which is close to the average return in industrial countries the return varies however by gender rural or urban residence and the share of agriculture in the economy furthermore more educated workers typically end up in wage employment and prefer nonfarm entrepreneurship to farming the education effect that separates workers into self employment and wage employment is stronger for women possibly stronger in urban areas and also stronger in the least developed economies where agriculture is more dominant and literacy rates are lower

legislative professionalism and incumbent reelection the development of institutional boundaries it is well established that legislators from highly professionalized bodies are more likely to win reelection than members of less professionalized legislatures we find that the effect of professionalization on incumbent electoral success is far more pervasive as the level of professionalism of a legislature increases the effects of external political and economic forces such as coattails from higher level elections and national economic conditions on a legislator s chances for reelection diminish in strength this implies that legislative professionalization promotes institutionalization by establishing boundaries that insulate members from external shocks we reach these conclusions by specifying and testing a district level model of state legislative election outcomes using as dependent variable the probability that an incumbent will win reelection the model is estimated with probit using data for more than 42 000 state legislators from 1970 to 1989 w hat determines whether a legislator seeking reelection will win we address this question by paying particular attention to the role of professionalization of legislatures in influencing the electoral success of members we know that american legislators are highly likely to win reelection garand 1991 jacobson 1987 king 1991 we also know that those from highly professionalized institutions have even better odds than those from less professionalized bodies as the former have greater resources for travel to their districts holbrook and tidmarch 1991 for casework cox and morgenstern 1993 1995 king 1991 and for devoting time and energy to campaign activities carey niemi and powell 2000 we maintain however that professionalism does more than boost the electoral prospects of incumbents it changes members relationships with the legislature s political and economic environment in particular professionalization promotes legislative institutionalization by

earnings manipulation and the cost of capital the cost of capital the widespread use of accounting information by investors and financial analysts to help value stocks creates an incentive for managers to manipulate earnings in an attempt to influence short term stock price performance this paper examines the role of earnings management in affecting a firm s cost of capital using an agency model with multiple firms whose cash flows are correlated we demonstrate that the extent of earnings manipulation varies across the business cycle depending on a firm s earnings profile it can have stronger incentives to overstate its performance in good times or in bad times because of this dependence on the state of the economy earnings manipulation can influence a firm s cost of capital despite the forces of diversification

enforceability of non compete covenants discretionary investments and financial reporting practices evidence from a natural experiment abstract non compete covenants are widely used in employment contracts to promote employee stability using legal amendments of non compete enforceability as a natural experiment we find that as non compete enforceability increases firms display an increased likelihood of meeting short term earnings benchmarks lower discretionary expenditures and declining future performance these effects are more pronounced when ceos have lower ability or shorter tenures and when firms have more growth opportunities or operate in localized industries our results suggest that managers actively adapt investment and financial reporting practices to the changing environment that affects their contractual relations with firms

family firms and r d behavior new evidence from a large scale survey abstract this paper analyzes how founders and their families influence r d intensity information on r d comes from a large scale bi annual survey among listed german firms we find that r d intensity is higher in firms that are actively managed by the family the impact of family control via voting rights is negative but mostly not significant while this negative family control effect is in line with hitherto existing literature the positive impact of family management is surprising indeed this positive effect disappears if we follow previous research and use r d information from financial statements we show that this puzzling result is related to corporate opacity opaque family managed firms report too conservative r d expenditures especially if they face financial constraints this leads to an under estimation of r d intensity in these firms if accounting figures are used

exclusive dealing investment promotion may facilitate inefficient foreclosure this paper studies a model whereby exclusive dealing ed can both promote investment and foreclose a more efficient supplier since ed promotes the incumbent seller s investment the seller and the buyer realize a greater surplus from bilateral trade under exclusivity hence the parties involved may sign an ed contract that excludes a more efficient entrant in circumstances where ed would not arise absent investment the paper therefore invites a more cautious attitude towards accepting possible investment promotion arguments as a defense for ed

corporate finance side of the q theory of investment abstract this paper presents a model of a firm under uncertainty in which the financial and investment decisions are simultaneously determined if profits are small relative to investment the firm finances a constant fraction of incremental investment by debt and the rest by retentions if profits are large relative to investment a constant fraction of marginal finance comes from debt and the rest from new shares in these two financing regimes a one to one relationship between optimal investment and q can be derived no such relation exists in the third and intermediate regime in which incremental investment is entirely debt financed

a learning curve of the market chasing alpha of socially responsible firms abstract this paper explores stock market reactions to corporate social performance we construct a value weighted portfolio based on the list of 100 best csr companies in the world published on the forbes website by reputation institute this portfolio yields statistically significant annual abnormal returns of 1 81 and 1 26 by controlling for carhart four factors and fama french five factors respectively 2 41 and 1 84 respectively for an equal weighted portfolio moreover such abnormal returns decrease as time passes especially after the inaugural publication of the csr lists in 2013 furthermore we find that companies with better social performance are more likely to have positive earnings surprises and that their returns are more sensitive to earnings surprises the results have three implications firstly csr reputation contributes positively to a firm s short term superior equity performance secondly the csr lists facilitate market correction of mispricing intangibles such as csr reputation abnormal returns decrease as the market gradually learns about the value of firms social performance lastly the paper contributes to the socially responsible investing sri screens and provides guidance for investors who would like to do well financially by doing good socially

r d investment of electricity generating firms following industry restructuring abstract since electricity market restructuring questions over adequate levels of r d investments persisted using an unbalanced panel data of 70 electricity generating firms across 15 organisations of economic co operation and development countries from 1990 to 2008 this paper empirically examines the impacts of entry liberalization allowing third party access establishing a wholesale market and deregulating a retail market vertical unbundling privatization and firm size on r d investments entry liberalization is associated with a decline in r d investment establishing a wholesale market exhibits the greatest negative effects on r d investment regulated tpa and retail market deregulation also decrease r d the effect of privatization is not independently salient but interacts with a wholesale pool to lower r d investments large firms spend more on r d investment than small firms results indicate that the restructuring of the electricity industry reduces r d investment which may be detrimental to the reliability and the efficiency of the electricity system as well as to the creation and maintenance of the innovation capabilities necessary to address demand and environmental concerns

dual class shares a review the majority of firms traded in the world s three largest stock exchanges london new york and tokyo follow the one share one vote principle however in other countries dual classes of shares are common place for example 50 percent of the publicly traded dutch firms have non voting equity and approximately 75 percent of the publicly traded danish finnish and swedish firms have shares that differ in their voting rights this paper reviews the arguments as to why firms create dual classes of shares their effect on firm value and the relative prices of shares that differ only in their voting rights copyright 1992 by oxford university press

the gains from takeover deregulation evidence from the end of interstate banking restrictions this paper uses interstate banking deregulation to explore the benefits of takeover deregulation and how these benefits are distributed across different firms we find large and significant abnormal returns around the interstate banking and branching efficiency act of 1994 which imply it created 85 billion of value in the banking industry consistent with an active market for corporate control allowing beneficial consolidation and providing needed discipline there is a strong negative relationship between banks abnormal returns and their prior performance consistent with managerial entrenchment limiting takeover discipline banks with higher insider ownership lower outside block ownership and or less independent boards have lower abnormal returns imagine an economy in which strict regulation has prohibited all takeover activity and the governing body suddenly announces that the restrictions on mergers and acquisitions will be eliminated in one year the capital market response to this announcement would establish the aggregate value added from an active corporate control market and differences between individual firms stock price reactions would reveal which firms benefit most from unrestricted consolidation and takeover discipline in some ways this hypothetical situation became reality for the u s banking industry in 1994 when congress wrote and passed the interstate banking and branching efficiency act ibbea this legislation liberalized the bank takeover market by eliminating the various state laws restricting bank mergers across state lines the ibbea was widely expected to accelerate the consolidation already occurring within the banking industry see for example american banker 10 11 94 a more active takeover market should increase firm values in at least two ways first unrestricted consolidation would allow firms to better utilize

female labor force participation in developing and developed countries consideration of the informal sector t he steady increase in the labor force participation of married women in the united states over the last few decades has stimulated considerable interest in the economic analysis of a woman s decision to work pioneering work by mincer 1962 and cain 1966 has served as a theoretical and empirical foundation for numerous studies of female labor force participation this research typically treats a woman s current labor force status measured as a dummy variable for the individual and as a rate for the population as a measure of labor supply which depends upon economic and demographic characteristics such as female earnings male earnings non earnings income schooling work experience age number of children and so on notable examples are bowen and finegan 1969 cogan 1975 1978 gronau 1973 heckman 1974 1980 and schultz 1980 while the associated theoretical models and statistical techniques have been refined considerably especially by lewis 1972 ben porath 1973 and heckman 1974 1979 the coefficients estimated using u s data have remained reasonably robust also there is substantial agreement among micro level and aggregate results see cain 1966 and bowen and finegan 1969 for comparisons as this body of literature has grown the economic models developed within it have been implemented to analyze the labor force behavior of women in other countries however there is no consistent international pattern in the behavioral trends of the female labor force perhaps the most notable difference in the economic opportunities available to women in many other countries is that they may work in the informal sector of the labor market women may be considered economically active and may be counted as being in the labor force as they produce goods at home for market sale work on the family farm or work in a small family run business the most convenient means of categorizing workers as being in the informal sector is by their employment status following jaffe and azumi 1960 we assume that women reported as self employed or as family workers are engaged in the informal sector of the labor force almost all women in the u s labor force work as employees only 6 6 worked as self employed or family workers in 1978 given japan s advanced economic development a surprisingly large fraction 38 4 in 1978 of its female labor force comprises self employed and family workers clearly in the united states and countries with a similar distribution of the labor force by employment status the labor force participation decision may be treated as the choice to work or not to work however if individuals regard the decision to enter the labor force as an employee as being distinct from the choice to enter the labor force as a family worker then economic models of labor force participation which treat these choices as identical will incorporate a specification bias the labor force participation decision may differ between these two sectors for several reasons first the wage offers may differ by sector second while entering the informal sector may be virtually frictionless there may be fixed costs among them commuting time and child care associated with working in the formal sector third family workers may face more flexible working schedules than paid employees the latter group may be subject to contractual working hours in order to treat the labor force decisions in coiuntines with significant informal sectors this received for publication march 16 1981 revision accepted for publication september 15 1982 rutgers university this paper is a revision of work begun with my doctoral dissertation i would like to thank h gregg lewis and t dudley wallace for their suggestions and hideo okamoto for providing the data set i would also like to thank david crawford toshiaki tachibanaki two anonymous referees and the participants of the columbia labor workshop the japan economic seminar and the yale labor and population workshop for their comments remaining errors are my own this research was supported by a postdoctoral fellowship from the national institutes of health additional funding was provided by the william and flora hewlett foundation grant to the yale economic demography program i statistical abstract of the u s and japan statistical yearbook

do foreign owners favour short term profit evidence from germany comparing domestic and foreign owned firms in germany this paper finds that foreign owned firms are more likely to focus on short term profit this influence is particularly strong if the local managers of the german subsidiary are not sent from the foreign parent company moreover the physical distance between the foreign parent company and its german subsidiary increases the probability of focusing on short term profit these findings conform to the hypothesis that foreign owners facing an information disadvantage concerning the local conditions of their subsidiaries are more likely to favor short term profit however we do not identify differences in short termism between investors from anglo saxon and other foreign countries rather results point in the direction of more general features of international business investment

institutional and legal context in natural experiments the case of state antitakeover laws we argue and demonstrate empirically that a firm s institutional and legal context has first order effects in tests that use state antitakeover laws for identification a priori the size and direction of a law s effect on a firm s takeover protection depends on i other state antitakeover laws ii preexisting firm level takeover defenses and iii the legal regime as reflected by important court decisions in addition iv state antitakeover laws are not exogenous for many easily identifiable firms we show that the inferences from nine prior studies related to nine different outcome variables change substantially when we include controls for these considerations

investment policy in family controlled firms abstract we explore the relation between family ownership and corporate investment policy our analysis centers on two incentives risk aversion and extended investment horizons which potentially influence the level and type of investments that family firms undertake we find that family firms devote less capital to long term investments than firms with diffuse ownership structures when dividing long term investment into its two components of r d and capital expenditures we note that family firms relative to nonfamily firms prefer investing in physical assets relative to riskier r d projects additional tests indicate that family firms receive fewer patent citations per dollar of r d investment relative to nonfamily firms overall all empirical results indicate that family preferences for lower firm risk across all family sub types affects corporate r d spending and capital expenditures

managerial reputation and divisional sell offs a model and empirical test abstract this paper presents a reputation model of divestiture activity that yields a sharp cross sectional implication for event studies of sell off announcements a decision to divest a division that is known to be successful conveys good news about the division in contrast a decision to divest a division that is known for underperformance conveys no news about the division we test these hypotheses on a sample of sell off announcements for which we find stories in the wall street journal unambiguously characterizing the division being sold as either a winner or a loser the stock price reaction to the sell off of losers is indistinguishable from zero while the stock price reaction to the sell off of winners is a statistically significant 2 5 these results are strengthened when we expand the sample to include divisions whose profitability was announced in the company s annual report for this expanded sample the average stock price reaction to the announcements of sell offs of losers remains indistinguishable from zero while returns from the sell offs of winners average a highly significant 3 4

framing controversial actions regulatory focus source credibility and stock market reaction to poison pill adoption we contribute to the research on organizational accounts by examining the role of different framing languages and the credibility of the frame articulator on justifying controversial organizational actions drawing on regulatory focus theory and the literature on source credibility we develop novel arguments as to how a gains versus nonlosses framing and the perceived credibility of the speaker influence stakeholder responses as well as how the effectiveness of these aspects is influenced by context we test our arguments using data on the framing of the adoption of poison pills by u s firms between 1983 and 2008 using content analysis and an event study we find that a gains framing aligned with the dominant institutional logic leads to a positive stock market reaction while statements emanating from speakers with potentially self serving interests negatively affect the stock market reaction our findings further show that the effectiveness of framing and source credibility are dependent on contextual attributes such as speaker visibility prior performance and practice prevalence

divided government in the american states a byproduct of legislative professionalism s since world war ii divided government has become increasingly common in the american states a significant component of the increase is the deterioration of republican fortunes in state legislatures after the 1990 and 1992 elections for example only five state legislatures were controlled by the republicans i shall examine the hypothesis that the professionalization of state legislatures makes legislative service more attractive to democratic candidates and less attractive to republican candidates because full time legislative service is incompatible with another career and democrats on average have less lucrative career opportunities than republicans statistical analysis of post world war ii legislative elections outside the south is consistent with the argument other things being equal every ten thousand dollar increase in real biennial legislative compensation is associated with approximately a 1 increase in democratic legislators

owner managers and firm performance during the asian and global financial crises evidence from korea abstractwe examine the performance of the korean owner managers during the 1997 1998 asian financial crisis and the 2008 2009 global financial crisis to establish whether they overcome the unexpected exterior shocks better than employed managers we find that the owner managers record a significantly greater performance during the crises and especially during the latter period moreover our results suggest that such a tendency comes from the owner managers superior investment decisions our paper thus highlights the role of owner managers by studying their performance during the korean economic crisis periods jel g01 g32 g34

leviathan as an inventor an extended agency model of state owned versus private firm invention in emerging and developed economies we examine the relative merits of state soe and private poe ownership on firm invention output in emerging as well as developed economies firm soe affords a vehicle by which governments throughout the world encourage risky investment in new technological paths yet from a traditional agency theoretical standpoint soes are plagued by low powered incentives and dysfunctional involvement e g wasteful budgets and political meddling which reduces soe performance relative to poes to examine this paradox we build an extended agency model which rather than overlooking agency cost drivers entertains a more balanced view in which these so called agency liabilities in fact benefit soes particularly in the sphere of inventions we argue that given relatively higher levels of managerial autonomy soes may outperform poes in some types of inventive output we further propose that key boundary conditions operate to modify this base effect in that contexts lacking political constraints a condition found in most emerging economies increase the risk of political meddling reducing managerial autonomy so that any soe inventive advantages wane significantly we also hypothesize that this negative effect of weak institutions is attenuated in high invention productivity sectors empirically we track the frequency pioneerism and impact of patent inventions of 521 soes and matched poes for 16 years across 43 countries and 22 industries we find empirical support for our hypotheses based on a robust set of fixed effects regression analyses aided by a battery of checks to assess self selection and omitted variable bias

when to risk it institutions ambitions and the decision to run for the u s house the health of any democratic system depends on political ambition to generate a steady supply of quality candidates for office because most models of candidate entry assume ambition rather than model it previous research fails to understand its roots in individual and institutional characteristics we develop a two stage model of progressive behavior that distinguishes between the formation of ambition for higher office and the decision to enter a particular race using data from a survey of state legislators we demonstrate that the intrinsic costs and benefits associated with running for and holding higher office shape ambitions but do not influence the decision to run for progressively ambitious legislators the second stage decision is a strategic choice about when to run rather than whether to run our research highlights how institutional characteristics that foster progressive ambition also increase the likelihood that national or local political conditions will be translated into meaningful choices at the ballot box

savings investment and the corporation in the east asian miracle abstract the east asian countries have achieved a spectacular average rate of economic growth over the last 30 to 40 years with very substantial diversification and economic development korea for example managed to transform itself from being a largely agricultural society in 1960 to the point where it became the third country after the us and japan to export 256 k memory chips developed by its own firms it is no exaggeration to say that the post wwii development of east asia including japan is the most successful story of sustained economic growth in the history of mankind how does one account for this extraordinary economic success

what s a losing party to do the calculus of contesting state legislative elections existing theories of contesting elections typically treat all potential challengers as identical while under playing the importance of political parties and primary contests we offer a theory addressing these issues based on how the various actors in the process define and evaluate the probability of winning an election and the value of the office being contested we test our theory by estimating a model predicting which of three responses a party that loses a legislative race makes in the next cycle nominating the same candidate nominating a new candidate or nominating no one we find substantial empirical support for our theory

resolving the commitment versus flexibility trade off the role of resource accumulation lags we examine how time consuming resource accumulation influences the classic strategy trade off between commitment and flexibility in particular using 1975 95 data from the worldwide petrochemical

takeover threats and managerial myopia this paper examines the familiar argument that takeover pressure can be damaging because it leads managers to sacrifice long term interests in order to boost current profits if stockholders are imperfectly informed temporarily low earnings may cause the stock to become undervalued increasing the likelihood of a takeover at an unfavorable price hence the managerial concern with current bottom line the magnitude of the problem depends on a variety of factors including the attitudes and beliefs of shareholders the extent to which corporate raiders have inside information and the degree to which managers are concerned with retaining control of their firms

evaluating contingent and actual contributions to a local public good tsetse control in the yale agro pastoral zone burkina faso abstract in this case study of the yale agro pastoral zone in southern burkina faso the sustainability of tsetse control as a local public good was shown to depend upon farmers contributions to establish and maintain the traps and targets that attract and kill tsetse flies contingent valuation cv techniques were used to generate estimates of farmers willingness to pay for tsetse control in money labour or both forms of payment of the 261 households that participated in the cv survey these proportions were 23 37 and 40 respectively indicating differentiation among the population and an overall preference for labour contribution a comparison of predicted versus actual contribution of labour indicated that only 56 of households that said they would contribute actually contributed 3 of households that said they would not contribute actually contributed major factors affecting contingent contributions of labour in discrete choice models were identified as well as those to account for in any successful scheme for actual labour contribution these factors include the age of household head offtake of cattle involvement in secondary activities membership in rural organizations current expenditure on drug therapy and cash on hand the results also indicate that full cost recovery of the investment in targets about us 8000 could not be achieved in the short run with the proposed contribution of us 0 90 1 00 per month per household contingent contributions of money were interpreted as maximum donations to expect of beneficiaries as part of the total cost of providing tsetse control

managerial legacies entrenchment and strategic inertia this paper argues that the legacy potential of a firm s strategy is an important deter minant of ceo compensation turnover and strategy change a legacy makes ceo replacement expensive because firm performance can only partially be attributed to a newly employed manager boards may therefore optimally allow an incumbent to be entrenched moreover when a firm changes strategy it is optimal to change the ceo because the incumbent has a vested interest in seeing the new strategy fail even though ceos have no specific skills in our model legacy issues can explain the empirical association between ceo and strategy change this paper proposes a model of ceo replacement and puts forward a novel determinant for turnover decisions the legacy potential of a firm s strategy we mean by this the extent to which a manager s decisions affect future firm cash flows potentially beyond the manager s own tenure the replacement of a ceo is arguably one of the most important decisions a firm takes yet the theoretical and empirical finance literature has relatively little to say about the firm and manager specific characteristics that lead to one manager being fired and replaced by another as brickley 2003 points out the only variable that predicts turnover empirically is poor firm performance but it has little pre dictive power theoretical papers on managerial turnover tend to reduce ceo successions to a sequence of static interactions see below for more details as such they do not distinguish between a ceo who is hired and can start a fresh project or one who is constrained in this choice because he inherits a prede cessor s long term strategy our paper focuses on this latter phenomenon and investigates turnover decisions when strategy choices have a legacy potential the fact that a dynamic link exists between a ceo and his predecessor is probably more recognized in the accounting literature than in finance pourciau both authors are from the toulouse school of economics and the institut d administration des

movers and shakers most projects in most walks of life require the participation of multiple parties while it is difficult to unite individuals in a common endeavor some people who we call movers and shakers seem able to do it the paper specifically examines moving and shaking of an investment project whose return depends both on its quality and the total capital invested in it we analyze a model with two types of agents managers and investors managers and investors initially form social connections managers then bid to buy control of the project and the winning bidder puts effort into making investors aware of it finally a subset of aware investors are given the chance to invest and they decide whether to do so after receiving private signals of the project s quality we first show that connections are valuable since they make it easier for a manager to move and shake the project i e obtain capital from investors when we endogenize the network we find that while managers are identical ex ante a single manager emerges as most connected he consequently earns a rent in extensions we move away from the assumption of ex ante identical managers to highlight forces that lead one manager or another to become a mover and shaker our theory sheds light on a range of topics including entrepreneurship venture capital and anchor investments

an empirical analysis of the reincorporation decision the literature suggests two competing explanations for reincorporations efforts at managerial entrenchment and attempts to improve contractual efficiency the empirical evidence to date is inconclusive to seek further evidence we examine a large sample of firms that changed their state of incorporation over the period 1980 1992 we find that shareholder wealth is decreased by reincorporations that erect takeover defenses but is increased by reincorporations that establish limits on director liability firms that claim they reincorporate to limit the personal liability of their board members and thereby attract better qualified outside directors do in fact expand the outside representation on their boards whereas firms citing other motives do not

determinants of women s time allocation in rural bangladesh time allocation patterns of women in developing countries have received attention due to interest in 2 problems the 1st is whether womens time is governed by economic constraints or by local customs and patriarchy 2nd is the question of whether these women have a 2 way to work or not to work or a 3 way to work inside or outside the family or not to work choice structure an economic framework is outlined that elucidates how jointly made decisions on labor force participation and hours of work affect womens time allocation decisions this econometric model of womens time allocation is based on a random sample of 500 households in different regions of rural bangladesh market production is defined as work for cash income whether inside or outside the home the study focused on married women aged 15 49 of whom 195 out of 444 engaged in market production these women tended to be younger live closer to market centers and have more schooling than those not participating in market production time use by these women was influenced by individual and household economic factors and was not rigidly set by local customs thus women in rural bangladesh will probably respond to market opportunities as development proceeds there the husbands educational level also had a large effect on time allocation and this may have been due to a spouse selection bias rather than the husband determining his wifes time use

corporate governance and innovation we use tobin s q models of investments to estimate the relationship between corporate governance and the level of innovative activity simple ordinary least squares ols models suggest that poor governance reduces innovative activity however ols results are sensitive to controlling for serial correlation unobserved effects or using instrumental variables to control simultaneity controlling for these effects substantially reduces or eliminates the relationship between governance and innovative activity

the impact of corporate governance practices on r d efforts a look at shareholders rights cross listing and control pyramid the paper considers the impact of multiple shareholder oriented governance practices on rd decisions based on a sample of 5 528 firms belonging to 110 large french listed business groups our results substantiate the idea that shareholder oriented governance practices and a lower position in a control pyramid are better for rd investment the introduction of any additional shareholder oriented practice is found to result in more rd we show however that this anglo americanization of the french corporate governance system is only partial we provide evidence of the co existence of an old french system of corporate governance with a hybrid model of corporate governance the lack of concrete results on complementarity among shareholder oriented governance practices casts doubt on the stability of this hybrid model in the french context

enjoying the quiet life corporate governance and managerial preferences much of our understanding of corporations builds on the idea that managers when they are not closely monitored will pursue goals that are not in shareholders interests but what goals would managers pursue this paper uses variation in corporate governance generated by state adoption of antitakeover laws to empirically map out managerial preferences we use plant level data and exploit a unique feature of corporate law that allows us to deal with possible biases associated with the timing of the laws we find that when managers are insulated from takeovers worker wages especially those of white collar workers rise the destruction of old plants falls but the creation of new plants also falls finally overall productivity and profitability decline in response to these laws our results suggest that active empire building may not be the norm and that managers may instead prefer to enjoy the quiet life

shark repellents and managerial myopia an empirical test since the proxy fights of the 1950s commentators have debated the welfare implications of corporate takeovers although observers such as manne 1965 jensen and meckling 1976 fama 1980 and jensen and ruback 1983 argue that the market for corporate control promotes efficiency and enhances wealth some critics such as managers of firms subject to hostile takeover attempts contend that takeovers destroy firm value the critics frequently assert that takeover pressure forces managers to sacrifice profitable but slowyielding long term investments in favor of less productive short term investments that offer immediate returns while the evidence supporting takeover induced shortsightedness is largely anecdotal a recent paper by stein 1988 develops a formal

staggered boards corporate opacity and firm value abstract we explore the effect of corporate opacity on the relation between staggered boards and firm value we find that through mitigating takeover pressure staggered boards become increasingly beneficial to firm value as opacity increases in addition we document that staggered boards reduce value only in transparent firms additional tests indicate that as opacity increases staggered boards bear an increasingly positive relation to research and development and ceo pay performance sensitivity taken together these results suggest that corporate opacity affects the value impact of takeover protection

conflicting interests in information disclosure and short term orientation of firms abstract this paper explains why firms might be excessively short term oriented even when they are able to inform the capital market about the true quality of their assets the information a firm reveals to the capital market can be used by competitors to the firm s detriment in this case the future profitability of the firm s assets is no longer exogenous but is influenced by the strategic actions of its competitors which in turn depend on the information the firm discloses this motivates the firm to switch resources from future prospects to short term profits the results have policy implications and may help explain the empirical observation that u s firms tend to be more short term oriented than japanese firms

agency costs and innovation some empirical evidence abstract this paper examines the empirical relation between corporate ownership structure and innovation we test the hypothesis that diffusely held firms are less innovative than firms with either a high concentration of management ownership or a significant equity block held by an outside investor overall the evidence indicates that diffusely held firms are less innovative along the dimensions we examine patent activity growth by acquisition versus internal development and timing of long term investment spending these results are consistent with the conjecture that concentrated ownership and shareholder monitoring are effective at alleviating the high agency and contracting costs associated with innovation

executive compensation a modern primer this article studies traditional and modern theories of executive compensation bringing them together under a simple unifying framework accessible to the general interest reader we analyze assignment models of the level of pay and static and dynamic moral hazard models of incentives and compare their predictions to empirical findings we make two broad points first traditional theories find it difficult to explain the data suggesting that compensation results from rent extraction by ceos however more modern shareholder value theories that arguably better capture the ceo setting do deliver predictions consistent with observed practices suggesting that these practices need not be inefficient second seemingly innocuous features of the modeling setup often made for tractability or convenience can lead to significant differences in the model s implications and conclusions on the efficiency of observed practices we close by highlighting apparent inefficiencies in executive compensation and additional directions for future research