trying to understand low income housing subsidies lessons from the united states this article asks why nations subsidise their low income housing sectors and offers five reasons to improve public health to reduce societal injustice to preserve the social order to increase e

estimation of the tenants benefits residing in public rental housing with unit size constraint in korea summary hicksian income equivalent variation ev has often been used to measure tenants benefits in evaluating public housing programmes a number of papers have so far attempted to apply hicksian ev under the implicit assumption of no constraint on unit size of public housing as a result overestimation of tenants benefits probably occurs where unit size constraints exist as in korea s public housing programme thus the purpose of the paper is to measure hicksian ev with the constraint in unit size of public housing by formulating a revised hicksian ev equation and comparing the result with constraint free cases it is found that hicksian ev with constraint in unit size decreases relative to that of the constraint free cases the extent of ev decrease depends on the income elasticity of demand for housing and the difference between the optimum consumption of public housing under rent support demand wanted and the actual constraint of unit size demand fulfilled

national cultural distance and cross border acquisition performance previous theoretical research has argued that national cultural distance hinders cross border acquisition performance by increasing the costs of integration this article tests the alternative hypothesis that national cultural distance enhances cross border acquisition performance by providing access to the target s and or the acquirer s diverse set of routines and repertoires embedded in national culture using a multi dimensional measure of national cultural distance and controlling for other effects we examine a sample of 52 cross border acquisitions that took place between 1987 and 1992 and find a positive association between national cultural distance and cross border acquisition performance

uncertainty avoidance and the preference for innovation championing roles this paper examines the preferences of 4405 individuals in forty three organizations from sixty eight different countries for four innovation championing roles the organizational maverick the network facilitator the transformational leader and the organizational buffer the study shows that the cultural value of uncertainty acceptance is significantly associated with preferences for these four championing roles it suggests that uncertainty accepting societies may be more innovative than uncertainty avoiding societies because of the greater legitimacy of those roles

standardization preferences a function of national culture work interdependence and local embeddedness both theoretical and empirical studies of professional service employee standardization preferences are relatively scarce using responses from 398 employees of an international public relations firm this study finds that employees from high power distance high uncertainty avoidance and high context cultures prefer greater standardization whereas employees from high individualism cultures prefer less standardization additionally work interdependence is positively associated with standardization preferences whereas local embeddedness is negatively associated with standardization preferences

psychological factors and stock option exercise we investigate stock option exercise decisions by over 50 000 employees at seven corporations controlling for economic factors psychological factors influence exercise consistent with psychological models of beliefs employees exercise in response to stock price trends exercise is positively related to stock returns during the preceding month and negatively related to returns over longer horizons consistent with psychological models of values that include reference points employee exercise activity roughly doubles when the stock price exceeds the maximum price attained during the previous year

exercise behavior valuation and the incentive effects of employee stock options abstract we use a large database on eso exercises to document characteristics of exercise behavior and calibrate a utility based model for measuring how differences in exercise behavior are manifested in option values and incentives option values and incentives computed from the model calibrations are compared to those computed from models used to value tradable options our analysis provides guidance to both academics and practitioners about how differences in exercise behavior and model choice affect measures of eso values and incentives and underscores the importance of gaining a thorough understanding of the underlying economic forces that affect the behavior of eso holders

gravity and culture in foreign portfolio investment abstract using panel regression estimates from the imf s cpis survey of foreign debt and equity portfolios across 174 originating and 50 destination countries from 2001 to 2007 we clarify the role of culture and extend the set of cultural variables that have been investigated in gravity models of foreign portfolio investment fpi incorporating hofstede s cultural dimensions of individualism masculinity power distance and uncertainty avoidance we show how cultural traits in both originating and destination countries as well as the cultural distances that separate them interact with geographic distance and other gravity variables to determine global fpi patterns we find hitherto unreported effects and show that while gravity always deters fpi aspects of culture and cultural distance can offset this by supporting fpi

the cross cultural research imperative the need to balance cross national and intra national diversity this paper provides a brief overview of the evolution of comparative management theories paradigms and highlights the contribution of the cross vergence construct despite progress most studies of work values across countries continue to suffer from two primary limitations the first is the fallacious assumption of cultural homogeneity with nations given the growing diversity of the workforce within country intra national variations can often be as significant as cross national differences the second is the fallacious assumption of cultural stability over time since cultures evolve albeit slowly it is important to take these changes over time into consideration and be aware of the paradoxes inherent within any given society hence the paper calls for the need to balance cross national and intra national diversity in order to truly understand cross cultural phenomena and thus further improve the quality of cross cultural research

transfers in cash and in kind theory meets the data we review theoretical explanations for in kind transfers in light of the limited empirical evidence after reviewing the traditional paternalistic arguments we consider explanations based on imperfect information and self targeting we then discuss the large literature on in kind programs as a way of improving the efficiency of the tax system and a range of other possible explanations including the samaritan s dilemma pecuniary effects credit constraints asymmetric information amongst agents and political economy considerations our reading of the evidence suggests that paternalism and interdependent preferences are leading overall explanations for the existence of in kind transfer programs but that some of the other arguments may apply to specific cases political economy considerations must also be part of the story

intra cultural variation evidence and implications for international business this paper discusses the methodological and theoretical significance of intra cultural variation icv the population distribution of a characteristic within a culture a monte carlo study shows that icv has substantial influence on the statistical power of cross cultural tests therefore studying icv is methodologically important if we are to understand inconsistent findings and design cross cultural studies with enough statistical power moreover an examination of the cultural means and icvs of 42 cultures shows that icv is as large as the variation of cultural means across cultures and its relationship to cultural means is not definite a model based on multiple disciplines is proposed to cast icv in a nomological net and to illuminate several avenues for future research practical implications are also discussed

the contracting benefits of accounting conservatism to lenders and borrowers abstract this paper examines the ex post and ex ante benefits of accounting conservatism to lenders and borrowers in the debt contracting process i expect conservatism to benefit lenders ex post through the timely signaling of default risk as manifested by accelerated covenant violations and to benefit borrowers ex ante through lower initial interest rates consistent with these predictions i find that more conservative borrowers are more likely to violate debt covenants following a negative price shock and that lenders offer lower interest rates to more conservative borrowers

national culture and corporate investment we explore the relation between individualism and horizons and types of corporate investment based on individualism s implications for risk taking we find that firms in individualistic countries invest more in long term risky than in short term safe assets moreover the effect of individualism on long term investment hinges on rd and 2 firms in individualistic countries invest more in r d because they have higher investment efficiency or pick less risky r d projects we further find that individualistic firms tend to employ excess cash to increase r d rather than increase dividends and r d decisions are less reliant on internal financing but more responsive to growth opportunities in individualistic countries

culture and ceo compensation the theory and research on chief executive officer ceo compensation tends to be dominated by assumptions and values reflective of those dominant in the national culture of the united states where most of this work is done this suggests that an underlying theme focuses on how ceo compensation is related to instrumental choices made in a competitive capitalist culture this study seeks to expand the understanding of ceo compensation by examining it in the context of other cultures based on the premise that national culture plays a significant part in the nature of compensation strategies we relate cultural dimensions uncertainty avoidance power distance individualism and masculinity femininity developed by hofstede hofstede 1980a 2001 to several dimensions of ceo compensation these dimensions are total ceo pay the proportion of variable pay to total compensation and the ratio of ceo pay to the lowest level employees the main findings of our paper are 1 all of the different dimensions of ceo pay were related to power distance leading us to infer that ceo pay in a culture is most reflective of the strength of the power structure in a society and 2 total compensation and the ratio of variable pay to total pay are related to individualism we conclude that cultural dimensions can contribute to understanding cross national ceo compensation the implication of this conclusion is that there are different ways that ceo compensation fits into the cognitive schema of various cultures and furthermore that these cognitive schema vary across societies that affect the nature of the cultural matrix into which money is incorporated bloch and parry 1989 p 1 moreover our results imply that particular forms of ceo compensation do not mean the same thing in different cultures but rather carry different symbolic connotations depending on the values dominant in a society thus not only does the compensation structure of a firm within a culture have a symbolic meaning within organizations e g trice and beyer 1993 but it can also be seen as an expression of deeper social values hofstede et al 1990 that may differ across countries

culture and international business recent advances and their implications for future research the paper provides a state of the art review of several innovative advances in culture and international business ib to stimulate new avenues for future research we first review the issues surrounding cultural convergence and divergence and the processes underlying cultural changes we then examine novel constructs for characterizing cultures and how to enhance the precision of cultural models by pinpointing when cultural effects are important finally we examine the usefulness of experimental methods which are rarely used by ib researchers implications of these path breaking approaches for future research on culture and ib are discussed

national culture and dividend policy this interdisciplinary study examines how national culture affects corporate dividend policies the dividend puzzle is one of the most studied yet unresolved issues in financial economics prior theoretical and empirical research has suggested several explanations of the dividend puzzle that are rooted mainly in agency asymmetric information bird in hand and pecking order theories the main intuition behind our analysis is that dividend policy may be determined not only by an objective assessment of the severity of agency and asymmetric information problems within a firm but also by management s and investors subjective perceptions of these problems which hinge on their national culture using schwartz s national culture dimensions conservatism and mastery we find that conservatism is positively related and mastery negatively related to dividend payouts for a sample of 27 462 firm years from 21 countries between 1995 and 2007 these effects are robust to controls for a wide variety of other determinants of dividend policy including investor protection stock market performance financial system configuration tax advantage economic development and dividend catering premium and to alternative culture proxies and sub period windows our findings that national culture affects perceptions of and responses to agency and information asymmetry have important implications for policymakers and multinational enterprises

assessing the effects of culture on managerial attitudes a three culture test cross cultural studies are inherently difficult because the typical research design fails to differentiate cultural from other environmental influences the present study uses a research design that attempts to isolate the influence of culture japanese chinese and mexican managers their ethnic american counterparts and anglo americans are used to test the model results indicate unique persistent cultural characteristics with the cultural effect varying among the three groups of managers

national culture and financial literacy international evidence we examine to what extent aspects of national culture can explain cross country variations in financial literacy our results for a sample of 92 countries show that hofstede s dimensions of pow

optimal exercise of executive stock options and implications for firm cost this paper conducts a comprehensive study of the optimal exercise policy for an executive stock option and its implications for option cost average life and alternative valuation concepts the paper is the first to provide analytical results for an executive with general concave utility wealthier or less risk averse executives exercise later and create greater option cost however option cost can decline with volatility we show when there exists a single exercise boundary yet demonstrate the possibility of a split continuation region we also show that for constant relative risk averse utility the option value does not converge to the black and scholes value as the correlation between the stock and the market portfolio converges to one we compare our model s option cost with the modified black and scholes approximation typically used in practice and show that the approximation error can be large or small positive or negative depending on firm characteristics

political economy of pension plans impact of institutions gender and culture abstract national pension systems are an important part of financial intermediation and worker welfare in most countries but how and why do they differ internationally controlling for important political economic and social institutions we document that international differences in pension progressivity or how pensions reflect lifetime earnings are negatively related to masculinity uncertainty avoidance individualism long term orientation employment rights average pension levels social trust and economic inequality we also find that pension progressivity is positively related to the economic and societal role of women the extent of catholicism as well as political voice and accountability these results provide important insights for both public policy and mnc managers

do low income housing subsidies increase the occupied housing stock abstract a necessary condition for justifying a policy such as subsidized low income housing either via tenant based rental assistance or construction of public or private projects is that it has a real effect on market outcomes in this paper we examine one aspect of the real effect of subsidized housing does it increase the housing stock if subsidized housing raises the quantity of occupied housing per capita either more people are finding housing or they are being housed less densely on the other hand if subsidized housing merely crowds out equivalent quality low income housing that otherwise would have been provided by the private sector the housing policy may have little real effect on housing consumption using both census place and msa level data from the decennial census and from the department of housing and urban development we ask whether housing markets with more subsidized housing also have more total housing after accounting for housing demand we find that government financed units raise the total number of units in a market although on average one government subsidized unit adds only one third to one half of a unit to the total housing stock there is less crowd out in more populous markets and more crowd out in places where there is less excess demand for subsidized housing as measured by the number of government financed units per eligible person tenant based housing programs such as section 8 certificates and vouchers seem to be more effective than project based programs at targeting subsidized housing units to people who otherwise would not have their own

equity ownership in international joint ventures the impact of source country factors this study examines the impact of four source country factors on the equity ownership in international joint ventures ijvs these factors are exchange rate cost of borrowing export capability and management orientation based on a sample of 8 078 ijvs in china this study shows that equity ownership tends to be higher for parent firms from a source country with strong currency low cost of borrowing strong export capability and high uncertainty avoidance

emerging themes in international business research this study is motivated by two research questions 1 which recent contributions have been driving the research agenda in international business 2 which emerging themes in the literature are likely to set the stage for future work to examine these questions the study examined scholarly work in international business over the time period 1996 2006 in six leading international business journals journal of international business studies management international review journal of world business international marketing review journal of international marketing and international business review next a delphi study of the most prolific authors in these journals over the same time period was conducted to delineate a future research agenda in international business addressing these two research questions provides us with a more complete understanding of the progress made to date in international business research and provides a glimpse of the future

avoiding uncertainty in hofstede and globe this paper compares the uncertainty avoidance ua dimension of national culture across the hofstede and globe models looking at relationships in both data and analysis rather than mutual support we detail major differences and anomalies across the studies we show how these anomalies are resulting in contradictory explanations in research on national differences across a range of individual firm and country level phenomena we clarify the ua measurement in both hofstede and globe and find that the two models are measuring different components of the ua construct we propose a two component model of ua namely ua stress and ua rule orientation and confirm its validity with national culture data from the hofstede and globe studies and economic data from the world bank we also explain the negative globe ua practices values relationship using motivational theories a way forward in future ua related research is suggested the hofstede ua index the globe ua practices scores and the globe ua values scores should be used within the specific domains that they represent that is stress rule orientation practices and rule orientation aspirations respectively resolving the contradictions in ua between and within hofstede and globe will help cross cultural researchers develop more robust theories and more practical recommendations for international business management

understanding compensation practice variations across firms the impact of national culture with operations spread worldwide firms that find themselves competing in a global marketplace are looking at the implications of the admonition when in rome this raises the question do cultures of countries have an impact on the generally accepted methods of managing human resources the answer to this question is the focus of this article by developing culture specific propositions for four categories of compensation practices based on status performance social benefits and programs and employee ownership plans we seek to determine the extent to which hofstede s four dimensions of culture are associated with specific compensation practices support is found for most of the propositions the implications of the finding for the management of human resources by multinational firms are discussed

national culture and corporate debt maturity abstract we investigate the influence of national culture on corporate debt maturity choice based on the framework of williamson we argue that culture located in social embeddedness level can shape contracting environments by serving as an informal constraint that affects human actors incentives and choices in market exchange we therefore expect national culture to be related to debt maturity structure after controlling for legal political financial and economic institutions using hofstede s four cultural dimensions uncertainty avoidance collectivism power distance and masculinity as proxies for culture and using a sample of 114 723 firm years from 40 countries over the 1991 2006 period we find robust evidence that firms located in countries with high uncertainty avoidance high collectivism high power distance and high masculinity tend to use more short term debt we interpret our results as consistent with the view that national culture helps explain cross country variations in the maturity structure of corporate debt

national culture and life insurance consumption this cross disciplinary study examines the way national culture affects consumption patterns of life insurance across countries life insurance is a service that is abstract complex and focused on unsure future benefits because of the uncertainty and ambiguity inherent in the life insurance product consumers are more likely to respond according to their cultural prescriptions our research hypotheses are tested empirically using hofstede s cultural dimensions and data from 1976 2001 across 41 countries the findings show that individualism indeed has a significant positive effect on life insurance consumption whereas power distance and masculinity femininity have significant negative effects the results are robust even after controlling for economic institutional and demographic determinants

steering the climate system using inertia to lower the cost of policy common views hold that the efficient way to limit warming to a chosen level is to price carbon emissions at a rate that increases exponentially we show that this hotelling tax on carbon emissions is actually inefficient the least cost policy path takes advantage of the climate system s inertia to delay reducing emissions and allow greater cumulative emissions the efficient carbon tax follows an inverse u shaped path and grows more slowly than the hotelling tax economic models that assume exponentially increasing carbon taxes are overestimating the cost of limiting warming overestimating the efficient near term carbon tax and overvaluing technologies that mature sooner

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

when elephants fight the grass gets trampled the globe and hofstede projects four aspects of the debate between hofstede and javidan et al are highlighted first it is shown that characterizing cultures either on the basis of aggregated self perceptions or on the basis of aggregated perceptions of others in one s society are not equivalent procedures each has inherent errors and neither can be considered as providing the one best way to denote national cultures furthermore the number of dimensions of national culture that can be usefully studied must be proportional to the limited number of nations available for comparative analyses third although hofstede and javidan et al appear to differ on optimal ways of aggregating individual level data to the nation level both appear to have done so in a way that does not prevent detection of differing relations between items at different levels of analysis finally we need greater clarity as to the ways in which national wealth relates to other aspects of culture it is a major component of contemporary national cultures and must be retained as an element within nation level analyses

a new database on the structure and development of the financial sector this article introduces a new database of indicators of financial structure and financial development across countries and over time the database is unique in that it combines a wide variety of indicators that measure the size activity and efficiency of financial intermediaries and markets it improves on previous efforts by presenting data on the public share of commercial banks introducing indicators of the size and activity of nonbank financial institutions and constructing measures of the size of bond and primary equity markets this article introduces a new database the first to provide comprehensive measures of the development structure and performance of the financial sector this database is the first to define and construct indicators of the size and activity of nonbank financial intermediaries such as insurance companies pension funds and non deposit money banks it is also the first to include indicators of the size of primary equity markets and primary and secondary bond markets in constructing the database authors carefully deflate measures and match stock and flow variables

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

modeling nonrenewable resources use with multiple demands and multiple sources the theoretical literature following hotelling j polit econ 39 137 175 1931 assumed that all nonrenewable resource needs are satisfied by one type of resource e g oil extractible at different per unit costs this formulation implicitly assumes that all users are the same distance from each resource pool that all users can switch costlessly from one type of resource to another e g liquid fossil fuels to coal or vice versa and that all users are subject to the same regulations these assumptions imply as herfindahl extractive resources and taxation university of wisconsin press madison pp 63 90 1967 showed that in competitive equilibrium all users will exhaust a lower cost resource completely before beginning to extract a higher cost resource simultaneous extraction of different grades of oil or of oil and coal should never occur in trying to apply the single demand curve model during the last twenty years several teams of authors have independently found a need to generalize it to account for users differing in their 1 location 2 resource needs or 3 regulatory environment each research team found that herfindahl s strong unrealistic conclusion disappears in the generalized model in its place a weaker herfindahl result emerges since each research team focussed on a different application however it has not always been clear that everyone has been describing the same generalized model the goal in this paper is to integrate the findings of these teams and to present an easily accessible generalization of the nonrenewable resource model to multiple demand curves

taking time for the environment on timing and the role of delays in environmental and resource economics ecosystem transformation and climate change evolve over long time scales the effects of the economic decisions on the natural environment are also of a long run character because they relate to investment decisions and capital stocks at the same time the economy is short sighted and subject to different kinds of market failures the time it takes to notice the changes and adequately address the associated problems affects the dynamics and inertia of the process we discuss some recent contributions and new research questions that deal with time and timing in environmental and resource economics

crowd out effects of place based subsidized rental housing new evidence from the lihtc program abstract since its inception in 1987 the low income housing tax credit lihtc program has ballooned into the largest ever source of subsidized construction of low income housing in the united states accounting for one third of all recent multi family rental construction this paper examines the crowd out effects of this increasingly important source of low moderate income housing to do so we analyze the impact of lihtc construction at three different levels of geography msa county and 10 mile radius circles this allows us to employ increasingly extensive geographic fixed effects that help to difference away unobserved factors political variables are also used as instruments to further facilitate identification in all of our models iv estimates yield substantially greater crowd out than ols confirming the endogenous attraction of lihtc development to areas ripe for new construction our most robust iv estimates indicate that nearly 100 of lihtc development is offset by a reduction in the number of newly built unsubsidized rental units although the confidence band around this point estimate allows for less dramatic assessments additional estimates suggest that lihtc development has a much more moderate impact on construction of owner occupied housing but these estimates are imprecise overall while lihtc development may well affect the location of low moderate income rental housing opportunities our estimates suggest that the impact of the program on the number of newly developed rental housing units appears to be small

the regulation of labor author s botero juan djankov simeon la porta rafael lopez de silanes florencio shleifer andrei abstract we investigate the regulation of labor markets through employment collective relations and social security laws in 85 countries we find that the political power of the left is associated with more stringent labor regulations and more generous social security systems and that socialist french and scandinavian legal origin countries have sharply higher levels of labor regulation than do common law countries however the effects of legal origins are larger and explain more of the variation in regulations than those of politics heavier regulation of labor is associated with lower labor force participation and higher unemployment especially of the young these results are most naturally consistent with legal theories according to which countries have pervasive regulaory styles inherited from the transplantation of legal systems

do the gses expand the supply of mortgage credit new evidence of crowd out in the secondary mortgage market abstract the dramatic government takeover of fannie mae and freddie mac in september 2008 was motivated in part by a desire to ensure a continued flow of credit to the mortgage market this study examines a closely related issue the extent to which gse activity crowds out mortgage purchases by private secondary market intermediaries evidence of substantial crowd out suggests that government support for the gses may be less warranted whereas the absence of crowd out implies that gse loan purchases enhance liquidity using 1994 2008 hmda data for conventional conforming sized loans three distinct periods with regard to gse crowd out are apparent from 1994 to 2003 the share of loans sold to the secondary market increased from 60 to over 90 private sector and gse market shares of loan purchases were roughly similar for most market segments and iv estimates indicate relatively little gse crowd out of private secondary market purchases from 2004 to 2006 private loan purchases boomed and dominated those of the gses while iv estimates indicate crowd out jumped to 50 at the peak of the boom this is especially true in the market for home purchase as opposed to refinance loans with the crash in housing and mortgage markets in 2007 private sector intermediaries pulled back the gses regained market share and evidence of gse crowd out disappeared in both the home purchase loan and refinance markets these patterns suggest that the degree of gse crowd out varies with market conditions and that the federal takeover of fannie mae and freddie mac likely served to enhance liquidity to the mortgage market during the 2007 2009 financial crisis

the cultural relativity of organizational practices and theories this paper summarizes the author s recently published findings about differences in people s work related values among 50 countries in view of these differences ethnocen tric management theories those based on the value system of one particular country have become untenable this concept is illustrated for the fields of leadership organization and motivation a key issue for organization science is the influence of national cultures on introduction management twenty or even 10 years ago the existence of a relationship be management and tween management and national cultures was far from obvious to many and it national cultures may not be obvious to everyone even now in the 1950s and 60s the dominant be lief at least in europe and the u s was that management was something univer sal there were principles of sound management which existed regardless of na tional environments if national or local practice deviated from these principles it was time to change local practice in the future the universality of sound manage ment practices would lead to societies becoming more and more alike this ap plied even to the poor countries of the third world which would become rich as well and would be managed just like the rich countries also the differences be tween management in the first and second world capitalist and socialist would disappear in fact under the surface they were thought to be a lot smaller than was officially recognized this way of thinking which dominated the 1950s and 60s is known as the convergence hypothesis during the 1970s the belief in the unavoidable convergence of management prac tices waned it was too obviously in conflict with the reality we saw around us at the same time supranational organizations like the european common market which were founded very much on the convergence belief had to recognize the stubbornness of national differences even within existing nations regional dif ferences became more rather than less accentuated the welsh the flemish the basques the bangladeshi the quebecois defended their own identity and this was difficult to reconcile with a management philosophy of convergence it slowly became clear that national and even regional cultures do matter for management the national and regional differences are not disappearing they are here to stay in fact these differences may become one of the most crucial problems for man agement in particular for the management of multinational multicultural orga nizations whether public or private

culture and congruence the fit between management practices and national culture the financial performance of european and asian work units of one multinational company is examined as a function of the congruence between management practices and national culture using hofstede s five national culture dimensions and analogous management practices we find that work unit financial performance is higher when management practices in the work unit are congruent with the national culture

stock based pay in new economy firms abstract ittner lambert and larcker j accounting economics 2003 this issue present compelling evidence that new economy firms rely more on stock based compensation than do old economy firms based on 1998 and 1999 data from a proprietary sample of companies i complement the ill results by analyzing data over a longer time period 1992 2001 and more importantly document the effect of the 2000 market crash on stock based pay in new economy firms finally i offer evidence supporting the conjecture that differences in pay practices between new and old economy firms reflect accounting considerations perceived costs and competitive inertia

optimum growth and carbon policies with lags in the climate system we study the optimal carbon tax in an economy in which climate change stemming from polluting non renewable resource affects the economy s growth potential our main contribution is to introduce and explore the natural time lag of the climate system between emissions and damages to capital accumulation in an endogenous growth setting this allows us to investigate how optimal climate policy and its interplay with climate dynamics affect long run growth and the transition of the economy towards it without pollution decay a higher speed of emissions diffusion steepens the growth profile of the economy with pollution decay this leads to lower short run but higher long run economic growth during transition poor understanding of the emissions diffusion process leads to suboptimal carbon taxes resource extraction and growth

uncertainty avoidance and the timing of employee stock option exercise we examine the impact of the cultural norm of uncertainty avoidance on employee stock option eso exercise behavior using proprietary data from a multinational firm we find that employees from countries with higher levels of uncertainty avoidance exercise their stock options earlier these findings lend support to a maintained assumption in the eso literature that employee attitudes toward uncertainty influence stock option exercise behaviors our findings further help to explain prior findings of cross cultural differences in firms compensation practices by indicating that employee responses to option based pay and firms consequent financial reporting costs vary as functions of employee uncertainty avoidance

economic demographic and institutional determinants of life insurance consumption across countries life insurance has become an increasingly important part of the financial sector over the past 40 years providing a range of financial services for consumers and becoming a major source of investment in the capital market but what drives the large variation in life insurance consumption across countries remains unclear using a panel with data aggregated at different frequencies for 68 economies in 1961 2000 this article finds that economic indicators such as inflation income per capita and banking sector development and religious and institutional indicators are the most robust predictors of the use of life insurance education life expectancy the young dependency ratio and the size of the social security system appear to have no robust association with life insurance consumption the results highlight the importance of price stability and banking sector development in fully realizing the savings and investment functions of life insurance in an economy

national culture and the choice of exchange rate regime abstract based on the social analysis framework of williamson we argue that national culture especially the individualism collectivism dimension located in the social embeddedness level can guide behaviors and decisions in a country including the choice of exchange rate regime we argue that individualistic societies are more likely to choose floating regimes because their economic agents are independent overconfident and have higher levels of risk tolerance individualistic societies are also associated with better financial development fewer capital controls and more democratic institutions which are all tied to a higher probability of choosing a floating exchange rate regime we use data on 78 countries over the 1976 2014 period and we control for common determinants of exchange rate regimes we find that individualistic countries have a significantly higher probability of implementing a floating regime than a fixed regime our evidence is robust to using an instrumental variables approach an alternative estimation technique an alternative regime classification alternative proxies for culture a subsample analysis and additional controls we also find that other cultural dimensions uncertainty avoidance power distance and masculinity can influence the choice of exchange rate regime but their effect is weaker than that of individualism

employee stock option exercises an empirical analysis this paper describes the exercise behavior of over 50 000 employees who hold longterm options on employer stock at eight corporations employees typically exercise options years before expiration commonly sacrificing half of the black scholes value exercise is strongly associated with recent stock price movements the market to strike ratio proximity to vesting dates time to maturity volatility and the employee s level within the company these findings have implications for compensation planners the fasb as it develops a new accounting standard for options and financial statement users and preparers who apply and interpret the new fasb standard

does a recession call for less stringent environmental policy a partial equilibrium second best analysis this paper analyses second best optimal environmental policy responses to real and financial shocks in a two period partial equilibrium model with heterogeneous firms an environmental externality and credit constraints we show that to alleviate credit constraints and encourage investment the second best optimal emission tax falls short of marginal emission damages the optimal response to shocks depends on how the shock affects the size of the environmental and credit market failures and the effectiveness of the tax in alleviating these market failures under mildly restrictive assumptions on functional forms the optimal response to a persistent negative productivity shock or a tightening of credit is to reduce the emission tax our results are informative for how climate change policy should optimally change with the business cycle

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

a cultural explanation of the foreign bias in international asset allocation abstract this paper examines the foreign bias in international asset allocation following extant literature in behavioral finance we argue that a society s culture and the cultural distance between two markets play an important role in explaining the foreign bias in particular we hypothesize that the degree of a nation s uncertainty avoidance affects the foreign bias more uncertainty avoiding countries allocate less to foreign markets as does the degree of a country s individualism in individualistic countries performance is more directly attributed to a person and less to teams causing these individuals to be more aggressive in their foreign asset allocations we further expect that the degree of cultural distance between two countries affects the amount of money allocated to that market based on extensive robustness analyses we find support for our hypotheses on the role of culture in international asset allocation

determinants of non life insurance expenditure in developed and developing countries an empirical investigation the determinants of non life insurance expenditure in a panel data set covering 36 developed countries and 31 developing countries for the period 2000 2011 are analysed results of our instrumental variable analysis indicate that economic freedom income bank development urbanization culture and law systems are the key drivers of the non life insurance expenditure across countries however their impacts differ significantly between the groups of developed and developing countries suggesting that the heterogeneity among countries in terms of the level of development plays an important role the global financial crisis is also found to influence the direction of those effects especially in developed countries the article yields useful policy and economic implications for governments and multinational non life insurance companies with regard to the development of the non life insurance sector an important engine for economic growth and prosperity

the influence of culture on budget control practices in the usa and japan an empirical study this article reports the results of a study that hypothesized the influence of culture on six aspects of budget control practices in the united states and japan data were collected through questionnaires from 70 manufacturing companies in the united states and 149 such companies in japan results of data analyses indicate that the individualism collectivism dimension would seem to explain why the u s companies compared to the japanese companies tend to use communication and coordination more extensively build budget slack to a greater extent and use long term performance evaluations to a lesser extent the implications of the results for further research and practice are discussed

crowding out effects of affordable and unaffordable housing in china 1999 2010 using panel data on housing construction this article examines the crowding out effects of affordable and unaffordable housing in china from 1999 to 2010 applying a dynamic panel model allows us to examine the dynamic interactions between affordable and unaffordable housing constructions when controlling for region specific fixed and time specific effects we analyse whether affordable unaffordable housing construction has changed in response to the past and contemporaneous construction of unaffordable affordable housing our empirical results reveal an asymmetric crowding out pattern between affordable and unaffordable housing we also observe that when urbanization rate is lower than 57 39 unaffordable housing construction crowds out affordable housing construction moreover the crowding out effect of unaffordable housing on affordable housing decreases with rising urbanization rates

the salience of culture s consequences the effects of cultural values on top executive commitment to the status quo while top executives are argued to play a central role in strategic adaptation evidence suggests that they are not equally open to organizational change this study extends earlier investigation of the determinants of top executive commitment to the status quo csq to the international arena examining the influence of cultural values on executive open mindedness toward change using data from a survey of top managers in 20 countries analyses reveal that values of individualism uncertainty avoidance power distance and long term orientation are significantly related to executives adherence to existing strategy and leadership profiles further while confirming earlier findings that industry tenure is positively related to strategy csq results show that tenure does not significantly affect leadership csq once cultural values are controlled in summary the findings reveal that culture has an important impact on executive mindsets as demonstrated by the fact that executives of differing cultural background are not equally open to change in organizational strategy and leadership profiles second the findings suggest that executives views of appropriate leadership profiles reflect the imprint of cultural socialization moreso than professional experience finally and more broadly the study offers empirical support for the view that values figure prominently in shaping executives strategic and leadership orientations 1997 by john wiley sons ltd

green attitude and economic growth we analyze the interdependence between green attitude and equilibrium development of environmental quality in an endogenous growth model individuals take only part of their impact on pollution into account hence there is a negative externality of capital accumulation on environmental quality increasing wealth or increasing pollution enhance green attitude and reduce the externality because individuals care more about the environment if their income is higher or if pollution is more obvious the time path of pollution as well as the evolution of equilibrium growth are shown to depend crucially on the determinants of green attitude ongoing growth may lead to complete internalization of the environmental externality if green attitude improves with increasing wealth e g as a consequence of an increase in environmental education in contrast if green attitude is determined exclusively by the level of environmental quality pollution remains at a suboptimally high level the interdependence of wealth and pollution in the determination of environmental awareness implies more complex dynamics capital growth enhances green attitude and thereby decreases pollution improved environmental quality in turn may increase capital growth due to less green attitude and therefore slow down convergence to the sustainable balanced growth path

what has happened to the bottom of the us housing market housing quality has improved dramatically for most low income households but they are paying much larger shares of their income for it many discussions of the bottom of the market focus on either the rising costs the bad news or the rising quality the good news both points of view have some merit this paper takes a positivist approach to the question what s happening to the bottom of the housing market we use a variety of indicators to look at whether the supply of low cost units has fallen we then focus on whether this dwindling supply reflects a market failure if the market for low income housing is indeed failing we would observe relatively high prices per unit of housing services provided by low quality housing obstructions to the supply of low cost housing which arises largely from filtering and high vacancy rates we find evidence of market failure in some markets but not in others finally we focus on one possible source of market failure excessive regulation to see whether it

leading cultural research in the future a matter of paradigms and taste the styles and approaches used in cross cultural organizational research are nearly as varied as the cultures under study we see two variations of one dominant style in the work of hofstede and the globe research consortium in this commentary i shall place these approaches in context and discuss alternatives that seem to be highly promising but largely overlooked based on this analysis i conclude that it may well be time that this form of large scale multi country survey be set aside for the development of alternative mid range theories having a more direct application and explanation for organizational phenomena in a cultural and national context

national culture and financial systems countries differ in the way their financial activities are organized in anglo saxon countries such as the us and the uk financial systems are dominated by stock markets whereas in continental europe and japan banks play a predominant role why do countries differ in the configuration of their financial systems we argue that national culture plays a significant role we find that countries characterized by higher uncertainty avoidance are more likely to have a bank based system

explaining the negative correlation between values and practices a note on the hofstede globe debate this note provides an explanation for the presumably counterintuitive negative correlations between values and practices reported by the global leadership and organizational behavior effectiveness project we argue that such results are compatible with basic microeconomic insights concerning diminishing marginal utility this explanation implies that values surveys as they are generally elicit marginal preferences rather than underlying values therefore they are a problematic instrument for the measurement of cultures and need to be improved so as to discriminate between the importance attached to an objective in general and that attached to it given current levels of satiation

explaining diversity in the worldwide diffusion of codes of good governance extending earlier literature on diffusion of codes of good governance cggs by integrating the effect of national culture this study offers a novel perspective on cross national diversity in the worldwide diffusion of corporate governance best practices we argue that particular cultural dimensions affect the indicators i e total number of codes per country and identity of issuing organizations of such diffusion for a sample of 67 countries our analysis reveals that individualist cultures have a stronger tendency to develop cggs in cultures with a high receptivity to power differences there is a higher probability that the first issuers are the government directors or professional associations whereas with low receptivity the stock exchange and investors groups of issuers are more likely to initiate the first code the effects of culture remain significant even after accounting for differences in legal systems and economic institutions indicating that national culture may serve as a comprehensive indicator of the regulatory stance with respect to good governance indeed the effect size is large enough to give pause e g to a location choice and possibly has relevance for strategic decision making by international companies

collectivism and corruption in bank lending this paper examines how national culture and collectivism in particular influences corruption in bank lending we hypothesize that interdependent self construal and particularist norms in collectivist countries lead to a higher level of lending corruption through their influence both on the interactions between bank officers and bank customers and on the dynamics among bank colleagues using a sample covering 3835 firms across 38 countries we find strong evidence that firms domiciled in collectivist countries perceive a higher level of lending corruption than firms domiciled in individualist countries in terms of economic magnitude the effect of collectivism is substantially larger than the effects of other cultural dimensions uncertainty avoidance masculinity and power distance and institutional factors identified in prior studies bank supervision bank competition information sharing and media monitoring we further find that the positive relationship between collectivism and lending corruption is not driven by endogeneity and that it is robust to different measures of bank corruption different measures of collectivism and different estimation methods finally we find that the link between collectivism and lending corruption cannot be explained by the role of the government in the economy political connections biased responses from disgruntled borrowers or relationship lending

individualism collectivism as a moderator of the work demands strains relationship a cross level and cross national examination surveying 6509 managers from 24 countries geopolitical entities we tested the process through which individualism collectivism at the country level relates to employees appraisals of and reactions to three types of work demands i e work hours workload and organizational constraints our multilevel modeling results suggested that while working the same number of hours employees from individualistic countries reported a higher perceived workload than their counterparts in collectivistic countries furthermore relationships of perceived workload and organizational constraints with job dissatisfaction and turnover intentions were stronger in individualistic than in collectivistic countries importantly results of supplementary analyses suggested that the cultural value of individualism collectivism moderated the mediation effect of perceived workload between work hours and both job dissatisfaction and turnover intentions our findings highlight the need to expand contemporary theories of work stress by applying multilevel approaches and incorporating cross national differences in dimensions such as individualism collectivism while studying how employees appraise and react to important work stressors