dynamics of niche width and resource partitioning this article examines the effects of crowding in a market center on rates of change in organizational niche width and on organizational mortality it proposes that although firms with wide niches benefit from risk spreading and economies of scale they are simultaneously exposed to intense competition an analysis of organizational dynamics in automobile manufacturing firms in france germany and great britain shows that competitive pressure not only increases the hazard of disbanding but also prompts organizational transformations that give rise to processes of resource partitioning emphasizing the content process distinction in conceptualizing organizational change the article finds that the process effect of changes in niche width and position increases mortality hazards we discuss our findings in light of the processes investigated by the ecological theories of density dependence resource partitioning and structural inertia and point to the theoretical links that help to integrate these theories

organizational identities and the hazard of change industrial and corporate change volume 15 number 5 pp 755 784 doi 10 1093 icc dtl020 advance access published august 8 2006 organizational identities and the hazard of change michael t hannan james n baron greta hsu and ozgecan kocak we examine how the life chances and financial performance of nascent high technology firms were affected by two kinds of organizational changes altering founders blueprints for the employment relation and replacing a founder chief executive officer ceo by an outsider we argue that both events destabilize organizations but that changes in employment blueprints are tied more tightly to the organization s identity and thus are more destabilizing we analyze three dimensions of organizational performance among a sample of young high technology companies in california s silicon valley survival versus failure launching an initial public offering ipo and changes in financial valuations among organi zations that underwent an ipo as predicted changing the employment blueprint increased the hazard of failure and diminished growth in market value appoint ing an outsider as ceo did not affect the hazard of failure appreciably but did depress the rate of growth in market capitalization the implications of these results for ecological and institutional perspectives on organizations are discussed 1 imprinting identity and disruptive change the proposition advanced by hannan and freeman 1984 that altering an organiza tion s core features is hazardous has been the focus of much theorizing and empirical research barnett and carroll 1995 carroll and hannan 2000 this research has generally emphasized one side of the inertia story the disruption entailed in reorgan izing routines and architectures the other side of the story that changes in core fea tures might be viewed as violations of deep seated taken for granted expectations by key organizational constituents has received less attention this article attempts to redress the balance by developing an identity based notion of an organization s core and testing the proposition that changing such core features is especially destabilizing notions of identity played an important part in shaping the original inertia argu ment for instance hannan and freeman 1984 155 156 motivated their argument with the example of the university although some features such as textbooks con stantly change in an adaptive way changing a curriculum from liberal arts to voca tional training would be extraordinarily difficult the curriculum is difficult to the author 2006 published by oxford university press on behalf of associazione icc all rights reserved

the influence of competitive positioning and rivalry on emerging market risk assessment rating agencies play a pivotal role in international credit transactions their sovereign risk assessments are largely thought to reflect objective evaluations of the creditworthiness of potential borrowers we test this assumption by examining the role that competitive positioning and dynamics play in the risk assessments these agencies provide our analyses of agency risk assessments for emerging market sovereign borrowers indicate that they are significantly related to agency positioning as an incumbent or insurgent new entrant to agency specialization in sovereigns from particular geographic regions and in some instances to the level of agency rivalry in a specific sovereign market our findings suggest both significant general and contingent links between foreign investment risk assessment and competitive positioning and rivalry among agencies

modelling political instability and economic performance israeli investment during the intifada i construct a model of investment in israel that incorporates both standard economic factors and indicators of political instability and unrest the model is used to estimate both the extent to which the intifada has depressed israeli investment in different kinds of capital good and the size of the corresponding peace dividend

option pricing and foreign investment under political risk abstract the paper analyses asset prices in a context of uncertainty over future government policy as current policy is maintained perceived risk abates thus leading to a gradual appreciation of asset prices and a gradual decrease in their conditional variance option values computed under this process have time series and the term structure of conditional volatility which in general are downward sloping in price series without a policy reversal implied volatility from option prices will exceed actual volatility with this wedge progressively disappearing this may be viewed as the volatility analogue of the peso premium for assets subject to large infrequent price drops

accounting for retail land sales analysis of a mandated change abstract this study assesses the stock market s reaction to a series of events leading up to a mandated change in accounting for retail land sales evidence is found to support the conclusion that the market reacted to some of these events in a manner consistent with the effects of the accounting change on debt annagement contracts a distinctive aspect of the analysis is the efficient use of security returns data to detect market reactions and to derive empirical distributions of test statistics employed the analysis is extended by a model for grouping regression equations known as seemingly unrelated regressions however the gains from this extension are modest

measuring the effects of regulation with stock price data this article examines the usefulness of stock returns in measuring the effects of regulation when the dates on which market expectations change are not known and standard sources e g the wall street journal are used to choose announcement dates twenty major changes in regulatory constraint since 1887 are considered tests using either monthly or daily data are found to have surprisingly little ability to detect the effects of regulation the evidence shows that formal regulatory announcements are generally anticipated in cases where it is unclear when expectations change

the wealth effects of deregulation of canadian financial institutions abstract canada like other industrial countries recently introduced various financial reforms to remove the barriers separating the operations and ownership of banks from non bank financial institutions this study analyzes the wealth effects of the reforms on the banks and non bank financial institutions and the changes in their systematic risk resulting from financial deregulation over the period 1984 to 1991 the results indicate that while there was a significant cumulative gain for the insurance industry unlike a number of u s studies there was no evidence of wealth transfer among the institutions during the period of deregulation of the canadian financial system additional tests indicate that although the regulatory changes did not have a significant effect on the risk of the banks the systematic risk of the non bank financial institutions increased significantly during the period of regulatory reforms

why the microbrewery movement organizational dynamics of resource partitioning in the u s brewing industry1 the number of small specialty brewers in the u s beer brewing industry has increased dramatically in recent decades even as the market for beer became increasingly dominated by mass production brewing companies using the resource partitioning model of organizational ecology this article shows that these two apparently contradictory trends are fundamentally interrelated hypotheses developed here refine the way scale competition among generalist organizations is modeled and improve the theoretical development of the sociological bases for the appeal of specialist organizations products especially those related to organizational identity evidence drawn from qualitative and quantitative research provides strong support for the theory the article offers a brief discussion of the theoretical and substantive issues involved in application of the model to other industries and to other cultures

income distribution political instability and investment abstract this paper successfully tests on a sample of 71 countries for the period 1960 85 the following hypotheses income inequality by fuelling social discontent increases sociopolitical instability the latter by creating uncertainty in the politico economic environment reduces investment as a consequence income inequality and investment are inversely related since investment is a primary engine of growth this paper identifies a channel for an inverse relationship between income inequality and growth we measure socio political instability with indices which capture the occurrence of more or less violent phenomena of political unrest and we test our hypotheses by estimating a two equation model in which the endogenous variables are investment and an index of socio political instability our results are robust to sensitivity analysis on the specification of the model and the measure of political instability and are unchanged when the model is estimated using robust regression techniques

platform investments and volatile exchange rates direct investment in the u s by japanese electronic companies this study examines the effects of previous entry on the subsequent decisions of japanese electronics companies to invest in the united states by gathering data at the firm level the empirical analysis provides a fine grain sorting out of firm and industry effects on foreign direct investment decisions the findings show that investment behavior is highly heterogeneous across firms and reflects their individual technological capabilities and their history of previous investments in the united states real exchange rate levels are also important the results suggest that initial investments serve as platforms for subsequent entry with the timing of entry triggered by movements in real exchange rates copyright 1996 by mit press

governance form and organizational adaptation lessons from the savings and loan industry in the 1980s this paper explores how governance form affects the organizational capacity for adaptation we make a general case about the importance of governance in adaptation and we identify three mechanisms through which governance form may affect organizations ability to manage the competency and failure traps that often frustrate the process we look for evidence of these mechanisms through a study of the u s savings and loan s l industry in the 1980s this is an apt context because s ls were confronted by severe environmental changes that suggested a need for change of a relatively radical sort during this decade and because the industry contains a mix of governance forms stock form firms and mutual associations we examine whether mutuals and stocks differed in their propensity to move away from their traditional business and mission of residential mortgage lending in response to the challenges of the 1980s we also consider whether stocks and mutuals differed in their performance outcomes during this decade results indicate that mutuals were slightly less prone toward change but were in no sense inertial they also show that mutuals performed better overall and appeared to change more successfully than did stock firms the overall pattern of results suggests that mutual governance was a resource that allowed s ls to better balance exploration and exploitation in the face of a changing and ambiguous environment we consider the broader implications of these findings for research on organizational adaptation governance form and governance more generally

capital gains tax and equity values empirical test of stock price reaction to the introduction and reduction of capital gains tax exemption abstract this paper evaluates the differential effect on stock prices of the introduction in canada of 500 000 capital gains tax exemption and the reduction of this limit to 100 000 two years later using the seemingly unrelated regression methodology and controlling for thin trading and heteroscedasticity the empirical evidence indicates that the changes in capital gains tax laws had a differential effect on low dividend yield and high dividend yield stocks on both occasions while the evidence indicates that the stock market anticipated the 1985 capital gains tax law changes the significant market reaction to the 1987 reduction of the exemption occurred a day before and after the reading of the tax reform proposals in parliament thus it can be inferred from the results that despite the presence of tax sheltering opportunities in canada changes in capital gains tax laws affect equity values

a new test of the relationship between regulatory change in financial markets and the stability of beta risk of depository institutions the us economy experienced major regulatory changes in the banking and finance industry with the passage of five major acts over the period 1980 to 1991 this has generated an extensive literature investigating the effects of these changes on the us banking industry in particular this body of research has examined the share market reaction to regulatory changes as well as their impact on the risk return market value and profitability of banking industry stocks generally it has been found that the regulatory changes have had a substantial impact although the effect has not been uniform across all depository institutions this paper extends this literature by analysing the stability of a sample of eighteen us banking industry stock betas across five periods a pre regulatory change period a monetary experiment period a deregulation period a reregulation period and a post regulatory change period based on an analysis of weekly returns we find that the level of bank risk has increased further we also find a tendency towards greater beta instability in both the monetary experiment and deregulation samples the degree of beta instability is lowest in the pre regulatory change and post regulatory change samples overall the monetary experiment and regulatory change coincided with an increased tendency towards beta instability we also compare our results to a randomly selected control sample of non banks and find some more general effects of regulatory change on individual stock betas

the market valuation effects of the financial institutions reform recovery and enforcement act of 1989 abstract this paper evaluates the stock market effects of events leading to the passage of the financial institutions reforms recovery and enforcement act of 1989 the evidence suggests that the signing of the act by president bush produced positive abnormal returns for both banks and s ls and that the addition of tougher capital standards produced positive returns for s ls in addition the act increased the risk of both banks and s ls

organizational inertia and momentum a dynamic model of strategic change this study provides an empirical test of hannan and freeman s theory of structural inertia we examined the changes organizations undertook in response to a major environmental change in addition

the dynamics of stock index and stock index futures returns in rational efficiently functioning markets the returns on stock index and stock index futures contracts should be perfectly contemporaneously correlated this study investigates the time series properties of 5 minute intraday returns of stock index and stock index futures contracts and finds that sp however the effect is not completely unidirectional with lagged stock index returns having a mild positive predictive impact on futures returns

an examination of investor behavior during periods of large dividend changes the information content of dividends hypothesis which emanates from the early work of lintner 17 and miller and modigliani 18 states that managers use dividend announcements to signal their beliefs about the prospects of the firm thus an announcement of an increase in the dividend rate reflects management s belief that the firm s cash flows in the foreseeable future will be sufficiently high to sustain payment at the increased rate similarly an announcement of a dividend decrease occurs only when management is extremely pessimistic about the probability that future cash flows will be sufficient to continue dividends at their present rate the theoretical implication of the information content hypothesisis that the announcement of a dividend or change in dividend conveys information about management s assessment of the firm s prospects that this information is different from other information provided by management and this information may cause an immediate investor reaction including but not limited to price changes

stock market reactions to the depository institutions deregulation and monetary control act of 1980 abstract this paper evaluates the effects of events leading to the passage of the depository institutions deregulation and monetary control act of 1980 the evidence suggests that the initial proposal of the act by then president carter and the final passage of the act by the house of representatives produced positive abnormal returns to stockholders of large commercial banks stockholders of small commercial banks and small savings and loans on the other hand generally experienced negative abnormal returns furthermore when hopes of passage of the act faced significant negative positive abnormal returns were experienced by stockholders of large small commercial banks

a multivariate garch model of international transmissions of stock returns and volatility the case of the united states and canada this study examines the short run dynamics of returns and volatility for stocks traded on the new york and toronto stock exchanges the main finding is that inferences about the magnitude and persistence of return innovations that originate in either market and that transmit to the other market depend importantly on how the cross market dynamics in volatility are modeled moreover much weaker cross market dynamics in returns and volatility prevail during later subperiods and especially for canadian stocks with shares dually listed in new york implications for international asset pricing hedging strategies and regulatory policy are discussed

evidence of risk premiums in foreign currency futures markets benchmark portfolios for con sumption and wealth when the parameters rep resenting the prices of the covariance risks areheld constant no risk premiums are detected however when these prices are allowed to varywith the conditional expected returns and vari ances of the benchmark portfolios possibly reflect ing changing investment opportunities strong evi dence of risk premiums is obtained recent examinations of foreign currency futures datahave tested the hypothesis that today s futures priceis an unbiased predictor of tomorrow s price againstan unspecified alternative hypothesis the accumu lated evidence against the unbiasedness hypothesishas not been accompanied by evidence consistentwith a particular equilibrium risk premium model

an examination of the impact of the garn st germain depository institutions act of 1982 on commercial banks and savings and loans this paper evaluates the effects of events leading to the passage of the garn st germain depository institutions act of 1982 the evidence suggests that the call for reform by president reagan s housing commission and the senate passage of the bill produced positive abnormal returns to stockholders of large savings and loans and commercial banks stockholders of small s ls and banks on the other hand generally experienced negative abnormal returns furthermore when hopes of passage of the act faded significant negative positive abnormal returns were experienced by stockholders of large small s ls and banks this study examines the impact of the passage of the garn st germain depository institutions gsgdi act of 1982 on commercial bank and savings and loan stockholder returns the gsgdi act represents one of two major revisions of the financial system over the last twenty years the other being the depository institutions deregulation and monetary control act of 19801 the proposal for such a change reflected the growing inadequacy of the regulatory structure of financial institutions to adapt to rapid changes in technology shifting consumer demands for financial services and extremely volatile interest rates efforts to reform the financial system resulted in passage of the gsgdi act of 1982 which included provisions seeking to improve both the implementation of monetary policy and the degree of equity in the regulation of financial institutions such improvements were intended to reduce the operational and financial risk of financial institutions a central issue in the economics of regulation is whether regulatory actions benefit the economic agents they are intended to benefit a large body of literature exists which examines the economic effects of regulation much of this literature has utilized the concepts and methods of welfare economics to assess the extent

policy uncertainty and the sequence of entry by japanese firms 1980 1998 we extend the stages model of internationalization to incorporate a sophisticated consideration of temporal and cross national variation in the uncertainty of the policy environment using a sample of 6465 international expansions of 665 japanese manufacturing firms in 49 countries we develop arguments from internationalization and bargaining power perspectives to show how japanese firms manage policy uncertainty in host country environments through the within country sequencing of investments although a distribution to manufacturing entry sequence tends to prevail in countries with low levels of policy uncertainty as uncertainty in the policy environment increases initial entry by distribution is increasingly likely to be eschewed in favor of an initial entry by a joint venture manufacturing plant we suggest that this change in investment sequence occurs as firms shift from an emphasis on developing knowledge about local markets and consumers in low hazards markets to an international expansion strategy in uncertain policy environments that places knowledge development of the policy environment at the forefront of a firm s strategy

the impact of political risk on the volatility of stock returns the case of canada this paper examines the impact of political risk in canada on the volatility of stock returns our results suggest that political news associated with the possible separation of quebec from canada plays an important role in the volatility of stock returns however our evidence indicates that investors do not require a risk premium supporting the idea that political risk is diversifiable we also show that stock return volatility varies with the degree of a firm s exposure to political risk namely the structure of assets and the extent of foreign involvement which indicates that firms most exposed to political risk bear the burden of diversification

output stock volatility and political uncertainty in a natural experiment germany 1880 1940 why does stock volatility increase when output declines the theory of investment under uncertainty implies that political uncertainty may simultaneously increase volatility and reduce output though cause and effect are typically hard to separate the transition from imperial to weimar germany offers a natural experiment because major political events left clear traces on stock prices current and past increases in volatility are associated with output declines consistent with u s experience however political events are more clearly the source of volatility and the results support the view that the relationship between volatility and output ref lects the joint effects of political factors why does stock volatility change over time and why is it higher in recessions though the basic facts are well established huang and kracaw 1984 schwert 1989a romer 1990 pindyck 1991a the causal link between volatility and business slumps is unclear slumps may cause volatility volatility may cause slumps or both may be the consequence of some other more clearly exogenous factor political uncertainty may represent such an exogenous factor consider the great depression in the united states major changes in economic policy occurred in the 1930s and even larger changes were a possibility the highly volatile stock market of the 1930s may very well have ref lected a nonnegligible f luctuating probability that the united states would go socialist the same uncertainty about economic policy may also have caused a slump in business investment and reduced consumer spending though the explanation has appeal political uncertainty was not clearly exogenous a critic could say that higher volatility and the radical nature of policy debate were consequences of the decline in output and the depression itself had other causes as schwert 1989b points out in a more general context we can easily construct links between volatility and the business cycle but causation is hard to pin down this paper looks at stock volatility and output in a case marked by a clear exogenous political shock until the start of world war i in 1914 imperial germany had a stable limited government weimar germany after the war

political instability uncertainty and economics this paper focuses on the relationship between political instability policy making and macroeconomic outcomes the theoretical section explores various models that explain the effect of instability and political uncertainty on growth budget formation inflation and monetary policy the empirical section discusses the evidence on the predictions generated by theoretical models preliminary to this discussion however is the analysis of a few general issues concerning the specification and estimation of econometric models with political variables some new results are then produced on the empirical relevance of theories of strategic use of fiscal deficit

ceba of 1987 and the security returns and market risk of savings and loan institutions a note abstract this article examines the market reaction to announcements leading to the eventual passage of the competitive equality banking act ceba of 1987 using portfolios of savings and loans negative announcement effects of the ceba legislation are observed for well capitalized savings and loans and positive announcement effects are observed for less capitalized savings and loans the evidence also indicates that the market risk for the less capitalized savings and loans decreased following the passage of the ceba legislation

the effect of asset and ownership structure on political risk some evidence from mitterrand s election in france abstract previous research suggests that political risk varies considerably from firm to firm yet few empirical tests of the cross sectional variation in political risk exist french assets were massively revalued the day after mitterrand was elected in 1981 providing a unique opportunity to test for the effect of firm specific factors on political risk although foreign ownership tends to increase political risk other factors can reduce it a simple model of political behavior is presented in which politicians value among other things economic growth a foreign firm with significant future growth options is likely to experience less political risk than other foreign firms and under certain circumstances less risk than even other domestic firms tests of these hypotheses are conducted using data from the french and u s capital markets the results are generally consistent with the hypotheses

a note on deposit rate deregulation super nows and bank security returns abstract this paper empirically investigates the effects on the weekly returns of almost 100 banking organizations of the december 1982 authorization of super nows examination of excess returns around the announcement date suggests that the announcement of the super nows had a statistically significant and negative effect and that the impact differed significantly by type of bank while returns for money center banks were generally unaffected excess returns for regional retail banks were highly significant

the valuation effects of the 1977 community reinvestment act and its enforcement abstract we examine the wealth effects of the passage of the community reinvestment act cra of 1977 for commercial banks and savings and loan associations we find significantly negative average excess returns for small nyse amex banks and sl in contrast there is no evidence that large nyse amex institutions or nasdaq institutions experience wealth losses we also study the effects of individual cra protests against institutions and find they produce significantly negative excess returns which are not reversed when the protests are resolved our results have implications for proposed changes to cra and for the future consolidation of the financial services industry the results also demonstrate the difficulties associated with studying returns from the early years of the nasdaq market

interest rate deregulation and banks off balance sheet activities a hong kong perspective through the interest rate deregulation and banks off balance sheet activities obsas in hong kong this study investigates the debate over the impact of banking deregulation on banks risk taking behaviour on the one hand the arrow effect implies that increased competition caused by the interest rate deregulation motivates hong kong banks to speed up their development of obsas as an additional but riskier income source on the other hand the schumpeterian effect implies that the deregulation may reduce the banks financial capability in developing new products and thus downscale their obsa adoption our findings show that while the negative scale effect is statistically insignificant the interest rate deregulation has a positive and significant impact on the adoption rate for all obsa categories we therefore conclude that the interest rate deregulation unambiguously leads to riskier bank behaviour in terms of higher obsa adoption

aggregate investment and political instability an econometric investigation although in theory the long run effect of uncertainty on investment is ambiguous available econometric evidence widely supports a negative association between aggregate investment and political instability a shortcoming of this body of evidence is that it has failed to investigate the existence and direction of causality between these two variables this paper fills this gap by testing for such causal and negative long run relationship between political instability and investment we find there is a causal relation going from instability to investment but it is positive and particularly strong in low income countries this finding is robust to various sensitivity checks

what makes the stock market jump an analysis of political risk on hong kong stock returns abstract this paper employs a components jump volatility filter to investigate the possible market impact of political risk the filter operates by identifying jump return dates which are then associated with political events allowing us to measure the market return and volatility effects of political announcements our empirical results show that political developments in hong kong have a significant impact on its market volatility and return the results have some interesting implications for option pricing and political risk management

citicorp travelers group merger challenging barriers between banking and insurance abstract the citicorp travelers group merger increased the prospects for new legislation to remove the barriers between banking and insurance resulting in a positive wealth effect for institutions most likely to gain from deregulation analysis of abnormal returns surrounding the merger show that life insurance companies and large banks excluding citicorp and travelers group have significant stock price increases while the returns of small banks health insurers and property casualty insurers are insignificantly different from 0 this analysis provides evidence that investors expect large banks and insurance companies to receive significant benefits from recent congressional legislation removing barriers to bancassurance

the reaction of bank stock prices to news of derivatives losses by corporate clients abstract from march through may of 1994 several large nonfinancial firms announced millions of dollars in losses from derivatives deals especially those arranged by bankers trust accompanying these announcements and related news stories were allegations that bankers trust had either misrepresented lied or deceived its clients using sur methods we investigate how these announcements affected bankers trust and three portfolios of banks dealers nondealers and nonusers our results indicate significant cumulative abnormal returns of 12 14 bankers trust 5 56 13 dealer banks and 2 45 32 nondealer user banks the evidence suggests an intra industry information transfer effect consistent with rational pricing the replacement cost of derivative contracts is an important factor in explaining the variation in abnormal returns across banks

political risk and dividend policy evidence from international political crises we examine the impact of political risk on firms payout policy using a large international sample across 35 countries over the period from 1990 to 2008 we find that global political crises raise the market perceived uncertainty and cost of external financing using crisis events as a proxy for political risk we document that past dividend payers are more likely to terminate dividends and that non payers are less likely to initiate dividends during periods of high political risk these findings suggest a precautionary incentive of managers in response to political shocks further analysis shows that the effect of political risk on payout policy is stronger for multinational corporations but can be attenuated by country specific institutional settings such as more stable political systems and stronger investor legal protection

didmca and bank market risk theory and evidence abstract this paper examines the theoretical and empirical consequences of the depository institutions deregulation and monetary control act of 1980 on the market risk of the us banking industry we survey several theoretical arguments linking deregulation of deposit interest rates to market based measures of bank risk capital market data for a sample of large commercial bank holding companies provides evidence that deregulation has accompanied increases in both systematic and nonsystematic measures of bank risk

resource nationalism meets the market political risk and the value of petroleum reserves this paper investigates the effect of resource nationalism on the value of petroleum crude oil and natural gas reserves we develop a framework for treating resource nationalism as political risk and utilize data on reserve transactions from john s herold and political risk ratings from international country risk guide and institutional investor for the period 2000 2006 controlling for other factors that affect reserve value we demonstrate the value destruction of political risk and estimate the political risk discount for 37 countries the paper contributes to both the international business literature and practitioner approaches to political risk analysis in demonstrating use of publicly available market data from real asset transactions to measure the cost of political risk we also show that the discount depends on market conditions the higher expected future petroleum prices are the larger is the discount at any level of political risk this insight adds a new dimension to analysis of political risk which is typically measured and examined without regard to market conditions

does the japanese stock market price bank risk evidence from financial firm failures the ability of the japanese stock market to appropriately price the riskiness of japanese financial firms has been frequently questioned particularly in light of japan s widespread financial distress in recent years and poor disclosure requirements this paper examines the response in equity returns of japanese banks to the failure of four commercial banks and two securities firms between 1995 and 1998 using event study methodology the analysis finds that share prices of surviving banks on the whole responded unfavorably to the failures and that financially weaker survivors were more adversely affected this suggests that despite the distress and alleged opaqueness bank shareholders were able to use available indicators of financial condition both to incorporate new information quickly into stock prices and to differentiate among banks

employing identities in organizational ecology this paper argues for greater attention to employment based organizational identities in ecological theory and research i define and explore three dimensions of particular relevance to labor market identities sharpness resonance focus and authenticity the paper offers some speculations regarding i when labor market identities are most decisive for organizations ii how product market and labor market identities interact iii how employment based organizational identities might be operationalized and iv how greater attention to such identities would illuminate key issues in organizational ecology copyright 2004 oxford university press

turning points in the civil war views from the greenback market in early 1862 the united states government began issuing greenbacks a legal tender currency that was not convertible into gold the government promised to redeem the greenbacks in gold eventually but speculators understood that the probability of redemption depended on union army military fortunes and political developments that affected the total cost of the war to serve the speculative interest in gold a market emerged for the purpose of trading greenbacks for gold dollars because the market price of a greenback reflected the public s perceptions of future war costs the movement of these prices provides unique insights into how people at the time perceived various events we use daily quotations of the gold price of greenbacks to identify a set of dates during the civil war that market participants regarded as turning points in some cases these dates coincide with events familiar from conventional historical accounts of the war in other instances however market participants reacted strongly to events that historians have not viewed as very significant this abstract was borrowed from another version of this item

an analysis of divestiture effects resulting from deregulation capital market data were used to examine the divestiture effects pertaining to deregulation the dropping of antitrust charges and the reversing of the co insurance effect associated with the recent breakup of at t the empirical results of the study indicate that significant economic events took place during the breakup process which led to transfers of wealth from various parties to the securityholders of at t the results also indicate that the buffering effect of regulation was reduced as at t went through the total deregulation process this is in accordance with peltzman s prediction the focus of this research is an involuntary breakup split up or total divestiture of a major corporation in the economy at t the breakup of at t occurring on january 1 1984 provides an excellent opportunity to study both merger and acquisition theory in reverse as well as to analyze the impact of significant deregulation on a large corporation in the economy while several firms have involuntarily divested themselves of a division or subsidiary over the recent past the size of the divestiture is usually not significant enough to be observed in the returns to bondholders stockholders and third parties the recent large scale breakup of at t by court order occurred over a fairly long time period approximately two years which makes it possible to examine the effects of certain specific subevents with respect to the wealth transfer among the claimants of the firm it is also possible to draw some conclusions about the effects of deregulation on corporate investors in general by examining the returns behavior over the extended split up period capital market data were used to examine the divestiture effects pertaining to the breakup of at t many theoretical and empirical studies have analyzed the impact of mergers and acquisitions on the wealth of corporate investors on the theoretical side single period cash flow models preserving limited liability have been developed by baron 2 chen 7 higgins and schall 11 and brennan 5 on the empirical side work by mandelker 15 langetieg 14 and asquith 1 has investigated the effect of mergers on target and bidder stockholder returns the results of these studies warrant the following general conclusions a some of the wealth of premerger stockholders may be transferred to the bondholders of southern methodist university and the university of texas at dallas respectively we would

the incidence of regulatory rents in the motor carrier industry this article focuses on two questions in the debate over motor carrier regulation first did regulation create eliminate or have no effect on monopoly rents in the trucking industry second ifthere were rents what was their incidence were they received by owners oftrucking firms dissipated through higher costs or captured by the teamsters union data on share price responses to deregulation announcements reveal declines in expected profits of 8 19 of totalfirm value this suggests that regulation created monopoly profits and indicates that at least some of these rents accrued to owners of trucking firms firms responses to regulatory change are modelled as functions of company s operating characteristics and measures of unionization operating efficiency and service characteristics are shown to affect the impact of deregulation on share values

political factors in international economics an overview abstract the intellectual interaction between politics and economics is not new theolder term to describe what economists do political economy which until recently survived only in french translation and on the masthead of one of the premier professional journals is a case in point a more pertinent example is provided by developments over the past two decades in the field of industrial organization the shift from an exclusively public interest view of economic regulation to one in which regulation is seen as the result of interaction between utility maximizing politicians and various interest groups 1 the extension of such ideas to international economics is i believe both necessary and desirable and as these papers indicate with the right experimental design it can also prove highly illuminating

governance infrastructure and us foreign direct investment this paper examines the statistical importance of governance infrastructure as a determinant of us foreign direct investment fdi in broad terms governance infrastructure represents attributes of legislation regulation and legal systems that condition freedom of transacting security of property rights and transparency of government and legal processes our econometric analysis uses a two stage estimation procedure in the first stage the probability that a country is an fdi recipient is estimated the results indicate that countries that fail to achieve a minimum threshold of effective governance are unlikely to receive any us fdi countries that receive no us fdi are typically countries that do not promote free and transparent markets that have ineffective governments and that often have legal systems that are not rooted in english common law in the second stage the analysis is restricted to those countries that did receive fdi flows the estimated equations focus on the determinants of the amount of fdi received given that a country is a recipient of us fdi governance infrastructure including the nature of the legal system is an important determinant of the amount received

an analysis of intra industry differences in the effect of regulation the case of deposit rate ceilings abstract this study examines the impact of deposit rate ceiling changes on the market value of commercial banks and stock savings and loan associations statistically significant increases in market value are found on announcement of the removal of ceilings on large denomination certificates of deposit in contrast retail commercial banks and savings and loans experienced declines in value on announcement of the elimination or relaxation of deposit rate ceilings on small denomination consumer accounts in addition for all events analyzed significant differences were found in the effect of ceiling changes on the market value of wholesale and retail commercial banks

the wealth effects of interstate branching abstract this paper examines the wealth effects of a decision by the office of thrift supervision ots to permit interstate branching for federally chartered savings and loan associations slas an event study of key ots announcements in 1991 and 1992 is conducted based on samples of 38 federally chartered slas and 88 commercial banks large slas and commercial banks generally experienced significant positive wealth effects but little or no reaction was found for smaller depository institutions these findings provide early evidence that interstate branching powers for depository institutions under the riegle neal interstate banking and branching efficiency act of 1994 will tend to benefit large institutions accelerating the trend toward consolidation though without necessarily compromising the viability of smaller institutions

who is afraid of political instability abstract an unstable macroeconomic environment is often regarded as detrimental to economic growth among the sources contributing to such instability much of the blame has been assigned to political issues this paper empirically tests for a causal and negative long run relation between political instability and economic growth but finds no evidence of such a relationship sensitivity analysis indicates that there is a contemporaneous negative relationship but also that in the long run and ignoring institutional factors the group of african countries plays the determining role

creative self destruction among organizations an empirical study of technical innovation and organizational failure in the american automobile industry 1885 1981 a hotly debated question of organizational theory especially evolutionary theories of organization asks how inert are organizational structures answering the question requires analysis of not only organizational change but also of the consequences of change for organizational survival this study examines one such organizational change technical innovation and its effects on the failure rates of american automobile producers from 1885 to 1981 technical innovations are shown to generate primarily beneficial effects for the firms spawning them and primarily detrimental effects for competitor firms however analysis of certain organizational contexts large organizations in particular suggests that the risks of innovation may on occasion outweigh benefits the findings imply that some theories of strategic management need rethinking copyright 1996 by oxford university press

event studies in economics and finance the event study is an important research tool in economics and finance the goal of an event study is to measure the effects of an economic event on the value of firms event study methods exploit the fact that given rationality in the marketplace the effects of an event will be reflected immediately in security prices thus the impact can be measured by examining security prices surrounding the event in this paper event study methods are described including some of the potential complications an example is included to illustrate the approach

the demise of expropriation as an instrument of ldc policy 1980 1992 this paper reports data collected on expropriation activity by developing countries from 1980 1992 extending previous work by kobrin 1984 kobrin s assumption that expropriation activity would continue to decrease over time and his reasons for this assumption are supported the paper introduces recent phenomena which further indicate that expropriation is unlikely to resurface in the near future as a source of multinational corporation developing country contention many developing countries now protect foreign direct investors from expropriation the broad scale movement in developing countries to privatize state owned enterprises also indicates that governments will not be eager to replace private sector activity with state ownership

modeling asymmetric comovements of asset returns existing time varying covariance models usually impose strong restrictions on how past shocks affect the forecasted covariance matrix in this article we compare the restrictions imposed by the four most popular multivariate garch models and introduce a set of robust conditional moment tests to detect misspecification we demonstrate that the choice of a multivariate volatility model can lead to substantially different conclusions in any application that involves forecasting dynamic covariance matrices like estimating the optimal hedge ratio or deriving the risk minimizing portfolio we therefore introduce a general model which nests these four models and their natural asymmetric extensions the new model is applied to study the dynamic relation between large and small firm returns article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

why do markets move together an investigation of u s japan stock return comovements this article explores the fundamental factors that affect cross country stock return correlations using transactions data from 1988 to 1992 we construct overnight and intraday returns for a portfolio of japanese stocks using their nyse traded american depository receipts adrs and a matched sample portfolio of u s stocks we find that u s macroeconomic announcements shocks to the yen dollar foreign exchange rate and treasury bill returns and industry effects have no measurable influence on u s and japanese return correlations however large shocks to broadbased market indices nikkei stock average and standard and poor s 500 stock index positively impact both the magnitude and persistence of the return correlations stock return cross country covariances play a key role in international finance changes in these covariances affect the volatility of portfolios and asset prices as these covariances increase one expects that a fewer domestic risks are internationally diversifiable so portfolio volatility increases b the risk premium on the world market portfolio increases 1 c the cost of capital increases for individual firms and d the domestic version of the capm becomes increasingly inadequate 2 despite the important economic consequences of changes in cross country covariances the determinants of the levels and dynamics of these covariances have been little studied from an academic