the nature of diversified business groups a research design and two case studies diversified business groups dominate the private sectors of most of the world s economies several of these economies have undergone sudden policy changes that significantly increase domestic competitive intensity the authors demonstrate how the changes in corporate scope that accompany such competitive shocks can be used to weigh the importance of different explanations for the existence of diversified business groups the authors illustrate their reasoning by studying the restructuring of two of india s largest business groups following a comprehensive post 1991 package of policy reforms the case studies also elucidate aspects of the restructuring process that should inform larger sample empirical analyses copyright 1998 by blackwell publishing ltd

bonus culture competitive pay screening and multitasking to analyze the impact of labor market competition on the structure of compensation we embed multitasking and screening within a hotelling framework competition for talent leads to an escalation of performance pay shifting effort away from long term investments risk management and cooperation efficiency losses can exceed those from a single principal who dulls incentives to extract rents as competition intensifies monopsonistic underincentivization of low skill agents first decreases and then gives way to growing overincentivization of high skill ones aggregate welfare is thus hill shaped while inequality tends to rise monotonically bonus caps can help restore balance in incentives but may generate other distortions

monitoring and competing principals a double edged sword abstract do monitoring technologies increase a principal s profits if she has to compete with others for an agent while monitoring improves the risk incentive tradeoff it also reduces the costs for a rivaling principal to offer a more attractive contract we show in a two action two outcome model that when the derivative of the agent s risk tolerance is smaller than one equilibrium profits are lower when monitoring is available if there is some competition when the derivative is larger than one equilibrium profits are higher when monitoring is available conversely the agent benefits from monitoring when the competition is intense but can be hurt when it is mild

turkish bank efficiency bayesian estimation with undesirable outputs this paper analyzes the productivity and efficiency of turkish banks from 2002 to 2010 we obtained estimates of efficiency productivity growth and efficiency growth using a bayesian stochastic frontier approach and focused on accounting for non performing loans npls for use in our model specifically we introduce npls as a bad output in an input distance function and estimate a system of non linear equations subject to endogeneity we confirm that the productivity growth of turkish banks was positive over the period of this study which was mainly due to the improvement in technology while efficiency growth continued to be negative over the same period methodologically we also prove that not accounting for npls in estimating the frontier model might seriously distort the efficiency and productivity results the study also provides measures of shadow prices for npl and discusses the results in terms of several interesting trends in turkish banking finally the paper provides efficiency and productivity comparisons between domestic and foreign banks

a performance assessment of mozambique banks a bayesian stochastic frontier abstractthis article analyses the technical efficiency of mozambican banks from 2005 to 2014 with a bayesian stochastic frontier model the intermediate approach is adopted and the results reveal that efficiency varies amongst the banks analysed foreign ownership of mozambican banks is also analysed as is public ownership the role of mergers and acquisitions big banks and active dividend policy within the context of bank costs policy implications are then derived

monitoring versus incentives abstract this paper analyzes the trade off between monitoring and incentives in a principal agent relationship with moral hazard we derive general results on the optimal monitoring incentives mix for the case where both parties are risk neutral and the agent faces a limited liability constraint we show that the principal uses less monitoring and stronger incentives if the agent s liability limit is relaxed or if monitoring costs increase to induce more effort on the part of the agent the principal resorts to more monitoring or to stronger incentives or both in particular there are cases where the cheapest way to induce more effort is to use lower powered money incentives but with much more precise monitoring

asset stock accumulation and sustainability of competitive advantage given incomplete factor markets appropriate time paths of flow variables must be chosen to build required stocks of assets that is critical resources are accumulated rather than acquired in strategic factor markets barney barney j 1986 strategic factor markets expectations luck and business strategy management sci october 1231 1241 sustainability of a firm s asset position hinges on how easily assets can be substituted or imitated imitability is linked to the characteristics of the asset accumulation process time compression diseconomies asset mass efficiencies inter connectedness asset erosion and causal ambiguity

leaders and laggards the influence of competing logics on corporate environmental action we study the sources of resistance to change among firms in the canadian petroleum industry in response to a shift in societal level logics related to corporate environmental performance despite challenges to its legitimacy as a result of poor environmental performance the canadian petroleum industry was divided as to how to respond with some members ignoring the concerns and resisting change i e laggards while others took action to ensure continued legitimacy i e leaders we examine why organizations within the same institutional field responded differently delaying the industry response we found that one population of firms was aligned with increasing pressures from its stakeholders for improved environmental performance and the other was influenced by local cultural political and economic ideals less demanding of environmental actions our results reveal that several factors both at the institutional field level and the organizational level affected how these two populations reacted to a changing societal logic implications for theory practice and future research are discussed

competitive price discrimination we model firms as supplying utility directly to consumers the equilibrium outcome of competition in utility space depends on the relationship u between profit and average utility per consumer public policy constraints on the deals firms may offer affect equilibrium outcomes via their effect on u f rom this perspective we examine the profit utility and welfare implications of price discrimination policies in an oligopolistic framework we also show that an equilibrium outcome of competitive nonlinear pricing when consumers have private information about their tastes is for firms to offer efficient two part tariffs

standards vs labels with imperfect competition and asymmetric information abstract i demonstrate that providing information about product quality is not necessarily the best way to address asymmetric information problems when markets are imperfectly competitive in a vertical differentiation model i show that a minimum quality standard which retains asymmetric information generates more welfare than a label which provides full information

a resource based perspective on corporate environmental performance and profitability drawing on the resource based view of the firm we posited that environmental performance and economic performance are positively linked and that industry growth moderates the relationship with the returns to environmental performance higher in high growth industries we tested these hypotheses with an analysis of 243 finns over two years using independently developed environmental ratings results indicate that it pays to be green and that this relationship strengthens with industry growth we conclude by highlighting the study s academic and managerial implications making special reference to the social issues in management literature

imperfect competition in selection markets policies to correct market power and selection can be misguided when these forces coexist we build a model of symmetric imperfect competition in selection markets that parameterizes the degree of market power and selection we use graphical price theoretic reasoning to characterize the interaction between these forces using a calibrated model of health insurance we show that the risk adjustment commonly used to offset adverse selection can reduce coverage and social surplus conversely in a calibrated model of subprime auto lending realistic levels of competition can generate an oversupply of credit implying that greater market power is desirable

to be different or to be the same it s a question and theory of strategic balance this paper addresses the performance consequences of firm level strategic similarity past research observed that firms face pressures to be different and to be the same by differentiating firms reduce competition by conforming firms demonstrate their legitimacy both reduced competition and legitimacy improve performance this paper begins building a theory of strategic balance by synthesizing the differentiation and conformity perspectives the theory directs attention to intermediate levels of strategic similarity where firms balance the pressures of competition and legitimation empirical support for the theory is found in a longitudinal study of commercial banks several suggestions for developing a theory of strategic balance conclude the paper the theory s major implication is that firms should be as different as legitimately possible copyright 1999 john wiley sons ltd

the erosion of colonial trade linkages after independence high trade between countries with colonial ties may be explained by government policies that establish preferential access or as a consequence of networks formed through social interactions using bilateral trade data from 1948 to 2003 we examine the eect of independence on post colonial trade the severing of formal colonial relations can lead to an immediate reduction in trade as preferential access is eliminated as well as a gradual reduction corresponding to the deterioration of trading networks our results reveal that independence reduces colonial trade with its colonizer metropole the reduction cumulates over a 30 year period and the disruption is particularly severe for hostile separations we also find that overall colonial trade falls subsequent to independence but to a lesser extent than trade with the metropole

effect of announcements of withdrawal from south africa on stockholder wealth in this study we analyzed investor reaction to corporate announcements of withdrawal from south africa to determine whether such announcements increased or reduced firms market value we also exa

principals competing for an agent in the presence of adverse selection and moral hazard abstract this paper analyzes competition between two principals for the exclusive services of an agent of unknown ability the principals differ in their marginal and average valuations for the agent s input they compete by offering menus of incentive contracts a prominent feature of the equilibrium when neither principal fully dominates is that they both offer identical pooling contracts to an interval of intermediate ability types all these types supply a constant input level receive the same monetary rewards and yield zero profits to the principals in addition the effort of low ability types is greater than the efficient level and welfare may be lower than if there was only one principal journal of economic literature classification numbers d82 c72

assessing productive efficiency of banks using integrated fuzzy dea and bootstrapping a case of mozambican banks performance analysis has become a vital part of the management practices in the banking industry there are numerous applications using dea models to estimate efficiency in banking and most of them assume that inputs and outputs are known with absolute precision here we propose new fuzzy dea level models to assess underlying uncertainty further bootstrap truncated regressions with fixed factors are used to measure the impact of each model on the efficiency scores and to identify the most relevant contextual variables on efficiency the proposed models have been demonstrated using an application in mozambican banks to handle the underlying uncertainty findings reveal that fuzziness is predominant over randomness in interpreting the results in addition fuzziness can be used by decision makers to identify missing variables to help in interpreting the results price of labor price of capital and market share were found to be the significant factors in measuring bank efficiency managerial implications are addressed

legal determinants of external finance revisited the inverse relationship between investor protection and societal well being this article investigates relationships between countries legal traditions and their quality of life as measured by a number of widely reported social indicators in so doing it also offers a critique of a highly influential body of work which is widely cited in the literatures of corporate governance economics and finance that body of work has shown inter alia statistically significant relationships between legal traditions and various proxies for investor protection we show statistically significant relationships between legal traditions and various proxies for societal health our comparative evidence suggests that the interests of investors are not congruent with the interests of wider society and that the criteria for judging the effectiveness of approaches to corporate governance should be broadened

third degree price discrimination in oligopoly all out competition and strategic commitment price discrimination by imperfectly competitive firms may intensify competition leading to lower prices for all consumers the tradeoff of consumer groups welfare that is characteristic of monopolistic discrimination need not arise this escalation of competition may make firms worse off and as a result firms may wish to avoid the discriminatory outcome under conditions similar to those in which unambiguous price and welfare effects may arise unilateral commitments not to price discriminate including the adoption of everyday low pricing or no haggle policies may raise firm profits by softening price competition

legal origins corporate governance and environmental outcomes environmental governance has emerged as a recent perspective to explain the link between corporate governance mechanisms and environmental performance such as pollution reduction we extend current models by incorporating the crucial role of the underlying institutional logics in terms of an a priori focus on either shareholder rights or stakeholder inclusion which in turn can be traced back to the legal origin of a specific country using data on a sample of common and civil law countries we find support for our predictions that a shareholder focused common law legal origin is associated with significantly higher emissions of co2 and also that international environmental agreements like the kyoto protocol seem to have a more pronounced effect in shareholder centric economies than thus far assumed

the revelation and delegation principles in common agency games in the context of common agency adverse selection games we illustrate that the revelation principle cannot be applied to study equilibria of the multi principal games we then demonstrate that an extension of the taxation principle what we term the delegation principle can be used to characterize the set of all common agency equilibria this abstract was borrowed from another version of this item

how do corporate governance model differences affect foreign direct investment in emerging economies this study examines the impact of national corporate governance models on inward foreign direct investment fdi in emerging economies we consider three potential mechanisms and conduct an empirical test of how family ownership and control in large group affiliated firms in taiwan affect joint venture investment from us and japanese firms during the period 1988 1998 results support the neo institutional perspective of fdi developed in this study the home country corporate governance models are likely to shape foreign firms choice of local partners

is there a single frontier in a single european banking market abstract this paper attempts to estimate comparable efficiency scores for european banks operating in the single market in the eu using a data set of more than 5000 large commercial banks from all major european banking markets over the period 1993 2004 the application of meta frontiers enables us to assess the existence of a single and integrated european banking market we find evidence in favor of a single european banking market characterized by cost and profit meta frontiers however compared to the meta frontier estimations pooled frontier estimations tend to underestimate efficiency levels and correlate poorly with country specific frontier efficiency ranks

business responses to climate change regulation in canada and germany lessons for mncs from emerging economies this article proposes a novel mapping of the complex relationship between business ethics and regulation by suggesting five distinct ways in which business ethics and regulation may intersect the framework is applied to a comparative case study of business responses to climate change regulation in canada and germany both signatories to the kyoto protocol both countries represent distinctly different approaches which yield significant lessons for emerging economies we also analyze the specific role of large multinational corporations in this process

estimating risk preferences from deductible choice we develop a structural econometric model to estimate risk preferences from data on deductible choices in auto insurance contracts we account for adverse selection by modeling unobserved heterogeneity in both risk claim rate and risk aversion we find large and skewed heterogeneity in risk attitudes in addition women are more risk averse than men risk aversion exhibits a u shape with respect to age and proxies for income and wealth are positively associated with absolute risk aversion finally unobserved heterogeneity in risk aversion is greater than that of risk and as we illustrate has important implications for insurance pricing

higher order risk attitudes demographics and financial decisions we conduct an experiment to study the prevalence of the higher order risk attitudes of prudence and temperance in a large demographically representative sample as well as in a sample of undergraduate students participants make pairwise choices between lotteries of the form proposed by eeckhoudt and schlesinger 2006 the choices in these lotteries isolate prudent from imprudent and temperate from intemperate behavior we relate individuals risk aversion prudence and temperance levels to demographics and financial decisions we observe that the majority of individuals decisions are consistent with risk aversion prudence and temperance in both the student and the demographically representative sample an individual s level of prudence is predictive of his wealth saving and borrowing behavior outside of the experiment while temperance predicts the riskiness of portfolio choices our findings suggest that the coefficient of relative prudence for a representative individual is approximately equal to two

screening and adverse selection in frictional markets we develop a tractable framework for analyzing adverse selection economies with imperfect competition in our environment uninformed buyers offer a general menu of screening contracts to privately informed sellers some sellers receive offers from multiple buyers while others receive offers from only one buyer as in burdett and judd 1983 this specification allows us to smoothly vary the degree of competition nesting monopsony and perfect competition a la rothschild and stiglitz 1976 as special cases we show that the unique symmetric mixed strategy equilibrium exhibits a strict rank preserving property in that different types of sellers have an identical ranking over the various menus offered in equilibrium these menus can be all separating all pooling or a mixture of both depending on the distribution of types and the degree of competition in the market this calls into question the practice of using the incidence of separating contracts as evidence of adverse selection without controlling for market structure we examine the relationship between exante welfare and the degree of competition and show that in some cases an interior level of frictions maximizes welfare while in other cases competition is unambiguously bad for welfare finally we study the effects of various policy interventions such as disclosure and non discrimination requirements and show that our model generates new and perhaps counter intuitive insights

precautionary saving in the small and in the large the theory of precautionary saving is shown to be isomorphic to the arrow pratt theory of risk aversion making possible the application of a large body of knowledge about risk aversion to precautionary saving and more generally to the theory of optimal choice under risk in particular a measure of the strength of the precautionary saving motive analogous to the arrow pratt measure of risk aversion is used to establish a number of new propositions about precautionary saving and to give a new interpretation of the dreze modigliani substitution effect copyright 1990 by the econometric society