marshall s scale economies using panel data this paper estimates plant level production functions for machinery and high tech industries that allow for scale externalities from other plants in the same industry locally and from the scale or diversity of local economic activity outside the own industry the paper finds that the count of other own industry plants representing a count of local information spillover sources has strong productivity effects in high tech but not machinery industries single plant firms both benefit more from and generate greater external benefits than corporate plants given their greater reliance on external environments on dynamic externalities high tech single plant firms benefit also from the scale of past own industry activity i find little evidence of economies from the diversity or scale of local economic activity outside the own industry

state characteristics and the location of foreign direct investment within the united states a conditional logit model of the location decision of foreign firms investing in manufacturing facilities in the united states is developed and estimated the authors results for 1981 83 indicate that states with higher per capita incomes and higher densities of manufacturing activity attracted relatively more foreign direct investment in addition higher wages deterred foreign direct investment while higher unemployment rates attracted it surprisingly higher unionization rates were associated with increased foreign direct investment overall higher taxes deterred foreign direct investment however more extensive transportation infrastructures and larger promotional expenditures were associated with increased foreign direct investment copyright 1991 by mit press

social influence and mne strategic response to political risk a global network approach abstract according to the conventional view of mne host country relations mnes faced with political risk condition their strategic responses on each party s relative power positions or bargaining influence drawing insight from network theory institutional theory and international relations research i argue that firm sensitivity to political risk is contingent upon a complementary concept social influence social influence arises through the mutual embeddedness of mne and host government in a complex global network of nations to test my hypotheses i construct a global network of trade relations that i combine with a unique transaction level dataset from the global petroleum industry my results demonstrate that social influence as modeled by home host structural equivalence moderates the effects of political risk further my findings provide support for a conceptual and empirical distinction between social influence and the traditional bargaining influence examined in the literature

the effect of a worldwide tax system on tax management of foreign subsidiaries under a worldwide tax system firms pay taxes on their domestic income and repatriated foreign income whereas under a territorial tax system repatriated foreign income is exempt from taxation we examine whether worldwide tax systems reduce the incentives of multinational corporations to engage in tax management in their foreign subsidiaries using two quasi natural experiments we show that multinationals lower the effective tax rates in their foreign subsidiaries after countries switch from a worldwide to a territorial tax system thus multinationals subject to a worldwide tax system face competitive disadvantages compared to competitors from countries with a territorial tax system

foreign venture capitalists and the internationalization of entrepreneurial companies evidence from china we use a comprehensive database of venture capital backed companies from china to test whether and how foreign venture capitalists vcs can facilitate international initial public offerings of entrepreneurial companies foreign vcs increase the likelihood that a portfolio company will list on a foreign exchange and use a top lawyer banker or accountant when doing so the propensity to list overseas is moderated by the number of venture backers the fund s size and governance in the domestic market foreign vcs encourage foreign listings in domestic backed companies we take steps to address sample selection and endogeneity concerns overall we show that foreign vcs encourage internationalization in entrepreneurial companies

on the internationalization of corporate boards the case of nordic firms this study investigates the internationalization of corporate boards using a sample of 346 non financial listed nordic firms during 2001 2008 given a high level of international activity these firms have surprisingly few foreign directors the picture of international expertise changes considerably however if we also count the international experience of national directors the percentage of foreign directors is related primarily to financial internationalization rather than foreign sales and thus presumably to the monitoring rather than advisory functions the international experience of the nationals covaries with foreign sales and increases with the share of foreign directors thus both sources of international expertise should be considered when analyzing board internationalization

geography industrial organization and agglomeration this paper makes two contributions to the empirical literature on agglomeration economies first the paper uses a unique and rich database in conjunction with mapping software to measure the geographic extent of agglomerative externalities previous papers have been forced to assume that agglomeration economies are club goods that operate at a metropolitan scale second the paper tests for the existence of organizational agglomeration economies of the kind studied qualitatively by saxenian 1994 this is a potentially important source of increasing returns that previous empirical work has not considered results indicate that localization economies attenuate rapidly and that industrial organization affects the benefits of agglomeration

regulations and productivity growth in banking evidence from transition economies this paper examines the relationship between the regulatory and supervision framework and the productivity of banks in 22 countries over the period 1999 2009 we follow a semiparametric two step approach that combines malmquist index estimates with bootstrap regressions the results indicate that regulations and incentives that promote private monitoring pmon have a positive impact on productivity restrictions on banks activities relating to their involvement in securities insurance real estate and ownership of nonfinancial firms also have a positive impact regulations relating to the first and second pillars of basel ii namely capital requirements capr and official supervisory power spr do not have in general a statistically significant impact on productivity over the study period although they appear to gain in importance following the onset of the financial crisis in 2007 the latter finding indicates that stringent capital and supervisory standards have positive productivity effects when financial pressures peak our results are robust when controlling for various country specific features and alternative estimation approaches

the liability of foreignness in capital markets sources and remedies the accelerating pace of global capital market integration has provided new opportunities for firms to raise capital abroad through global debt issues cross listings and initial public offerings in foreign stock exchanges however existing empirical evidence suggests that foreign firms tend to be at a disadvantage compared with domestic firms and they often suffer from investors home bias the objective of this paper is to understand why firms are facing problems when accessing capital in foreign markets and possible mechanisms that can help to mitigate these problems it expands the liability of foreignness lof research beyond the product market domain to include liabilities faced by firms attempting to secure resources in foreign capital markets we identify key differences between product and capital markets related to information environment time structure of transactions and linkages between buyers and sellers we analyze institutional distance information asymmetry unfamiliarity and cultural differences as the main sources of capital market lof cmlof we suggest possible mechanisms that managers can employ to mitigate cmlof and overcome investors home bias bonding signaling organizational isomorphism and reputational endorsements we also outline directions for further theoretical and empirical development of the cmlof research

conservatism and debt abstract despite the unquestionable influence of conservatism disagreement remains about what economic demands lead to financial reporting conservatism research examining lenders demands for reporting conservatism has been questioned for ignoring conservative contract modifications we document that these modifications exist but are not ubiquitous we find contract modifications are more likely when agency costs are higher and litigation tax and equity demands for conservatism are lower however we find a positive association between unexplained reporting conservatism and contract modifications suggesting contractual modifications alone do not fulfill lenders demands for conservatism

can foreign firms bond themselves effectively by renting u s securities laws abstract the study tests the functional convergence hypothesis which states that foreign firms can leapfrog their countries weak legal institutions by listing equities in new york and agreeing to follow u s securities law evidence shows that the sec and minority shareholders have not effectively enforced the law against cross listed foreign firms detailed evidence from mexico further shows that while some insiders exploited this weak legal enforcement with impunity others that issued a cross listing and passed through an economic downturn with a clean reputation went on to receive privileged long term access to outside finance as compared with legal bonding reputational bonding better explains the success of cross listings

fragmenting global business processes a protection for proprietary information this study shows that when sourcing business services in foreign countries the fragmentation of processes across production units acts as an operational level adjustment variable for firms to adapt their information protection approach to the regulative environment of the host country they have selected and to the possibility to use internal controls over the activities performed abroad we hypothesize that when the above mechanisms are not available firms are more likely to fragment processes across multiple foreign production units instead of collocating all process tasks in the same unit thanks to it enabled integration capabilities firms can exploit the complementarities between the dispersed fragments of a process while reducing the misappropriation hazard of individual fragments empirical results and robustness tests are strongly congruent with these hypotheses we find also that the propensity to turn to the process fragmentation protection mechanism increases with firm host country specific experience and with the alternative value of the proprietary information involved in the activity sourced abroad

the principle of minimum differentiation holds under sufficient heterogeneity the so called principle of minimum differentiation stated by hotelling has been challenged by many authors this paper restores the principle by showing that n firms locate at the center of the market and charge prices higher than the marginal cost of production when heterogeneity in consumers tastes is large enough

internal equity financing and the performance of multinational subsidiaries in emerging economies we examine the internal equity financing of the multinational subsidiary which retains and reinvests its own earnings internal equity financing is a type of firm specific advantage fsa along with other traditional fsas in innovation research and development brands and management skills it also reflects subsidiary level financial management decision making here we test the contributions of internal equity financing and subsidiary level financial management decision making to subsidiary performance using original survey data from british multinational subsidiaries in six emerging countries in the south east asia region our first finding is that internal equity financing acts as an fsa to improve subsidiary performance our second finding is that over 90 of financing sources including capital investment by the parent firms in the british subsidiaries come from internal funding our third finding is that subsidiary level financial management decision making has a statistically significant positive impact on subsidiary performance our findings advance the theoretical empirical and managerial analysis of subsidiary performance in emerging economies

do venture capital firms benefit from international syndicates this paper examines the benefits of syndicating with foreign venture capital vc firms for domestic vc firms in emerging markets we find that the vc firms that are domestic to their invested companies and previously syndicated with foreign partners invest proportionately more frequently in riskier ventures after gaining syndication experience with foreign vc firms a larger number of their portfolio companies are successfully exited thereby suggesting improved performance we hypothesize that this outcome is due to the organizational learning effects while the previous research has shown benefits for foreign vc firms our results show that domestic vc firms also benefit from international syndication through improved investments

foreign earnings management of us multinational companies the role of decision rights us multinational corporations mncs need to allocate decision rights between parent companies and subsidiaries to manage global operations this article examines how the allocation of decision rights affects foreign earnings management of mncs i find that the extent of foreign earnings management increases when parents retain centralized decision rights but internal cross border frictions between parents and their foreign subsidiaries and the external local legal environment in which foreign subsidiaries operate can mitigate foreign earnings management despite parents having centralized decision rights this study provides evidence on how the decision structures of mncs affect where earnings are managed

related lending and banking development does related lending have positive or negative effects on the development of banking systems we analyze a unique cross country data set covering 74 countries from 1990 to 2007 and find that related lending on average does not have any effect on the growth of credit we do find however that there are conditional relationships related lending tends to retard the growth of banking systems when rule of law is weak whereas it tends to promote the growth of banking systems when rule of law is strong we also find that related lending appears to be associated with looting when banks are owned by non financial firms but that it does not do so when non financial firms are owned by banks our results indicate that whether related lending is positive or pernicious depends critically on the institutional context in which it takes place there is no single best policy regarding related lending these findings are robust to alternative specifications including iv regressions

do state and local taxes affect economic growth this paper tests if variations in the treatment of expenditures by state and local governments are an explanation for the inconsistent results of previous tax studies estimates for net investment and employment in manufacturing for 1962 82 support this conjecture indicating that state and local taxes have a negative effect when the revenues are devoted to transfer payment programs and that with taxes held constant increases in expenditures on health education consistent with the vicious circle phenomenon do not appear simply to reflect common cyclical movements and provide evidence of structural linkages implicit in previous results for growth in state personal income copyright 1990 by mit press

the effect of attending the flagship state university on earnings a discontinuity based approach abstract this paper examines the effect of attending the flagship state university on the earnings of 28 to 33 year olds by combining confidential admissions records from a large state university with earnings data collected through the state s unemployment insurance program to distinguish the effect of attending the flagship state university from the effects of confounding factors correlated with the university s admission decision or the applicant s enrollment decision i exploit a large discontinuity in the probability of enrollment at the admission cutoff the results indicate that attending the most selective state university causes earnings to be approximately 20 higher for white men

financial services global perspectives the purpose of this paper is to discuss the issues related to the deregulation of the financial services sector and the role of multilateral negotiations which has opened up opportunities for the expansion of international financial services the paper analyses various categories of international financial services and highlights those factors that contribute to an increase in the competitiveness of financial institutions in their attempt to increase the supply of international financial services the paper also analyses the complementary role of fdi and trade in international financial services and discusses some of the benefits of fdi in financial services that have led to a more efficient and more competitive financial services industry in the host countries

disclosure venture capital and entrepreneurial spawning venture capital vc funds have been facing increasing regulatory scrutiny since the 2007 financial crisis particularly with respect to calls for increased disclosure requirements in this paper we examine the effect of more stringent securities regulation on the supply and performance of vc as well as on new business creation i e entrepreneurial spawning using country level and investment level data from 34 countries over the years 2000 2008 we find that more stringent securities regulation is positively associated with the supply and performance of vc around the world more stringent securities regulation is also positively associated with entrepreneurial spawning induced by vc among different forms of securities regulation disclosure stands out as having the most economically meaningful impact which casts doubt on the oft repeated objections to disclosure in vc that it would stifle the vc industry because secrets would have to be revealed to competitors and the public these findings are robust to numerous robustness checks for endogeneity the policy implications are clear however regardless of endogeneity concerns vc and entrepreneurship markets are enabled not curtailed in countries with better disclosure standards when one compares the existing differences in disclosure around the world and changes thereto over the 2000 2008 period

solving theoretical and empirical conundrums in international strategy research linking foreign entry mode choices and performance several theoretical and empirical developments in the literature on foreign entry mode and performance and on international strategy more generally were influenced or prefigured by brouthers 2002 jibs decade award winning paper regarding theory brouthers is an archetype of the integration of transaction cost and institutional perspectives i argue that it is also relevant to the growing literature that aims at synthesizing these and other perspectives methodologically brouthers 2002 contributed several uniquely direct and rich measures furthermore it not only displayed awareness of endogeneity specifically self selection issues but also was among the pioneers in the comparative analysis of governance choices for a given firm or transaction i elaborate on the promising if challenging use of such what if imputation to identify the impact of more or less well aligned choices overall i argue that such methodological advances cannot be decoupled from the conceptual advances that enable them and which they reinforce

do international investors enhance private firm value evidence from venture capital we examine the impact of international venture capital investors on private firm success spanning 81 countries over the years 1995 2010 the data examined indicate that relative to deals in which the investor base is purely domestic private firms that have an international investor base have a higher probability of exiting via an initial public offering ipo and higher ipo proceeds the evidence is consistent with the view that while the benefits of internationalization may be difficult and costly to manage for those firms that succeed in managing cross border coordination costs there is potential value for an ipo firm the benefits relative to the costs of internationalizing the investor base for private firms sold in acquisitions by contrast are much less pronounced the most important source of this benefit appears to be access to capital

from the editors can i trust your findings ruling out alternative explanations in international business research the complex nature of international business research with its cross country and multilevel nature complicates the empirical identification of relationships among theoretical constructs the objective of this editorial is to provide guidance to help international business scholars navigate this complexity and ensure that readers can trust their findings we provide suggestions for how to rule out alternative explanations explaining key considerations not only in empirical analyses but also in theory building and in research design our discussion covers both qualitative and quantitative studies because we believe that it is imperative to understand how trustworthiness is established in both traditions even for international business researchers who self identify with only one this enables scholars to have a broader scope of knowledge when interpreting past research in the field and to be more adept at explaining their design choices to a diverse audience

explaining interaction effects within and across levels of analysis many manuscripts submitted to the journal of international business studies propose an interaction effect in their models in an effort to explain the complexity and contingency of relationships across borders in this article we provide guidance on how best to explain the interaction effects theoretically within and across levels of analysis first in the case of interactions within the same level of analysis we suggest that authors provide an explanation of the mechanisms that link the main independent variable to the dependent variable and then explain how the interaction variable modifies these mechanisms moreover to ensure that the arguments are theoretically complete we suggest that authors theoretically rule out the potential reverse interaction effect between the main variable and moderating variable second in the case of interactions across levels of analysis we suggest that authors identify the cross level nature of the moderating relationships specify the level of analysis of the main relationship and the nested nature of the cross level influences and theoretically explain these cross level influences additionally we suggest that authors pay particular attention to nesting in order to theoretically rule out reverse interactions

the role of accruals in asymmetrically timely gain and loss recognition we investigate the role of accrual accounting in the asymmetrically timely recognition incorporation in reported earnings of gains and losses timely recognition requires accruals when it precedes complete realization of the gains and losses in cash we show that nonlinear accruals models incorporating the asymmetry in gain and loss recognition timelier loss recognition or conditional conservatism offer a substantial specification improvement explaining substantially more variation in accruals than equivalent linear specifications conversely conventional linear accruals models by omitting the loss recognition asymmetry exhibit substantial attenuation bias and offer a comparatively poor specification of the accounting accrual process linear specifications also understate the ability of current earnings to predict future cash flows these findings have implications for our understanding of accrual accounting and conservatism as well as for researchers estimating discretionary accruals earnings management and earnings quality

conservatism and international ipo underpricing we study the impact of country level accounting conservatism on international ipo underpricing examining 13 285 ipos from 36 countries we find that ipos are underpriced less in countries in which existing public firms practice more accounting conservatism the link between conservatism and underpricing is robust to alternative measures of conservatism country mean regressions sample country exclusions and endogenous treatment models consistent with the hypothesis that conservatism reduces underpricing by mitigating the impact of information asymmetries we find that higher country level conservatism is associated with lower country level pin values and that the negative relation between conservatism and underpricing is strongest for ipos involving small firms in which information asymmetries are likely to be high lastly we find evidence that legal origin a factor linked to the practice of conservatism influences the relations between underpricing and conservatism

the tortuous evolution of the role of culture in ib research what we know what we don t know and where we are headed this paper takes stock of the literature on culture in international business by looking back in terms of evaluating what we know and what we do not know and looking forward by identifying emerging trends and outlining avenues for future research unresolved issues gaps and limitations include 1 narrow conceptualization of culture and fragmented approach to the study of culture 2 failure to adopt a multilevel approach and insufficient attention to level of analysis 3 insufficient attention to context and process 4 failure to adopt a more dynamic view of culture 5 tendency to equate country with culture and failure to explore other national differentiators and 6 western centric approach to the study of culture suggestions on redressing the unresolved issues include 1 broadening the definition of culture and transcending the values based approach to include schemas norms and memes 2 paying more attention to process context by exploring the situation dependent and dynamic nature of culture and 3 entertaining alternative research designs methods such as emic approaches qualitative methods experimental designs neuroscience based methods and replication studies while these may represent a major departure from methodologies popular in our field their use can hopefully help us overcome the fragmented discipline based approach which has contributed to the persistent problems that have plagued the study of culture in ib in the past

endogeneity and the dynamics of internal corporate governance abstract we use a well developed dynamic panel generalized method of moments gmm estimator to alleviate endogeneity concerns in two aspects of corporate governance research the effect of board structure on firm performance and the determinants of board structure the estimator incorporates the dynamic nature of internal governance choices to provide valid and powerful instruments that address unobserved heterogeneity and simultaneity we re examine the relation between board structure and performance using the gmm estimator in a panel of 6 000 firms over a period from 1991 to 2003 and find no causal relation between board structure and current firm performance we illustrate why other commonly used estimators that ignore the dynamic relationship between current governance and past firm performance may be biased we discuss where it may be appropriate to consider the dynamic panel gmm estimator in corporate governance research as well as caveats to its use

international expansion of emerging market enterprises a springboard perspective in this article we present a springboard perspective to describe the internationalization of emerging market multinational corporations em mnes em mnes use international expansion as a springboard to acquire strategic resources and reduce their institutional and market constraints at home in so doing they overcome their latecomer disadvantage in the global stage via a series of aggressive risk taking measures by aggressively acquiring or buying critical assets from mature mnes to compensate for their competitive weaknesses we discuss unique traits that characterize the international expansion of em mnes and the unique motivations that steer them toward internationalization we further delineate peculiar strategies and activities undertaken by these firms in pursuit of international expansion as well as internal and external forces that might compel or facilitate their propulsion into the global scene we finally explain the risks and remedies associated with this international springboarding strategy and highlight major issues meriting further investigation

internationalization and performance degree duration and scale of operations we assess the theoretical underpinnings and associated empirical findings of the three stage sigmoid curve relationship between degree of internationalization doi and performance by re examining the results reported in one of the prominent studies in the literature we further conduct our own analyses of 23 474 observations of 2 620 us manufacturing firms over the period 1976 2008 and account for self selection of firms into different degrees of internationalization by using a generalized propensity score estimator both sets of results show that the relationship between doi and performance conforms to a mostly negative sigmoid curve and does not support the three stage theorization further examination reveals that two major conceptual and empirical shortcomings underlie the disparity between the theoretical predictions of the three stage model and these empirical findings first whereas theory relies overwhelmingly on enhanced scale of operations as a causal mechanism through which internationalization contributes to performance empirical studies preclude proper identification of scale related benefits second theory and empirics tend to confuse temporary difficulties experienced upon entry into international markets with examining the benefits realizable at different levels of doi regardless of the firm s short term difficulties in realizing those benefits our empirical results show that correcting for each of these shortcomings contributes to diminishing the theory empirics gap

estimation and empirical properties of a firm year measure of accounting conservatism we estimate a firm year measure of accounting conservatism examine its empirical properties as a metric and illustrate applications by testing new hypotheses that shed further light on the nature and effects of conservatism the results are consistent with the measure c score capturing variation in conservatism and also predicting asymmetric earnings timeliness at horizons of up to 3 years ahead cross sectional hypothesis tests suggest firms with longer investment cycles higher idiosyncratic uncertainty and higher information asymmetry have higher accounting conservatism event studies suggest increased conservatism is a response to increases in information asymmetry and idiosyncratic uncertainty

financial regulation and financial system architecture in central europe abstract at the beginning of the transition advice to central european countries with respect to how to set up their financial systems was based on models used in western economies this paper analyzes the experiences to set up a financial system in central europe the experience in the first transition years 1990 1996 with financial system architecture shows that changes are slow but that the central european countries tend to catch up more quickly with the western ones in the case of their banking systems than with respect to their stock markets

credit markets credibility and economic transformation this paper focuses on the special role that capital markets play in the transformation of centrally planned economies into well functioning market economies we demonstrate that underdeveloped credit markets inhibit the effectiveness of price reform monetary and credit policies and trade liberalization we explore various ways to overcome the difficulties associated with the underdeveloped credit markets in this regard we examine the implications of cleaning the balance sheets of enterprises and banks from nonperforming loans as well as ways to enhance credibility the paper concludes with a brief discussion of sequencing of economic reform measures

understanding the determinants of managerial ownership and the link between ownership and performance comment abstract himmelberg et al j financial econom 53 1999 353 384 argue that fixed effects estimators should be used in examination of the relationship between managerial ownership and firm performance i show that managerial ownership while substantially different across firms typically changes slowly from year to year within a company with rational managers maximising long term utility small one year changes in ownership are not likely to reflect notable changes in incentives that would lead to substantive within year changes in performance by relying on within variation fixed effects estimators may not detect an effect of ownership on performance even if one exists

fifty years of methodological trends in jibs why future ib research needs more triangulation we analyze methodological trends in empirical research in jibs from 1970 2019 our results point to the prevalence of the following patterns there has been an increase in the use of 1 large scale longitudinal cross national datasets 2 complex analytical techniques including the incorporation of multiple analytical techniques within the same study but 3 a decline in the diversity of methods in use we relate these trends to the underlying social technical and communicative conventions in the journal during the 50 year period the observed patterns are consistent with theory that posits scientific fields entrench a dominant paradigm over time resulting in a restricted set of methodological options being selected such restrictions jeopardize the quality of research because the study of any phenomenon requires the use of multiple methodological procedures to avoid the systematic biases errors omissions and limitations introduced by any single option therefore we propose the use of triangulation as a strategy for building methodological alternatives into research designs institutionalization of this principle in the field of international business has the potential to enhance both the rigor and scope of inquiry of future research

on the use of instrumental variables in accounting research abstract instrumental variable iv methods are commonly used in accounting research e g earnings management corporate governance executive compensation and disclosure research when the regressor variables are endogenous while iv estimation is the standard textbook solution to mitigating endogeneity problems the appropriateness of iv methods in typical accounting research settings is not obvious drawing on recent advances in statistics and econometrics we identify conditions under which iv methods are preferred to ols estimates and propose a series of tests for research studies employing iv methods we illustrate these ideas by examining the relation between corporate disclosure and the cost of capital

stagflationary effects of stabilization programs in reforming socialist countries enterprise side and household side factors dismantling subsidies could give rise to serious macroeconomic difficulties in the short run this article explores a view based on the enterprise sector as a central source and main channel of the stagflation phenomenon using as an example the stagflation that followed the 1990 stabilization program in poland the stagflation phenomenon is linked to features of the financial market that are somewhat peculiar to reforming socialist economies the weak credit links between households and enterprises and the existence of large interenterprise debt the policy implications of the enterprise side view include more explicit consideration of initial conditions in the credit market implementation of privatization schemes and the development of a domestic banking

from the editors how to write articles that are relevant to practice although the journal of international business studies is not a practice oriented journal thinking deeper about the practical relevance of our articles can only help enrich them and help decision makers implement better decisions however while many academic articles in social sciences go to great lengths to explain their theoretical and empirical impact in many cases their explanation of practical relevance is a paragraph in the conclusion section with a few cursory ideas that appear to be an afterthought rather than an integral part of the article here we provide suggestions for crafting a practical implications section that is relevant for decision makers

credit rating initiation and accounting quality for emerging market firms we examine whether certification by an internationally recognized information intermediary helps emerging market firms overcome the liability of foreignness in capital markets specifically we ask whether securing a credit rating from standard poor s s p enables these firms to certify their financial reporting quality we hypothesize that the unique information demands of lenders motivate firms to provide more conservative financial statements upon securing an s p rating we find evidence consistent with this conjecture moreover the rating appears to be part of an international expansion strategy for these firms and is followed by increased international activity in capital and product markets

taxes and agglomeration economies how are they related to nonprofit firm location author affiliation teresa d harrison department of economics drexel university 3141 chestnut street philadelphia pa 19104 usa tharrison drexel edu1 introductionnonprofits are an ever increasing component of the u s economy from 1997 2001 employment growth in the nonprofit sector averaged 2 5 outpacing both the business 1 8 and the government sectors 1 6 moore 2004 much of this growth stems from new nonprofits yet few studies have investigated possible determinants of nonprofit entry and location decisions most of these studies focus on demand side factors wolch and geiger 1983 downes and greenstein 1996 bielefeld murdoch and waddell 1997 for example downes and greenstein 1996 focus on demographic and religious characteristics of the surrounding community and its relation to private school location in this paper i use firm level data and focus on potentially important supply side variables tax rates and agglomeration economies most nonprofits are exempt from corporate sales and property taxes hansmann 1987 and gulley and santerre 1993 find evidence that higher corporate property and sales taxes are positively related to nonprofit market share however market share measures obfuscate the dynamics of the industry in terms of entry and exit rates if market share for nonprofits increases in response to higher tax rates this could be because new nonprofits are entering or because for profits are leaving the industry identifying these two cases is impossible with market share data using nonprofit tax return data i examine the relation between these tax exemptions and state county location decisions of new nonprofits to my knowledge this is the first paper to study these interactions at the individual firm level nonprofits also receive tax favored status due to the individual tax deduction on charitable contributions gentry and penrod 1998 employees of and donors to the nonprofits will be affected by the individual tax rates this in turn alters the costs to the nonprofit of location in a high or low tax area unlike previous studies i therefore investigate the relation between individual marginal tax rates and nonprofit location another potential supply side determinant of firm location decisions is the existing firm concentration in the area the potential economies of scale generated by proximity to other firms have been extensively examined in for profit industries 1 previous studies have generally found a positive relation between agglomeration and location carlton 1983 bartik 1985 woodward 1992 gius and frese 2002 rosenthal and strange 2003 to my knowledge bielefeld et al 2004 is the only study that examines nonprofit agglomeration finding evidence of agglomeration in dallas texas this warrants additional examination because nonprofit output is generally service driven and less mobile thus agglomeration implies greater direct competition making market saturation a larger issue in the nonprofit market using a nationwide dataset i examine how location and existing firm concentration are related and explore the potential presence of market saturation i also investigate possible differences between inter and intra industry agglomeration my results provide new insight into nonprofit firm behavior in most cases higher tax rates are associated with new firm location but the results for corporate and property taxes vary across the sample years i find that individual tax rates are an important consideration for nonprofits and are positively correlated to location my analysis also contributes to the literature by examining how the sensitivity to tax rates varies according to the sources of revenues for the institution firms that depend highly on individual donations are more likely to locate in high individual tax states while nonprofits with large mission related revenues are more sensitive to the property tax rate

integration oriented strategies host market corruption and the likelihood of foreign subsidiary exit from emerging markets extant research has found that more pronounced levels of corruption in foreign host emerging markets increase the likelihood that subsidiaries established by multinational enterprises mnes from developed countries will exit we synthesize insights from the organizational perspective of corruption and the integration responsiveness paradigm to propose that integration oriented strategies will weaken the positive relationship between corruption and the likelihood of exit at high levels of host market corruption we develop and test hypotheses pertaining to the main effect of corruption on the likelihood of subsidiary exit as well as the moderating impacts of a firm s equity ownership strategy and its expatriate staffing strategy upon this relationship we theorize that uncertainty operates as the mechanism that underpins the corruption market exit relationship and that an mne s strategic choices with respect to its subsidiary investments contribute to reducing this uncertainty we find that an increase in the foreign investing mne s equity ownership share negatively moderates the positive relationship between corruption and the likelihood that foreign subsidiaries established by developed market mnes will exit host emerging markets when corruption is high however the marginal effects results do not support the expatriate staffing strategy hypothesis our work provides guidance to developed country mnes that seek insights with respect to the utility of strategies that might be implemented in host emerging markets characterized by more pronounced levels of corruption

monitor objectivity with important clients evidence from auditor opinions around the world we examine whether monitors are likely to compromise their monitoring objectivity in the face of economically important clients in international business settings in the context of external auditing and assurance services we measure monitor objectivity by whether auditors are more or less likely to issue to their important clients modified audit opinions that is audit opinions provided to outside investors about the firm that demotes explicit areas of concern using a large cross country sample we document that auditors are more likely to issue modified opinions to their economically important clients relative to other clients furthermore we find that this association is stronger 1 for big n auditors 2 for multinational audit clients and 3 in countries with stronger legal regimes these results suggest that monitors prioritize the protection of their reputation over lucrative economic relationships and such information certification function is more pronounced for international auditors multinational client firms and in strong legal regimes

labor market regulations and cross border mergers and acquisitions this article exploits changes in country level employment protection regulations as a source of plausibly exogenous variation in labor laws and finds that these regulations play an important role in cross border merger activity over the 1991 2009 period countries that tighten employment regulations attract more foreign acquirers especially those from countries with relatively more flexible labor regulations the results appear to be robust to alternative specifications importantly these patterns are pronounced in those recipient country sectors in which foreign acquirers may find attractive targets at bargain prices sectors with relatively high productivity and skill the article also provides evidence suggesting that because pro labor reforms allow foreign acquirers to cherry pick more skilled and productive local firms these transactions are associated with greater deal synergies and improved post merger operating performance

eastern europe s experience with banking reform is there a role for banks in the transition are there lessons to be learned about how eastern european countries have dealt with problems in their banking systems what role have these countries assigned to banks during the transition how have they used banks in dealing with the enterprise problem the author addresses these questions by analyzing experience in bulgaria hungary poland romania and the former czech and slovak federal republic most of these countries have made substantial progress in restructuring their banking systems but few have used their banking systems to improve the allocation of credit and hence stimulate the supply response the author finds the following the problem is not whether banks hold nonperforming loans but how banks can avoid accumulating more nonperforming loans the underlying problem is how to close loss making and nonviable enterprises the countries that have encouraged the establishment of new private banks that have introduced regulation and supervision and that have tried to make banks more competitive have been more successful at improving the allocation of credit and achieving more control over loss making enterprises banks must focus on assessing risk and for this capital private ownership and adequate regulation are crucial how quickly banks achieve independence in credit decisions depends on how fast new governance structures can be introduced in this the five countries have been less successful the objectives of bank recapitulation should be to prevent banks from accumulating more nonperforming loans that is dealing with the enterprise problem and to give them the governance structure that would prevent them from incurring new nonperforming loans this requires introducing a system of risk and reward by making banks comply with capital adequacy requirements by privatizing a critical number of banks and by introducing strong regulation and supervision government should see that banks provide efficient payment systems the basis for trust in banking systems introducing adequate regulation and supervision has been difficult as it requires knowing what the banks role should be evidence strongly supports the need to recapitalize and privatize a critical number of banks authorities cannot rely on banks to exert control on enterprises early in the transition in the early stages control over state owned enterprises should be exercised by a semipublic institution

globalization of corporate risk taking we explore how the interconnected nature of global finance affects corporate risk taking we show that a common global factor known to be associated with fluctuations in cross border banking is also strongly associated with common co movements in corporate risk taking across a diverse universe of international firms our study contributes to the international business literature as the first comprehensive investigation of how global financial conditions induce greater synchronization of risk taking across regions and sectors

from the editors explaining theoretical relationships in international business research focusing on the arrows not the boxes distinctive features of articles accepted by the journal of international business studies are that they are multidisciplinary in scope and interdisciplinary in content and methodology and they make a substantial theoretical contribution to international business studies failure to meet this last requirement is an often cited reason given by reviewers for article rejection sometimes reviewers mean that a manuscript does not conform to the dominant paradigm in that it is not the next logical step in the study of a phenomenon or they mean that there is little if any integration of several theories used to explain a phenomenon however perhaps the most common underlying meaning when reviewers cite lack of a theoretical contribution for rejection is that the nature of the relationships proposed is not well explained while the first two meanings may be influenced by the specific discipline or methodology involved this final one is not in this editorial we provide a set of guidelines that authors can use to ensure that their paper meets the standard of explaining the logic of the relationships they propose

liability of foreignness natural disasters and corporate philanthropy this study examines how philanthropy can mitigate liability of foreignness lof in the aftermath of a national disaster a major disaster restructures the social landscape creating an avenue for corporate contributions to play a role in recovery and relief efforts this social restructuring offers a valuable opportunity for multinational enterprises mnes to establish strong local ties in turn mne contributions at such times have a stronger impact on their local acceptance thus mnes can use these events to strengthen their position in the community and mitigate lof using the context of a national disaster in india i test these arguments with a sample of 190 mnes and 660 domestic firms i found that in the aftermath of the disaster the increase in mne contributions was much larger and less strongly tied to promotional activities than the increase in contributions from domestic firms and this difference persisted over time moreover the performance implication of post disaster philanthropy was stronger for mnes than for domestic firms these findings suggest that philanthropy plays a more strategic role for mnes in the aftermath of a disaster and it has a pronounced effect on mitigating lof

is there a better commitment mechanism than cross listings for emerging economy firms evidence from mexico the last decade of work in corporate governance has shown that weak legal institutions at the country level hinder firms in emerging economies from accessing finance and technology affordably to attract outside resources these firms must often use external commitments for repayment research suggests that a common commitment mechanism is to borrow us securities laws which involves listing the emerging economy firm s shares on a us exchange this paper uses a quasi natural experiment from mexico to examine the conditions under which forming a strategic alliance with a foreign multinational firm is actually a superior mechanism for ensuring good corporate governance

partnering with leviathan the politics of innovation in foreign host state joint ventures forming international joint ventures ijvs with political institutions in emerging economies involves both benefits and risks for multinational enterprises mnes while political partners can provide ijvs with various resources their political status equips them with a strong position to appropriate rents in ijvs we address this tension by examining how host state ownership affects both innovation inputs and outputs in china based ijvs over 2008 2013 despite the potential government opportunism we find more r d investment innovation inputs made in ijvs with state partners than in those with private ones thus r d investment can be politically motivated and symbolically managed to ensure continued resource exchanges with the host state this political pressure is mitigated when foreign parents directly transfer home country based technology to ijvs when the host market dependence of ijv is weak and when ijvs are located in a deregulated region moreover we find foreign host state jvs deliver fewer innovation outputs measured by patent data than foreign private jvs which implies the failure of state partners to adequately absorb foreign technologies these findings highlight both the state partners powerfulness to boost ijv innovation investment and their limits in shaping ijv innovation outcomes and bear rich implications for the management of mne host government relationships

deregulation ownership and productivity growth in the banking industry evidence from india this paper analyzes the relationship between deregulation and total factor productivity tfp growth in the indian banking industry using a generalized shadow cost function approach tfp growth is decomposed into a technological change a scale and a miscellaneous component a disaggregated panel data analysis using the population of public and private banks over 1985 96 that covers both pre and post deregulation periods indicates that a significant decline in regulatory distortions and the anticipated increase in tfp growth have not yet materialized following deregulation while private sector banks have improved their performance mainly due to the freedom to expand output public sector banks have not responded well to the deregulation measures

a general theory of springboard mnes the springboard view has become one theoretic lens to analyze emerging market multinationals emnes in the past decade a decade after its first introduction in 2007 new developments offer keen insights on these firms and mnes in general that aggressively engage in critical asset seeking we compare this view with other ib theories highlighting their differences as well as complementarity we articulate unique strengths and weaknesses of emnes including their vulnerability and complexity caused in part by home country institutions we discuss amalgamation ambidexterity and adaptation advantages that differentiate springboard mnes from more established advanced country mnes and explain why and how springboard acts should be analyzed along with global competitiveness augmentation we introduce an upward spiral concept to advance our understanding of linkages between springboard and post springboard activities and explain some critical cross cultural and human resource management issues in the process to help continued research on springboard mnes we highlight macro and micro management issues that are particularly worth exploring

urban diversity and economic growth at the risk of some simplification it is possible to identify four periods of intense study of cities by economists each of these has led to an increased understanding of the economics of urban areas and the unique role played by cities in the modem economy the first of these periods occurred in the decade after world war i only about ten years after the truck revolutionized the transport of goods within urban areas this period included the first systematic empirical analysis of the forces affecting the location of firms and households within cities robert murray haig 1926 and a number of other microeconomists at columbia analyzed the spatial pattems of manufacturing activity in lower manhattan and in the rest of new york city haig jmd his colleagues devoted considerable attention to where things belong in an urban area p 402 providing the first systematic economic analysis of urban spatial structure for example they analyzed the garment industry concluding that it was destined by nature to disperse north of 14th street and predicting that it would follow the estabhshed spatial pattem of the cooperage barrelmaking industry standardization in size and quality of barrels had meant that identical barrels could be made throughout the new york metropolitan area even in new jersey and the introduction of the truck meant that they could be transported cheaply throughout the region and exported the second of these periods though not in chronological order began in the mid 1960s it formalized many of the insights about location incentives within urban areas which had been uncovered a half century before mixed them with the logic of heinrich von thunen s 1826 ancient theories about agricultural crops and land values and applied them to the hotisehold sector the works of william alonso 1964

does the source of capital affect capital structure prior work on leverage implicitly assumes capital availability depends solely on firm characteristics however market frictions that make capital structure relevant may also be associated with a firm s source of capital examining this intuition we find firms that have access to the public bond markets as measured by having a debt rating have significantly more leverage although firms with a rating are fundamentally different these differences do not explain our findings even after controlling for firm characteristics that determine observed capital structure and instrumenting for the possible endogeneity of having a rating firms with access have 35 more debt copyright 2006 oxford university press

what s in a p reassessing best practices for conducting and reporting hypothesis testing research social science research has recently been subject to considerable criticism regarding the validity and power of empirical tests published in leading journals and business scholarship is no exception transparency and replicability of empirical findings are essential to build a cumulative body of scholarly knowledge yet current practices are under increased scrutiny to achieve these objectives jibs is therefore discussing and revising its editorial practices to enhance the validity of empirical research in this editorial we reflect on best practices with respect to conducting reporting and discussing the results of quantitative hypothesis testing research and we develop guidelines for authors to enhance the rigor of their empirical work this will not only help readers to assess empirical evidence comprehensively but also enable subsequent research to build a cumulative body of empirical knowledge

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

from the editors endogeneity in international business research this essay builds on the exposition by thomas et al and focuses on analyzing cause and effect in international business research we attempt to explain how endogeneity problems occur and why they are so prevalent in international business research in a non technical fashion we then discuss the importance of explicitly identifying how the chosen research design best approximates a randomized controlled experiment finally we provide some guidelines on achieving this goal and emphasize the practices that seem most relevant to jibs reviewers in evaluating high quality international business research

self disclosure at international cartels we study revelation behavior at illegal international cartels our hypotheses suggest that a resource advantage induces executives of large multinational enterprises mnes to be more likely to reveal the cartel and to cooperate with the antitrust agency during the prosecution stage moreover we expect the cultural background to influence the firm s inclination to reveal incriminating evidence empirical tests based on data about cartel breakdowns under the eu leniency program show that large mnes are indeed more likely to reveal the cartel however they largely fail to explain variation in legal actions along cultural dimensions