the value of corporate voting rights and control a cross country analysis this paper measures the value of corporate voting rights specifically of the control block of votes in a sample of 661 dual class firms in 18 countries in 1997 a consistent measure across countries is proposed the measure is adjusted for takeover probability block holding costs and dividend and liquidity differences between the share classes the value of controlblock votes varies widely across countries it is close to half of firm market value in south korea andclose to zero in finland the value of control block votes is interpretedas a lower bound for actual private benefits of the controlling shareholder the legal environment law enforcement investor protection takeover regulations andpower concentrating corporate charter provisions explain 68 of the cross country variation in the value of control block votes

contractual resolutions of financial distress in a financial contracting model we study the optimal debt structure to resolve financial distress we show that a debt structure where two distinct debt classes co exist one class fully concentrated and with control rights upon default the other dispersed and without control rights removes the controlling creditor s liquidation bias when investor protection is strong these results rationalize the use and the performance of floating charge financing debt financing where the controlling creditor takes the entire business as collateral in countries with strong investor protection more broadly our theory predicts that the efficiency of contractual resolutions of financial distress should increase with investor protection

investor protection and equity markets we present a simple model of an entrepreneur going public in an environment with poor legal protection of outside shareholders the model incorporates elements of becker s j political econ 106 1968 172 crime and punishment framework into a corporate finance environment of jensen and meckling j financial econ 3 1976 305 we examine the entrepreneur s decision and the market equilibrium the model is consistent with a number of empirical regularities concerning the relation between investor protection and corporate finance it also sheds light on the patterns of capital flows between rich and poor countries and on the politics of reform of investor protection r 2002 elsevier science b v all rights reserved

crime deterrence and the business cycle in new york city a var approach a bstract we apply a var vector autoregressive technique to estimate the interrelationships between unemployment arrests police demographics and property related felony crimes in new york city from 1970 to 1984 despite the limitations of using a var the technique provides a useful alternative to more standard models in analyzing what causes crime the study concludes that arrests provide a strong deterrent to crimes but the reverse effect of crime on arrests is extremely small we find a brief and relatively weak effect of changes in unemployment rates on crime changes in demographics are associated with relatively stronger changes in crime rates

creation adoption and diffusion of innovations by subsidiaries of multinational corporations this paper reports some of the findings of a multi phased and multi method study on the organizational attributes that facilitate creation adoption and diffusion of innovations by subsidiaries of multinational companies comparison of results obtained through case research in nine companies multiple respondent questionnaire surveys in three companies and a single respondent survey in 66 north american and european multinationals reveal unambiguous and positive impacts of normative integration through organizational socialization and dense intra and inter unit communication on an mnc subsidiary s ability to contribute to the different innovation tasks the findings are less consistent with regard to the effects of local resources and autonomy and it appears that the influences of these two attributes are strongly mediated by the levels of normative integration and organizational communication

crime rates and local labor market opportunities in the united states 1979 1997 the labor market prospects of young unskilled men fell dramatically in the 1980s and improved in the 1990s crime rates show a reverse pattern increasing during the 1980s and falling in the 1990s because young unskilled men commit most crime this paper seeks to establish a causal relationship between the two trends previous work on the relationship between labor markets and crime focused mainly on the relationship between the unemployment rate and crime and found inconclusive results in contrast this paper examines the impact of both wages and unemployment on crime and uses instrumental variables to establish causality we conclude that both wages and unemployment are significantly related to crime but that wages played a larger role in the crime trends over the last few decades these results are robust to the inclusion of deterrence variables controls for simultaneity and controlling for individual and family characteristics

determinants of violent and property crimes in england and wales a panel data analysis we examine various determinants of property and violent crimes by using police force area level pfa data on england and wales over the period of 1992 2008 our list of potential determinants includes two law enforcement variables namely crime specific detection rate and prison population and various socio economic variables such as unemployment rate real earnings proportion of young people and the gini coefficient by adopting a fixed effect dynamic gmm estimation methodology we attempt to address the potential bias that arises from the presence of time invariant unobserved characteristics of a pfa and the endogeneity of several regressors there is a significant positive effect of own lagged crime rate the own lagged effect is stronger for property crime on an average than violent crime we find that on an average higher detection rate and prison population leads to lower property and violent crimes this is robust to various specifications however socio economic variables with the exception

entrepreneurship financiership and selection we develop an equilibrium model of the market for entrepreneurial finance in which all agents have some personal wealth and a project whose quality is their private information all agents choose whether to invest either as entrepreneurs or financiers or to invest in storage technology we find that a binding economy level wealth constraint which renders credit scarce can create advantageous selection where productive agents become entrepreneurs and unproductive agents become their financiers if funding is easier to obtain entrepreneurship also attracts unproductive agents in our model individual wealth and entrepreneurship are positively negatively correlated if financial market participation is complete incomplete

owning versus renting do courts matter abstract we develop a legal contract enforcement theory of the decision to own or lease the allocation of ownership rights will minimize enforcement costs when the legal system is inefficient in particular when legal enforcement of contracts is costly there will be a shift from arrangements that rely on such enforcement such as a rental agreement toward other forms that do not such as direct ownership we then test this prediction and show that costly enforcement of rental contracts hampers the development of the rental housing market in a cross section of countries we argue that this association is not the result of reverse causation from a developed rental market to more investor protective enforcement and is not driven by alternative institutional channels the results provide supportive evidence for the importance of legal contract enforcement for market development and the optimal allocation of property rights

towards a more balanced treatment of culture in international business studies the need for positive cross cultural scholarship the results of a content analysis of 1141 articles published in the journal of international business studies over a 24 year time period 1989 2012 reveal that a pervasive tendency exists in the international business ib literature towards emphasizing the adverse outcomes associated with cultural differences more than the positive effects we argue that this imbalance is not an accurate reflection of the reality of cross cultural contact in ib and that it has hindered our understanding of the processes and conditions that help organizations leverage the benefits of cultural differences in a wide range of contexts we offer several explanations for the predominance of the negative over the positive in theory and research on culture in ib and using a positive organizational scholarship lens couched in the context of march s 1991 exploration vs exploitation organizational learning framework highlight a complementary perspective namely the idea that cultural differences can be an asset not just a liability in a range of ib contexts we conclude by offering an integrative framework within which both positive and negative effects of cultural differences can be understood and provide a road map for future research on culture in ib

the u curve adjustment hypothesis revisited a review and theoretical framework the cross cultural adjustment research literature has largely been conducted from an atheoretical perspective when a theoretical framework is imposed the u curve adjustment theory has been the one most commonly used the lack of a comprehensive review of the empirical literature on the u curve adjustment theory has allowed scholars to accept or dismiss the theory on grounds other than that of empirical evidence this paper reviews the empirical literature and proposes a theoretical framework and research agenda for future research on cross cultural adjustment

using electoral cycles in police hiring to estimate the effect of police on crime comment previous empirical studies have uncovered little evidence that police reduce crime possibly due to simultaneity problems this paper uses the timing of mayoral and gubernatorial elections as an instrumental variable to identify a causal effect of police on crime increases in the size of police forces are shown to be disproportionately concentrated in mayoral and gubernatorial election years increases in police are shown to substantially reduce violent crime but have a smaller impact on property crime the null hypothesis that the marginal social benefit of reduced crime equals the costs of hiring additional police cannot be rejected

knowledge sharing and social interaction within mnes social interaction between managers from different units of a multinational enterprise mne has been shown to be an important factor stimulating intra mne knowledge sharing face to face social interactions form a communication channel particularly conducive to the transfer of tacit non codified knowledge but intensive social interaction also provides opportunities for social construction of knowledge in a learning dialogue the first explanation sender receiver makes us expect social interaction to moderate positively the effects of the factors giving rise to knowledge flows in the first place such as differences in capabilities between mne subsidiaries the second perspective social learning also grants an independent effect to social interaction as a main factor stimulating intra mne knowledge flows we formulate hypotheses based on both perspectives and test these on data from 169 mne subsidiaries our findings show a considerable main effect of social interaction on all intra mne knowledge flows confirming the expectations based on the social learning model interaction effects based on the predictions of the sender receiver model are only partly confirmed these findings suggest that future research should devote more attention to the social constitution of mne knowledge

coordination demands of international strategies a study of fifty subsidiaries of multinational corporations shows a connection between their strategy and their use of different mechanisms of coordination the main finding is that subsidiaries pursuing strategies with a high degree of integration with their corporate parent make a much more extensive use of both formal and subtle coordination mechanisms than other firms in the sample these results are borne out in both static and dynamic tests they confirm previous literature on coordination mechanisms in organizations in general and apply that literature to the field of multinational corporations which are some of today s more important and complex business organizations

unemployment and crime is there a connection a panel of swedish counties over the years 1988 1999 is used to study the effects of unemployment on property crime rates the period under study is characterized by turbulence in the labor market the variation in unemployment rates was unprecedented in the latter part of the century hence the data provide a unique opportunity to examine unemployment effects according to the theory of economics of crime increased unemployment rates lead to higher property crime rates a fixed effects model is estimated to investigate this hypothesis the model includes time and county specific effects and a number of economic and socio demographic variables to control for unobservables and covariates the results show that unemployment had a positive and significant effect on some property crimes burglary car theft and bike theft

the assessment trade and location this paper gives an overview of different analyses of the effects of globalization on industrial location it suggests that comparative advantage is inadequate to explain several aspects of the changing patterns of trade and location and that it needs to supplemented by approaches based on new economic geography and theories of cumulative causation copyright 1998 by oxford university press

down and out in italian towns measuring the impact of economic downturns on crime the paper investigates the effect of local economic conditions on crime the study focuses on italy s local labor markets and analyzes the response of crime to the severe slump of 2007 2011 it shows that the downturn led to a significant increase in economic related offenses that do not require particular criminal skills or tools namely thefts

taxes institutions and foreign diversification opportunities abstract investors can access foreign diversification opportunities through either foreign portfolio investment fpi or foreign direct investment fdi the worldwide tax regime employed by the us potentially distorts this choice by penalizing fdi relative to fpi in low tax countries on the other hand weak investor protections in foreign countries may increase the value of control creating an incentive to use fdi rather than fpi by combining data on us outbound fpi and fdi this paper analyzes whether the composition of us outbound capital flows reflects these incentives to bypass home and host country institutional regimes the results suggest that the residual tax on us multinational firms foreign earnings skews the composition of outbound capital flows a 10 decrease in a foreign country s corporate tax rate increases us investors equity fpi holdings by approximately 10 controlling for effects on fdi investor protections also seem to shape portfolio choices though these results are not robust when only within country variation is employed

individualism and stock price crash risk employing a sample of 26 473 firms across 42 countries from 1990 to 2013 we find that firms located in countries with higher individualism have higher stock price crash risk furthermore individualism can be transmitted by foreign investors from overseas markets to influence local firms crash risk and can exacerbate the impact of firm risk taking and earnings management on crash risk moreover the positive relation between individualism and crash risk is amplified during the global financial crisis and attenuated by enhanced country level financial information transparency and the adoption of international financial reporting standards

expatriate managers loyalty to the mnc myth or reality an exploratory study this exploratory study examines five antecedent conditions of organizational commitment among groups of american dutch israeli and british managers in six multinational banking corporations role nationality age seniority and rank are tested as correlates of the organizational commitment construct among three groups of managers headquarters hq officials expatriate managers and host country managers in foreign subsidiaries

the transfer of organizational culture overseas an approach to control in the multinational corporation organizational control has traditionally been described within the framework of the ideal type of weberian bureaucracy in which rules and regulations specify desired behavior and rewards are based on explicit performance measures this paper describes an alternative organizational ideal type that relies on an organizational culture for control in this type of system behavior is specified by the organizational culture and performance is maintained via mechanisms of social pressure an example of this letter type of control is found in the type z organization an american organizational form similar in many ways to the japanese form particularly interesting is the way in which a type z organization manages overseas subsidiaries by establishing the organizational culture in the subsidiary the process by which this is accomplished and by which control is maintained are described in a comparative empirical study of the headquarters and subsidiary of a firm representative of each control type the implications of this approach for management of the multinational firm and for the host country are also discussed

examining the link between crime and unemployment a time series analysis for canada we use national and regional canadian data to analyse the relationship between economic activity as reflected by the unemployment rate and crime rates given potential aggregation bias we disaggregate the crime data and look at the relationship between six different types of crimes rates and unemployment rate we also disaggregate the data by region we employ an error correction model in our analysis to test for short run and long run dynamics we find no evidence of long run relationship between crime and unemployment when we look at both disaggregation by type of crime and disaggregation by region lack of evidence of a long run relationship indicates we have no evidence of the motivation hypothesis for selected types of property crimes we find some evidence of a significant negative short run relationship between crime and unemployment lending support to the opportunity hypothesis inclusion of control variables in the panel analysis does not alter the findings qualitatively or quantitatively

striking at the roots of crime the impact of welfare spending on crime during the great depression abstractduring the great depression contemporaries worried that people hit by hard times would resort to crime president franklin roosevelt argued that the massive government relief efforts struck at the roots of crime by providing subsistence income to needy families after constructing a panel data set for 81 large american cities for the years 1930 40 we estimate the effect of relief spending by all levels of government on crime rates the analysis suggests that a 10 percent increase in relief spending during the 1930s reduced property crime by roughly 1 5 percent by limiting the amount of relief recipients free time work relief may have been more effective than direct relief in reducing crime more generally our results indicate that social insurance which tends to be understudied in economic analyses of crime should be more explicitly and more carefully incorporated into the analysis of temporal and spatial variations in criminal activity

limited enforcement financial intermediation and economic development a quantitative assessment we present a model of economic development where the importance of financial differences caused by limited enforcement can be measured economies where enforcement is poor direct less capital to the production sector and employ less efficient technologies calibrated simulations reveal that the resulting effect on output is large furthermore the model correctly predicts that the average scale of production should rise with the quality of enforcement finally we find that the importance of limited enforcement rises with the importance of capital in production

identifying the effect of unemployment on crime abstract in this paper we analyze the relationship between unemployment and crime using u s state data we estimate the effect of unemployment on the rates of seven felony offenses we control extensively for state level demographic and economic factors and estimate specifications that include state specific time trends state effects and year effects in addition we use prime defense contracts and a state specific measure of exposure to oil shocks as instruments for unemployment rates we find significantly positive effects of unemployment on property crime rates that are stable across model specifications our estimates suggest that a substantial portion of the decline in property crime rates during the 1990s is attributable to the decline in the unemployment rate the evidence for violent crime is considerably weaker however a closer analysis of the violent crime of rape yields some evidence that the employment prospects of males are weakly related to state rape rates

the effect of prison population size on crime rates evidence from prison overcrowding litigation simultaneity between prisoner populations and crime rates makes it difficult to isolate the causal effect of changes in prison populations on crime to break that simultaneity this paper uses prison overcrowding litigation in a state as an instrument for changes in the prison population the resulting elasticities are two to three times greater than those of previous studies a one prisoner reduction is associated with an increase of fifteen index i crimes per year while calculations of the costs of crime are inherently uncertain it appears that the social benefits associated with crime reduction equal or exceed the social costs of incarceration for the marginal prisoner

crime and unemployment in turbulent times we use the exceptional variation in municipality level unemployment in sweden during the 1990s to identify the effect of unemployment on crime our findings are as follows i there is a statistically and economically significant effect of general unemployment on the incidence of burglary auto theft and drug possession ii we find no evidence for the popular view that youth unemployment matters for crime iii prime aged unemployment is robustly correlated with main categories of youthful crimes a finding consistent with the idea that unstable life conditions of parents have adverse spillover effects on the life choices of their children jel j00 k4

law finance and firm growth we investigate how differences in legal and financial systems affect firms use of external financing to fund growth we show that in countries whose legal systems score high on an efficiency index a greater proportion of firms use long term external financing an active though not necessarily large stock market and a large banking sector are also associated with externally financed firm growth the increased reliance on external financing occurs in part because established firms in countries with well functioning institutions have lower profit rates government subsidies to industry do not increase the proportion of firms relying on external financing the corporate finance literature suggests that market imperfections caused by conflicts of interest and informational asymmetries between corporate insiders and investors constrain firms in their ability to fund investment projects the magnitude of these imperfections depends in part on the effectiveness of the legal and financial systems because these systems differ across countries the literature implies that there should exist systematic cross country differences in firms ability to obtain external capital to finance investment in this paper we examine whether the underdevelopment of legal and financial systems does prevent firms in some countries from investing in potentially profitable growth opportunities in particular we focus on the use of long term debt or external equity to fund growth see our earlier work demirgut kunt and maksimovic 1996a which compares firms financial structures in developed and developing countries and finds the greatest difference to be in the provision of long term credit we estimate a financial planning model to obtain the maximum growth rate that each firm in our thirty country sample could attain without access to long term financing we then compare these predicted growth rates to growth rates realized by firms in countries with differing degrees of development in their legal and financial systems our approach enables us to identify specific characteristics of the legal and financial systems that are associated with long term financing of firm growth thus we provide a micro level test of the hypoth

do inequality unemployment and deterrence affect crime over the long run abstractdo inequality unemployment and deterrence affect crime over the long run regional studies this paper investigates the long run relationship between crime inequality unemployment and deterrence using us state level data from 1978 to 2013 the novelty is to use non stationary panels with a factor structure the results show that 1 a crime theoretical model fits the long run relationship well 2 income inequality and unemployment have a positive impact on crime whereas that of deterrence is negative 3 the effect of income inequality on crime is larger when inequality is measured on a wider population proportion and 4 property crime is generally highly sensitive to the deterrence effect of police

disentangling the incentive and entrenchment effects of large shareholdings this article disentangles the incentive and entrenchment effects of large ownership using data for 1 301 publicly traded corporations in eight east asian economies we find that firm value increases with the cash flow ownership of the largest shareholder consistent with a positive incentive effect but firm value falls when the control rights of the largest shareholder exceed its cash flow ownership consistent with an entrenchment effect given that concentrated corporate ownership is predominant in most countries these findings have relevance for corporate governance across the world

international patterns of ownership structure choices of start ups does the quality of law matter the concentration of ownership of enterprises varies significantly among countries in this paper we investigate the role that differences in legal systems among nations play in molding founders preferences with respect to the ownership structure of their start ups we develop an economic framework which articulates the impact that the quality of protection offered to shareholders and debt holders has on the supply of debt and equity financing and the incentives of the founders to recruit partners or opt for sole ownership the theoretical analysis predicts that a positive relationship is likely to exist between the quality of the legal system and the ownership concentration of start ups this prediction is in contrast to the findings on relationships in large publicly traded firms using data obtained from the adult population survey of the global entrepreneurship monitor project from 2001 to 2004 about ownership preference patterns we confirm the prediction

coase versus the coasians who should enforce laws or contracts judges or regulators many coasians though not coase himself advocate judicial enforcement we show that the incentives facing judges and regulators crucially shape this choice we then compare the regulation of e nancial markets in poland and the czech republic in the 1990s in poland strict enforcement of the securities law by a highly motivated regulator was associated with a rapidly developing stock market in the czech republic hands off regulation was associated with a moribund stock market i introduction at the heart of economists traditional skepticism about government regulation is the coase theorem coase 1960 the theorem states that when property rights are well dee ned and transaction costs are zero market participants will organize their transactions in ways that achieve efe cient outcomes when they can do so it is not necessary for the government to engage in corrective actions through taxes regulations or even legal rules financial markets are often used to demonstrate the coase theorem s case against regulation advocates of the regulation of these markets point to a variety of potential failures such as the ability of security issuers to expropriate both potential and existing investors through misrepresentation or proe t diversion investors fear of such expropriation prevents e rms from raising external funds and keeps efe cient projects from being undertaken not so reply the coasians they point out that most securities transactions take place between sophisticated adults and that both the buyers and the issuers of securities have available to them a vast range of private arrangements to achieve efe ciency including contracts such as corporate charters certie cation by intermediaries and various forms of bonding such contracts render most laws and regulations unnecessary stigler 1964 easterbrook and fischel 1991

the role of international assignees social capital in creating inter unit intellectual capital a cross level model we conceptualize international assignees as informational boundary spanners between multinational enterprise units and develop a cross level model that explores how assignees social capital translates into inter unit intellectual capital first as knowledge brokers assignees create inter unit intellectual capital by linking their home and host unit social capital thereby enabling cross unit access to previously unconnected knowledge resources second as knowledge transmitters assignees host unit social capital facilitates their creation of individual intellectual capital which in turn translates into inter unit intellectual capital we conclude that individual social capital needs to be explicitly transferred to the organizational level to have a sustained effect on inter unit intellectual capital

managing knowledge transfer in mncs the impact of headquarters control mechanisms in this paper we explore the impact of organisational mechanisms on inter unit knowledge flows in multinational corporations mncs a comprehensive model based on agency theory and socialisation theory is tested on a sample of 134 finnish and chinese mnc subsidiaries our findings indicate that mncs can influence inter unit knowledge transfer by specifying the objectives of the subsidiary and by utilising corporate socialisation mechanisms however we found no support for the hypothesised impact of management compensation systems and the use of expatriate managers on the extent of knowledge transfers from foreign subsidiaries to other parts of the mnc

the effect of national culture on the choice of entry mode characteristics of national cultures have frequently been claimed to influence the selection of entry modes this article investigates this claim by developing a theoretical argument for why culture should influence the choice of entry two hypotheses are derived which relate culture to entry mode choice one focusing on the cultural distance between countries the other on attitudes towards uncertainty avoidance using a multinomial logit model and controlling for other effects the hypotheses are tested by analysing data on 228 entries into the united states market by acquisition wholly owned greenfield and joint venture empirical support for the effect of national culture on entry choice is found

investor protection and corporate governance recent research has documented large differences among countries in ownership concentration in publicly traded firms in the breadth and depth of capital markets in dividend policies and in the access of firms to external finance a common element to the explanations of these differences is how well investors both shareholders and creditors are protected by law from expropriation by the managers and controlling shareholders of firms we describe the differences in laws and the effectiveness of their enforcement across countries discuss the possible origins of these differences summarize their consequences and assess potential strategies of corporate governance reform we argue that the legal approach is a more fruitful way to understand corporate governance and its reform than the conventional distinction between bank centered and market centered financial systems

why higher takeover premia protect minority shareholders posttakeover moral hazard by the acquirer and free riding by the target shareholders lead the former to acquire as few sharcs as necessary to gain control as moral hazard is most severe under such low ownership concentration inefficiencies arise in successful takeovers moreover share supply is shown to be upward sloping rules promoting ownership concentration limit both agency costs and the occurrence of takeovers furthermore higher takeover premia induced by competition translate into higher ownership concen tration and are thus beneficial finally one share one vote and simple majority are generally not optimal and socially optimal rules need not emerge through private contracting

widening the lens rethinking distance diversity and foreignness in international business research through positive organizational scholarship the point of departure for the special issue is that current theory and research in international business ib may have overly emphasized a negative view on foreignness distance and differences of all kinds national cultural organizational and institutional with an emphasis on liabilities and adverse outcomes associated with such differences while existing research is certainly valuable we argue that focusing on mostly negative processes and outcomes has hindered our understanding of the dynamics processes and conditions that enable organizations to benefit from diversity in a wide range of ib contexts the goal of this special issue is to promote research that is in line with a positive organizational scholarship perspective which encourages scholars to look at commonly considered phenomena in new ways as well as to explicitly consider positive phenomena in ib research we then introduce the three articles included in the special issue and highlight how they help ib scholars better understand when and how foreignness distance and diversity can enhance organizational effectiveness and performance at multiple levels

financial education investor protection and international portfolio diversification abstract this paper investigates the effect of financial education on foreign portfolio investment we show that higher investor financial education fosters international diversification and that its role is particularly pronounced where information problems and monitoring costs are likely to be more severe that is in countries where protection of minority shareholders rights is weaker we interpret this evidence as supportive of the conjecture that financial education lessens the informational constraints binding foreign investors

public enforcement of securities market rules resource based evidence from the securities and exchange commission we empirically investigate whether increases in the u s securities and exchange commission s sec budget have an effect on firms compliance behavior with securities market rules our study uses a dataset on the sec s resources and its enforcement actions over a period beginning shortly after the second world war and ending in 2010 we find that increases in the sec s resources both improve compliance and lead to an increased activity level of the sec the higher level of compliance is reflected by a decrease in the numbers of enforcement cases the increased activity level is reflected by a surge in the number of investigations conducted by the sec

the value of the voting right a study of the milan stock exchange experience i study the large premium 82 percent attributed to voting shares on the milan stock exchange the premium varies according to the ownership structare and the concentration of the voting rights and it can be rationalized in the presence of enormous private benefits of control a case study seems to indicate that in italy private benefits of control can easily be worth more than 60 percent of the value of nonvoting equity a tentative explanation for these findings is provided traditional finance theory disregards the value of voting rights in pricing common stock in most cases this omission does not seem harmful many studies of differential voting stocks in different countries have indicated that voting rights are generally worth between 10 percent and 20 percent of the value of common stock the italian evidence i present differs sharply from this view in italy voting shares that have inferior dividend rights trade at an average premium

merging without alienating interventions promoting cross cultural organizational integration and their limitations foreign direct investment particularly cross border mergers and acquisitions can spawn a range of individual level outcomes from cross cultural adjustment and synergistic learning on the positive side to work alienation on the negative unsuccessful navigation of these individual level outcomes leads to failed integration that can seriously affect the realization of desired organizational outcomes such as successful technology transfer knowledge sharing and the general realization of global growth by means of an iterative between methods triangulation the study surfaces cross cultural work alienation as a phenomenon that can limit the overall success of such ventures and identifies interventions that help to promote successful post merger integration

crime inequality and unemployment in england and wales a model of crime is developed based on principles from the existing literature with some original insight the implications of the model are that income inequality and unemployment are important explanatory variables for crimes motivated by economic gain but do not offer much explanatory power for other types of crime panel data of uk regions over the years from 2002 to 2007 are then used to test these predictions the empirical results strongly support the hypothesis that crime is an economic phenomenon

four factors that explain both the rise and fall of us crime 1970 2003 previous research has failed to explain the rise and fall of us crime since 1970 this study uses cointegration error correction and common long memory components analyses to demonstrate that four basic crime factors explaining both the increases in us violent and property crime between 1970 and 1991 and the dramatic declines in crime after 1991 the four factors include arrest rates income per capita the proportion of criminal justice resources devoted to drug crime and alcohol consumption error correction models and common long memory factors show an especially close link between crime rates and the percentage of prison resources devoted to drug offenders similar factors result in cointegrated models for murder rape robbery assault and larceny additional modelling shows that effective abortion rates computed along the lines of donohue and levitt 2001 do not help in explaining the rise and fall of us crime

dual values based organizational identification in mnc subsidiaries a multilevel study dual organizational identification with both the whole corporation and the local subsidiary is considered valuable for subsidiary employees international assignees and multinational corporations mncs while extant research has examined antecedents of separate targets of identification it has not fully addressed the challenge of identifying factors capable of supporting both simultaneously this study examines the influence of individual and organizational level factors on the dual values based identification of foreign subsidiary employees drawing on acculturation and organizational socialization theory we test hypotheses on multilevel data from 793 managers and professionals in 90 foreign subsidiaries belonging to 11 nordic mncs the results show that dual values based identification is associated with acculturation and first hand contact at the individual level and a supportive social context for affective learning at the organizational level through its emphasis on higher order elements that connect different parts of the mnc rather than those that lead to the formation of in groups and out groups the values based approach to identification contributes to our understanding of dual identification in mnc subsidiaries and represents a more positive treatment of cultural diversity the findings have heightened practical relevance given the emphasis individuals are placing on values congruence in career choices and mnc efforts at instilling shared values

individual perceptions of the criminal justice system this paper empirically examines belief updating of the perceived probability of arrest and its criminal deterrence effects using two longitudinal data sources while beliefs about the probability of arrest are positively correlated with local official arrest rates they are unresponsive to information acquired from random individuals and local neighborhood conditions importantly perceptions respond to changes in an individual s criminal and arrest history young males who engage in crime without getting arrested revise their perceived probability of arrest downward while those who are arrested revise their probability upward estimates suggest that beliefs about the probability of arrest significantly deter crime jel k42

what drives the global land rush the authors review evidence regarding the size and evolution of the land rush in the wake of the 2007 8 boom in agricultural commodity prices and authors study the determinants of foreign land acquisition for large scale agricultural investment the use of data on bilateral investment relationships to estimate gravity models of transnational land intensive investments confirms the central role of agro ecological potential as a pull factor however this finding contrasts the standard literature insofar as the quality of the destination country s business climate is insignificant and weak tenure security is associated with increased interest for investors to acquire land in the country policy implications are discussed

the pecking order of cross border investment abstract is there a pecking order of cross border investment in that countries become financially integrated through some types of investment rather than others using a novel database of bilateral capital stocks for all types of investment fdi portfolio equity securities debt securities as well as loans for a broad set of 77 countries we show that such a pecking order indeed exists the paper focuses on two key determinants of this pecking order information frictions and the quality of host country institutions overall we find that in particular fdi and to some extent also loans are substantially more sensitive to information frictions than investment in portfolio equity and debt securities we also show that the share as well as the size of fdi that a country receive are largely insensitive to institutional factors in host countries while portfolio investment is by far the most sensitive to the quality of institutions this provides new evidence in favor of some hypotheses but contradicts others put forward in the literature on trade in financial assets

portable country governance and cross border acquisitions the agency theory and law and finance literatures show good country governance encourages financial development mitigates agency problems and increases firm value drawing on these literatures we develop a theory that benefits from good country governance are portable by firms across countries through cross border acquisitions using acquisitions from 56 countries from 1990 to 2007 we find that acquirers can transport the benefits from good country governance so that they gain more from acquiring targets with worse country governance than their own as predicted the acquirer s stock price reaction to acquisitions increases with the country governance distance between the acquirer and the target

families and firms agency costs and labor market imperfections in sialkot s surgical industry abstract the family firm is generally viewed as an organizational solution to agency costs in the labor market for managers and institutional underdevelopment consistent with this view this paper links the preponderance of family firms in the surgical instrument industry of sialkot to the prevailing agency and institutional problems however strong dependence on family management coupled with restrictions on family size constrains the firms from optimally choosing management size the resulting labor market distortion is manifested by a significant positive correlation between the founder s family size and the firm size such that the founders who have more brothers a larger pool of potential managers end up with bigger firms

legal institutions and fragile financial markets abstract this study investigates equity liquidity variation with a funding constraint across 38 countries and examines whether the effectiveness of a country s legal institutions is systematically related to cross country differences in fragile equity liquidity our results show that firms from countries with more extensive disclosure requirements tend to have lower liquidity shocks due to funding constraints leading to higher firm value this effect is stronger for ex ante disclosures especially for countries with a high level of openness and market volatility our empirical results are robust to the 2sls regression model the random effect regression model the alternative measure of fragile equity liquidity and the alternative measure of disclosure and enforcement variables our study provides a better understanding of the effect of information environments amidst periods of funding constraint

is effective junior equity market regulation possible the authors examined canada s capital pool company cpc program a regulated blind pool program since its inception in 1986 they found that the cpc regulations increased the quality of both the junior equity companies going public and the underwriters taking those companies public and significantly reduced the incidence of fraud in that market overall the authors found that effective regulation can help create a viable junior equity market that facilitates the development of smaller companies

rising metropoli the geography of mergers and acquisitions in germany high levels of mergers and acquisitions m as were a characteristic of the global economy in the 1990s the overall effects of m as on economic welfare and their spatial implications however remain a profoundly neglected topic using three standardised indices representing the relative quantity of take overs in each german regierungsbezirk the paper demonstrates that the recent wave of m as has resulted in a major concentration of firms and economic activity in the main german metropoli the paper then turns to a study of the flows of m a transactions by means of regression analysis it identifies the main drivers of the geographical concentration of firms to be indicators of the general level of agglomeration i e regional gdp and population and the concentration of political power in the region the results also indicate that investment in r d the general level of education or unemployment when considered in combination with agglomeration indicators play a negligible role in determining m a f

trade and capital flows a financial frictions perspective the classical heckscher ohlin mundell paradigm states that trade and capital mobility are substitutes in the sense that trade integration reduces the incentives for capital to ow to capital scarce countries in this paper we show that in a world with heterogeneous nancial development the classic conclusion does not hold in particular in less nancially developed economies south trade and capital mobility are complements within a dynamic framework the complementarity carries over to nancial capital ows this interaction implies that deepening trade integration in south raises net capital in ows or reduces net capital out ows it also implies that at the global level protectionism may back re if the goal is to rebalance capital ows when these are already heading from south to north our perspective also has

the left and organized labor in low inflation times this article presents fresh empirical data showing that policy alignment between center left governments and trade unions was a sustained feature of european politics between 1974 and 2005 this contradicts expectations of a wide delinkage between the electoral left and labor as a consequence of globalization deindustrialization and unionization decline however structural economic change has altered the policy field so that sustained policy alignment can no longer be explained by existing theoretical frameworks based on a theoretical argument and a multivariate empirical test the article contends that policy alignment is likelier to occur if labor plays an important role in economic management at the microlevel and the industry level and if unions are politically cohesive agents thanks to powerful confederation leadership supported by democratic decision making practices in making its case the article bridges the literatures on comparative capitalism and party politics in order to account for change and continuity in policy making processes

how does law affect finance an examination of equity tunneling in bulgaria abstract we model and test the mechanisms through which law affects tunneling and tunneling affects firm valuation in 2002 bulgaria adopted legal changes which limit equity tunneling through dilutive equity offerings and freezeouts following the changes minority shareholders participate equally in equity offerings where before they suffered severe dilution freezeout offer price ratios quadruple and tobin s q rises sharply for firms at high risk of tunneling the paper shows the importance of legal rules in limiting equity tunneling the role of equity tunneling risk as a factor in determining equity prices and substitution by controlling shareholders between different forms of tunneling

the balance of power in closely held corporations abstract we analyze a closely held corporation characterized by the absence of a resale market for its shares we show that the founder of the firm can optimally choose an ownership structure with several large shareholders to force them to form coalitions to obtain control by grouping member cash flows a coalition internalizes to a larger extent the consequences of its actions and hence takes more efficient actions than would any of its individual members the model has implications for the optimal bundling of cash flow and voting rights and for the optimal number and size of shareholders

the link between crime risk and property prices in england and wales evidence from street level data this paper uses street level data on property sales and crime rates for england and wales to investigate compensating differentials for crime risk my identification strategy relies on the use of non parametric regional time trends on various levels of spatial aggregation as well as various fixed effects for streets and wider areas to control for unobserved amenities and regional economic conditions the data comes from transaction data collected by the land registry and recently published crime maps for the whole of the uk my estimates which are robust to a range of sensible specification changes suggest that each case of anti social behaviour per ten population in the same street leads to an approximately 0 6 0 8 drop in property prices while a corresponding increase in violent crime decreases prices by roughly 0 6 1 6 and a corresponding increase in non violent crime by about 0 2 0 4 the majority of estimates are at the upper end of these intervals estimates for robbery burglary and vehicle c

navigating identity duality in multinational subsidiaries a paradox lens on identity claims at hindustan unilever 1959 2015 multinational subsidiaries do not merely seek legitimacy within their dual institutional contexts they also strive to articulate an organizational identity by drawing on institutional resources embedded in these dual contexts we draw attention to the subsidiary s identity duality and conceptualize it as a paradox i e as the juxtaposition of the contradictory interdependent and persistent characteristics of the global and the local in the subsidiary s identity using 57 years of archival data from hindustan unilever the indian subsidiary of anglo dutch multinational unilever we observe changing patterns in the articulation of identity claims by subsidiary leaders and develop a process model of how subsidiaries navigate identity duality over time we find that subsidiary leaders may use two modes of organizational identity work for this purpose logic ordering the articulation of identity claims that respond to contradictory institutional demands by privileging one and subordinating the other and logic bridging the articulation of identity claims that respond to contradictory institutional demands by effecting a janusian integration of the said demands over time and employing these modes of identity work leaders at hindustan unilever sustained a dynamic balance between the dual cores of the subsidiary s espoused identity

economic upturns are good for your heart but watch out for accidents a study on swedish regional data 1976 2005 this article explores the relationship between the regional unemployment rate in total and cause specific mortality in sweden during 1976 2005 overall mortality is unrelated to changes in the unemployment rate while the biggest cause of death heart disease decreases when the unemployment rate decreases at the same time other accidents including job related accidents increases when the unemployment rate decreases swedish evidence provide no support for the us research findings that short term decreases in the unemployment rate are bad for your health in general

the effects of labor markets and income inequality on crime evidence from panel data we estimate a model of crime using panel data for the u s we focus on the role of labor markets income distribution and demographics on property crime we find strong evidence that favorable labor market conditions have a significant negative effect on property crime we further test this result using sector specific wages and find that crime is most elastic with respect to wages in sectors that use low skilled labor we also find that income inequality has no significant effect on crime and that the proportion of young males in the population has a significant positive effect on crime

what lies beneath the euro s effect on financial integration currency risk legal harmonization or trade abstract although recent research shows that the euro has spurred cross border financial integration the exact mechanisms remain unknown we investigate the underlying channels of the euro s effect on financial integration using data on bilateral banking linkages among twenty industrial countries in the past thirty years we also construct a dataset that records the timing of legislative regulatory harmonization policies in financial services across the european union we find that the euro s impact on financial integration is primarily driven by eliminating the currency risk legislative regulatory convergence has also contributed to the spur of cross border financial transactions trade in goods while highly correlated with bilateral financial activities does not play a key role in explaining the euro s positive effect on financial integration

the effectiveness of public enforcement evidence from the resolution of tunneling in china this paper examines the effectiveness of public enforcement by studying the effects of regulatory intervention to curb tunneling through intercorporate loans in china specifically we explore whether public enforcement efforts in 2006 blacklisting and sanctions resulted in less tunneling and ultimately in increased performance for tunneling firms we show that tunneling is among the dominant factors increasing the likelihood of becoming blacklisted we also find that firms tunneling mechanisms decreased significantly after the regulatory shock and that their performance increased significantly compared to non tunneling firms after the regulatory shock finally we find a positive market reaction to the public announcement of tunneling both for firms that have been blacklisted and other tunneling firms that are not blacklisted collectively these results suggest that public enforcement in the presence of a credible threat succeeds in deterring the effect on tunneling behavior in china

carrots sticks and broken windows abstract this paper investigates the effect of economic conditions carrots and sanctions sticks on murder assault robbery burglary motor vehicle theft grand larceny and rape in new york city using monthly time series data spanning 1974 99 carrots are measured by the unemployment rate and the real minimum wage sticks are measured by the number of felony arrests size of the police force and number of new york city residents in prison in addition the paper tests the validity of the broken windows hypothesis consistent with its implementation by the new york police department we use misdemeanor arrests as a measure of broken windows policing the broken windows hypothesis has validity in the case of robbery motor vehicle theft and grand larceny while both economic and deterrence variables are important in explaining the decline in crime the contribution of deterrence measures is larger than those of economic variables

to steal or not to steal firm attributes legal environment and valuation data on corporate governance and disclosure practices reveal wide within country variation that decreases with the strength of investors legal protection a simple model identifies three firm attributes related to that variation investment opportunities external financing and ownership structure using firm level governance and transparency data from 27 countries we find that all three firm attributes are related to the quality of governance and disclosure practices and firms with higher governance and transparency rankings are valued higher in stock markets all relations are stronger in less investor friendly countries demonstrating that firms adapt to poor legal environments to establish efficient governance practices

investor protection optimal incentives and economic growth does investor protection foster economic growth to assess the widely held affirmative view we introduce investor protection into a standard overlapping generations model of capital accumulation better investor protection implies better risk sharing because of entrepreneurs risk aversion this results in a larger demand for capital this is the demand effect a second effect the supply effect follows from general equilibrium restrictions better protection i e higher demand increases the interest rate and lowers the income of entrepreneurs decreasing current savings and next period s supply of capital the supply effect is stronger the tighter are the restrictions on capital flows our model thus predicts that the positive effect of investor protection on growth is stronger for countries with lower restrictions cross country data provide support for this prediction as does the detailed examination of the growth experiences of south korea and india

what we talk about when we talk about global mindset managerial cognition in multinational corporations recent developments in the global economy and in multinational corporations have placed significant emphasis on the cognitive orientations of managers giving rise to a number of concepts such as global mindset that are presumed to be associated with the effective management of multinational corporations this paper reviews the literature on global mindset and clarifies some of the conceptual confusion surrounding the construct we identify common themes across writers suggesting that the majority of studies fall into one of three research perspectives cultural strategic and multidimensional we also identify two constructs from the social sciences cosmopolitanism and cognitive complexity that underlie the perspectives found in the literature we then use these two constructs to develop an integrative theoretical framework of global mindset we then provide a critical assessment of the field of global mindset and suggest directions for future theoretical and empirical research

why does the law matter investor protection and its effects on investment finance and growth investor protection is associated with greater investment sensitivity to q and lower investment sensitivity to cash flow finance plays a role in causing these effects in countries with strong investor protection external finance increases more strongly with q and declines more strongly with cash flow we further find that q and cash flow sensitivities are associated with ex post investment efficiency investment predicts growth and profits more strongly in countries with greater q sensitivities and lower cash flow sensitivities the paper s findings are broadly consistent with investor protection promoting accurate share prices reducing financial constraints and encouraging efficient investment in this paper we study how investor protection affects firm level resource allocations our analyses center on two hypotheses our first hypothesis is that stock prices more strongly predict both investment and external finance in countries with stronger investor protection laws tobin 1969 shows in a frictionless setting that marginal q predicts real investment in this framework high marginal q firms should all else equal also raise the most capital as these firms invest more we use average q q as a proxy for marginal q and test whether investment and external finance are more sensitive to q in countries with stronger investor protection laws

should business groups be dismantled the equilibrium costs of efficient internal capital markets abstract we analyze the relationship between conglomerates internal capital markets and the efficiency of economy wide capital allocation and we identify a novel cost of conglomeration that arises from an equilibrium framework because of financial market imperfections engendered by imperfect investor protection conglomerates that engage in winner picking stein 1997 internal capital markets and the competition for corporate resources journal of finance 52 111 133 find it optimal to allocate scarce capital internally to mediocre projects even when other firms in the economy have higher productivity projects that are in need of additional capital this bias for internal capital allocation can decrease allocative efficiency even when conglomerates have efficient internal capital markets because a substantial presence of conglomerates might make it harder for other firms in the economy to raise capital we also argue that the negative externality associated with conglomeration is particularly costly for countries that are at intermediary levels of financial development in such countries a high degree of conglomeration generated for example by the control of the corporate sector by family business groups could decrease the efficiency of the capital market our theory generates novel empirical predictions that cannot be derived in models that ignore the equilibrium effects of conglomerates these predictions are consistent with anecdotal evidence that the presence of business groups in developing countries inhibits the growth of new independent firms because of a lack of finance