securing the containerized supply chain analysis of government incentives for private investment to mitigate the threat that terrorists smuggle weapons of mass destruction into the united states through maritime containers the u s bureau of customs and border protection cbp inspects containers upon entry to domestic ports inspection driven congestion is costly and cbp provides incentives to firms to improve security upstream in the supply chain thereby reducing the inspection burden at u s ports we perform an economic analysis of this incentive program called customs trade partnership against terrorism c tpat modeling in a game theoretic framework the strategic interaction between cbp trading firms and terrorists our equilibrium results highlight the possibility that a properly run program can efficiently shift some of cbp s security burden to private industry these results also suggest that cbp may have the opportunity to use strategic delay as an incentive for firms to join analysis of comparative statics shows that with increasing capacity membership in c tpat systematically declines

balancing terrorism and natural disasters defensive strategy with endogenous attacker effort in this paper we apply game theory to identify equilibrium strategies for both attacker and defender in a fully endogenous model of resource allocation for countering terrorism and natural disasters the key features of our model include balancing protection from terrorism and natural disasters and describing the attacker choice by a continuous level of effort rather than a discrete choice i e attack or not interestingly in a sequential game increased defensive investment can lead an attacker to either increase his level of effort to help compensate for the reduced probability of damage from an attack or decrease his level of effort because attacking has become less profitable this can either reduce or increase the effectiveness of investments in protection from intentional attack and can therefore affect the relative desirability of investing in protection from natural disasters

unions in a general equilibrium model of firm formation unions are introduced into a general equilibrium model of firm formation i find under reasonable conditions that large firms are more likely to be unionized and that unionized firms are more productive and better managed than nonunion firms of the same size as well unions reduce economic efficiency by distorting the occupation choice decision between managing a firm and working in one perhaps surprisingly this distortion persists even when individual union contracts set both wages and employment in a fully efficient manner but can disappear when the mechanism that allocates property rights to union jobs is changed in certain ways

the impact on economic performance of a transformation in workplace relations this study examines how a transformation in patterns of conflict and cooperation affected economic performance in 25 work areas of a large unionized manufacturing facility in the period 1984 87 unlike most studies of industrial relations and economic performance this study clearly distinguishes conflict from cooperation but evaluates the two together rather than focusing on only one an analysis of data collected from union and employer records and interviews strongly suggests that work areas with traditional labor management relations rooted in adversarial assumptions had higher costs more scrap lower productivity and a lower return to direct labor hours worked than work areas with transformational relations characterized by increased cooperation and improved dispute resolution

union coverage and profitability among u s firms this paper utilizes unique survey data on labor union coverage at the firm level to examine union effects on the profitability of 705 u s companies during the 1970s market value and earnings are estimated to be about 10 15 percent lower in an average unionized company than in a nonunion company following extensive control for firm and industry characteristics deleterious union effects on firm profitability are sizable throughout the 1972 80 period but vary considerably across industries the relatively poor profit performance of unionized companies may help explain the recent decline in u s union membership the author thanks the w e upjohn institute for employment research for financial support elizabeth gregory for assistance with the union coverage survey zvi griliches for providing access to the rd donald deere terry seaks and anonymous referees for helpful suggestions and seminar participants at connecticut florida state harvard texas a m and william and mary for comments on earlier versions of this research

the effect of imf lending on the probability of sovereign debt crises abstract this paper explores empirically how the adoption of imf programs affects sovereign risk over the medium term we find that imf programs significantly increase the probability of subsequent sovereign defaults by approximately 1 5 2 percentage points these results cannot be attributed to endogeneity bias as they are supported by specifications that explain sovereign defaults and program participation simultaneously furthermore imf programs turn out to be especially detrimental to fiscal solvency when the fund distributes its resources to countries whose economic fundamentals are already weak our evidence is therefore consistent with the hypothesis that debtor moral hazard is most likely to occur in these circumstances other explanations that point to the effects of debt dilution and the possibility of imf triggered debt runs however are also possible

labor unions bargaining power and corporate bond yield spreads structural credit model perspectives abstract this study investigates labor union effects on bond yield spreads from perspectives of structural credit models by employing american bond observations from 2001 to 2007 this research finds that union strength significantly and positively relates to bond yield spreads this effect is roughly equal to that of issuer rating for one standard deviation change when controlling for well known variables the empirical results also show that the positive effects become weaker when management has higher bargaining power additionally union strength volatility significantly and negatively relates to bond yield spreads and capital structure leverage the above results are robust when controlling for credit ratings collinearity concerns industry effect and tax effect

adoption of an imf programme and debt rescheduling an empirical analysis the existence of an empirical relationship between the adoption of an imf programme and the concession of a debt rescheduling by commercial and official creditors is tested using a bivariate probit model if countries who have arrangements with the imf are more likely than others to obtain a rescheduling of their external debt we could conclude that the adoption of an imf programme could work as a sort of signal of a country s good willingness which is thus rewarded with the debt relief the results confirm the existence of a significant effect of the adoption of an imf programme on the subsequent concession of a debt rescheduling by creditors

the economic characteristics of imf program countries abstract a logit analysis is utilized to identify the factors that characterized developing nations that entered imf stabilization programs in the early 1980s program countries recorded higher rates of domestic credit growth larger shares of government expenditure more severe current account deficits smaller reserve holdings and lower per capita incomes

the demand for imf credits by sub saharan african countries abstract in this paper the demand behaviour of sub saharan african countries for imf credits will be studied on the basis of pooled cross section and time series analysis it will be concluded that drawings on imf facilities are not a purely economic phenomenon

does multilateral lending aid capital accumulation role of intellectual capital and institutional quality abstract this paper investigates whether multilateral lending is more effective in accumulating capital in countries with a higher level of innovation specifically we examine the role of the world bank or imf financing on the capital stock using data from 175 countries over the period 1970 2017 while considering different types of long term external flows namely fdi and debt we find that fdi as a long term inflow influences domestic capital stock positively but non g7 countries even with a higher level of innovation are unable to benefit from greater fdi flows in boosting their capital stock which we explain considering institutional quality differences across countries with regard to foreign debt flows the multilateral lending only benefits the borrowing country if it has a greater level of intellectual capital or if those funds are used in financing innovative activities as opposed to short term imf loans world bank lending tends to be directed more towards long term development goals thereby helping boost productive capital exploiting a policy intervention with trips agreement the paper uncovers that countries with better institutional quality and greater innovation generate a higher level of capital stock

renegotiation collective action clauses and sovereign debt markets abstract collective action clauses cacs are provisions specifying that a supermajority of bondholders can change the terms of a bond we study how cacs determine governments fiscal incentives sovereign bond prices and default probabilities in environments with and without contingent debt and imf presence we claim that cacs are likely to be an irrelevant dimension of debt contracts in current sovereign debt markets because of the variety of instruments utilized by sovereigns and the implicit imf guarantee nonetheless under a new international bankruptcy regime like that recently proposed by the imf cacs can increase significantly the cost of borrowing for sovereigns contrary to what is suggested in previous empirical literature

the impact of disaster on the strategic interaction between company and government a company allocates a resource between safety effort and production the government earns taxes on production the disaster probability is modeled as a contest between the disaster magnitude and the two players safety efforts the model illustrates that safety efforts are strategic substitutes and inverse u shaped in the disaster magnitude the company s safety effort increases and the government s safety effort decreases in taxation taxation can ameliorate companies free riding on governments safety efforts with sufficiently large production the government prefers and the company does not prefer raising taxation above 0 for the government an upper limit usually exists above which taxation cannot be profitably increased the model shows how both or no players exert safety efforts when the disaster magnitude is small and large respectively and how they free ride on each other s safety efforts when the disaster magnitude is intermediate the company free rides when the unit production cost is low so that the large profits outweigh the negative impact of the disaster with endogenized taxation determined by the government the tax rate decreases in the disaster magnitude the unit production cost the government s unit cost of safety effort and how the company is negatively affected by the disaster the tax rate increases in the company s resource and how the government is negatively affected by the disaster the tax rate is weakly u shaped in the company s unit safety effort the model is illustrated with numerical examples and with the oil spill disasters by bp in 2010 and by exxon valdez in 1989

three approaches to predict the timing and quantity of ldc debt rescheduling the performance of three approaches to predict the timing and quantity of ldc debt rescheduling is examined the balance sheet approach the traditional macro approach and the structural approach results show that the balance sheet approach performs better

equal employment opportunity law and firm profitability based on a sample of 260 cases reported in the wall street journal between 1964 and 1986 this study finds that the equity value of firms charged with violating equal employment opportunity eeo laws fell at the time that a suit decision or settlement was announced most dramatically the value of firms involved in class action suits fell 15 6 percent on average around the time of the suit further the average loss to shareholders exceeds the amount firms are required to spend to settle the case this may be due to the expected costs of changing employment practices or to the information about the firm s management that is revealed by the case a staggering number of statutes amendments and court decisions regulating equal opportunity in employment have been passed during the past 25 years firms found guilty of violations of equal employment opportunity laws have been required to pay millions of dollars in back pay and to alter their employment practices to comply with the laws this study measures the costs to firms resulting from government and private lawsuits and the further costs of losing those suits i address this question by examining changes in the market value of the equity of firms at the time a lawsuit is filed for a violation of an equal employment opportunity eeo law and at the time a decision of guilty or a settlement

from the fringe to the fore labor unions and employee compensation conventional wisdom suggests that labor unions raise worker wages while the newer empirical literature finds only negligible earnings effects i reconcile this apparent contradiction by arguing th

the effect of two tier collective bargaining agreements on shareholder equity this study uses an event time methodology to examine the impact of two tier agreements on shareholder equity from 1981 through 1986 following announcements of two tier agreements about half of the firms in the sample had negative abnormal returns returns with values below the expected market returns and half had positive abnormal returns because the positive returns exceeded the negative returns in absolute value however there was a statistically significant increase in mean firm value the abnormal returns averaged between 2 and 4 over a 10 to 12 week period following the announcement a figure that approximately equals the transactions cost of a stock purchase the authors speculate that this rather low average gain may help explain the marked decline of new two tier agreements during the latter half of the 1980s

internal cooperation and competitive success the case of the us steel minimill sector since the 1960s american steel minimills have captured markets once dominated by the american integrated steel producers this article argues that the minimills competitive success is due in part to their ability to cultivate and sustain flexible and participative internal labor market and industrial relations systems they have accomplished this by reducing internal sources of conflict among plant level workers and managers through the absence reduction or elimination of factors contributing to their vulnerability to higher level decisions the sector s market success has permitted the institutionalization of chosen strategies and structures and reinforced the virtues circle of convergent interests internal accord organizational responsiveness and product market success c 1995 academic press ltd copyright 1995 by oxford university press

the effects of automobile strikes on the stock value of steel suppliers this analysis of stock market data for the years 1965 90 indicates that upon announcements of automobile strikes steel suppliers experienced statistically significant negative returns about equal to the negative returns experienced by the struck automobile producers significantly larger negative interindustry effects were associated with large multi plant strikes than with smaller one plant strikes and the negative effects were significantly greater in the later years of the sample period a time of relatively weak financial condition than in the earlier years a time of stronger financial condition the author concludes that researchers and policy makers evaluating the private and social costs of strikes should consider adverse effects on the profitability not only of the struck industries but also of linked industries and should take into account the important roles of strike size and industry financial health

an analysis of drawings on the international monetary fund by developing countries the nature of relations between the imf and developing countries has come under close scrutiny in recent years this has partly been the result of the deteriorating economic situation in which a large number of non oil developing countries have found themselves a situation characterised by falling rates of economic growth increasing balance of payments deficits and rising debt service ratios and partly it has resulted from the particular but public experiences of a number of developing countries such as jamaica peru and tanzania in their dealings with the fund

employment protection and takeovers labor restructuring is a key driver of takeovers and the associated synergy gains worldwide in a difference in differences research design we show that major increases in employment protection reduce takeover activity by 14 27 and the combined firm gains synergies by over half consistent with the labor channel behind these effects deals with greater potential for workforce restructuring show a greater reduction in volume number and synergies the reforms do impede layoffs and the associated wage costs match the magnitude of synergy losses offer prices are not fully adjusted with both bidders and targets exhibiting lower returns following the reforms

effect of strike activity on firm value the article examines the stock market s reaction to labor management problems and employee strikes a discussion is presented about various categories of strike costs and cumulative abnormal return

using country balance sheet data to predict debt rescheduling in this study we utilise data relating to the balance sheets of developing countries e g short term debt in a logit model of debt rescheduling we find that such variables are theoretically and empirically superior to those conventionally used such as debt export ratios the study is based upon an annual sample of 27 countries for 1977 1981 and a six monthly data set involving 59 countries from 1977 1985

the effects of the nlra on stockholder wealth in the 1930s whereas most recent research examining the effects of the nlra on labor management relations has focused on the impact of specific provisions of the law this study provides an estimate of the impact of the passage of the nlra on 75 firms that were at great risk of being unionized in the 1930s taking changes in shareholder wealth as a measure of the shift in the balance of power caused by the nlra the authors find that the passage of the nlra caused a statistically and economically significant decline in shareholder wealth for the sampled firms specifically by april 1937 stockholder wealth in the firms was 15 9 lower than would have been expected had the nlra not been enacted t he impact of public policy on the balance of power between labor and management has always been a fundamental topic in industrial relations recent changes in many labor management relationships have renewed interest in the influence of public policy on labor relations and raised questions of how modifications in these policies might alter the behavior of the parties according to delaney lewin and sockell 1985 the empirical research on this topic has largely concentrated on specific provisions of the wagner act such as election procedures and regulation of employer unfair labor practices for example getman gold

predicting the quantity of ldc debt rescheduling in this paper we estimate a type 2 tobit model to explain both the timing and quantity of developing country debt rescheduling using an annual data set for 27 countries from 1977 1981 and six monthly data for 59 countries from 1977 1985 we obtain a satisfactory model for both the timing and quantity of rescheduling which will be more useful for country risk analysis than models which predict the timing alone

the union impact on profits evidence from industry price cost margin data this paper uses industry price cost margin data to estimate the extent to which unions reduce profits estimates allowing for the endogeneity of union status are contrasted with estimates that assume union status is exogenous and not determined in part by either profitability or industry structure endogeneity is found to be an important consideration in estimating the union impact on profits two stage estimates are considerably larger than ols estimates the final section explores the total estimated redistribution from capital to labor in the manufacturing sector an important conclusion is that unions raise prices less than was previously believed

labor unions and tax aggressiveness abstract we examine the impact of unionization on firms tax aggressiveness we find a negative association between firms tax aggressiveness and union power and a decrease in tax aggressiveness after labor union election wins this relation is consistent with labor unions influencing managers in one or both of two ways 1 constraining managers ability to invest in tax aggressiveness through increased monitoring or 2 decreasing returns to tax aggressiveness that arise from unions rent seeking behavior we also find preliminary evidence that the market expects these reductions around union elections and discounts firms that likely add shareholder value via aggressive tax strategies

wholesale pricing and evolutionarily stable strategies of retailers with imperfectly observable objective abstract this paper develops a one population indirect evolutionary game model of a supply chain with one manufacturer supplier and many a sufficiently large number of retailers to study how the retailer s marketing objective depends on the wholesale price its observability the error probability of the observed result on the rival s preference the market scale and the retailer s bargaining power this paper also presents an algorithm for computing the optimal wholesale price of the manufacturer we find that the profit revenue maximization behavior is an evolutionarily stable marketing strategy if the wholesale price is sufficiently high low given an appropriate wholesale price the revenue maximization behavior coexists with the profit maximization behavior in the retailers population the larger the market scale the stronger the motivation of the retailer to take profit maximization behavior due to a higher wholesale price the cross effects of the retailer s reservation payoff and the other factors should be considered in the decision process

balancing congestion and security in the presence of strategic applicants with private information concerns on security and congestion appear in security screening which is used to identify and deter potential threats e g attackers terrorists smugglers spies among normal applicants wishing to enter an organization location or facility generally in depth screening reduces the risk of being attacked but creates delays that may deter normal applicants and thus decrease the welfare of the approver authority manager screener in this paper we develop a model to determine the optimal screening policy to maximize the reward from admitting normal applicants net of the penalty from admitting bad applicants we use an m m 1 queueing system to capture the impact of security screening policies on system congestion and use game theory to model strategic behavior in which potential applicants with private information can decide whether to apply based on the observed approver s screening policy and the submission behavior of other potential applicants we provide analytical solutions for the optimal non discriminatory screening policy and numerical illustrations for both the discriminatory and non discriminatory policies in addition we discuss more complex scenarios including imperfect screening abandonment behavior of normal applicants and non zero waiting costs of attackers

bargaining with endogenous deadlines we develop a two person negotiation model with complete information that makes endogenous both the deadline and the level of surplus destruction after the deadline we show that the undominated nash equilibrium outcome is always unique but might be inefficient moreover as the bargaining period becomes short or as the players become very patient the unique undominated nash equilibrium outcome is always inefficient

the impact of labour unions on external auditor selection and audit scope evidence from the korean market abstractwe examine whether labour unions influence external auditor selection and audit scope as a major user group of financial information labour unions likely demand financial information of high quality and thus high quality audits as a union s request for wage increases is likely strong when a firm is performing well management facing wage negotiations with the labour union has incentives to manipulate earnings downward and may therefore prefer auditors who allow more discretion using union data unique to korea during 2005 2008 we find that firms with a stronger labour union tend to choose higher quality auditors i e big n or industry specialist auditors we also find that unionization is negatively positively associated with positive negative abnormal audit fees and audit hours and the effects are more pronounced when the union is stronger and more active given that departures from normal audit fees and audit hours in either direction arguably impair audit quality this finding is con

catalysing private capital flows do imf programmes work as commitment devices in this article we examine whether imf programmes influence the ability of developing country issuers to tap international bond markets and if they improve spreads paid on the bonds issued we find that fund programmes do not provide a uniformly favourable signalling effect instead the evidence is most consistent with a positive effect of imf programmes when they are viewed as likely to lead to policy reform and when undertaken before economic fundamentals have deteriorated significantly the size of the fund s programme matters but the credibility of a joint commitment by the country and the imf appears to be critical enhancing its members access to international capital markets is widely regarded as an important objective of the international monetary fund imf or fund though the objective is not an explicitly stated purpose in the fund s articles of agreements the flow of international capital is essential to such stated purposes as the stability of the international monetary system efficient trade and productive resource use and to providing confidence when a member country experiences difficulties with its balance of payments 1 the fund s interest in private international capital flows has moreover increased over the last decade reflecting this evolution the fund s former managing

compliance and enforcement decisions under the national labor relations act this article analyzes the growth of regulatory litigation under the national labor relations act by modeling the compliance and enforcement decisions made by the employers unions and workers covered by the act an empirical analysis of the model on time series data for 1950 80 confirms the importance of compliance and enforcement incentives in explaining the growth of unfair labor practice charges while some actions of the national labor relations board the regulatory agency established by the act influence these incentives and the resulting regulatory litigation changes in some important incentives notably relative labor costs are beyond the board s influence

modeling secrecy and deception in a multiple period attacker defender signaling game abstract in this paper we apply game theory to model strategies of secrecy and deception in a multiple period attacker defender resource allocation and signaling game with incomplete information at each period we allow one of the three possible types of defender signals truthful disclosure secrecy and deception we also allow two types of information updating the attacker updates his knowledge about the defender type after observing the defender s signals and also after observing the result of a contest if one occurs in any given time period our multiple period model provides insights into the balance between capital and expense for defensive investments and the effects of defender private information such as defense effectiveness target valuations and costs and also shows that defenders can achieve more cost effective security through secrecy and deception possibly lasting more than one period in a multiple period game this paper helps to fill a significant gap in the literature in particular to our knowledge no past work has studied defender secrecy and deception in a multiple period game moreover we believe that the solution approach developed and applied in this paper would prove useful in other types of multiple period games

concession bargaining the impact on shareholders equity this analysis of bargaining settlements in 1982 83 shows that on average shareholders in those firms that negotiated concessionary settlements enjoyed an 8 to 10 percent increase in the value of their holdings the author interprets this result to mean not that the value of the firm increased but rather that concessions enlarged the shareholders portion of the firm s value at the expense of the workers portion on the other hand concession bargaining does not seem to have reallocated business risk between shareholders and labor finally the evidence suggests that firm specific sources of risk can explain in part not only the magnitude of the concession effects but also the probability that concession bargaining will occur

economic impacts of new unionization on private sector employers 1984 2001 economic impacts of unionization on employers are difficult to estimate in the absence of large representative data on establishments with union status information estimates are also confounded by selection bias because unions could organize at highly profitable enterprises that are more likely to grow and pay higher wages using multiple establishment level data sets that represent establishments that faced organizing drives in the united states during 1984 1999 this paper uses a regression discontinuity design to estimate the impact of unionization on business survival employment output productivity and wages essentially outcomes for employers where unions barely won the election e g by one vote are compared with those where the unions barely lost the analysis finds small impacts on all outcomes that we examine estimates for wages are close to zero the evidence suggests that at least in recent decades the legal mandate that requires the employer to bargain with a certified union has had little economic impact on employers because unions have been somewhat unsuccessful at securing significant wage gains

imf conditionality as a screening device a theoretical model is developed in which adoption of an imf programme signals a country s productivity it is assumed that there are two types of country one with a high return on investment and the other with a low return the country s type is known only to itself in the presence of a debt overhang the high productivity country may choose not to undertake the investment despite it being socially efficient to do so in this case the creditor would like to offer the country some debt reduction but the low productivity type will also benefit from the debt reduction this problem can be avoided if the country has sufficient resources to engage in a debt buyback in order to gain the debt relief only the high productivity type would be prepared to sacrifice current resources for the debt reduction and thus a separation of the types is achieved this is similar to an argument found in acharya and diwan 1993 we argue however that it is unlikely that a heavily indebted country will have sufficient resources for a buyback if the country is credit constrained an alternative screening mechanism is to undertake an imf programme in return for debt reduction and possibly an imf loan this mechanism can be the equilibrium outcome even if the programme creates only disutility for the country s policy makers

the impact of labor strikes on consumer demand an application to professional sports the primary bargaining power of organized labor is its ability to withdraw labor from the rm in the form of a strike from the workers perspective a strike is intended to impose substantial costs upon the rm over time as these costs accumulate the rm develops an appreciation of the solidarity of labor and may eventually surrender to the demands of the workers orley c ashenfelter and george e johnson 1969 note that the strike also serves the function of informing the workers to the reality of the rm s position although the union leadership may recognize early in negotiations that the rm cannot or will not meet the workers demands the rank and le of the union often do not understand the impracticality in their position until the workers have struck and the rm fails to surrender whether strikes ultimately serve as a lesson to workers or rms is partially impacted by the extent to which such events impart costs upon both the rm and the industry for example brian e becker and craig a olson 1986 examined the relationship between worker strikes and changes in shareholder equity these authors found that on average a strike of at least 1 000 workers would reduce shareholder equity by 4 1 percent richard a de fusco and scott m fuess jr 1991 examined airline carriers and found that strikes tended to redistribute wealth from shareholders of those airlines which experienced a strike to shareholders of airlines that had management labor peace furthermore richard mchugh 1991 investigated the impact of a labor strike on both the rm and organizations linked as purchasers or suppliers surprisingly the impact of the strike was greater for the linked rm than it was for the rm directly experiencing the worker strike each of the aforementioned studies found that strikes impose costs on the rm these costs generally centered on the loss of output the rm experienced during the duration of the management labor con ict previous studies have largely neglected the possible extended costs associated with the reactions of the remaining party impacted by the worker strike the consumer although in many industries rms can increase inventories prior to a worker strike this is not true in all industries within the airline industry for example labor strikes temporarily force consumers to either consume the production of other suppliers or live without the particular good or service this outcome leads to the question we investigate do work stoppages permanently impact consumer demand when the struck rm is unable to meet demand during the labor strike a natural setting to explore this issue is the professional sports industry in such an industry worker strikes can completely remove the output from the consumer s consumption basket unlike strikes in other industries though consumers of the output from the professional team sports industry frequently threaten to withdraw all future demand if worker strikes are not avoided or ended quickly this threat has led industry insiders to claim that labor strikes might destroy the professional sports league experiencing management labor dif culty

an approximate solution to rent seeking contests with private information abstract we propose an approximate solution to rent seeking contests in which participants have heterogeneous and private valuations the procedure only requires common knowledge about the mean of the distribution of valuations we obtain a closed form expression for an agent s level of investment and subject it to comparative statics analysis we then assess the performance of the model and find that the proposed solution provides a remarkably effective approximation of the optimal solution for a wide range of parameter specifications

union rent seeking intangible capital and market value of the firm abstract this study considers the effect of unions on intangi ble capital investment and profitability within the context of a market value rather than a more traditional accounting based approach theory is provided suggesting unions are able to affect profitability by sharing in the economic returns to firm specific intangible capital in support of this hypothesis we find unionization reduces the returns to r d and produces a corresponding limiting influence on r d investment at the firm level i introduction a n extensive literature in economics has ex amined the determinants of profitability with much of the focus centering on the role of market structure only recently however have the effects of labor unions on profitability been analyzed ths is surprising since labor economists long have emphasized union influences on wages and productivity that in turn may affect profitabil ity in recent studies freeman 1983 and karier 1985 report a significant limiting influence of unions on price cost margins in high concentra tion manufacturing industries using firm level data and the market based tobin s

union firm bargaining and the influence of product market power and production technology on systematic risk the relationship between the capm firm beta and the firm s microeconomic decisions is studied by a model under uncertainty which combines the feature of an ex ante inputs substituable production technology and the existence of a union which bargains over various economic dimensions of the firm it is shown that the earlier findings of a relationship between the firm beta the firm product market power and the labor capital ratio may be reinforced through the indirect channel of labor market bargaining but the relationship becomes more complex and heavily depends on the scope of the union firm bargaining process this yields the empirical prediction confirmed for a panel of belgian firms that any proper estimation of the determinants of firm beta must control for firms in the sample being unionized

when unions mattered the impact of strikes on financial markets 1925 1937 this examination of the stock market s responsiveness to strikes looks specifically at strike actions that labor historians generally view as the major ones occurring in the united states in the years 1925 37 the authors find that strikes had large negative effects on industry stock value longer strikes violent strikes strikes in which unions won industry wide strikes strikes that led to union recognition and strikes that led to large wage increases were associated with larger negative share price reactions than were other strikes much of the news generated by the typical strike seems to have been registered by the stock market very early in the strike however there were also some fairly large stock price reactions to news that could be fully revealed only at the end of a strike

security screening queues with impatient applicants a new model with a case study abstract security screening policies are critical in military contexts airports ports and visa issuance processes in order to minimize risks from terrorists smugglers fugitives and others however such screening procedures also increase congestion and inconvenience for normal applicants which may create a trade off for the authorities balancing between risk and congestion in this paper we develop a game theoretical model to investigate optimal screening policies that acknowledges the trade offs between risk congestion and abandonment behavior of the applicants to calculate the average waiting time in the screening queue with heterogeneous impatient applicants we use a two dimensional markov chain model as a case study we tackle the security screening process of us visa applications by conducting an online survey collected data shows some key aspects of applicant preferences such as abandonment behavior we conduct sensitivity analysis for our model we show that if the authorities take the abandonment behavior of the applicants into account beforehand they may achieve higher utility depending on the characteristics of applicants

evolutionary stability of auction and supply chain contracting an analysis based on disintermediation in the indian tea supply chains abstract the purpose of this paper is to show that evolutionary stable market equilibrium is achievable through complete disintermediation of auctioneers if the option of bargaining based supply chain contracting exists the paper analyzes the evolutionary dynamics of a market that caters both the scopes of auction intermediation and supply chain contracting to a set of homogeneous buyers and sellers the motivation of this work developed from the contradiction between the theoretical framework of lu and mcafee 1996 that identifies auction to be evolutionary stable over bargaining and the real instance of sustained disintermediation of auctioneers in the world s largest tea industry in india where supply chain contracting is the other option of trading

the effect of labor unions on ceo compensation we find evidence that labor unions affect chief executive officer ceo compensation first we find that firms with strong unions pay their ceos less the negative effect is robust to various tests for endogeneity including cross sectional variations and a regression discontinuity design second we find that ceo compensation is curbed before union contract negotiations especially when the compensation is discretionary and the unions have a strong bargaining position third we report that curbing ceo compensation mitigates the chance of a labor strike thus providing a rationale for firms to pay ceos less when facing strong unions

unionization and shareholder interests drawing on agency theory this study examines union nonunion differences in the allocation of both firm profits and business risk to employees and shareholders using a sample of more than 1 000 large private sector firms the authors find that over the period 1970 81 shareholders in unionized firms assumed less of the firm s business risk than shareholders in nonunion firms this finding is interpreted as evidence that managers of unionized firms attempted to minimize agency costs by capitalizing on the incentive effects of risksharing in addition risk adjusted returns to shareholders were lower in unionized firms than in nonunion firms the authors view the relatively poor performance of union firms as a primary motivating factor behind the restructuring of the american industrial relations system during the period studied

unionization and profitability evidence from the capital market this paper examines the effect of unionization on the profitability of firms abnormal monthly common stock returns for a sample of 253 nyse listed firms are estimated for the month in which the union petitions for an election and for the month in which the national labor relations board certifies the election outcome the results suggest that unionization on average is associated with a reduction in equity value when unions win an election the average loss associated with the unionization drive is 3 8 percent of equity value when unions lose an election there is an average net reduction of 1 3 percent in the equity value of the firm

economic determinants of imf financial arrangements abstract we analyze factors that lead to imf approval of financial arrangements we account for both economic variables that induce a country to seek an imf arrangement demand side factors and macroeconomic policy commitments that the imf considers when deciding whether to approve it supply side factors using a pooled sample of annual observations for 91 developing countries over 1973 1991 we obtain maximum likelihood bivariate and univariate probit estimates of the approval of an imf arrangement for a given country in a given year a number of demand side and supply side variables are statistically significant determinants of the approval of an imf arrangement

right to work laws new evidence from the stock market 1 introduction business organizations the national right to work committee and organized labor periodically devote enormous resources to battles over passage or repeal of individual state rightto work rtw laws all rtw laws outlaw union shop agreements clauses in collective bargaining agreements that require employees to join the union that represents them and about half also outlaw agency shop agreements clauses in collective bargaining agreements that require nonmembers to pay a fee to the union to cover the cost of representation supporters of rtw argue that employees should not be required to pay dues to a labor organization that they do not support opponents argue that because union contracts and grievance arbitration systems cover all employees members and nonmembers rtw laws encourage free riding by individuals who want to gain the benefits of unionization without bearing the costs and that this weakens labor unions are rtw laws largely symbolic or do they reduce union membership the probability of union growth and union bargaining power informed opinion is still sharply divided one view is that rtw laws reduce the probability of union organizing at least in the years immediately following their passage and that this along with lower levels of membership in previously organized units reduces the level of unionization in a state e g hirsch 1980 carroll 1983 garofalo and malhotra 1992 davis and huston 1993 1995 ellwood and fine 1987 present evidence that the effect on new organizing is most severe with new organizing diminished between 32 and 38 in the 10 years after passage of a rtw law 1 zax and ichniowski 1991 see also ichniowski and zax 1991 demonstrate that the dampening of new organizing extends to the public sector when it operates under rtw laws even when those laws are favorable to unions in other respects others however argue that rtw legislation is largely symbolic it reflects the prevailing anti union opinion climate of a particular state but has little independent impact on union organizing or membership moore and newman 1985 1975 wessels 1981 lumsden and peterson 1975 sobel 1995 presents evidence on the true number of free riders consistent with the taste hypothesis rtw legislation is passed in this perspective in states in which public opinion is anti union and the labor movement is politically weak in these states workers are less attracted to unions and it is this public opinion climate rather than the law itself that hurts union growth 2 we present a new type of evidence on this issue from two states in which public opinion had turned sharply against unions or at least in favor of rtw in the period before the passage of a rtw law we reason that if passage of the rtw law itself actually lowers the probability of unionization or reduces the bargaining power of unions operating within a particular state beyond the effect of the prior shift in attitudes then anticipated future profits of firms operating in that state will rise in response to passage of that law because unions are associated with lower firm profits 3 hence equity values of those firms will increase we use event study methodology to discover whether or not this actually happened in louisiana when it passed a rtw law in 1976 and in idaho when it passed a rtw law in 1985 1986 4 louisiana and idaho are both well suited to research based on the event study technique legislative action in both states took place in the period in which daily stock price data are available from all three sources of stock price data new york american and nasdaq 5 daily as opposed to monthly stock price data are much more likely to reveal statistically significant changes in shareholder equity brown and warner 1985 because we use daily rather than monthly data a finding of no statistically significant change in shareholder equity would be valid evidence that rtw laws are symbolic rather than substantive

capital labor and the firm a study of german codetermination under the german corporate governance system of codetermination employees are legally allocated control rights over corporate assets through seats on the supervisory board that is the board of nonexecutive directors the supervisory board oversees the management board the board of executive directors approves or rejects its decisions and appoints its members and sets their salaries we empirically investigate the implications of this sort of labor participation in corporate decision making we find that companies with equal representation of employees and shareholders on the supervisory board trade at a 31 stock market discount as compared with companies where employee representatives fill only one third of the supervisory board seats we show that under equal representation management board compensation provides incentives that are not conducive to furthering shareholders interests possibly because labor maximizes a different objective function than shareholders we document that under equal representation companies have longer payrolls than their one third representation peers have finally we provide evidence that shareholders respond to the allocation of control rights to labor by linking supervisory board compensation to firm performance and by leveraging up the firm jel g32 g34

imf lending programs participation and impact abstract participation in imf programs has been an option that more and more developing countries have exercised in recent years in this paper a detailed analysis of such participation over the period 1976 1986 provides a number of insights into the motivations for and the macroeconomic effects of such participation participation is driven by a combination of past performance present external influences and sluggish adjustment of developing countries the ability to predict which countries will participate in the imf program is quite good with nearly 90 percent of variation in such choices accounted for by the explanatory variables employed increased participation has as contemporaneous effects a reduction in economic growth and domestic investment and an improvement in the current account lagged effects of increased participation on economic growth and domestic investment are positive and in most estimates quantitatively greater than the contemporaneous effects there is also evidence of significantly lower public investment an increased budget surplus and real depreciation of the exchange rate with increased participation results for domestic credit creation and government current expenditure although they have a sign consistent with more austere policy cannot be shown to be significantly different from those not participating

the debt crisis structural explanations of country performance abstract this paper develops a cross country statistical model of debt rescheduling and the secondary market valuation of ldc debt which links these variables to key structural characteristics of developing countries such as the trade regime the degree of income inequality and the share of agriculture in gnp our most striking finding is that higher income inequality is a significant predictor of a higher probability of debt rescheduling in a cross section of middle income countries we attribute this correlation to various difficulties of political management in economies with extreme inequality we also find that outward orientation of the trade regime is a significant predictor of a reduced probability of debt rescheduling

does the political power of nonfinancial stakeholders affect firm values evidence from labor unions whereas corporate political connections are known to enhance equity values we demonstrate that union political activity can have the opposite effect we examine the consequences of a recent australian state law that restricts union political activity but does not change collective bargaining rights in the wake of this law the equity values of affected unionized firms significantly increase and consistent with this market reaction these firms are able to bargain for more favorable labor contracts than their unionized peers in other states the evidence strongly suggests that unions use political activism to extract rents from shareholders and benefit their members

can union labor ever cost less this paper examines the effect of unions on efficiency by estimating cost function systems over three different sets of construction projects the results show that union contractors have greater economies of scale this gives them a cost advantage in large commercial office buildings but in school and hospital construction nonunion contractors have lower costs at all output levels despite the cost differences profits for nonunion contractors in school and hospital construction are no higher than those for union contractors because the burden of higher union costs is shifted to buyers

the economic effect of strikes on the shareholders of nonstruck competitors prior research has established that strikes incur significant economic losses for the struck firms this event study of intraindustry strike effects in highly concentrated industries focuses on two samples firms that experienced a strike involving 1 000 or more workers between 1982 and 1990 and the nonstruck firms that were their closest competitors contrary to the prediction of some models that the economic losses incurred by struck firms are captured by their nonstruck competitors the results indicate that the total spillover from shareholders of the struck firms to shareholders of the nonstruck competitors in this sample was not statistically significant the authors speculate that the struck firms were able to limit spillover effects through such tactics as stockpiling inventory before a strike also concessions by labor which were common outcomes of collective bargaining during the sample period probably significantly reduced the struck firms total strike cost

optimal allocation of resources in airport security profiling vs screening this model examines the role of intelligence gathering and screening in providing airport security we analyze this problem using a game between the government and a terrorist by investing in intelligence gathering the government can improve the precision of its information in contrast screening can be used to search a passenger and thereby deter terrorist attacks we determine the optimal allocation of resources between these two strategies wherein we model the role of intelligence using the concept of supermodular precision one striking result is that under certain circumstances an increase in the investment in intelligence can induce a more devious terrorist to attack with a higher probability we also find that when there is a cost reducing innovation in the screening technology then the optimal investment in intelligence gathering can go either way however such an innovation unambiguously improves social welfare another interesting implication is that a developed economy would value intelligence inputs more than a developing economy we also examine the efficacy of a program such as precheck that allows some select passengers expedited screening in exchange for voluntarily revealing information about themselves our analysis shows that such a program can be used to cushion the adverse effect of budgetary shortages finally we also examine the role of enhanced punishment on the optimal level of intelligence we find that the result can go both ways if the initial level of punishment is high then any further enhancement reduces the optimal level of intelligence gathering however this result is reversed if the initial level of punishment is low

hiding in plain sight using signals to detect terrorists this paper studies the interaction between a governmental security agency as the transportation security agency or the immigration and naturalization service and a terrorist organization like al qaeda the governmental agency wants to stop the terrorists but first must infer whether a visa applicant or an airline passenger is a terrorist on the basis of some observable signal the terrorist organization s objective is to get past security to commit murder and mayhem we derive the equilibrium strategy for this signaling model and evaluate specific anti terrorist policies as the creation of the new homeland security agency and increased airport security screening

country balance sheet data vs traditional macro variables in a logit model to predict debt rescheduling abstract this paper presents empirical estimates of rescheduling probabilities for 68 debtor countries using semi annual data from 1981 i through 1988 ii the set of regressors integrates bis data on banks balance sheet positions e g the ratio of short term debt to total debt of developing countries or undisbursed credit commitments to total debt with traditional macro variables e g export growth or gross domestic product of the g7 all estimated equations have a high explanatory power the novel result is that as the prediction lag is lengthened the significance of the macro variables improves relative to the one of the balance sheet data this suggests that macro variables are proxies for more fundamental longer term determinants of a country s solvency whilst financial variables provide information about the country s current liquidity

labor protection and leverage this paper exploits inter temporal variations in employment protection across countries and finds that rigidities in labor markets are an important determinant of firms capital structure decisions over the 1985 2007 period we find that reforms increasing employment protection are associated with a 187 basis point reduction in leverage we interpret this finding to suggest that employment protection increases operating leverage crowding out financial leverage this result is robust across measures of employment protection and leverage and does not appear to be due to pre treatment differences between treated and control firms omitted variables unobserved changes in regional economic conditions and reverse causality heterogeneous treatment effects are consistent with our economic intuition we find that the negative effect is more pronounced in firms that are subject to frequent hiring and firing

do highly unionized companies compensate their ceos less in periods of financial distress evidence from canada in this article the author studies the strategic interaction between employee stakeholders in particular labor unions and top management and he evaluates the effect of the two parties inherent competitive rent seeking behavior on ceo pay using a panel of firms listed on the s p tsx composite index the author shows that ceo compensation withstood the financial crisis 2008 2011 despite lower and even negative corporate performance further highly unionized companies were associated with higher ceo pay in terms of non equity elements such as salary and pension allocations the presence of unions had no observed effect in reducing bonuses stock options and restricted stock units these findings have implications for the debate on income inequality and the power of unions to bring about change

a game theoretic model of international influenza vaccination coordination influenza vaccination decisions in one country can influence the size of an outbreak in other countries due to interdependent risks from infectious disease transmission this paper examines the inefficiency in the allocation of influenza vaccines that is due to interdependent risk of infection across borders and proposes a contractual mechanism to reduce such inefficiencies the proposed contract is based on an epidemic model that accounts for intranational transmission and that from a source country where the dominant strain emerges the contract reduces the overall financial burden of infection globally and improves the total number infected by seasonal influenza outbreaks this is consistent with recent recommendations to improve pandemic preparedness numerical experiments demonstrate that the benefits of the contract can prevent millions of influenza cases and save tens of millions of dollars and that the benefits are even greater when cross border transmission is higher even if cross border transm

event studies in management research theoretical and empirical issues we examined the use of event studies in management research and found that there was inadequate attention paid to theoretical and research design issues this lack of attention may lead to false in

global horse trading imf loans for votes in the united nations security council we investigate whether temporary members of the united nations security council receive favorable treatment from the international monetary fund imf using panel data for 197 countries over the period from 1951 to 2004 our results indicate a robust positive relationship between temporary security council membership and participation in imf programs even after accounting for economic political and country specific factors there is also evidence that security council membership reduces the number of conditions included in imf programs imf loans seem to be a mechanism by which the major shareholders of the fund can win favor with voting members of the security council

unionism in a competitive industry this article explores a model in which a union confronts many competitive workers firms and consumers under monopoly unionism union coverage may be incomplete then union wages and employment are insensitive to product demand variation under efficient unionism coverage can never be incomplete some union variables necessarily vary with product demand preliminary evidence on the demand independence under incomplete coverage hypothesis is presented also more structure is imposed and further hypotheses are derived and the manner in which the model can be enriched to allow for a variety of union related issues within a consistent framework is set out

do unions capture monopoly profits this paper challenges the conclusion reached in recent studies that unions reduce profits exclusively in highly concentrated industries from their review of previous studies and their analysis of 1977 data on 367 fortune 500 firms the authors conclude that there is no convincing evidence that concentration produces monopoly profits for unions to capture moreover they find that the union wage effect is not greater in concentrated industries as suggested by the hypothesis that unions capture concentration related profits evidence is found suggesting that a firm s market share its expenditures on research and development and its protection from foreign competition provide more likely sources for union rents than does industry concentration several recent studies have found that unions reduce profits significantly and some have concluded that this profit reduction is restricted to highly concentrated industries both conclusions are important the finding that unions reduce profitability indicates that in general the cost increasing effects of unions outweigh any positive productivity effects they may bring to the workplace such a

the effect of wage bargains on the stock market value of the firm the author estimates the change in the value of common stock resulting from an unexpected change in collectively bargained labor costs using bargaining unit wage data and nyse stock returns he estimates a dollar for dollar trade off between these variables this result is consistent with stock valuations based on present value maximizing managerial decisions that is the results are consistent with hotelling s lemma the author also finds support for the hypothesis that collective bargains maximize the sum of shareholder and union member wealth that is the results are consistent with strong efficiency in the contracting environment copyright 1989 by american economic association

the impact of strikes on shareholder equity from an analysis of data for 1962 82 the authors find that strikes substantially affect shareholder equity as measured by the change in stock prices associated with strikes over that period the a

union effects on productivity profits and growth has the long run arrived this article interprets literature examining union effects on economic performance production function studies indicate small overall union impacts on productivity positive effects where they exist appear to result from management response to decreased profit expectations and from a natural selection process lower profitability among unionized firms is well established more interesting is the possibility that unions appropriate quasi rents deriving from long lived tangible and intangible capital the connection between unions investment behavior and productivity growth emerges as a particularly fruitful line of empirical inquiry although it does not encourage a sanguine view of unionism s long run impact

union certification in ontario its effect on the value of the firm event study methodology is used to determine the effect of union certification in ontario on the expected profitability of firms raid and non raid applications and the method of certification are examined contrary to expectations we find no strong negative response to certification applications in most cases in general the more contentious the certification process the greater the negative abnormal returns this is not only true within ontario but also when our results are compared to those of the u s

catalytic finance when does it work in a model of debt crisis caused partly by creditor coordination failure we show that bailouts that reduce ex post inefficiency will sometimes enhance the incentives for governments to take costly adjustment effort this model helps us understand a debate about the role of the imf in catalyzing lending to developing countries

historical evolution and benefit cost explanation of periodical fluctuation in coal mine safety supervision an evolutionary game analysis framework abstract the periodical fluctuation phenomenon appears in coal mine and other fields of government safety supervision the paper provides a theoretical explanation by building an evolutionary game model between coal mine industry and governmental supervision institutions moreover the paper provides a numerical example to demonstrate how the initial state and the costs or gains influence the fluctuation amplitude and the equilibrium position we find that the initial state and the payoffs of different strategies are the two main determinants of periodical fluctuation phenomenon the successful experience of coal mine safety supervision in china shows the importance of highly efficient government safety governance in developing countries