political and legal restraints on ownership and control of public companies abstract law and politics affect the financial structure of the public corporation perhaps as much as economics law restricts financial institutions from holding large equity blocks and from networking the small blocks they do own impetus for these restrictions came from several sources a public spirited belief that financial stability would be fostered by financial fragmentation american federalism each state created its own insular set of financial institutions rivalries between groups of financial institutions and popular mistrust of powerful private financial institutions the stability of many of these rules also derives from the political resistance that one would expect corporate managers and benefited financial institutions to offer to any change

an agency model to explain trade credit policy and empirical evidence this article explains trade credit policy based on the agency theory according to this theory we have developed an agency model based on the adverse selection and moral hazard phenomena arising from the relation between sellers and buyers this model has been estimated by using panel data methodology applied to uk companies our findings strongly support the model proposed we find that smaller firms those with a smaller proportion of fixed assets and those that are less profitable extend more trade credit whereas firms with a high proportion of variable costs and high percentage of bad debts extend less

valuation of non priced amenities provided by the biological resources within the monteverde cloud forest preserve costa rica abstract to quantify the economic benefits of the monteverde cloud forest preserve and to test the contingent valuation method in a third world setting a contingent valuation survey was designed with five experimental treatments these determined an overall expected value per visitor determined and compared two ways of eliciting value single versus annual lump sum payments and compared average values of costa rican versus non costa rican visitors visitors were willing to pay to prevent the preserve s conversion to agricultural uses monteverde s value as a cloud forest preserve appears much higher than any value it might have in agricultural use despite lower incomes costa rican visitors valued the preserve more highly than non costa rican visitors visitors may have differentiated only weakly between greatly differing bid amounts expected values derived from econometric analysis of the differing experimental treatments suggest that further methodological adaptation of the contingent valuation method may be required 1 when it is applied in third world settings and 2 when precision is critical in estimating wtps

growth forecasts belief manipulation and capital markets abstract we analyze how a benevolent privately informed government agency would optimally release information about the economy s growth rate when the agents hold heterogeneous beliefs we model two types of agent conforming and dissenting the former has a prior that is identical to that of the government agency whereas the latter has a prior that differs from that of the government agency we identify both informative and uninformative equilibria informative equilibria are equilibria in which the government agency s equilibrium signal leads to a revision of beliefs we demonstrate that the uninformative equilibria can in fact dominate the informative ones in terms of ex post social welfare

the impact of group membership on cooperation and norm enforcement evidence using random assignment to real social groups due to incomplete contracts efficiency of an organization depends on willingness of individuals to take non selfish actions such as cooperating when there is no incentive to do so or punishing inefficient actions by others organizations also constitute a social boundary or group we investigate whether this social aspect of organizations has an important benefit fostering unselfish cooperation and norm enforcement within the group but also whether there is a dark side in the form of hostility between groups our experiment provides the first evidence free from the confounding effect of self selection into groups individuals are randomly assigned to different platoons during a four week period of officer training in the swiss army we conduct choice experiments simultaneous prisoner s dilemma games with and without third party punishment in week three random assignment significantly increases willingness to cooperate with fellow platoon members assignment does not lead to hostility in the sense of vindictive punishment of outsiders but does affect norm enforcement enhancing willingness to enforce a norm of cooperation towards fellow platoon members this suggests that the social aspect of organizations motivates efficient behavior even when ordinary incentives fail and helps to explain practices designed to foster social ties or group identification within an organization this abstract was borrowed from another version of this item

r d internationalization and growth of newly listed firms european evidence the initial public offering ipo is an important stage in the life cycle of privately held and entrepreneurial firms for innovative firms eager to capitalize on their technological advances an ipo represents a springboard for a rapid international expansion of sales however there is little research on the longer term post ipo strategic evolution of newly listed companies including their internationalization we build on international entrepreneurship and dynamic capabilities perspectives and examine interrelationships between r d exporting and growth of newly listed firms in the uk germany italy and france using panel data for 1110 ipos during the period 1985 2004 we found that r d intensity is an important antecedent factor for internationalization of sales both r d and export intensities have a positive effect on the sales growth of newly listed firms however r d intensity is path dependent and is determined by levels of accumulated intangible assets and debt in terms of time dynamics the growth of ipo firms is at its highest level just after the float whereas export intensity increases as ipo firms mature we conclude that managers and ipo investors need to take into account not only growth opportunities but also past innovation strategies and financial constraints on managers strategic choices

inflexible rules in incentive problems in practice contracts involve standard terms or rules allowing for variations only under exceptional circumstances we develop a simple model in which optimal contracts display this feature even in the absence of transactions costs rules arise when an agent has countervailing incentives to misrepresent private information these incentives are created by endowing the agent with a critical factor of production ex ante applications in regulatory labor and legal settings

institutional investment patterns and corporate financial behavior in the united states and japan abstract this paper examines the agency problem between shareholders and debtholders of japanese and u s firms whereas u s institutional investors are restricted from doing so japanese financial institutions take large equity positions in firms to which they lend particularly in firms more susceptible to the agency problem debt ratios of u s firms are negatively related to the firm s potential to engage in risky suboptimal investments whereas japanese debt ratios show no such relation the evidence is consistent with the notion that the agency problem is mitigated to a greater degree in japan than in the u s

intercorporate shareholdings and corporate control in the japanese firm abstract the purpose of this paper is to specify a formal model that rationalizes the intercorporate shareholdings observed in the japanese equity market as a mechanism for mutual commitment and risk sharing that creates greater possibilities to resolve managerial myopic problems caused by the threat of external takeovers we show that under certain conditions all agents including the existing shareholders of the firm are strictly better off when participating in an implicit contract associated with intercorporate shareholdings the results also suggest that intercorporate ownership raises the stock prices of the member firms

specification of the logit model the case of valuation of nonmarket goods abstract we address the proper specification of the logit model for estimation of nonmarket commodity demand economic theory is used to show the conditions which must be met by the logit functional form if it is to yield valid estimates of welfare change measures and demand relationships an empirical example is used to illustrate the argument recreational boating data were collected using the contingent valuation method cvm in texas in one instance the demand curve is positively sloped due to the specific functional form chosen the estimated demand curve for the theoretically preferred functional form has the expected negative slope

interval estimates of non market resource values from referendum contingent valuation surveys contingent valuation methods cvm have attracted considerable attention in recent years as researchers have begun to resort to survey methods to elicit individual values for non market goods such as environmental resources or public goods cummings brookshire and schulze 1986 and mitchell and carson 1989 offer comprehensive assessments of these methods cvm survey questions come in a variety of forms one format which has proven to be popular is called the discrete choice or take it or leave it referendum or closedended question originally implemented in the literature by bishop and heberlein 1979 since respondents find it very difficult to identify precisely their true point value of access to some resource or public good open ended valuation questions can be unreliable or can discourage response in contrast most people are familiar with being confronted by a posted price for a good and with deciding whether or not they would buy at that price this is the strategy behind discrete choice cvm questions a different hypothetical price is offered to each respondent and by their yes no response to the question of whether they would be willing to pay this price the researcher gains information about their true underlying point value one persistent difficulty with the econometric techniques that are currently used most widely to analyze referendum contingent valuation data is the absence of confidence intervals for the ultimate value estimates early empirical applications approximate mean valuations using a truncated mean based on a logit model with the upper limit being the highest bid value in the sample unfortunately the variance of this estimated mean cannot easily be recovered from the numerical integration procedure commonly used to calculate the

evidence on the impact of the agency costs of debt on corporate debt policy in the last several years there has been increased theoretical emphasis on the agent principal problem as it applies to corporate finance this paper is an attempt to empirically test for the presence of the agency costs and their relation to the debt policy of corporations we find that firms with higher insider ownership have greater debt ratios than firms with lower insider ownership which may be explained by the agency costs of debt and or the agency costs of equity other regression results tend to confirm the theoretically optimal relationships put forth by myers we find that high growth firms use less debt rather than more debt high operating risk firms use more debt rather than less debt and firm size appears to be uncorrelated to the level of debt

asymmetric information and legislative rules some amendments we reexamine the major tenets of the informational theory of legislative rules focusing on the informational efficiency of rules with varying degrees of restrictiveness when committees are heterogeneous full efficiency is attainable under the unrestrictive open rule as well as the somewhat restrictive modified rule in contrast the restrictive closed rule always leads to inefficiencies when committees are homogeneous the situation is different all equilibria are inefficient regardless of legislative rules but the closed rule leads to greater informational efficiency than does the open rule furthermore the efficiency gains under the closed rule more than offset distributional losses regardless of the degree of preference divergence we also examine the incentives provided by the different rules for information acquisition and committee specialization

the international transmission of financial shocks the case of japan one of the more dramatic financial events of the late 1980s and early 1990s was the surge in japanese stock prices that was immediately followed by a very sharp decline of more than 50 percent while the unprecedented fluctuations in japanese stock prices were domestic financial shocks the unique institutional characteristics of the japanese economy produce a framework that is particularly suited to the transmission of such shocks to other countries through the behavior of the japanese banking system the large size of japanese bank lending operations in the united states enables us to use u s banking data to investigate the extent to which this domestic japanese financial shock was transmitted to the united states as well as to identify a supply shock to u s bank lending that is independent of u s loan demand we find that binding risk based capital requirements associated with the decline in the japanese stock market resulted in a decline in commercial lending by japanese banks in the united states that was both economically and statistically significant this finding has added importance given the severe real estate loan problems currently faced by japanese banks how japanese bank regulators decide to resolve these problems will have significant implications for credit availability in the united states as well as in other countries with a significant japanese bank presence

pinocchio s pupil using eyetracking and pupil dilation to understand truth telling and deception in sender receiver games we conduct laboratory experiments on sender receiver games with an incentive for senders to exaggerate such as security analyst s painting a rosy picture about earnings prospects our results show that overcommunicati on messages are more informative of the true state than they should be in equilibri um is consistent with a level k model eyetracking shows that senders look much more on the payoff rows corresponding to the true state and much less at receiver payoffs than at their own payoffs senders pupils also dilate more when their deception is larger in magnitude together these data are consistent with the hypothesis that figuring out ho w to deceive another player is cognitively difficult as assumed in the level k mod el a combination of sender messages and lookup patterns predicts the true state about t wice as often as predicted by equilibrium using these measures would enable receiver subjects to hypothetically earn up to 16 21 percent more than they actually do

what s different about banks abstract negotiable certificates of deposit cd s trade in the capital market in competition with other securities like commercial paper and bankers acceptances if cd s must pay lenders competitive monetary interest the reserve tax on cd s is borne by bank borrowers viability of the tax means there must be something special about bank loans that makes some borrowers willing to pay higher interest rates than those on other securities of equivalent risk moreover there must be something special about banks that prevents other intermediaries from competing to assure that it never pays to finance loans with cd s

confidence intervals for evaluating benefits estimates from dichotomous choice contingent valuation studies i evaluate the potential usefulness of nonmarket valuation concepts and techniques from environmental economics for improving wildlife conservation the concepts include distinguishing between on site recreation use value and off site passive use or

banks equity stakes and lending evidence from a tax reform abstract we study how a bank s equity stake in a borrowing firm affects lending to that firm similar to prior papers we find a positive association between a bank s equity stake in a borrowing firm and lending to that firm while such a positive cross sectional correlation may be due to equity stakes benefiting lending it may also be driven by endogeneity to distinguish the two explanations we study a german tax reform that permitted banks to sell their equity stakes tax free after the reform many banks sold their equity stakes but did not reduce lending to the firms this observation is robust to several alternative model specifications control groups and time windows our findings suggest that banks equity stakes may be less important for lending than previously thought

validation of empirical measures of welfare change a comparison of nonmarket techniques since the passing of the flood control act of 1936 the attention of many resource economists has been directed towards measuring the benefits and costs of alternative uses of natural resources increasingly it has been recognized that the value of some of these uses is not explicitly determined through market transactions this has led to the focus of much attention upon the development of nonmarket methods to estimate the value of these uses in the 1940s the groundwork for the travel cost method was established by hotelling prewitt 1949 following this in the 1960s davis initiated the basic foundation for bidding methods davis 1963 which were later to be subsumed under the heading of contingent valuation methods brookshire randall and stoll 1980 schulze d arge and brookshire 1981 thayer 1981 both of these methods will be further discussed below in addition to these two methods a third approach the unit day value method has been recognized as acceptable but not preferred for the valuation of recreational uses of water and related land resources dwyer kelley and bowes 1977 u s water resources council 1979 given the existence of alternative methods of estimating the value of resource uses several obvious questions arise one of the first of these is under what circumstances is each method most appropriate existing literature has focussed sufficiently on this question and pointed out limitations of each especially the travel cost method and unit day value methods brookshire ives and schulze 1976 dwyer kelly and bowes 1977 freeman 1979 mcconnell 1975 randall ives and eastman 1977 schulze d arge and brook

economic value of wetlands based recreation abstract the loss of wetlands is an issue of growing concern previous studies have focused primarily on quantifying the commercial storm protection and energy output values of wetlands relatively little research has been devoted to quantifying the outdoor recreational value of wetlands in this paper the recreational value of wetlands is discussed conceptually within a total economic value framework total economic value contains many value components which are broadly divided into non use current use and future use values each of these value categories can be further subdivided into expenditures and consumer s surplus an empirical study was conducted to measure expenditures and consumer s surplus associated with on site current recreational uses of a coastal wetlands area aggregate expenditures were estimated at approximately 118 million and aggregate consumer s surplus was estimated at approximately 27 million these results suggest that the economic impacts and net economic benefits associated with wetlands based recreation may be substantial hence recreational functions provided by wetlands may be important considerations for wetlands policy and management

banking corporate finance and monetary policy an empirical perspective traditional theories of corporate finance and macroeconomics give no independent role to bank credit in real behavior implicitly assuming perfect capital markets however most recent theoretical work in corporate finance stresses capital market imperfections which limit access to finance for certain borrowers banks are seen as means to overcome these difficulties implying a comparative advantage over securities markets and that bank lending may have real effects empirical results at a micro level tend to support many of these theories based on asymmetric information and incomplete contracts albeit often also being consistent with other hypotheses equally some progress had been made relating recent developments in banking and corporate finance to macroeconomic developments the so called credit channel of monetary transmission the central banks are showing a greater interest in credit as an indicator and component of the monetary policy transmission mechanism partly in the light of this body of research copyright 1994 by oxford university press

the total economic value of amazonian deforestation 1978 1993 national income accounting has been criticized because of its failure to encompass the notion of sustainability several studies address this problem through green income accounting i e by adjusting conventionally measured gdp for reduction in a given country s stock of natural resources these studies generally base value on the unit net price of the resource other studies go beyond net price emphasizing a natural resource s total economic value tev that is its non marketable as well as its marketable values this paper combines the green income accounting and tev approaches and applies the new framework to brazil in order to assess the foregone economic benefits resulting from amazonian deforestation the results lend support to calls for greater policy emphasis on conservation of unique and irreplaceable ecosystems 2000 elsevier science b v all rights reserved

should banks own equity stakes in their borrowers a contractual solution to hold up problems abstract this paper develops a model to answer the question whether a bank should hold a share of the equity of a borrowing firm the model shows that a small equity stake held by the bank can have a significant and positive impact on the lending relationship the benefit of bank equity participation arises from the reduced ability of the bank to extract rents from the firm in multiple rounds of financing this in turn improves the firm s incentive to make investments in profitable projects that require future outside finance the benefit is likely to be significant for small to medium size firms growth firms and firms with ongoing capital needs the paper addresses from a corporate finance perspective the current debate about whether banks should be allowed to own equity stakes in corporations and how large these equity stakes should be

use of dichotomous choice nonmarket methods to value the whooping crane resource market prices for endangered wildlife species rarely exist when prices do exist they arc not likely to reflect accurately individual preferences both consumptive uses such as hunting fishing and trapping boyle and bishop 1985 stou and johnson brookshire eubanks and randall and more esoteric benefits such as viewing and existence values must be considered this article is addressed to the valuation of whooping cranes grus americana a prominent endangered species the purpose of this article is to present a methodology for estimating nonconsumptive benefits associated with the existence of an endangered species a dichotomous choice form of contingent valuation is applied to quantify individuals economic surplus associated with preservation of the whooping crane resource specific issues and limitations of the empirical approach are discussed some of which have been previously examined by bishop and heberlein 1979 and hanemann the present paper expands upon earlier work in several ways fit in addition to discussing the above issues a unique application of the approach to an endangered species is presented second three model specifications are examined two of which arc consistent with utility theory and one which is not hanemann ti again following hanemann economic surplus is estimated at the sample median as well as the mean the dii cussion of the last two issues sheds sit on their implications for estimation of economic surplus throughout the article the suitability of alternative estimation techniques for dichom mous choice or referendum style data is examined the methodological and empirical results are relevant to a number of cumnt issues regarding model specification choice of binary response model and choice of estimator for equivalent surplus hanemann boyle and bishop 1984 sellar chavas and stoll

cheap talk with two audiences these problems have in common a simple structure an informed sender says something to two interested but uninformed receivers who then take actions based on their beliefs these actions affect the sender as well as the receivers in this paper we study how costless nonverifiable claims cheap talk can affect these beliefs and hence the actions and how the incentives for truthful revelation to one receiver are affected by the presence of the other we then ask how welfare is affected by whether claims are made in public or in private as some of the above examples suggest public messages may be more credible than private messages addressed to either audience one possibility is that the presence of one audience can discipline the sender s relationship with the other we call this one sided

deregulation disintermediation and agency costs of debt evidence from japan abstract many japanese firms reduced dependence on banks following financial deregulation in the 1980s the financial architecture of japanese firms after liberalization provides an opportunity to investigate the choice of financing with public bonds versus monitored bank loans examination of accounting and stock price data for a sample of japanese firms in the late 1980s suggests that debt structure is related to variables that serve as proxies for agency costs of debt in particular we find that the proportion of bond debt is inversely related to growth opportunities while the proportion of bank debt is positively related to growth opportunities

experimental evidence on the evolution of the meaning of messages in sender receiver games an experiment this paper experimentally investigates the evolution of message meanings when talk is cheap we consider communication between a privately informed sender and a receiver when the sender s message does not affect payoffs directly sender receiver games introduced by jerry green and nancy stokey 1980 and vincent p crawford and joel sobel 1982 provide the simplest stylized environment in which communication is essential communication is the only way to link the receiver s action to the sender s private information in addition sender receiver games have been widely used to study communication in accounting economics finance and political science intuition strongly suggests that effective communication will evolve when the players interests are closely aligned however there is always a nash equilibrium in which the sender randomizes uniformly across all messages such babbling equilibria are proper roger b myerson 1978 blume 1994 and even strategic stability elon kohlberg and jeanfrancois mertens 1986 does not rule out uninformative equilibria in general in response a literature developed that formulates equilibrium selection criteria by appealing to the existence of a commonly understood language matthew rabin 1990 steven a matthews et al 1991 joseph farrell 1993 that can be used to formulate credible deviations from equilibrium unfortunately the selection criteria from this literature are frequently strong enough to remove all equilibria from consideration in addition these arguments are vulnerable to stiglitz s observation in koo cho and david m kreps 1987 that successful deviations from equilibrium may induce further deviations which in turn may undermine the credibility of the original deviations both problems can be avoided by a dynamic approach as in rabin and sobel 1996 we also adopt a dynamic perspective but do not require messages to have a priori meanings instead distinct meanings may emerge endogenously this is important for communication across cultures and for language change 2 we are guided by recent results of blume department of economics university of iowa iowa city ia 52242 dejong department of accounting university of iowa iowa city ia 52242 kim department of economics sung kyun kwan university seoul 110 745 korea sprinkle department of accounting university of wisconsin madison wi 53706 we thank joyce berg vince crawford robert forsythe joel horowitz deirdre mccloskey forrest nelson larry samuelson gene savin joel sobel and especially two anonymous referees for their advice and suggestions we benefitted from comments and discussions resulting from presentations at the 1994 summer meetings of the econometric society the 1996 social learning workshop at suny stony brook the io me gt workshop at the university of iowa the university of bonn the university of bielefeld the center for economic research at tilburg university ohio state university seoul national university and texas a m university we are grateful for financial support from the college of business administration at the university of iowa the ira b mcgladrey institute and the national science foundation

strategic communication networks in this paper we consider situations in which individuals want to choose an action close to others actions as well as close to a payoff relevant state of nature with the ideal proximity to the common state varying across the agents before this coordination game with heterogeneous preferences is played a cheap talk communication stage is offered to players who decide to whom they reveal the private information they hold about the state the strategic information transmission taking place in the communication stage is characterized by a strategic communication network we provide a direct link between players preferences and the strategic communication network emerging at equilibrium depending on the strength of the coordination motive and the prior information structure equilibrium strategic communication networks are characterized in a very tractable way and compared in term of efficiency in general a maximal strategic communication network may not exist and communication networks cannot be ordered in the sense of pareto however expected social welfare always increases when the communication network expands strategic information transmission can be improved when group or public communication is allowed and or when information is certifiable

financial intermediaries ownership structure and monitored finance evidence from japan this paper introduces new and unique data from 127 japanese private equity funds that enable a first ever direct comparison of individual owner manager structures versus financial intermediation structures in terms of the governance provided to investee companies through private equity funds the data indicate individual owner manager structures financial disintermediation give rise to much smaller portfolios of entrepreneurial firms and more advice to entrepreneurs across the scope of different financial intermediation structures including banks life insurance companies securities firms corporations and government bodies there are further differences in the provision of governance and value added advice provided to investees the data further indicate us affiliated funds in japan are more likely to have smaller portfolios and provide more advice to entrepreneurial companies possibly due to a greater skill set in providing advice to facilitate the development of small entrepreneurial firms

cross holdings estimation issues biases and distortions cross holding occurs when listed corporations own securities issued by other corporations we analyze the effect of cross holdings on market capitalization and return measures as well as implications for econometric testing of asset pricing theories we show that cross holdings generally distort standard market return and risk measures the magnitudes of such distortions are calculated for simulated economies by using a variety of crossholding patterns in addition cross holdings are shown to induce nonstationarity in the covariance matrix of security returns we examine the effect of this nonstationarity for estimating efficient frontiers and factor structures we also discuss the implications for risk return estimates in equilibrium asset pricing models article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

subordination of american capital abstract to economists agency problems present challenges that can be resolved through optimal contracting or incentive mechanisms to politicians agency problems represent entitlements to be allocated among favored constituencies corporate management constitutes a powerful constituency independent of the interests of workers local communities and other corporate stakeholders the political process has for politically rational but economically dabatable reasons systematically subordinated investors desire to resolve agency problems to managers desire to be protected from capital market discipline politically explicit modes of analysis thus complement traditional tools of finance theory and improve our ability to explain capital market structure and behavior

does the japanese governance system enhance shareholder wealth evidence from the stock price effects of top management turnover this article examines the stock price effects of top management turnover announcements for 432 japanese corporations from 1985 to 1990 we find that these announcements are associated with significantly positive abnormal returns the returns are greater when turnover is forced than when turnover represents normal succession the stock price effects are also significantly positive when turnover is forced and the successor is appointed from outside the firm we find that large shareholders play an important role during outside succession this evidence suggests that the disciplinary decisions of japanese governance mechanisms are consistent with shareholder wealth maximization article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

shareholding in the keiretsu japan s financial groups largest debtholders in keiretsu member companies hold more stock if the companies have high debt to equity ratios or have weaker collateral greater prospects of growth or unique aspects all are factors associated with the agency problems of debt that stockholding by a debtholder can help to resolve the stockholding also induces greater borrowing by these same companies ceteris paribus copyright 1993 by mit press

debt and taxes abstract the extreme reliance on debt that has been a persistent feature of corporate finance in contemporary japan is at least partially due to low personal tax rates this statement is supported by comparison of japan and u s taxes based on the taxes and failure cost theory of finance

the persistence and implications of japanese keiretsu organization this paper examines two important research questions 1 to what extent have recent economic and regulatory changes influenced the japanese inter corporate network 2 have the patterns of firm performance fostered by the japanese inter corporate system remained stable or has there been an evolution to more north american performance profiles using hierarchical regressions to compare patterns of networking and firm performance with data from the periods 1987 to 1991 and 1992 to 1997 we find little evidence to support the existence of significant changes in the patterns and implications of japanese industrial organization we conclude that the keiretsu system remained strongly in place throughout the first half of the 1990s nevertheless we suggest that the continued move toward globalization of capital markets in japan and ongoing regulatory change may potentially impact networking and performance implications in the 21st century

estimating the existence value of north forests of iran by using a contingent valuation method abstract forests play a significant role for human s well being economists attention is mostly drawn on the market value of certain forest products the trend however is changing as non market values of forests are increasingly appreciated and measured recently the ecosystem value of natural resources has been studied by natural resource economists and its role on human welfare is ensured these studies had made a considerable progress in valuation of environmental and ecological services which was offered by ecosystems there are different methods assessing environmental economy based on revealed and stated preference for measure of environmental values the subjects of this research are the determination of existence value of north forests of iran nfi adjacent to caspian sea and measure of individual s willingness to pay wtp based on contingent valuation cv and dichotomous choice dc the logit model was used for measuring individuals wtp estimation parameters of the model are based on the method of maximum likelihood ml results showed that 65 8 individuals are willing to pay for the existence of nfi while about 20 of these individuals have not yet visited and 41 of them only visited the nfi once or twice the mean of wtp for existence value of these forests is us 2 51 household month or annual value of us 30 12 for a household

cheap talk and the fed a theory of imprecise policy announcments this paper examines the problem faced by the federal reserve in announcing its private information about its future policies because it would like to manipulate expectations and pursue a time inconsistent policy the fed cannot reveal its policy objectives precisely and credibly it can however communicate some information about its goals through the cheap talk mechanism of vincent crawford and joel sobel making announcements that are imprecise and only giving ranges within which these goals may lie copyright 1989 by american economic association

a model of electoral competition with incomplete information a model of two candidate electoral competition is developed in which voters are uncertain about the policy either candidate would implement if elected candidates simultaneously announce policy positions from which voters attempt to infer the true positions the candidates would adopt announcing a position different from the true position is costly to the winning candidate with these costs increasing as the difference between the true policy and the announced policy increases a refinement of the sequential equilibrium concept is used to describe the behavior of candidates and voters

market distortions and government transparency in this paper we investigate how government transparency depends on economic distortions we first consider an abstract class of economies in which a benevolent policy maker is privately informed about the exogenous state of the economy and contemplates whether to release this information our key result is that distortions limit communication even if transparency is ex ante pareto superior to opaqueness it cannot constitute an equilibrium when distortions are sufficiently high we next confirm this broad insight in two applied contexts in which monopoly power and income taxes are the specific sources of distortions jel d82 e61

valuation of tropical rainforests philosophical and practical issues in the use of contingent valuation abstract this paper explores the possibility of using a large scale multi country contingent valuation study for making decisions concerning global resources in the specific context of valuing a large set of tropical rainforests before considering the practical issues involved in implementing such a study the paper addresses philosophical issues related to the use of contingent valuation including the role of passive use motives such as altruism and the role of information the implications of empirically based criticisms which argue that contingent valuation results are unreliable are also considered the main portion of the paper sketches the practical difficulties likely to be encountered in actually implementing a large contingent valuation study in multiple countries which seeks to value a common set of tropical rainforests some key study design choices are discussed

money or friends social identity and deception in networks abstract strategic communication occurs in virtually all committee decision environments theory suggests that small differences in monetary incentives between committee members can leave deception a strategically optimal decision crawford and sobel 1982 galeotti et al 2013 at the same time in natural environments social incentives can also play an important role in determining the way people share or withhold truthful information unfortunately little is known about how monetary and social incentives interact to determine truth telling we investigate this issue by first building a novel model and then testing its equilibrium predictions using laboratory data in the absence of social identity the model s predictions are supported there is more truthful communication between those who share monetary incentives than those who do not we find that the effect of identity is asymmetric sharing the same identity does not promote truth telling but holding different identities reduces truthfulness overall as compared to environments lacking social identity committees with both monetary and social incentives exhibit truthful communication substantially less frequently

information incentives and organizational mode we examine the choice of organizational mode for a two stage production process wherein cost realizations at each stage are observed only by the producing party when these costs are positively correlated the principal prefers to undertake second stage production herself when the correlation is negative and sufficiently small she will prefer that the agent who performs the first stage also perform the second for large negative correlation either mode might be preferred when costs are uncorrelated the principal is indifferent between modes

understanding the rise and decline of the japanese main bank system the changing effects of bank rent extraction this paper shows how main bank rent extraction affects corporate decisions about investment and financing during financial regulatory reform our model predicts that limited loanable funds can initially contain main bank controlled overinvestment even when new equity is available to the firm abundant funds facilitate overinvestment to the detriment of firm profitability a shift of control rights back to the firm due to financial deregulation produces an equity for upside potential and bank debt for downside risk bias against the banks a stock market and real estate boom in japan made it harder than ever for the banks to diversify risk the insights from this analysis help explain why japan s main bank system was beneficial in the capital constrained postwar period but became harmful during the capital abundant and even bubbly 1980s and why the adverse shocks of the post deregulation 1990s had such severe effects on the banking system

information aggregation in polls we study information transmission via polling a policymaker polls constitu ents who differ in their information and ideology to determine policy full rev elation is an equilibrium in a poll with a small sample but not with a large one in large polls full information aggregation can arise in an equilibrium where constituents endogenously sort themselves into centrists who respond truth fully and extremists who do not we find polling statistics that ignore strate gic behavior yield biased estimators and mischaracterize the polvs margin of error we construct estimators that account for strategic behavior finally we compare polls and elections jel c42 d83

on the costs of a bank centered financial system evidence from the changing main bank relations in japan we examine the effects of bank firm relationships on firm performance in japan when access to capital markets is limited close bank firm ties increase the availability of capital to borrowing firms but do not lead to higher profitability or growth the cost of capital of firms with close bank ties is higher than that of their peers this indicates that most of the benefits from these relationships are appropriated by the banks finally the slow growth rates of bank clients suggest that banks discourage firms from investing in risky profitable projects however liberalization of financial markets reduces the banks market power the close relationship between manufacturing firms and financial institutions in japan has recently been at the center of the debate on the appropriate financial system for the reforming economies of eastern europe as opposed to the anglo saxon separation of finance and industry long term ties between main banks and their client firms involving bank loans bank equity holding and some bank appointed personnel which are common in japan and germany have often been described as a growth oriented financial system that could serve the needs of developing and reformed economiies better than anonymous capital markets modeled after the arnerican and british financial systems the claim that close ties between investmentoriented banks and industrial firms could help overcome the difficulties of relative backwardness dates back to gerschenkron 1962 who investigates european development rosovsky 1961 applies gerschenkron s framework to the analysis of japanese growth more recently aoki patrick and sheard 1994 hoshi kashyap and loveman 1994 and teranishi 1993 among others portray the close ties between finance and industry in japan as an important factor in the international competitiveness of modern japanese

management background corporate governance and industrial restructuring the japanese upstream petroleum industry japanese upstream companies have consistently underperformed private independents a recent audit by the ministry of international trade and industry miti underlines the magnitude of financial losses and the necessity for sectoral restructuring miti s proposals involve refocusing rather than redefining upstream policy including recognition that official intervention should be reduced in favour of greater control by the more successful local production companies some commentators claim the proposed reforms do not go far enough the ultimate success of miti s initiatives it is claimed depends upon changes in prevailing corporate governance arrangements and the progressive replacement of existing senior managers with those having superior professional or technical qualification these changes have not been directly mandated by japanese authorities on the other hand miti s proposals do imply a redisrtribution of corporate oversight in favour of greater market control a major step in the direction of increased operational and financial efficiency

mutual fund activism and market regulation during the pre ifrs period the case of earnings informativeness in china from an ethical perspective this paper investigates the emerging effect of mutual fund involvement on the agency problem between majority and minority shareholders during the pre ifrs period in china indicated by earnings informativeness from an ethical perspective we find that the presence of mutual fund hampers earnings informativeness implying that mutual funds in general at their early stage in china are not yet capable of serving as an effective monitor this finding is in sharp contrast to the role of institutional investors in mature markets as documented in the literature however mutual funds affiliated with banks have been found to be effective to improve earnings informativeness of chinese listed companies and the impact is more pronounced among those affiliated with joint equity banks compared to their counterparts affiliated with state owned banks

contingent valuation and the activation of environmental norms abstract this paper uses contingent valuation cvm as the context in which to explore the implications of a model of altruistic norm activation a model is presented which provides a framework for thinking about the factors that individuals consider when formulating their responses to cvm questions and the processes by which they bring such factors together the activation of personal environmental norms and hence positive willingness to pay depends on four main categories of belief awareness and acceptance of environmental need consequences of personal action responsibility for personal action and acceptance of policy initiatives the model is illustrated with a qualitative case study and some of the implications for cvm are considered in light of these findings it is argued that whilst notions of fairness may not present problems from a demand prediction economic standpoint such notions may be more problematic for the cost benefit analysis use of results

institutional herding business groups and economic regimes evidence from japan we study institutional herding in japan japanese firms are primarily owned by financial institutions and other corporations they may belong to a business group the keiretsu and they have experienced several distinct economic regimes in its recent past overall we find herding in japan occurs on a lower level than in the united states but with a large impact on price movements the price impact is even greater for keiretsu affiliated firms we also find the effects and behavior of institutional herding depends on the economic condition and the regulatory environment

intergenerational resource rights efficiency and social optimality the discipline of economics is generally defined as the science of the allocation of scarce resources between competing social objectives given an initial distribution of resources between economic agents how would they behave so as to improve their welfare according to the pareto criterion the agents would exchange commodities until the opportunities for fruitful exchange were fully exhausted and no agent could be made better off without rendering at least one other agent worse off pareto efficiency is a powerful concept in microeconomic analysis provided that the initial distribution of property rights is equitable allocative efficiency gives rise to the best of all possible worlds acknowledging that the assumptions of perfect competition are often violated firms are monopolistic information is incomplete and externalities exist economists have argued for the modification of institutions so that economic reality will conform more closely to the assumptions of the model that yields such gratifying results but microeconomic theory has always maintained that allocative efficiency is in itself insufficient to maximize social welfare bator 1957 a social welfare function is required to discriminate a social optimum among the array of efficient allocations that correspond to alternative assignments of property rights though economists have posited alternative functional forms for the sake of pursuing conceptual arguments welfare functions have remained elusive constructs for well known theoretical and practical reasons consequently a sharp line of demarcation has been drawn between questions of efficiency the province of economics and equity the principal focus of ethical and political discourse in resource economics however the line demarcating efficiency and equity is often crossed the term optimal depletion appears regularly where only efficient depletion is meant while political debates about resource exploitation over time are laden with questions of the proper distribution of our natural patrimony between generations resource economists have predominantly espoused particular use rules that guarantee efficiency but overlook potential improvements in social welfare achievable through the reassignment of property rights across generations we document the evolution and current status of the misuse of the term optimal depletion in section ii we develop a simple two generation three period general equilibrium model in section iii to illustrate how alternative distributions of resource rights between generations relate to alternative pareto efficient solutions in section iv we demonstrate how different social welfare functions affect the optimal solution and associated assignment of resource rights between generations

competition in japan japan registered a remarkable 6 5 percent rate of economic growth from 1955 to 1990 catching up with high income western countries in its level of economic development during the 1950s 1960s 1970s and into the 1980s japan s share of world exports rose dramatically from 2 9 percent in 1960 to 6 1 percent in 1970 8 2 percent in 1980 and a peak of 9 8 percent in 1985 porter takeuchi and sakakibara 2000 japanese firms were increasingly successful internationally in large visible industries such as automobiles semiconductors and consumer electronics the striking economic success of japan was widely attributed to a set of economic institutions and policies that encouraged collaboration and limited competition the japanese case then called into question many of the bedrock assumptions of competition thinking it seemed to show that there was a different path to economic prosperity this article begins by examining competition in japan and the supporting policies and institutions during the twentieth century many factors seem to suggest that competition in japan has been less intense but there is an awkward complication the empirical evidence about the intensity of competition in japanese industry does not support the conclusion the story clearly is more complicated we seek to reconcile the apparent differences between policy and institutional circumstances and the empirical evidence by examining the types of competition that prevail across japanese industries and the underlying causes japan indeed pursued an array of policies that limited competition but these policies were not applied throughout the economy in fact those industries in which competition

the aversion to lying abstract we experimentally investigate the effect of cheap talk in a bargaining game with one sided asymmetric information a seller has private information about her skill and is provided an opportunity to communicate this information to a buyer through a written message four different treatments are compared one without communication one with free form communication and two treatments with pre specified communication in the form of promises of varying strength our results suggest that individuals have an aversion towards lying about private information and that the aversion to lying increases with the size of the lie and the strength of the promise freely formulated messages lead to the fewest lies and the most efficient outcomes