multinationals productivity advantage scale or technology this study decomposes the productivity advantage of foreign multinationals into a technology and a scale effect and analyses the causal relationship between foreign ownership and these two components this is done by analyzing the effects of an acquisition of a domestic establishment by a foreign multinational using a combined propensity score matching and difference in differences estimation the main results show that any positive impact of acquisition is predominantly due to changes in technical efficiency and not in scale and that the preacquisition productivity of the target plays a role in mediating the rate of technology transfer from the multinational jel f23 l22

benefit incidence public spending reforms and the timing of program capture assessments of the distributional effects of public spending reforms have generally been based on average rates of program participation by income or expenditure group this practice can be deceptive because the socioeconomic composition of participants can change as a social program expands or contracts the geographic variation found in 1993 94 household survey data for rural india is used to estimate the marginal odds of participating in schooling and antipoverty programs the results suggest early capture of these programs by the non poor it is shown that conventional methods for assessing benefit incidence underestimate the gains to the poor from higher public outlays and underestimate the losses from cuts

the takeover deterrent effect of open market share repurchases this paper examines whether open market share repurchases deter takeovers we model pre repurchase takeover probability as a latent variable and examine its impact on the firm s decision to repurchase shares given specification tests reject the tobit model we turn to the censored quantile regression method of powell 1986 journal of econometrics 32 143 155 we find a significantly positive relation between open market share repurchases and takeover probability and we reconcile empirical findings in previous studies that contradict predictions repurchase activity is inversely related to firm size consistent with smaller firms having greater information asymmetry and is related to temporary but not permanent cash flows

the choice of equity selling mechanisms abstract this paper examines the impact of information asymmetry and monitoring of managers on the choice between public offerings and private placements three key findings emerge first private placement firms have higher information asymmetry than public offering firms second private placement investors do not engage in more monitoring than public offering investors finally discounts for private placements sold to managers are higher than discounts for private placements in which managers do not participate the final two findings cast doubts on the widely held view that private placements are motivated by a demand for enhanced monitoring

the effect of foreign aid on corruption a quantile regression approach abstract this paper investigates the effect of foreign aid on corruption using a quantile regression method we show that foreign aid generally reduces corruption and its reduction effect is greater in less corrupt countries moreover this effect is different by different donor countries

aid and government fiscal behavior assessing recent evidence this paper reviews evidence published in the last 10 years that has added to our understanding of the effects of aid on government spending and tax effort in recipient countries with a discussion of when general budget support is a fiscally efficient aid modality three generalizations are permitted by the evidence aid finances government spending the extent to which aid is fungible is over stated and even where it is fungible this does not appear to make the aid less effective and there is no systematic effect of aid on tax effort beyond these conclusions effects are country specific

divergence of opinion in complete markets a note we consider an arrow debreu model with agents who have different subjective probabilities in general asset prices will depend only on aggregate consumption and the distribution of subjective probabilities in each state of nature if all agents have identical preferences then an asset with more dispersed subjective probabilities will have a lower price than an asset with less dispersed subjective probabilities if risk aversion does not decline too rapidly it seems that this condition is likely to be met in practice so that increased dispersion of beliefs will generally be associated with reduced asset prices in a given arrow debreu equilibrium there have been several recent investigations concerning the effect of heterogeneous probability beliefs on asset prices most of these investigations have taken place in the context of capm like mean variance models see for example lintner 5 miller 7 williams 10 jarrow 4 and mayshar 6 comparatively little has been done in the analysis of differences of opinion in an arrow debreu contingent claims context rubinstein 8 breeden and litzenberger 2 and breeden 1 have presented nice analyses of asset price determination in an arrow debreu model but most of their results have assumed commonly held probability beliefs in this paper we analyze the impact of divergence of opinion on asset prices in an arrow debreu economy the results serve to generalize the findings of rubinstein and breeden litzenberger to the case of different probability beliefs among the results we establish are 1 in equilibrium asset prices depend only on aggregate consumption and the distribution of subjective probability beliefs 2 asset values are an increasing function of any one individual s probability beliefs 3 an increase in the spread of the probability beliefs of investors may increase or decrease equilibrium asset values depending on the value of a parameter of the utility function however the most likely effect is to decrease the asset values these results are especially interesting in light of the recent empirical work of cragg and malkiel 3 they studied the relationship between ex post return and various measures of risk for common stocks and found that the measure of risk that performed best in their analysis was a measure of divergence of opinion

hunger inequality ethics and aid abstractthis article considers the inequality in the cross country distribution of hunger using multiple ethical underpinnings under sovereign equality each nation state receives equal weighting leading to the conclusion that hunger should be concentrated in a few large countries under the democratic ethic individuals receive equal weighting and the global distribution of hungry people is irrelevant inequality aversion deliberately prefers equal levels of hunger across countries these ideals are presented in a general social welfare function and compared to the actual changes in hunger during 1991 2001 the distribution of food aid to reduce both hunger and hunger inequality are considered

large block transactions the speed of response and temporary and permanent stock price effects abstract the paper investigates how quickly prices attain new equilibrium levels after large block transactions and measures the associated temporary and permanent price effects we find that prices adjust within at most three trades with most of the adjustment occurring in the first trade the temporary price effect for seller initiated transactions is related to block size but the temporary price effect observed for buyer initiated transactions is no larger than that observed in 100 share trades most of the price effect associated with block trades is permanent and is related to block size regardless of the initiating party

aid poverty reduction and the new conditionality the paper examines the effect of aid on poverty rather than on economic growth we devise a pro poor public expenditure index and present evidence that together with inequality and corruption this is a key determinant of the aid s poverty leverage after presenting empirical evidence which suggests a positive leverage of aid donors on pro poor expenditure we argue for the development of conditionality in a new form which gives greater flexibility to donors in punishing slippage on previous commitments and keys aid disbursements to performance in respect of policy variables which governments can influence in a pro poor direction

aid policies and growth the authors of this paper use a new database on foreign aid to examine the relationships among foreign aid economic policies and growth of per capita gdp in panel growth regressions for 56 developing countries and 6 four year periods 1970 93 they find that the policies that have a great effect on growth are those related to fiscal surplus inflation and trade openness they construct an index for those three policies and have that index interact with foreign aid they have instruments for both aid and aid interacting with policies they find that aid has a positive impact on growth in developing countries with good fiscal monetary and trade policies in the presence of poor policies aid has no positive effect on growth this result is robust in a variety of specifications which include or exclude middle income countries include or exclude outliers and treat policies as exogenous or endogenous they examine the determinants of policy and find no evidence that aid has systematically affected policies either for good or for ill they estimate an aid allocation equation and show that any tendency for aid to reward good policies has been overwhelmed by donors pursuit of their own strategic interests in a counterfactual they reallocate aid reduce the role of donor interests and increasing the importance of policy such a reallocation would have a large positive effect on developing countries growth rates

transaction costs and the pricing of assets the existence of transaction costs explains why investors do not fully diversify their portfolios this paper examines the implications of such limited diversification oi equilibrium asset prices in the framework of the capital asset pricing model in the pricing equation obtained here an asset s risk premium depends on a weighted average of its covariance with the market and its own variance the absence of transaction costs in the sharpe lintner capital asset pricing model capm is often claimed to be only a minor idealization which hardly affects the substantive implications of the model this paper aims to demonstrate that this is not the case incorporating transaction costs into the capm leads to a major reformulation of its basic asset pricing equation in contrast with the capm formula

empirics of health aid education and infant mortality a semiparametric study the present article uses semiparametric regression to capture the impact of foreign aid given for health purposes on the infant mortality rate imr of poor developing countries after controlling for other covariates we also investigate whether education general awareness helps lower imr directly or helps improve effectiveness of health aid in reducing imr in addition the study investigates whether various disaggregated components of health aid for example aid that goes for infectious disease control or nutrition help lower imr we find that although adult education awareness always lowers imr the overall effect of health aid remains insignificant our conclusion is robust to various disaggregated components of health aid as well we also check if health aid has improved prenatal care for expecting mothers but our conclusion regarding the overall ineffectiveness of aid remains unchanged interestingly we find that total health aid as well as nutrition aid may lower imr only after education ex

verifying the relation between labor productivity and productive efficiency by means of the properties of the input output matrices the european case abstract this article discusses the relationship between labor productivity and the degree of production efficiency for 24 countries inside the european union eu over a period of 17 years a panel data econometric model is used to estimate it to this end an indicator of productive efficiency has been applied it is based on the dominant eigenvalue of the matrix of technical coefficients of the input output model this indicator allows the relationship between the economic sectors of each country and its productive technologies to be taken into account the results reveal a significant relationship between the proposed productive efficiency indicator and labor productivity finally several implications from a policy perspective are suggested as concluding remarks

labour productivity change drivers business impact and macroeconomic moderators abstract this paper focuses on the operational drivers of labour productivity changes we consider two sets of drivers a current working practices and b changes in working practices through management programs the relationship between these two sets of drivers and productivity changes are analysed we also investigate the importance of productivity growth by looking at the impact of labour productivity changes on business performance changes finally the moderating effects of industry and country on the use of drivers of productivity changes are examined data from an international survey imss iv are used for the analysis

institutional ownership and changes in the s p 500 several recent articles have provided new evidence for the existence of price pressures by examining the price and volume effects associated with changes in the s p 500 the present study extends this work by examining actual changes in institutional holdings following both additions to and deletions from the s p 500 the results show that changes in institutional holdings in response to additions or deletions from the s p 500 are positively correlated in addition to providing further evidence for the existence of price pressure effects the results also provide evidence of the very large institutional elasticities of demand for stock in two recent articles in this journal shleifer 1986 and harris and gurel 1986 present important new evidence of the existence of price pressures by examining the price and volume effects associated with changes in the composition of the standard and poor s s p 500 market index specifically these authors interpret the strong increases in trading volume and economically and statistically significant increases decreases in share prices on the first trading day following additions to or deletions from the s p 500 as the result of increased decreased demand by institutional index funds rather than from information effects concerning the future return distributions of the newly listed delisted firms the results of similar price and volume studies conducted by woolridge and ghosh 1986 and lamoureux and wansley 1987 are also generally consistent with the predictions of the price pressure hypothesis while both schleifer 1986 and harris and gurel 1986 suggest that changes in institutional index fund holdings are responsible for the observed abnormal returns in response to s p 500 changes over the years between 1966 and 1983 their joint failure to examine actual institutional ownership changes following listing or delisting from the index does not allow for direct tests of this possibility this study presents results of such tests

does stock price elasticity affect corporate financial decisions abstract this paper considers whether stock price elasticity affects corporate financial decisions basic economic principles and the existing theoretical literature predict that firms choosing the dutch auction instead of the fixed price tender offer should be those firms expecting to face greater stock price elasticity econometric analysis suggests that firms choosing the dutch auction instead of the fixed price tender offer between 1984 and 1989 are indeed those firms expecting to face greater stock elasticity even though the average realized elasticities of the firms conducting the various tender offers fail to be significantly different the expected elasticity remains an important determinant of the tender offer choice even when allowing for firm characteristics associated with the choice of repurchase method firms facing greater elasticity are also characterized the findings suggest that expected stock price elasticity may be an important determinant of corporate financial decisions that affect the supply of or demand for stock

the determinants of tendering rates in interfirm and self tender offers the authors estimate the determinants of shareholder heterogeneity by examining the shareholder responses to fixed price self tender offers and two tier interfirm tender offers tendering rates are increased in the cash price relative to the postoffer price of the stock proxies for capital gains tax liabilities also explain tendering rates controlling for the cash tender relative to the postoffer price of the stock the authors find that tendering rates are significantly higher in interfirm tender offers than in self tender offers which indicates that shareholders view accepting another firm s stock as an unattractive means of avoiding capital gains copyright 1992 by university of chicago press

on the choice of incentives in firms abstract simple models of individual and group incentives under uncertainty are compared and comparative performance is shown to depend upon various exogenous parameters the incentive effects of profit sharing will thus vary with organizational and other characteristics that may be difficult to observe and attempts to quantify productivity effects that neglect selection bias are likely to be misspecified significant selection effects are found in previously used firm level data and productivity effects of existing profit sharing are found to be much larger than potential effects in firms without sharing arrangements this throws doubt on policies to encourage sharing in isolation

record date when issued and ex date effects in stock splits negative abnormal stock returns of about 1 occur near record dates of stock splits fur ther the lower the returns the more positive are ex date returns and when issued premi ums a possible explanation of these related phenomena is that trading hindrances asso ciated with record dates create trading inconvenience that is reflected in lower prices near record dates in turn anomalous positive ex date returns arise in part from the abnormally low prices of unsplit shares caused by the negative record date returns

price and volume effects associated with changes in the s p 500 list new evidence for the existence of price pressures attempts to identify price pressures caused by large transactions may be inconclusive if the transactions convey new information to the market this problem is addressed in an examination of prices and volume surrounding changes in the composition of the s p 500 since these changes cause some investors to adjust their holdings of the affected securities and since it is unlikely that the changes convey information about the future prospects of these securities they provide an excellent opportunity to study price pressures the results are consistent with the price pressure hypothesis immediately after an addition is announced prices increase by more than 3 percent this increase is nearly fully reversed after 2 weeks the efficient market hypothesis emh predicts that security prices reflect all publicly available information therefore one corollary of the emh is that you can sell or buy large blocks of stock at close to the market price as long as you can convince other investors that you have no private information 1 this statement assumes that securities are near perfect substitutes for each other if so the excess demand for a single security will be very elastic and the sale or purchase of a large number of shares will have no impact on price in contrast to the emh scholes 8 kraus and stoll 5 hess and frost 4 and others propose two hypotheses which predict that a large stock sale purchase will cause the price to decrease increase even if no new information is associated with the transaction the imperfect substitutes hypothesis ish also known as the distribution effect hypothesis assumes that securities are not close substitutes for each other and hence that long term demand is less than perfectly elastic under this hypothesis equilibrium prices change when demand curves shift to eliminate excess demand price reversals are not expected because the new price reflects a new equilibrium distribution of security holders the price pressure hypothesis pph assumes that investors who accommodate demand shifts must be compensated for the transaction costs and portfolio risks that they bear when they agree to immediately buy or sell securities which they otherwise would not trade these passive suppliers of liquidity are attracted by immediate price drops rises associated with large sales purchases they are compensated for their liquidity service when prices rise drop to their fullinformation levels the pph like the emh assumes that long run demand is

aid fragmentation or aid pluralism the effect of multiple donors on child survival in developing countries 1990 2010 while most policy makers and researchers stress the negative impact of aid fragmentation on development outcomes in recipient countries we argue that the greater diversity of perspectives entailed by higher multiplicity of donors can help select better policies we hypothesize a u shaped relationship countries with a moderate number of donors fare better than countries with either few or many donors the hypothesis is supported by a generalized method of moments gmm analysis of the relationship between health aid donors and child survival in 110 low and middle income countries during 1990 2010

the fiscal effects of aid in ethiopia evidence from cvar applications abstractthis article explores the fiscal effects of aid in ethiopia using the cointegrated vector auto regressive cvar methodology to model complex long run and short run dynamics we use national data for 1961 2010 including a measure of aid capturing flows through the budget as measured by the recipient the data suggests three main conclusions on the long run equilibrium first government long term spending plans are based on domestic sources treating aid as an additional source of revenue second both grants and loans are positively related to tax revenue third aid is positively associated with spending with a particularly strong relation between capital expenditure and grants overall our results show that aid in ethiopia had beneficial fiscal effects

do demand curves for stocks slope down since september 1976 stocks newly included into the standard and poor s 500 index have earned a significant positive abnormal return at the announcement of the inclusion this return does not disappear for at least ten days after the inclusion the returns are positively related to measures of buying by index funds consistent with the hypothesis that demand curves for stocks slope down the returns are not related to s p s bond ratings which is inconsistent with a plausible version of the hypothesis that inclusion is a certification of the quality of the stock

politics and the effectiveness of foreign aid abstract critics of foreign aid programs have long argued that poverty reflects government failure in this paper i test predictions for aid effectiveness based on an analytical framework that relates aid effectiveness to political regimes i find that aid does not significantly increase investment nor benefit the poor as measured by improvements in human development indicators but it does increase the size of government the impact of aid does not vary according to whether recipient governments are liberal democratic or highly repressive but liberal political regimes and democracies ceteris paribus have on average 30 lower infant mortality than the least free regimes this may be due to greater empowerment of the poor under liberal regimes even though the political elite continues to receive the benefits of aid programs an implication is that short term aid targeted to support new liberal regimes may be a more successful means of reducing poverty than current programs

aid government expenditure and aggregate welfare summary this paper tests the hypothesis that aid contributes to increasing aggregate welfare measured by infant mortality and the human development index hdi in recipient countries estimation is based on data for 104 countries over the period 1980 2000 and for subsamples of low income and middle income countries fixed effect estimates provide robust evidence that aid is associated with improved values of the welfare indicators and this effect appears to be greater in low income countries aid appears to increase welfare either directly or through the effect on growth and there is no evidence that aid operates through public spending

aid and growth regressions this paper examines the relationship between foreign aid and growth in real gdp per capita as it emerges from simple augmentations of popular cross country growth specifications it is shown that aid in all likelihood increases the growth rate and this result is not conditional on good policy there are however decreasing returns to aid and the estimated effectiveness of aid is highly sensitive to the choice of estimator and the set of control variables when investment and human capital are controlled for no positive effect of aid is found yet aid continues to impact on growth via investment we conclude by stressing the need for more theoretical work before this kind of cross country regressions are used for policy purposes

computing productivity firm level evidence we explore the effect of computerization on productivity and output growth using data from 527 large us firms over 1987 1994 we find that computerization makes a contribution to measured productivity and output growth in the short term using one year differences that is consistent with normal returns to computer investments however the productivity and output contributions associated with computerization are up to five times greater over long periods using five to seven year differences the results suggest that the observed contribution of computerization is accompanied by relatively large and time consuming investments in complementary inputs such as organizational capital that may be omitted in conventional calculations of productivity the large long run contribution of computers and their associated complements that we uncover may partially explain the subsequent investment surge in computers in the late 1990s