welfare economics risk and uncertainty social decisions in risky contexts raise a number of difficult questions such as 1 should social decisions be more or less risk averse than the average person 2 should we try to avoid large catastrophes more than frequent but limited harms with similar expected impact 3 should social decisions be ambiguity averse or stick to the expected utility canon this paper reviews the welfare economics of risk and uncertainty and examines possible answers to these questions based on the pros and cons of utilitarianism ex ante egalitarianism and ex post egalitarianism

selecting suitable compensation plans of executive stock options theoretical and empirical works have emphasized that executive stock option plans play an important role in compensation management and corporate governance owing to the incentives to increase firm stock price and volatility levels this study not only proposes models of executive stock options and constructs value matched financial variables for comparing the incentive effects towards these options but also develops an empirical study exploring the characteristics of executive stock options and suitable compensation management for companies this investigation examines the daily value and compares incentive effects of six kinds of executive stock options with the empirical data of tsmc the world s largest dedicated semiconductor foundry which is listed on the tse and nyse empirical results indicate that purchased options would be the best choice for companies that are unsuitable to undertake risky investments while the relative indexed options are appropriate for bear markets and good for companies

trading for the future signaling in permit markets abstract permit markets are celebrated as a policy instrument since they allow i firms to equalize marginal costs through trade and ii the regulator to distribute the burden in a politically desirable way these two concerns however may conflict in a dynamic setting anticipating the regulator s future desire to give more permits to firms that appear to need them firms purchase permits to signal their need this raises the price above marginal costs and the market becomes inefficient if the social cost of pollution is high and the government intervenes frequently in the market the distortions are greater than the gains from trade and non tradable permits are better the analysis helps to understand permit markets and how they should be designed

the dating game do managers designate option grant dates to increase their compensation we provide evidence of two variants of a dating game that entails picking a grant date ex post that is after the board s compensation decision is made back dating picking a date before the board decision date and forward dating waiting after the board decision date to observe the stock price behavior consistent with back dating we find stock return behavior around the grant date to be positively related to reporting lag in the promptly reported sample we find stock return behavior and the pattern of reporting lags consistent with forward dating our calculations show that managers can obtain economically significant benefits by playing the dating game

what fraction of stock option grants to top executives have been backdated or manipulated we estimate that 13 6 of all option grants to top executives during the period 1996 2005 were backdated or otherwise manipulated our study primarily focuses on grants that were unscheduled and at the money of which we estimate that 18 9 were manipulated the fraction is 23 0 before the new two day filing requirement took effect on august 29 2002 and 10 0 afterward for the minority of grants that are not filed within the required two day window the fraction of manipulated grants remains as high as 19 9 we further find a higher frequency of manipulation among tech firms small firms and firms with high stock price volatility in addition firms that use smaller non big five auditing firms are more likely to file their grants late finally at the firm level we estimate that 29 2 of firms manipulated grants to top executives at some point between 1996 and 2005

fair management of social risk we provide a general method for extending social preferences defined for riskless economic environments to the context of risk and uncertainty we apply the method to the problems of managing unemployment allowances in the context of macroeconomic fluctuations and catastrophic risks in the context of climate change the method guarantees ex post fairness and pays attention to individuals risk attitudes while ensuring rationality properties for social preferences revisiting basic ideas from harsanyi s celebrated aggregation theorem harsanyi 1955 the social preferences that we obtain do not always take the form of an expected utility criterion but they always satisfy statewise dominance when we require social preferences to be expected utilities we obtain a variant of harsanyi s result under a weak version of the pareto principle and a maximin criterion under a stronger pareto requirement whenever the ex post social ordering does not depend on people s risk attitudes we also show how non expected utility individual preferences can be accommodated in the approach

legitimacy and multi level institutional environments implications for foreign subsidiary ownership structure in this study we examine from an institutional perspective the legitimacy rationale behind the choice of subsidiary ownership structure among multinational corporations mncs we suggest that when under a strong pressure to conform at the host country and local industry levels of their institutional environment mncs are likely to take a lower ownership stake in exchange for external legitimacy in the host country or local industry that their foreign subsidiaries are entering we also suggest that mncs are likely to take a higher ownership stake in response to strong internal pressure to sustain their internal legitimacy at the corporate level of their institutional environment we also propose that mncs are more likely to exchange ownership for legitimacy in local industries than in host countries and in local markets with a high level of political instability than in those with a low level of political instability these propositions are generally supported by our analysis of 4451 subsidiaries established by 898 japanese mncs that operated in 39 countries across 52 industries two digit sic between 1988 and 1999

ex ante and ex post welfare optimality under uncertainty it is widely believed by economic theorists that if there were no transactions costs and if all information about the economy were perfectly shared by all then arrow debreu contingent commodity markets should bring about an ideal allocation the basis for this belief seems clear we have the two efficiency theorems of welfare economics which assure us that in the absence of external effects any competitive allocation is pareto efficient and that any pareto efficient allocation is competitive provided that appropriate lump sum transfers are made of course there are some reservations that need to be made local satiation and non convexities are well known to cause problems but these are not the problems i wish to discuss here to return to the usual argument the next step involves noticing how with contingent commodity markets the efficiency theorems of welfare economics carry over to an economy with uncertainty as explained for instance in chapter 7 of debreu s theorpj of value the fundamental value judgment that gives these efficiency theorems their normative interest is what may be called consumer sovereignty it is an assumption that the social welfare ordering should respect the preferences that govern consumers market behaviour it is a serious value judgment more serious than most economists have been prepared to concede but its seriousness increases when there is uncertainty we know full well that individuals misperceive the probabilities of certain events assuming that they even perceive any probabilities at all see for example kahneman and tversky 1979 nor are we always willing to accept as appropriate the attitudes to risk of individuals who seem either extremely reckless or extremely cautious societies are often willing to make some gestures towards property owners who have not insured themselves adequately against damage from fire flood or tempest and not just because of imperfect insurance markets or even misperceptions of probabilities in addition the inequalities of income that arise when some individuals take more risks than others are not necessarily seen to be desirable particularly if an individual has undertaken a useful but risky activity and has a very low income as a result of failure such gestures are examples of contingent lump sum transfers it seems clear that if such transfers occur to a sufficient extent they could supplant completely the securities markets which are usually sufficient to bring about pareto efficiency they may even be able to go further and correct the imperfections of an arrow debreu market allocation when individuals do misperceive probabilities or else have wrong attitudes to risk this is the main question i wish to consider here the idea that consumer sovereignty should not always extend to economies with uncertainty is not new it can be found in work by diamond 1967 dr6ze

the repricing of executive stock options abstract we examine a sample of firms that reset the exercise prices on their executive options these repricings follow a period of about one year of poor firm specific performance in which the average firm loses one fourth of its value no other offsetting changes to option terms or compensation are made and many firms reprice more than once without repricing a majority of the options would have been at the money within two years we find that when faced with circumstances in which repricing might be chosen firms with greater agency problems smaller size and insider dominated boards are more likely to reprice

competitiveness through management of diversity effects on stock price valuation this study s premise is that firms that can lower their costs and enhance their differentiation through the effective management of their human resources have a competitive advantage using data fr

issuing costs to existing shareholders in competitive and negotiated underwritten public utility equity offerings abstract this paper presents the results of an empirical investigation of whether there is any difference in the cost incurred by public utilities if they issue new equity through a negotiated or competitive underwriting we conclude that the expected cost of a competitive offer is less than the expected cost of a negotiated offer but that the variance of the cost is substantially greater with a competitive offer these results are interesting because most public utilities use negotiated underwriting unless forced by regulation to use competitive offers this paper is also an addition to the growing agency theory literature

generalized utilitarianism and harsanyi s impartial observer theorem harsanyi s impartial observer must consider two types of lotteries imaginary identity lotteries accidents of birth that she faces as herself and the real outcome lotteries life chances to be faced by the individuals she imagines becoming if we maintain a distinction between identity and outcome lotteries then harsanyi like axioms yield generalized utilitarianism and allow us to accommodate concerns about different individuals risk attitudes and concerns about fairness requiring an impartial observer to be indifferent as to which individual should face similar risks restricts her social welfare function but still allows her to accommodate fairness requiring an impartial observer to be indifferent between identity and outcome lotteries however forces her to ignore both fairness and different risk attitudes and yields a new axiomatization of harsanyi s utilitarianism

an analysis of the use of accounting and market measures of performance in executive compensation contracts prior research has provided useful insights into the structure of compensation plans and their incentive effects however one important limitation of these studies is the virtual absence of any cross sectional analyses of the attributes of compensation contracts 2 this absence is related in part to the problems associated with controlling for other factors that affect compensation that is compensation contracts are

utilitarianism egalitarianism and the timing effect in social choice problems two theorems are derived about social choice functions which are defined on comprehensive convex subsets of utility allocation space theorem 1 asserts that a linearity condition together with pareto optimality implies that a social choice function must be utilitarian theorem 2 asserts that a concavity condition together with pareto optimality and independence of irrelevant alternatives implies that a social choice function must be either utilitarian or egalitarian these linearity and concavity conditions have natural interpretations in terms of the timing of social welfare analysis before or after the resolution of uncertainties and its impact on social choices

the ethics of intergenerational risk abstract this paper addresses the evaluation of intergenerational allocations in an uncertain world it axiomatically characterizes a class of criteria named reference dependent utilitarian that assess allocations relative to a stochastic reference the characterized criteria combine social concerns for ex ante equity capturing the idea that generations should be treated equitably before risk is resolved and for ex post fairness capturing the idea that generations should be treated equitably after risk is resolved social discounting is endogenous and is governed by two opposite forces extinction risk pushes society to reduce the weight on future generations while uninsurable technological risk pushes society to increase the weight on future generations

an organizational model for understanding internationalization processes we propose an organizational model for understanding internationalization processes we argue that these processes differ with the type of organization we compare the internationalization processes of three organization types the mass production organization the disaggregated production organization and the project based organization each organization type responds differently to critical elements of the internationalization process namely the focus of entry the degree of presence and physical presence requirements in the foreign market which in turn influence what modal forms are adopted as the process progresses consequently we observe different approaches to resource commitment in the foreign market over time

proxy contests and the governance of publicly held corporations abstract analysis of 60 proxy contests for seats on the boards of exchange listed firms during 1978 1985 shows that three years after the contest less than one fifth of the sample firms remain independent publicly held corporations run by the same management team proxy contests are typically followed by managerial resignations even when dissidents fail to obtain a majority of board seats and are often followed by sale or liquidation of the firm the average stockholder wealth gains associated with proxy contests are largely attributable to gains by companies in which dissident activity leads to sale or liquidation

communication costs information acquisition and voting decisions in proxy contests this article synthesizes some recent progress in the theories of corporate control and political lobbying to model the proxy campaign as a political campaign the model yields a number of testable implications only some of which have been examined in the literature for example if the loss from voting for a bad dissident exceeds the gain from voting for a good dissident the model predicts that as communication costs fall the number of proxy fights increases announcement day returns decrease and the fraction of dissident wins first increases and then decreases article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

the timing of option repricing we investigate whether executive stock option repricings are systematically timed to coincide with favorable movements in the company s stock price for a sample of 236 repricing events we observe sharp increases in stock price in the 20 day period following the repricing date in addition repricing dates tend to either precede the release of good news or follow the release of bad news in the quarterly earnings announcements since information about stock option repricing is not generally released to the public around the repricing date these findings suggest that ceos opportunistically manage the timing of the option repricing date

altering the terms of executive stock options abstract we examine the practice of resetting the terms of previously issued executive stock options we identify properties of reset options develop a model for valuing resettable options and characterize the firms that have reset options we find the vast majority of options are reset at the money resulting on average in the strike price dropping 40 our valuation model suggests that resetting has only a small impact on the ex ante value of an option award but the ex post gain can be substantial finally we find resetting has a strong negative relation with firm performance even after correcting for industry performance

economies of scale in services a study of multinational insurers this study investigates whether multinational insurers achieve economies of scale using a time series cross sectional design it analyzes the relationship between expenses and output of multinational insurers the study finds that multinational insurers achieve economies of scale only up to a point and rather than benefitting from scale the most internationally diverse insurers suffer diseconomies the conclusion is that the benefits of extensive foreign acquisitions by insurers are questionable

the role of path dependency and managerial intentionality a perspective on international business research several decades of research in the field of international business have advanced various theories and studies on the internationalization of firms our assessment of the literature on internationalization shows that the focus has been primarily on path dependency and learning based aspects of internationalization while managerial intentionality and the possibility of managers making deliberate strategic choices towards further internationalization have not been very prominent in the ib literature we argue that internationalization paths and processes should be approached as a joint outcome of management intentionality and experience based learning in other words managers are assumed to have the ability and the intention to influence the evolutionary paths of the firm we derive a future research agenda that calls for the pursuit of this promising and emergent research stream moreover we develop a model integrating managerial intentionality knowledge experience and other factors institutional and selection forces to explain heterogeneous outcomes of internationalization positions paths and processes

performance and survival of joint ventures with non conventional ownership structures the international joint venture jv literature has focused on two parent jvs formed between one foreign and one local firm yet other types of jvs exist this paper identifies four distinct forms of jvs based on the jv partners nationality and equity affiliation these are i jvs that are formed between affiliated home country based firms ii jvs that are formed between unaffiliated home country based firmsl iii jvs that are formed between home country based and local firms and iv jvs that are formed between home country and third country based firms our analysis of 737 japanese jvs in asia demonstrates that the conventionally assumed form of jv represented only 30 percent of the total further each of the four jv forms significantly differed in terms of incidence performance and survival likelihood

a theory of subjective compound lotteries abstract we develop a savage type model of choice under uncertainty in which agents identify uncertain prospects with subjective compound lotteries our theory permits issue preference that is agents may not be indifferent among gambles that yield the same probability distribution if they depend on different issues hence we establish subjective foundations for the anscombe aumann framework and other models with two different types of probabilities we define second order risk as risk that resolves in the first stage of the compound lottery and show that uncertainty aversion implies aversion to second order risk which implies issue preference and behavior consistent with the ellsberg paradox

the experience factor in foreign market entry behavior of service firms the paper examines the effect of international experience on service firms selection of foreign markets and entry modes the investigation utilizes survey date from 151 united states based service firms results on market selection suggest that as their experience increases and becomes geographically more diversified service firms tend to choose markets that are culturally less similar to their home country on entry mode choice the paper departs from traditional linear conceptualizations and hypothesizes a u shaped relationship between experience and propensity for integrated entry modes results generally support the hypothesis the paper explains these findings and describes how service firms resemble and differ from manufacturing firms in their foreign market entry behavior

on corporate governance a study of proxy contests abstract this paper examines a sample of firms experiencing proxy contests for seats on their board of directors dissident shareholders usually fail to obtain a majority of board seats nevertheless they capture some seats via mechanisms such as cumulative voting in over half of the sample contests regardless of proxy contest outcome positive and statistically significant share price performance is associated with the contest that finding is predicted by the standard economic analysis of proxy contests in which the challenges benefit shareholders by improving corporate performance the finding runs counter to the claim of berle 1962 that the economists view of proxy contests is a wholly imaginary picture a portion of the positive share price changes taking place in the early stages of some proxy contests is not permanent however and as suggested by manne 1962 is at least partially attributable to temporary increases in the market value of the vote attached to corporate shares

the consequences of the fasb s 1998 proposal on accounting for stock option repricing abstract we examine repricing activity surrounding the fasb s 1998 announcement regarding accounting for repriced options we find that repricing increases during and decreases after the 12 day window between the announcement and proposed effective dates consistent with firms timing repricings to avoid recording an expense we find that firms experiencing increasing earnings patterns firms with earnings around zero and growth firms are more likely to reprice in the window but having repriced recently decreases the likelihood of doing so the evidence suggests that firms trade off financial reporting benefits against reputation costs in decisions to time repricings to get favorable accounting treatment

customer involvement and service firm internationalization performance an integrative framework to overcome the costs of doing business abroad researchers have suggested either legitimacy or efficiency based solutions however both types of solutions still treat host country customers as external to the theory we highlight the role of customers in the international professional business service setting and argue that customer involvement is positively related to the perceived internationalization performance of multinational corporations mncs mncs with managers who perceive higher legitimacy pressures and greater needs for local knowledge tend to undertake greater efforts to build customer involvement furthermore we develop a configuration framework between perceived strategic needs and mncs capabilities specifically mncs that match relational capability with legitimacy needs and absorptive capacity with knowledge needs are more likely to engage in customer involvement our survey of 175 chinese mncs provides evidence that customer involvement is positively related to perceived internationalization performance when mncs relational capabilities are stronger the positive relationship between legitimacy pressure and customer involvement increases by contrast mncs with greater perceived market ambiguity improve customer involvement only when they have stronger absorptive capacity we conclude that mncs may simultaneously reduce legitimacy and efficiency costs through customer involvement after considering the fit between perceived environmental pressures and firm capabilities

the social construction of market value institutionalization and learning perspectives on stock market reactions this study advances a social constructionist view of financial market behavior the paper suggests that the market s reaction to particular corporate practices such as stock repurchase plans are not as financial economists contend simply a function of the inherent efficiency of such practices rather stock market reactions are also influenced by the prevailing institutional logic and the degree of institutionalization of the practice the theory first predicts that the emergence of the agency perspective on corporate governance in the mid 1980s represented a powerful new institutional logic that would lead the market to reverse its prior aggregate reaction to stock repurchase plans in the united states the paper then considers the potential for institutional decoupling of repurchase plans and develops competing hypotheses about how the market value of these policies might have changed as more firms formally adopted but did not implement the plans over time in contrast to a financial economic pers

equally distributed equivalent utility ex post egalitarianism and utilitarianism we provide an axiomatization of expected equally distributed equivalent utility social welfare functions in the context of harsanyi s impartial observer theorem for this family of social welfare functions we show what additional axiom is necessary and sufficient for the observer to exhibit aversion to ex post inequality we also relate this axiomatization to our axiomatization in a companion paper of generalized utilitarian social welfare functions given certain richness assumptions the only social welfare functions that belong to both families are the utilitarian

optimal exercise prices for executive stock options although exercise prices for executive stock options can be set either below or above the grant date market price in practice virtually all options are granted at the money we offer an economic rationale for this apparent puzzle by showing that pay to performance incentives for risk averse undiversified executives are typically maximized by setting exercise prices at or near the grant date market price we provide an operationally useful alternative to black scholes 1973 for the purpose of both valuing executive stock options and measuring the incentives created by options our framework has implications not only for exercise price policies but also for indexed options option repricings exchanges of cash for stock based compensation and the design of bonus plans

prioritarianism and climate change prioritarianism is the ethical view that gives greater weight to well being changes affecting individuals at lower well being levels this view is influential both in moral philosophy and in theoretical work on social choice where it is captured by a social welfare function swf summing a concave transformation of individual well being numbers however prioritarianism has largely been ignored by scholarship on climate change this article compares utilitarianism and prioritarianism as frameworks for evaluating climate policy it reviews the distinctive normative choices that are required for the prioritarian approach specifying a ratio scale for well being if the prioritarian swf takes the standard atkinson form determining the degree of concavity of the transformation function i e the degree of social inequality aversion and choosing between ex ante and ex post prioritarianism under conditions of risk the article also sketches some of salient implications of a prioritarian swf for climate policy with respect to the social cost of carbon the social discount rate optimal mitigation and the dismal theorem finally it discusses the issue of variable population

aggregate risk and the pareto principle abstract in the evaluation of public policies a crucial distinction is between plans that involve purely idiosyncratic risk and those that generate correlated or aggregate risk while natural this distinction is not captured by standard utilitarian aggregators in this paper we revisit harsanyi s 1955 celebrated theory of preferences aggregation and develop a parsimonious generalization of utilitarianism the theory we propose captures sensitivity to aggregate risk in large populations and can be characterized by two simple axioms of preferences aggregation

interdependent behavior in foreign direct investment the multi level effects of prior entry and prior exit on foreign market entry this paper examines the interdependent foreign market entry decisions of multinational corporations mncs based on the argument that legitimacy and competition are two important forces in foreign market entry decisions we hypothesize that an mnc s market entry decisions are influenced by its own prior entry and prior exit decisions and those of other mncs we examine this general proposition at four levels of analysis the host country global industry an industry that spans host countries local industry an industry that is separately defined within each host country and parent firm level our analysis of a panel data of over 4000 market entry decisions that were made by japanese mncs shows that an mnc s market entry decision has a stronger inverted u shaped relationship with the prior entry and exit decisions of other mncs at the local industry level than the prior entry and exit decisions of other mncs at the host country and global industry levels we also find that both the prior entry and prior exit decisions of an mnc have a marginal influence on its own subsequent market entry decisions at the parent firm level

the outsourcing of r d through acquisitions in the pharmaceutical industry abstract we examine the performance of 160 pharmaceutical acquisitions from 1994 to 2001 and find evidence that on average acquirers realize significant positive returns these returns are positively correlated with prior acquirer access to information about the research and development activities at target firms and a superior negotiating position a unique desperation index is employed to determine the current status of a firm s internal productivity we find that firms experiencing declines in internal productivity or which are more desperate are more likely to engage in an outsourcing type acquisition in an effort to replenish their research pipelines

ceo stock option awards and the timing of corporate voluntary disclosures abstract we investigate whether ceos manage the timing of their voluntary disclosures around stock option awards we conjecture that ceos manage investors expectations around award dates by delaying good news and rushing forward bad news for a sample of 2 039 ceo option awards by 572 firms with fixed award schedules we document changes in share prices and analyst earnings forecasts around option awards that are consistent with our conjecture we also provide more direct evidence based on management earnings forecasts issued prior to award dates our findings suggest that ceos make opportunistic voluntary disclosure decisions that maximize their stock option compensation

multinational corporation internationalization in the service sector a study of japanese trading companies this paper extends chang s 1995 sequential investment theory to include multinational corporations mncs in service industries given this sector s large and growing impact on the global economy to facilitate an examination of service mnc internationalization patterns we develop a new typology of service investment i e core global related local unrelated global and unrelated local based on business relatedness and location specificity we test this typology on a sample of large japanese trading companies our results suggest that the initial investments of service mncs are closely related to their core businesses and are less location specific but that subsequent investments are less related to firms core services and are more location specific a pattern similar to the traditional view on manufacturing mncs we extend our analysis to examine several case studies to provide a richer context for these findings in addition we examine the performance implications of internationalization our findings suggest that firms that internationalize through early investments that are closely related to their core activities outperform those in unrelated businesses over time but that this performance gap between related and unrelated foreign investments diminishes in more advanced stages of internationalization

the pareto principle of optimal inequality the pareto principle is often viewed as a mild requirement compatible with a variety of value judgements in particular it is generally thought that it can accommodate different views on the desirable degree of equality we show that this is generally not true in intertemporal models where some uncertainty prevails to do so we formalize the concept of inequality aversion we show that different degrees of inequality aversion are not possible in typical models of time consistent dynamic decision under uncertainty

ceo compensation in financially distressed firms an empirical analysis this paper studies senior management compensation policy in 77 publicly traded firms that filed for bankruptcy or privately restructured their debt during 1981 to 1987 almost one third of all ceos are replaced and those who keep their jobs often experience large salary and bonus reductions newly appointed ceos with ties to previous management are typically paid 35 less than the ceos they replace in contrast outside replacement ceos are typically paid 36 more than their predecessors and are often compensated with stock options on average ceo wealth is significantly related to shareholder wealth after firms renegotiate their debt contracts however managers compensation is sometimes explicitly tied to the value of creditors claims

on the optimality of resetting executive stock options the practice of resetting strike prices on underwater executive stock options has drawn criticism for weakening managerial incentives our model shows that although the anticipation of resetting can negatively affect initial incentives resetting can still be an important value enhancing aspect of compensation contracts even from an ex ante standpoint in fact we find that some resetting is almost always optimal the relative advantages of resetting diminish with greater ability of managers to influence the resetting process greater relative importance of external factors on stock performance and lower costs of replacing incumbent managers

private information in executive stock option trades evidence of insider trading in the uk uk executives stock option exercises and associated sell decisions are motivated by private inside information executives use their inside information to lock in short term gains and to sell stock acquired prior to negative abnormal stock returns this informed trading is robust to the alternative factors that might motivate the exercise of executive stock options including option moneyness and value of exercise we suggest that the disparity in informed trading between us and uk executives option trades is related to important differences in the proportion of executive remuneration linked to options the regulation of options and the taxation of option gains

japanese trading companies can they be copied analysis of japanese trading companies suggests that would be u s trading companies could be emulate japan s special rather than general trading companies factors likely to lead to success are offering narrow high margin product lines in geographically diversified markets integration with manufacturing operations having strong domestic markets well capitalized finances with access to ample credit perhaps achieved through partnership with large international banks efficient working capital management consisting of liberal but controlled trade credit and tight inventories management experienced in international markets and capable of heeding national interest considerations in many countries and patience and a long term outlook since during client relationships are necessary to achieve profitability

on the internationalization process of firms a critical analysis even though international marketing has been challenged because of theoretical and methodological shortcomings very few researchers have actually attempted to analyze the weaknesses based on principles of theory evaluation in this article the author examines two types of models addressing the individual firm s internationalization process a theory evaluation is performed based on the explanation and the falsification criteria in order to improve the internationalization models some measures are proposed

factors affecting export intermediaries service offerings the british example this study attempts to determine and explain the service offering behavior of british export intermediaries eis it was empirically confirmed that eis offer two categories of services transaction creating and physical fulfillment services it was postulated that the extent to which an ei offers these types of services is influenced by a set of factors that are internally product market supplier and buyer related empirical tests on a sample of 135 british eis established that an ei s exporting role number of employees amount of undifferentiated products carried number of suppliers and number of countries served all have a direct impact on an ei s service offering behavior

why regulate insider trading evidence from the first great merger wave 1897 1903 we use event time methodology to study legal insider trading associated with mergers circa 1900 for mergers with prospective disclosures similar to today s we find substantial value gains at announcement implying participation by outside shareholders despite the absence of insider constraints furthermore preannouncement stock price runups relative to total value gain are no more than those observed for modern mergers insider regulation apparently has produced little benefit for outsiders with the inside information pricing function and related gains shifting to external information specialists other results suggest market penalties for nondisclosure i e insider trading is less successful in a restricted information environment

service multinationals conceptualization measurement and theory the application of mne definitions measurements and theories to international services is still in its infancy despite the considerable size and growth of this sector there are problems in defining classifying measuring comparing and explaining service mnes but they do not require special definitions and theories still research to date suggests 1 delinking the concepts of multinational enterprise and foreign direct investment under certain conditions and 2 qualifying the nature of ownership internalization and location advantages in fdi theory as far as service mnes are concerned

the effect of pre emptive right amendments on shareholder wealth abstract pre emptive rights allow existing shareholders to purchase a new offering of shares before the general public this paper investigates the effect on shareholder wealth of removing pre emptive rights from corporate charters two hypotheses are constrasted 1 shareholder wealth maximization suggests that management uses this extra degree of freedom to pick the least cost method for raising new equity hence the amendment increases shareholder wealth 2 management welfare maximization holds that management will use the passage of the amendment to maximize their own welfare sometimes to the detriment of shareholders hence the amendment decreases shareholder wealth the evidence indicates that the amendment decreases shareholder wealth

the relationship between international diversification and performance in service firms international diversification is a growth strategy that has a major potential impact on firm performance the relationship between international diversification and firm performance has been extensively studied in the international strategy literature a major gap in the literature has been the non existence of studies that have examined the effect of international diversification on performance in service firms previous studies that have tested the international diversification performance relationship were based on samples of manufacturing firms we argue that the form of the relationship between multinationality and performance is different in service firms we provide a theoretical argument for this claim and hypothesize that there is a u shaped curvilinear relationship between multinationality and performance in service firms our sample consists of 81 major german service firms spanning across four industries results show that there is support for a u shaped curvilinear relationship based on the findings implications and directions for future research are provided

the role of power and politics in the repricing of executive options we explore how ceo power affects the repricing of executive options the spread between an option s exercise or strike price and the market value of a stock impacts the likelihood of repricing

intrinsic preference for information abstract suppose agents value information not only to make contingent plans but also intrinsically how are such attitudes toward information related to attitudes toward risk we generalize the kreps porteus recursive expected utility model dropping both recursivity and expected utility there is a geometric analogy between risk and information we characterize intrinsic information loving in general by a substitution property analogous to multivariate risk loving and for smooth preferences by the convexity of gateaux derivatives even with recursivity preference for information does not imply expected utility we provide an example we examine connections between information loving and risk aversion for early and late resolving risks journal of economic literatureclassification numbers d80 d81

fairness risk preferences and independence impossibility theorems the most widely used economic models of social preferences are specified only for certain outcomes there are two obvious methods of extending them to lotteries if we do so by expected utility theory so that the independence axiom is satisfied our results imply that the resulting preferences do not exhibit ex ante fairness if we do so by replacing certain outcomes with their expected utilities for each individual so that individual risk preferences are preserved then ex ante fairness may be preserved but neither the independence axiom nor ex post fairness is satisfied both ex ante and ex post fairness can be satisfied but then the individual does not have well defined preferences over own lotteries

the globalization of service multinationals in the triad regions japan western europe and north america in this study we empirically investigate the determinants of foreign direct investment of service multinationals based in the triad regions japan western europe and north america foreign investment decisions of 168 of the largest service firms in nine service industries over the period 1976 1986 are analyzed and hypotheses that are developed based on findings of manufacturing fdi and studies of single service industries are tested using a logistic regression model the applicability of the mne fdi theories to service mnes is tested empirically over a broad range of mne home countries and service industries differences in the international behavior of service mnes based in different countries are uncovered and analyzed

a reexamination of the conglomerate merger wave in the 1960s an internal capital markets view one possible explanation for bidding firms earning positive abnormal returns in diversifying acquisitions in the 1960s is that internal capital markets were expected to overcome the information deficiencies of the less developed capital markets examining 392 bidder firms during the 1960s we find the highest bidder returns when financially unconstrained buyers acquire constrained targets this result holds while controlling for merger terms and for different proxies used to classify firms facing costly external financing we also find that bidders generally retain target management suggesting that management may have provided companyspecific operational information while the bidder provided capital budgeting expertise

a review of research on the growth of multinational enterprises a penrosean lens abstract we provide a comprehensive review of the growth of multinational enterprises mnes based on a quarter century 25 years of scholarly international business publications we synthesize research insights on the determinants of the growth of mnes through the lens of penrose s theory of firm growth which is the most influential theoretical perspective on firm growth the review takes stock of the research findings on the facilitators constraints and the trajectory of growth of mnes and elaborates on the commonalities and differences between research on the growth of mnes that draws on penrose s theory and research that does not this comparison highlights the opportunity to build an internally coherent theory of the growth of mnes that is a theory that connects what an mne is to what determines an mne s growth it also indicates that past research placed a strong emphasis on exogenous factors e g cross country distances as key constraints on growth even though the penrosean lens suggests a close consideration of endogenous factors that drive international growth as well as endogenizing the ostensibly exogenous growth determinants the review highlights the importance of firm specific managerial knowledge and learning which shapes the direction of the growth of mnes and ensures its administrative coherence