competition in global markets a case study of american and japanese competition in the british market the results of a three year study of the objectives strategies and organisation of american subsidiaries are presented their operations are compared against a matched sample of competitive british and japanese subsidiaries american subsidiaries were found to be less ambitious more orientated towards delivering short term profit performance and less adapted to local market conditions than their japanese competitors over the five year period only one in three u s subsidiaries exhibited successful profit and market performance against more than three out of four japanese subsidiaries

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

monetary integration and the cost of borrowing with european monetary union emu there was an increase in the adjusted spreads of euro area sovereign securities over germany corrected from the foreign exchange risk causing a lower than expected fall in borrowing costs the objective of this paper is to study the reasons for this increase and in particular whether the change in the price assigned by markets was due to domestic factors credit risk and or market liquidity or to international risk factors the empirical evidence suggests that it may have been a change in the market assessment of domestic both liquidity and default risk rather than international factors that caused the observed increase in adjusted spreads with monetary integration even though since market size scale economies have increased since emu their effect differs according to the size of the market

local fiscal policies default risk and municipal borrowing costs abstract this paper provides an empirical study of the effects that a local government s fiscal decisions exert on its cost of borrowing using a sample of new jersey municipalities the results are consistent with the view that current period fiscal decisions do impact the cost of borrowing a one standard deviation increase in the amount borrowed is associated with a 66 basis point increase in the annual yield furthermore that the standard approach of treating current period policy variables as exogenous regressors leads to a downward bias in the effect of additional borrowing on the interest rate

biased signaling and yardstick comparisons in a sovereign debt market abstract this paper develops a sovereign debt model in which governments are privately informed about their likelihood of default but can themselves have a biased perception of this likelihood i show that in this setup government borrowing acts as a signal that is only partially informative about fundamental default probabilities and bond prices do not necessarily reflect true credit risk i also show that in a two country version of the model correlations between the two countries induces yardstick comparisons and the borrowing decision of one government affects the bond price received by the other whether the information spillover increases or decreases the distortion created by the bias depends on the extent to which borrowing signals reinforce each other

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

can the new forms of investment substitute for the old forms a transaction costs perspective this paper uses transaction costs theory is used to explain the features of the new contractual alternatives to foreign direct investment the new forms to assess their efficiency and to forecast their future development

asset stock accumulation and sustainability of competitive advantage given incomplete factor markets appropriate time paths of flow variables must be chosen to build required stocks of assets that is critical resources are accumulated rather than acquired in strategic factor markets barney barney j 1986 strategic factor markets expectations luck and business strategy management sci october 1231 1241 sustainability of a firm s asset position hinges on how easily assets can be substituted or imitated imitability is linked to the characteristics of the asset accumulation process time compression diseconomies asset mass efficiencies inter connectedness asset erosion and causal ambiguity

the political economy of the euro crisis this article introduces the special issue on the political economy of the euro crisis which aims to improve our understanding of the causes consequences and implications of the highly unusual nature of this crisis a financial crisis among developed countries within a supranational monetary union the article provides a brief chronology of the crisis discusses its underlying causes and reviews the ways in which comparative and international political economy can help us understand the crisis the article then discusses the individual and collective contributions of the articles in the special issue and discusses possible future research paths on the political economy of the euro crisis we conclude with a brief discussion of how a political economy perspective informs our understanding of the long term prospects for the eurozone and european integration

layoffs top executive pay and firm performance this paper examines the connection between layoffs executive pay and stock prices firms that announce layoffs in the previous year pay their ceos more and give their ceos larger percentage raises than firms which do not have at least one layoff announcement in the previous year however the likelihood of announcing a layoff varies dramatically along other dimensions for example firm size which are also correlated with ceo pay once firm specific fixed effects are controlled for the ceo pay premium for laying off workers disappears in addition there is a small negative share price reaction to layoff announcements copyright 1998 by american economic association

estimating fiscal limits the case of greece summary this paper uses bayesian methods to estimate a real business cycle model that allows for interactions among fiscal policy instruments the stochastic fiscal limit and sovereign default using the particle filter to perform likelihood based inference we estimate the full nonlinear model with post emu data until 2010 q4 we find that i the probability of default on greek debt was in the range of 5 10 in 2010 q4 and ii the 2011 surge in the greek real interest rate is within model forecast bands the results suggest that a nonlinear rational expectations environment can account for the greek interest rate path copyright 2014 john wiley sons ltd

what drives provincial canada yield spreads although recent research has led to a deeper understanding of the factors determining yields on long term canada bonds there has been little corresponding work on provincial bonds this is despite the fact that unlike the us state bond market provincial debt represents a significant part of the canadian bond market provincial and state debt are examples of sub national debt which are backed by taxing powers similar to that of the national government but without control of the money supply which leaves them open to the possibility of default or payment rescheduling this in turn makes them similar to corporate debt by using a carefully constructed new data set we establish two important results first provincial fiscal positions debt and deficits are an important factor in determining yield spreads between provincial and canada bonds second we show that provincial bonds are a substitute for corporate debt in that during recessionary flights to quality their yields react similar to those on corporate bonds

size matters for liquidity evidence from emu sovereign yield spreads abstract the objective is to study the relative importance of domestic components of emu sovereign yield spreads since the start of monetary integration the results indicate a change in the market value of liquidity as measured by market size after emu

what drives spreads in the euro area government bond market spreads between euro area government bond yields are related to short term interest rates which are in turn related to market liquidity to cyclical conditions and to investors incentives to take risk in theory lower interest rates are associated with lower degrees of risk aversion and smaller government bond spreads empirically the eurosystem s short term interest rates are positively related to those spreads which our econometric model finds to include significant and policy relevant default risk and liquidity risk components simone manganelli and guido wolswijk

are european sovereign bonds fairly priced the role of modelling uncertainty abstract this paper examines the extent to which large swings of sovereign yields in euro area countries during the debt crisis can be attributed to fundamentals focusing on the inherent uncertainty in bond yield models we show that the outcomes are strongly affected by modelling choices with regard to i the confidence bands for the model prediction ii the assumption whether the model coefficients are similar across countries or not iii the sample selection iv the inclusion of financial variables and v the choice of time varying coefficients these choices affect the explanatory power of macro fundamentals and the extent of mispricing

insider trading and the valuation of international strategic alliances in emerging stock markets because stock markets in emerging economies are relatively new under regulated and often segmented investors responses to public announcements by firms in these economies may differ from responses in developed economies stock markets we draw on the institutional and corporate governance literatures to explain investor reactions to announcements of international strategic alliances isas between foreign and emerging market firms we argue that emerging economies stock markets positively value isas however information leakages due to weak regulatory environments siphon off the good news before the isa announcement date the level of state ownership of publicly traded firms and the nationality of foreign partners both affect the size and timing of market reactions

the european bond markets under emu in this paper we document how in the wake of monetary unification the markets for euro area sovereign and private sector bonds have become increasingly integrated issuers and investors alike have come to regard the euro area bond market as a single one primary and secondary bond markets have become increasingly integrated on a pan european scale issuance of corporate bonds has taken off on an unprecedented scale in continental europe in the process both investors and issuers have reaped the considerable benefits afforded by greater competition in the underwriting of private bonds and auctioning of public ones and by the greater liquidity of secondary markets bond yields have converged dramatically in the transition to emu the persistence of small and variable yield differentials for sovereign debt under emu indicates that euro area bonds are still not perfect substitutes however to a large extent this does not reflect persistent market segmentation but rather small differentials in fundamental risk liquidity differences play at most a minor role and this role appears to arise partly from their interaction with fundamental risk the challenges still lying ahead are numerous they include the imbalance between the german dominated futures and the underlying cash market the vulnerability of the cash markets prices to free riding and manipulation by large financial institutions the possibility of joint bond issuance by euro area countries the integration of clearing and settlement systems in the euro area bond market and the participation of new accession countries issuers in this market copyright 2004 oxford university press

determinants of sovereign yield spreads in the eurozone a bayesian approach abstract we analyze the determinants of sovereign yields spreads of emu member states applying bayesian model averaging bma to annual panel data from 1999 to 2009 bma is well suited in cases of small samples and high model uncertainty this seems to be the case in modeling sovereign yield spreads in the eurozone since the literature reports heterogeneous results with respect to significant explanatory variables we are testing a number of variables reported to be significant in the literature and find that the most likely country specific drivers of yield spreads are fiscal variables such as budget balance and government debt as well as external sector variables such as terms of trade trade balance and openness global financing conditions indicated by the us interest rate and market sentiments indicated by corporate bond spreads are likely to influence sovereign yield spreads

stability without a pact lessons from the european gold standard 1880 1914 stability pacts european lessons from the gold standard the gold standard was a system of fixed exchange rates that offered little opportunity for carrying out monetary policies short of suspending gold convertibility trade integration and capital mobility were very high it is worthwhile asking whether there are useful lessons to draw for emu from european experience during that period one clear lesson is that debts matter another basic finding is that the stability of the european gold standard depended on the underlying price trend deflation prior to 1895 resulted in rising public debt burdens which forced some countries to leave the system once gold was discovered and deflation gave way to inflation real interest service fell debts grew more slowly and a high degree of convergence allowed most countries to return to gold for emu this result implies that stability will hinge on the ecb s policy not being too restrictive other lessons concern the fragility of institutions in the face of deep public finance difficulties the risks for the single market of leaving out countries that have not fully converged and the existence of a virtuous cycle including low real interest rates fast growth and debt reduction marc flandreau jacques le cacheux and frederic zumer

sovereign risk premia the link between fiscal rules and stability culture abstract there is a growing empirical literature studying whether permanent constraints on fiscal policy such as fiscal rules reduce sovereign risk premia nevertheless it remains an open question whether these rules are effective genuinely or just because they mirror fiscal preferences of politicians and voters in our analysis of european bond spreads before the financial crisis we shed light on this issue by employing several types of stability preference related proxies these proxies refer to a country s past stability performance government characteristics and survey results related to general trust we find evidence that these preference indicators affect sovereign bond spreads and dampen the measurable impact of fiscal rules yet the interaction of stability preferences and rules points to a particular potential of fiscal rules to restore market confidence in countries with a historical lack of stability culture

sovereign default exit and contagion in a monetary union abstract the european sovereign debt crisis is characterized by the simultaneous surge in borrowing costs in the gips countries after 2008 we present a theory which can account for the behavior of sovereign bond spreads in southern europe between 1998 and 2012 our key theoretical argument is related to the bail out guarantee provided by a monetary union which endogenously varies with the number of member countries in sovereign debt trouble we incorporate this theoretical foundation in an otherwise standard small open economy dsge model and explain i the convergence of interest rates on sovereign bonds following the european monetary integration in late 1990s and ii following the heightened default risk of greece the sudden surge in interest rates in countries with relatively sound economic and financial fundamentals we calibrate the model to match the behavior of the portuguese economy over the period of 1998 to 2012

the time varying integration of euro area government bond markets abstract we derive a model in which a standard international capital asset pricing model icapm for government bonds is nested within an icapm with impediments to invest in the local government bond markets excess returns or risk premiums are then driven by a country specific or idiosyncratic stochastic factor on top of the common factor which has a time varying idiosyncratic impact on the premiums with this model we investigate the financial integration of government bond markets over time through two channels first we allow for gradual convergence from the full icapm with impediments to the standard model through the vanishing of the idiosyncratic factors second we allow for gradual equalization of the country specific impacts of the common factor state space methods are used to estimate the model with weekly government bond risk premiums for belgium france italy germany and the netherlands over the period 1995 2009 our results suggest first that the idiosyncratic factors were almost eliminated by 2006 in all countries but italy but then reappeared due to the financial crisis that started in 2007 second the country specific exposures to the common international risk factor have converged across countries with no setback during the crisis

taking stock of work family initiatives how announcements of family friendly human resource decisions affect shareholder value this study examines share price reactions to 231 work family human resource policies adopted by fortune 500 companies and announced in the wall street journal between 1971 and 1996 consistent with

yield spreads on emu government bonds government bond spreads we provide evidence that the movements in yield differentials between euro zone government bonds explained by changes in international risk factors as measured by banking and corporate risk premiums in the united states are more pronounced for bonds issued by italy and spain liquidity factors play a smaller role so policies meant to increase financial market efficiency do not appear sufficient to deliver a seamless bond market in the euro area the risk of default is a small but important component of yield differentials movements which signal market perceptions of fiscal vulnerability impose market discipline on national fiscal policies and may be reduced only by further convergence in debt ratios lorenzo codogno carlo favero and alessandro missale

an assessment of the measurement of performance in international business research a sizeable body of international business ib research is devoted to building knowledge about the determinants of organizational performance a key precursor to accurately diagnosing why some organizations succeed in the international marketplace while others struggle is operationalizing performance appropriately yet to date no systematic investigation has considered how well ib research measures performance we examine the measurement of performance in 96 articles published in the academy of management journal administrative science quarterly journal of marketing journal of marketing research journal of international business studies management science organization science a nd thestrategic management journal between 1995 and 2005 the findings reveal that most studies do not measure performance in a manner that captures the multifaceted nature of the construct we describe the implications of these results and offer suggestions for improving future practice journal of international business studies 2008 39 1064 1080

sovereign risk premiums in the european government bond market this paper provides a study of bond yield differentials among eu government bonds issued between 1993 and 2005 on the basis of a unique dataset of issue spreads in the us and dm euro bond market interest differentials between bonds issued by eu countries and germany or the usa contain risk premiums which increase with fiscal imbalances and depend negatively on the issuer s relative bond market size the start of the european monetary union has shifted market attention to debt service payments as the key measure of indebtedness and eliminated liquidity premiums in the euro area

ownership patterns of u s joint ventures abroad and the liberalization of foreign government regulations in the 1980s evidence from the benchmark surveys data from the benchmark surveys of the commerce department show the beginning of a global liberalization in government restrictions on foreign equity in the 1980s this was manifested in a small but unmistakable across the board reduction in the share of 50 50 and minority affiliates out of all u s affiliates in a country across countries there remains a huge variation in this proportion and the second part of the paper seeks to statistically explain this variation in a cross sectional regression analysis

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

economic policy uncertainty and risk spillovers in the eurozone this paper focuses on the impact of economic policy uncertainty on risk spillovers within the eurozone and contributes to these two growing literatures to this end we adapt the two step procedure developed by adrian and brunnermeier forthcoming in the framework of financial systemic risk to the sovereign bond market accordingly we attempt i to measure the extent to which distress affecting one given country s sovereign spreads can affect the eurozone s bond market as a whole and then ii to identify the determinants of risk spillovers by estimating a panel data model with macroeconomic state variables and economic policy uncertainty epu indices introduced by baker et al 2013 as regressors epu indices considered concern the four largest eurozone countries i e germany france italy and spain as well as the united states the model is estimated with quarterly data for ten countries representing the bulk of debt issuances within the eurozone over a period ranging from q4 2008 to q2 2013 which is characterized by historically high dispersion of sovereign bond spreads either across time or across countries our results support the idea that economic policy uncertainty in the core economies of the eurozone i e germany and france as well as in the largest periphery countries i e italy and spain can create an environment likely to exacerbate the transmission of risk arising from abnormal developments of individual countries sovereign spreads to the eurozone bond market as a whole in this respect our results plead for larger effort of eurozone leaders to reduce the uncertainty surrounding their economic policy in periods of crisis not only to avoid adverse effects on their own economies but also to reduce the risk of a destabilization of the eurozone sovereign bond market as a whole

transactions cost economics and the multinational enterprise an assessment abstract this paper applies transactions cost principles to the multinational enterprise in order to ascertain its distinctive properties as a mode of economic organization the analysis helps identify just when and where contractual alternatives to the multinational firm are likely to be viable this turns out to depend upon the nature of the technology the regime of appropriability within which the firm operates and the characteristics of the markets in question transactions cost analysis is also extended to the multinational enterprise host country relationship implications for management and public policy are derived

macroeconomic imbalances financial stress and fiscal vulnerability in the euro area before the debt crises a market view abstract this paper tries to identify the macro financial imbalances that exposed the euro area countries to fiscal stress before the outbreak of the european debt crises contrary to conventional wisdom that interprets fiscal stress in terms of fiscal sustainability we focus on short term fiscal vulnerability as reflected by the conditions of debt refinancing in the sovereign bond markets we find that market based indicators capturing risk perceptions of sovereign debts have been influenced by the indicators defined in the european macroeconomic imbalance procedure mip and by variables of financial vulnerability when pricing the risk of sovereign bonds the holders of government debts take into account not only the macroeconomic imbalances but also factors such as banking distress corporate bond risk liquidity risks in the interbank market or the volatility of stock prices

do credit markets discipline sovereign borrowers evidence from u s states the degree to which credit markets discipline sovereign borrowers is investigated by estimating the supply curve for debt faced by u s states the results generally support an optimistic view of the market discipline hypothesis with credit markets providing incentives for sovereign borrowers to restrain borrowing while the risk premium on bond yields is estimated to increase only gradually at low levels of debt this effect appears to become much larger as debt rises there is also some evidence that credit markets may withhold access to credit at very high levels of debt copyright 1995 by ohio state university press

equity joint ventures and the theory of the multinational enterprise this paper extends the internalization approach to the theory of the multinational enterprise mne to include an expanded role for equity joint ventures using the transaction cost paradigm of williamson this paper explains why joint ventures may sometimes be preferred over wholly owned subsidiaries also presented is empirical work on joint venture performance in developing countries which demonstrates that under certain conditions joint ventures can be the optimal mode of foreign direct investment

how does liquidity affect government bond yields the paper explores the determinants of yield differentials between sovereign bonds using euro area data there is a common trend in yield differentials which is correlated with a measure of aggregate risk in contrast liquidity differentials display sizeable heterogeneity and no common factor we propose a simple model with endogenous liquidity demand where a bond s liquidity premium depends both on its transaction cost and on investment opportunities the model predicts that yield differentials should increase in both liquidity and risk with an interaction term of the opposite sign testing these predictions on daily data we find that the aggregate risk factor is consistently priced liquidity differentials are priced for a subset of countries and their interaction with the risk factor is in line with the model s prediction and crucial to detect their effect

the development and impact of marketing capabilities in central europe the industrial organisation and evolutionary economics traditions in international business and the resource based view of the firm in strategic management provide a rich and related set of perspectives on the question of performance in an international environment this paper draws on these perspectives to examine the nature of marketing capabilities across a range of firm types in hungary poland and slovenia a number of key strategic capabilities are examined including market orientation the time horizon of strategic decision making and positioning capability the study finds that firms with foreign participation have been able to develop a sophisticated level of marketing capability with a resulting positive impact on financial and market performance wholly owned subsidiaries and international joint ventures emerge as equally effective mechanisms for the transfer of marketing capability conclusions are drawn and implications from the research are outlined

fiscal policy and interest rates in europe the appetite for fiscal discipline has been steadily declining among most industrial countries in the past fiscal profligacy would have been punished by markets with higher interest rates and in some cases also exchange rate depreciation however in post emu europe exchange rate markets no longer discipline the fiscal behaviour of national governments perhaps more crucially even the interest rate punishment to fiscal indiscipline is highly uncertain with academic opinions being quite divided on this issue this paper takes a close look at the link between fiscal policy and interest rates in the european context the key finding is that an expansionary fiscal policy in one emu member will have an effect both on its spreads and on the overall level of interest rates for the currency union as a whole with the second effect however being quantitatively much more significant this suggests that there are indeed substantial spillovers through the interest rate channel among fiscal policies of member countries to limit countries incentive to run expansionary fiscal policies a set of rules like those embedded in the stability and growth pact is then needed some weak evidence is also found that after emu interest rate spillovers seem to be more significant for high debt countries with unsustainable fiscal policies reflecting perhaps market concerns about a possible sovereign bail out or the impact of financial distress there may be a case then for imposing tighter rules on high debt countries riccardo faini

feeling the blues moral hazard and debt dilution in eurobonds before 1914 debt mutualisation through eurobonds has been proposed as a solution to the euro crisis although this proposal found some support it also attracted strong criticisms as it risks raising the spreads for strong countries diluting legacy debt and promoting moral hazard by weak countries because eurobonds are a new addition to the policy toolkit there are many untested hypotheses in the literature about the counterfactual behaviour of markets and sovereigns this paper offers some tests of the issues by drawing from the closest historical parallel five guaranteed bonds issued in europe between 1833 and 1913 the empirical evidence suggests that contemporary concerns about fiscal transfers and debt dilution may be overblown and creditors moral hazard may be as much of a problem as debtors

sovereign bond yield spreads a time varying coefficient approach abstract we study the determinants of sovereign bond yield spreads across 10 emu countries between q1 1999 and q1 2010 we apply a semiparametric time varying coefficient model to identify to what extent an observed change in the yield spread is due to a shift in macroeconomic fundamentals or due to altering risk pricing we find that at the beginning of emu the government debt level and the general investors risk aversion had a significant impact on interest differentials in the subsequent years however financial markets paid less attention to the fiscal position of a country and the safe haven status of germany diminished in importance by the end of 2006 two years before the fall of lehman brothers financial markets began to grant germany safe haven status again one year later when financial turmoil began the market reaction to fiscal loosening increased considerably the altering in risk pricing over time period confirms the need of time varying coefficient models in this context

is there a better commitment mechanism than cross listings for emerging economy firms evidence from mexico the last decade of work in corporate governance has shown that weak legal institutions at the country level hinder firms in emerging economies from accessing finance and technology affordably to attract outside resources these firms must often use external commitments for repayment research suggests that a common commitment mechanism is to borrow us securities laws which involves listing the emerging economy firm s shares on a us exchange this paper uses a quasi natural experiment from mexico to examine the conditions under which forming a strategic alliance with a foreign multinational firm is actually a superior mechanism for ensuring good corporate governance

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

measuring bilateral spillover and testing contagion on sovereign bond markets in europe abstract the global financial crisis rapidly spread across borders and financial markets and also distressed eu bond markets the crisis did not hit all markets in the same way we measure the strength and direction of linkages between 16 eu sovereign bond markets using a factor augmented version of the var model in diebold and yilmaz 2009 we then provide a novel test for contagion by applying the multivariate structural break test of qu and perron 2007 on this favar detecting significant sudden changes in shock transmission results indicate substantial spillover especially between emu countries with belgium italy and spain being key markets during the financial crisis contagion has been a rather rare phenomenon limited to a few well defined moments of uncertainty on financial assistance packages for greece ireland and portugal most of the frequent surges in market co movement are driven by larger shocks rather than by contagion

a multivariate latent factor decomposition of international bond yield spreads a factor analysis of long term bond spreads is performed by decomposing international interest rate spreads into national and global factors the factors are latent and are assumed to have garch type specifications as well as exhibiting serial dependence an indirect estimator is used to compute estimates of the unknown parameters the sampling performance of this estimator is investigated and compared with an alternative direct estimator based on the kalman predictor the factor model is applied to weekly data on long bond spreads between five countries australia japan germany canada and the uk and the usa over the period 1991 to 1999 the resulting factor decomposition is used to examine the international investor s optimal portfolio decision in a mean variance framework copyright 2000 john wiley sons ltd

foreign direct investment in hungary resource acquisition and domestic competitive advantage this paper examines the impact of foreign direct investment on the marketing resources and capabilities of firms in hungary foreign direct investment into hungary has been substantial in recent years and is credited as a major factor in leading the transition towards a market led economy while the motives of foreign investors to invest and of governments to attract investment have been extensively addressed in the literature there has been little research on the reasons why individual host firms seek to attract investment this paper develops a theoretical explanation of host firm motives through the resource based theory of the firm proposing that host firms seek resources from their investors that can then be deployed to create competitive advantage over rivals in the domestic market a series of specific propositions are developed and tested empirically on a large sample of hungarian enterprises

sovereign risk and the bank lending channel in europe abstract the main purpose of this article is to analyze how sovereign risk influences the loan supply reaction of banks to monetary policy through the bank lending channel additionally we aim to test whether this reaction differs in easy and tight monetary regimes using a sample of 3125 banks from the euro zone between 1999 and 2012 we find that sovereign risk plays an important role in determining loan supply from banks during tight monetary regimes banks in higher sovereign risk countries reduce lending more during tight regimes however we find little evidence to support any relationship between sovereign risk and loan supply reaction to monetary policy expansions these results are very interesting for the way monetary policy is conducted in europe banking union banking system strength and the budget control of governments would be necessary measures to reduce the heterogeneous transmission of the monetary policy in the euro zone

bank sovereign risk spillovers in the european debt crisis this paper investigates contagion between bank risk and sovereign risk in europe over the period 2006 2011 since this period covers various stages of the banking and sovereign crisis it oers a fertile ground to analyze bank sovereign risk spillovers we de ne contagion as excess correlation i e correlation between banks and sovereigns over and above what is explained by common factors using cds spreads at the bank and at the sovereign level moreover we investigate the determinants of contagion by analyzing bank speci c as well as country speci c variables and their interaction we provide empirical evidence that various contagion channels are at work including a strong home bias in bank bond portfolios using the eba s disclosure of sovereign exposures of banks we nd that banks with a weak capital and or funding position are particularly vulnerable to risk spillovers at the country level the debt ratio is the most important driver of contagion

risk assessment on euro area government bond markets the role of governance abstract since the announcement of the outright monetary transactions program omt government bond yield spreads have decreased substantially but have not fallen to pre crisis levels this paper argues that the debt to gdp ratio has become less relevant as a determinant for government bond spreads while financial markets have become more concerned about the willingness and the capability to cooperate with the institutions that conduct the adjustment programs since the announcement of omt the paper links the willingness and the capability to cooperate to political stability and the quality of governance for which the indicators are available from the world bank by means of a time varying coefficient approach it can be shown that the coefficient for a composite world bank indicator on the quality of governance has outpaced other possible determinants of government bond spreads since the announcement of omt

granger causality in peripheral emu public debt markets a dynamic approach our research aims to analyze the possible existence of granger causal relationships in the behavior of public debt issued by peripheral member countries of the european economic and monetary union emu with special emphasis on the recent episodes of crisis triggered in the eurozone sovereign debt markets since 2009 with this goal in mind we make use of a database of daily frequency of yields on 10 year government bonds issued by five emu countries greece ireland italy portugal and spain covering the entire history of the emu from its inception on 1 january 1999 until 31 december 2010 in the first step we explore the pair wise granger causal relationship between yields both for the whole sample and for changing subsamples of the data in order to capture the possible time varying causal relationship this approach allows us to detect episodes of significant increase in granger causality between yields on bonds issued by different countries in the second step we study the determinants of these episodes analyzing the role played by different factors paying special attention to instruments that capture the total national debt domestic and foreign in each country

risk asset pricing and monetary policy transmission in europe evidence from a threshold var approach abstract this paper investigates in how far monetary policy shocks impact european asset markets conditional on different risk states we distinguish between macroeconomic risk economic policy risk and financial risk and separately extract three factors via principal component analysis from a set of candidate variables these factors augment a threshold vectorautoregressive model that contains assets and a short rate impulse responses show that we indeed see state dependency in the reaction of asset prices to monetary policy shocks this indicates that asset markets distinguish between different types and states of risk investment grade corporate bond yields show the most pronounced state dependency if we distinguish between states of high and low economic policy risk non investment grade corporate bond yields as well as equity of industrial firms face the strongest state dependency for macroeconomic risk financial equity shows state dependency for financial risk regimes further on we illustrate that during periods of severe crisis different risk regimes coincide this impedes a clear delimitation among these three types of risk as a consequence of our findings monetary policy transmission via distinct asset prices highly depends on the degree of these different kinds of risk inherent in europe

determinants of sovereign bond yield spreads in the emu an optimal currency area perspective in the light of the recent financial crisis we take a panel cointegration approach that allows for structural breaks to the analysis of the determinants of sovereign bond yield spreads in nine economies of the european monetary union we find evidence for a level break in the cointegrating relationship moreover results show that i fiscal imbalances namely expected government debt to gdp differentials are the main long run drivers of sovereign spreads ii liquidity risks and cumulated inflation differentials have non negligible weights but iii all conclusions are ultimately connected to whether or not the sample of countries is composed of members of an optimal currency area oca in particular we establish i that results are overall driven by those countries not passing the oca test and ii that investors closely monitor and severely punish the deterioration of expected debt positions of those economies exhibiting significant gaps in competitiveness