puttin on the ritz pre ipo enlistment of prestigious affiliates as deadline induced remediation we describe two theoretical explanations for the amount pace and costs of the prestige enhancement a firm engages in during the year before its initial public offering the snowball model captures well known processes whereby prestige rich organizations accumulate even more prestige the dressing up model builds upon deadline induced remediation a phenomenon not previously studied in a macro organizational context in 242 software ipos the snowball model substantially explains final year prestigious hiring but there is also strong evidence of a tandem dressing up process as the final year counts down prestige poor firms aggressively hire prestigious executives and directors and pay higher prices to do so

better together signaling interactions in new venture pursuit of initial external capital after new ventures have exhausted the limited financial resources of founders family and friends they often pursue initial external capital to secure investment entrepreneurs can signal about

what do entrepreneurs pay for venture capital affiliation this study empirically evaluates the certification and value added roles of reputable venture capitalists vcs using a novel sample of entrepreneurial start ups with multiple financing offers i analyze financing offers made by competing vcs at the first professional round of start up funding holding characteristics of the start up fixed offers made by vcs with a high reputation are three times more likely to be accepted and high reputation vcs acquire start up equity at a 10 14 discount the evidence suggests that vcs extra financial value may be more distinctive than their functionally equivalent financial capital these extra financial services can have financial consequences a central issue for early stage high tech entrepreneurs is obtaining external resources when the assets of their start up are intangible and knowledge based particularly for entrepreneurs without an established reputation convincing external resource providers such as venture capitalists vcs to provide financial capital may be challenging the literature contains two main lines of research for overcoming this problem one research stream has concentrated on designing institutional structures to permit financing early stage ventures this contractual and monitoring based approach is aimed at solving potential agency problems between investors and entrepreneurs e g admati and pfleiderer 1994 lerner 1995 hellmann 1998 and kaplan and str omberg 2001 2002 2003 a second research stream has suggested that when the quality of a start up cannot be directly observed external actors rely on the quality of the start up s affiliates as a signal of the start up s own quality

an empirical study of the consolidation of local public health services in connecticut this study contributes to the literature by empirically examining the decision of connecticut communities to consolidate the delivery of public health services as theory suggests the prospect of scale economies is found empirically to increase the likelihood that a community consolidates public health services in addition differences across communities are found to inhibit the consolidation of public health services overall the results imply that financial incentives may be necessary to encourage more regional districts because localities may underestimate the true minimum efficient scale for public health services and because heterogeneity among jurisdictions impedes regional cooperation

precision of dichotomous choice contingent valuation welfare measures some simulation results the purpose of this research is to examine the roles of individuals heterogeneous economic factors and model misspecification in dichotomous choice contingent valuation welfare measurement willingness to pay for an improvement of environmental quality is studied simulation results indicate that the precision of welfare estimates increases with individuals income levels and decreases with the price of the quality related good the dependence of the consumption of the quality related good on the environmental quality also affects the reliability of welfare estimates

spatial differences in the demands for local public goods differences in the mix of public goods across locations are apparent particularly sharp are the differences between public spending habits of central cities and suburbs for 37 of the largest smsas in 1977 the ratio of per capita educational expenditures in central cities to the per capita education expenditures in suburban areas was 93 and the comparable ratio for per capita noneducational expenditures was 2 01 1 relative to suburban areas central cities have spent more of their revenue on noneducational public goods and less on education although these differences have been attributed to various demandand supply side factors analysts have placed considerable emphasis on the demand side determinants of local expenditures researchers such as borcherding and deacon 1972 have estimated the demands for local public goods by focusing on the consumption behavior of the median voter the partial equilibrium nature of these earlier models however missed the potential interdependencies between the demands for public and private goods more recently there have been attempts to develop a more complete general equilibrium model of public choice which incorporates the interaction between public and private goods perkins 1977 presents a general equilibrium extension of the borcherding and deacon framework by testing the cross price effects between various local public goods his empirical results strongly suggest that there is substitutability among certain local public

study on benefit transfer in an international setting how to improve welfare estimates in the case of the countries income heterogeneity abstract the paper aims at investigating the validity of benefit transfer in the case of transfers between countries highly heterogeneous in income and demonstrates relative performance of different benefit transfer methods under these conditions lake water quality valuation studies were conducted in two countries in transition poland and the czech republic they reflected two earlier studies carried out in norway we examine how income elasticity of wtp varies with the levels of income and find support for applying the income elasticity of 1 to adjust transferred welfare estimates in case of high differences in income between countries in addition we show that using site specific measures of income outperforms transfers based on gpd per capita the accuracy of benefit transfer is compared using equivalence testing following the tosc two one sided convolutions test a new more informative way of reporting equivalence is proposed based on computing minimum tolerance level rather than specifying it a priori

valuing global ecosystem services what do european experts say applying the delphi method to contingent valuation of the amazon rainforest valuing global public goods like the amazon rainforest by stated preference surveys of a representative sample of the global population would be very costly and time consuming we explore the use of the delphi method in contingent valuation cv by asking a panel of 49 european environmental valuation experts in two rounds what they think would be the result if a european cv survey of amazon rainforest protection plans was conducted the experts best guess for the mean willingness to pay wtp by european households for preserving the current amazon rainforest and thus avoiding a predicted loss in forest area by 2050 from currently 85 to 60 of the original forest in the 1970s was 28 per household annually as an additional income tax aggregated over all european households this amounts to about 8 4 billion annually this preliminary estimate indicate that wtp of distant beneficiaries is substantial and could justify preservation of global ecosystem services where aggregated benefits of the local population often do not exceed the opportunity costs of preservation in terms of lost income from commercial activities the income elasticity of wtp with respect to per capita income in the european countries is 0 5 0 6 recognizing the limitations and assumptions of the delphi cv method it could still be a time saving and cost effective benefit transfer tool for providing international donors with much needed order of magnitude estimates of the non use value of ecosystem services of global significance

getting off to a good start the effects of upper echelon affiliations on underwriter prestige the initial public offering ipo is one of the most critical events in the lifetime of a young firm prior research has shown that firms tend to have successful ipos if they go public with the endorsement of a prestigious lead underwriter this paper examines the antecedents to receiving endorsement by a prestigious underwriter and links this to the experience base of a firm s upper echelon we theorize that the amount and type of upper echelon experience serve as important symbols of a young firm s legitimacy to critical outsiders we introduce a typology of upper echelon experience that distinguishes between upper echelon upstream horizontal and downstream employment based affiliations and suggest that these different types of upper echelon affiliations allay different types of endorser concerns regarding firm legitimacy affecting the endorsement process further we theorize that the relationships between upper echelon experience and investment bank prestige will be moderated by technological uncertainty we test our assertions on a comprehensive sample of public and private biotechnology firms that were founded between 1961 and 1994 and that went public between 1979 and 1996 analyses of the five year career histories of the over 3 200 executives and directors that make up the upper echelons of these firms show that firms with upper echelons with affiliations with prominent downstream organizations i e pharmaceutical and or healthcare companies and with prominent horizontal organizations i e biotechnology companies are more likely to attract the endorsement of a prestigious investment bank we also find that the greater the range of upper echelon affiliations across the categories of upstream horizontal and downstream affiliations the more prestigious the firm s lead underwriter we also find that these latter results are moderated by technological uncertainty the present research has implications for the study of organizational legitimacy interorganizational endorsements and entrepreneurship

a repeated nested logit model of atlantic salmon fishing participation and site choice for atlantic salmon fishing are modeled in the context of a repeated three level nested logit model consumer s surplus measures are derived for different levels of species availability in the penobscot river the most important salmon river in new england for comparison six other travel cost models are estimated these include restrictive cases of the nested logit model a partial demand model and two single site demand models comparisons across these models indicate the importance of modeling the participation decision including income effects and of adopting a nested logit structure rather than a single level logit structure

arbitrage continuous trading and margin requirements this paper studies the impact that margin requirements have on both the existence of arbitrage opportunities and the valuation of call options in the context of the blackscholes economy margin restrictions are shown to exclude continuous trading arbitrage opportunities and with two additional hypotheses still to allow the black scholes call model to apply the black scholes economy consists of a continuously traded stock with a price process that follows a geometric brownian motion and a continuously traded bond with a price process that is deterministic continuous trading security market models constitute a significant area of continuing reesearch in financial economics these models form the basis of the option pricing methodology see merton 16 for a review and current intertemporal asset pricing models see merton 15 breeden 3 and cox ingersoll and ross 5 given the importance of these models it is of no surprise that there has been significant academic concern see dybvig 9 cox ingersoll and ross 4 p 341 and ingersoll 13 pp 13 25 over the discovery of a continuous trading strategy by harrison and kreps 10 called the doubling strategy that generates a sure dollar from a zero investment the existence of this doubling strategy violates a basic premise of the option pricing methodology the premise of no arbitrage opportunities given this violation the question naturally arises as to whether the option pricing methodology is internally consistent fortunately harrison and pliska 11 showed that the exclusion of arbitrage opportunities and the doubling strategy does not invalidate the familiar derivation of the black scholes call option formula the exogenous exclusion of these doubling strategies is somewhat arbitrary however types of constraints that exclude continuous trading arbitrage opportunities were studied by kreps 14 harrison and kreps 10 and dybvig 9 these papers provide constraints that are unsatisfactory from an institutional point of view since they have no market analogue margin requirements on the other hand have a market analogue one purpose of this paper is to show that margin requirements also exclude continuous trading arbitrage opportunities to make this argument self contained we first provide a unified framework that synthesizes the previously stated results our assertion concerning margin re

top managerial prestige and organizational bankruptcy this paper extends earlier work on an alternative view of bankruptcy suggesting that bankruptcy occurs when creditors withdraw then support from a firm s top management team it further proposes that support for the top team depends upon the team s prestige five characteristics measuring the relative status of top teams were tested for their association with bankruptcy three of the characteristics focused on items commonly associated with membership in economic elites elite educational backgrounds board memberships and previous employment as officers in other corporations the fourth and fifth characteristics focused on membership in political and military elites the results indicated that political and board connections were negatively associated with bankruptcy in the year of failure even when financial factors and cooptive board linkages were controlled the results also showed that failing firms attempted to improve their managerial prestige three to four years before they failed they were how

contingent valuation a practical alternative when prices aren t available a person may be willing to make an economic tradeoff to assure that a wilderness area or scenic resource is protected even if neither that person nor perhaps anyone else will actually visit this area this tradeoff is commonly labeled passive use value contingent valuation studies ask questions that help to reveal the monetary tradeoff each person would make concerning the value of goods or services such surveys are a practical alternative approach for eliciting the value of public goods including those with passive use considerations first i discuss the exxon valdez oil spill of march 1989 focusing on why it is important to measure monetary tradeoffs for goods where passive use considerations loom large although discussions of contingent valuation often focus on whether the method is sufficiently reliable for use in assessing natural resource damages in lawsuits it is important to remember that most estimates from contingent valuation studies are used in benefit cost assessments not natural resource damage assessments those working on benefit cost analysis have long recognized that goods and impacts that cannot be quantified are valued implicitly by giving them a limitless value when government regulations preclude certain activities or giving them a value of zero by leaving certain consequences out of the analysis contingent valuation offers a practical alternative for reducing the use of either of these extreme choices i put forward an affirmative case for contingent valuation and address a number of the concerns that have arisen

understanding the consequences of consequentiality testing the validity of stated preferences in the field this study pursues the external validation of stated preference methods by comparing survey responses from verified voters with the outcome of a parallel public referendum on a conservation and preservation program to be funded by a local property tax surcharge the majority of respondents were unaware of the upcoming referendum and the experimental design allows us to control for referenda related information effects as well as respondents perceptions regarding the consequentiality i e the potential policy impact of their survey votes we find the survey under predicts yes referendum votes at the precinct level these differences go away however if we focus only on respondents who perceived their survey vote to be consequential negative hypothetical bias among inconsequential survey respondents is also evident in the estimation of willingness to pay and controlling for consequentiality increases construct validity

how much prestige is enough assessing the value of multiple types of high status affiliates for young firms abstract young unproven firms can signal their worthiness or potential through affiliations with various types of prestigious parties drawing from signaling theory we present a formal consideration of the implications of multiple numbers and types of prestigious affiliates for ipo valuations we argue that different types of prestigious affiliates prestigious executives directors venture capital firms and underwriters convey different signals of ipo worth depending on the extent to which they provide certification or substantive benefits based on a sample of 257 software ipos we find considerable support for our expectations the benefits of prestigious executives and directors accumulate in a linear more is better fashion in contrast the payoffs from vc and underwriter prestige accumulate in a curvilinear fashion we discuss the theoretical implications of these findings and propose an agenda for future research

pricing convertible bonds abstract convertible bonds are an important segment of the corporate bond market although their pricing is compromised by the presence of complex option features and difficulty in measuring the risk factors needed as inputs to standard valuation models using a unique sample of pure u s convertible bonds devoid of other optionality we show that underpricing is affected mainly by the degree of underlying asset volatility and liquidity convertible bonds with a greater debt component more credit sensitive longer time to maturity and lower quality credit ratings are also found to be more underpriced the global financial crisis gfc is an episode with high underlying asset volatility and one subject to short selling constraints during this period there was deep convertible bond discounting which highlights the importance of market conditions and the temporal rather than systematic nature of the pricing errors

media legitimation effects in the market for initial public offerings in this study we argue that media provided information affects investors impressions of newly public firms in 225 initial public offerings ipos the volume of mediaprovided information had a negative diminishing relationship with underpricing and a positive diminishing relationship with stock turnover on the first day of trading the relationship between the tenor of media provided information and underpricing increases at a nonlinear rate and decreases similarly for turnover findings provide important evidence that publicly available information not only reflects ipos legitimacy but also adds to their legitimacy and influences investor behavior in the last 20 years an increasing amount of research on markets has been conducted from a social constructionist perspective emphasizing how social structures enhance the flow of useful and credible information that market participants use to reduce the uncertainty of market exchanges e g aldrich fiol 1994 zuckerman 1999 further recent organizational research has begun to stress the influence of information intermediaries such as financial analysts and the media on mar

lobbying political competition and local land supply recent evidence from spain abstract we analyze whether local land supply is influenced by the degree of political competition and interpret the findings as indications of the influence wielded by land developer lobbies we use a new database including both political and land supply data for more than 2 000 spanish municipalities for the period 2003 2007 in spain land use policies are largely a local responsibility with municipalities needing periodically to pass comprehensive land use plans the main policy variable in these plans and the one analyzed here is the amount of land classified for potential development we measure local political competition as the margin of victory of the incumbent government this variable is however potentially endogenous since not only do votes affect policy but also policy is expected to affect votes to deal with this problem we instrument this variable using the votes at the first national legislative elections following the re establishment of democracy and votes actually obtained regionally at the same type of election the results indicate that stiffer political competition does indeed reduce the amount of new land designated for development this effect is found to be most marked in suburbs in towns with a high percentage of commuters and homeowners and in municipalities governed by the left

the public demand for open space the case of connecticut communities abstract at both the state and national levels public policies are being designed to stimulate the demand for locally owned open space yet very little is known about the factors that influence the demand for open space and the sensitivity of demand to price and income to fill the void this study uses data for connecticut cities and towns to estimate the public demand for open space the empirical results suggest that the demand for open space is relatively insensitive to changes in price but highly responsive to changes in income the findings also show that federal and state open space may tend to crowd out locally owned open space and that locally owned open space represents a highly congestable good finally the analysis indicates that privately owned open space is not a good substitute for locally owned public open space

is the income elasticity of environmental improvements less than one we estimated the income elasticity of environmental improvements for a number of european data sets the value of this parameter is consistently found to be less than one with few exceptions our findings are compared with state of the art contingent valuation studies from other countries we also compared our findings with those reported in the literature on charitable donations and corporate donations these studies show a similar pattern donations decrease as a percentage of income as income increases

a one factor model of interest rates and its application to treasury bond options 1990 a one factor model of interest rates and its application to treasury bond options financial analysts journal vol 46 no 1 pp 33 39

what do income tests tell us about the gap between wta and wtp for public goods abstract theory relates the gap between wta willingness to accept compensation and wtp willingness to pay to the income elasticity of wtp it has been suggested that empirical estimates of the income elasticity of wtp can therefore be used to test whether an observed gap between wta and wtp is consistent with rational behavior we examine this issue for the case of non market public goods we identify the theoretically appropriate tests of income sensitivity and examine conditions for valid income sensitivity tests we show that income tests may provide false signals in common settings indicating an inconsistency where none exists

income treatment effects in contingent valuation the case of the swedish predator policy this paper provides case study evidence on two relevant issues in estimating the relationship between wtp and income using contingent valuation 1 the choice of income measure and 2 the modelling choice addressing these issues a sensitivity analysis is performed on a dataset concerning implementation of the swedish predator policy the results show that the estimated income elasticity of wtp varies between 0 12 and 0 40 for the models estimated the main conclusion drawn from the analysis is that controlling for the number of adults in the household is important for finding a significant income effect when the household income measure is used besides this finding the empirical analysis finds little support for the hypothesis that the choice of income measure and modelling assumptions significantly influence the overall model fit

convertible bonds model value attribution and analytics convertible bonds provide investors an option to convert the bond into the underlying equity for this reason a convertible bond is exposed to both equity and interest rate risk incorporating these two sources of risk into the model is particularly important for callable issues in this study a two factor model is used to analyze a sample of bonds the model shows that the correlation of stock risk and interest rate risk may affect convertible bond prices significantly the bond pricing model also provides portfolio analytics and can decompose a convertible bond into its basic components the stock and bonds with different maturities this approach enables an investor to implement a more precise hedging strategy than is possible using only delta

a box cox double hurdle model of wildlife valuation the citizen s perspective abstract a stated preference approach is used to elicit the attitudes of the general public towards coyote conservation the payment vehicle is presented in a way that explicitly prompts respondents to adopt a citizen perspective rather than a consumer perspective when responding to the survey to deal with the large numbers of zero responses a box cox double hurdle specification is used to model separately individuals choices about whether to support conservation or not and their choice about the level of support the results show that simpler analyses that do not account explicitly for these two different decisions would lead to misleading conclusions in the study of nuisance wildlife the study uses primary data from prince edward island canada

property value capitalization and municipal open space referenda this paper first develops a theory of demand for land conservation in the presence of price effects due to both amenity creation and housing supply restriction three hypotheses designed to distinguish demand for amenities from homeowner rent seeking are based upon 1 renters 2 the quality of another locally provided good schools and 3 spatial autocorrelation of funding across municipalities econometric results suggest an observable degree of demand for open space measures is nonenvironmental in motivation efficiency and policy implications are discussed along with a recommendation for benefit cost analysis capable of separating nonrival amenities from other interests to certify open space measures jel h41 q24

contingent valuation a new perspective after several decades of academic research on the contingent valuation cv method a consistent behavioral explanation of hypothetical bias is still lacking based on evidence from economics economic psychology and the political sciences i propose an explanation that is based on two simple working hypotheses about respondent behaviour in contingent valuation surveys the first hypothesis is that survey respondents are unable to form consistent preferences about unfamiliar goods unless the choice context offers reliable informative cues that can be rationally exploited in simplified heuristics the second hypothesis is that the probability and impact of strategic responses in dichotomous choice questions about public goods depends on the extent to which the presented hypothetical costs differ from the actual costs the literature on hypothetical bias is revisited in the light of these behavioral hypotheses i find that the hypotheses are generally supported by the empirical data moreover the hypotheses are able to explain several important empirical phenomena that previous research has not been able to explain in particular they solve the puzzle that pre election polls but not cv surveys are able to predict actual referendum outcomes and they explain why income effects on willingness to pay are lower in cv responses than in actual votes if confirmed by further studies the hypotheses will have important implications for future research and practice first the hypothetical costs presented in the dichotomous choice question should to be close enough to the actual costs to be credible to all respondents this can be achieved by specifying the costs as a percentage rather than absolute change in taxes second the respondents should be given the option to answer based on information about the positions of large parties and interest groups with known political orientation rather than based on the raw policy information theory and evidence suggest that this new survey paradigm largely eliminates the fundamental problems of the conventional stated preference methods

contingent valuation controversies and evidence contingent valuation cv has become one of the most widely used non market valuation techniques cv s prominence is due to its flexibility and ability to estimate total value including passive use value its use and the inclusion of passive use value in benefit cost analyses and environ mental litigation are the subject of a contentious debate this paper discusses key areas of the debate over cv and the validity of passive use value we conclude that many of the alleged problems with cv can be resolved by careful study design and implementation we further conclude that claims that empirical cv findings are theoretically inconsistent are not generally supported by the literature the debate over cv however has clarified several key issues related to nonmarket valuation and can provide useful guidance both to cv practitioners and the users of cv results

willingness to pay and willingness to accept how much can they differ comment i agree with the point made by edoh y amiran and daniel a hagen 2003 that there can be a substantial or even infinite divergence between the wta and wtp for a public good even where there is a nonzero elasticity of substitution between market goods and the public good provided that the indifference curves are asymptotically bounded with respect to market goods in the manner they describe this is an important point they are also correct to point out that the elasticity of substitution is a local concept whereas their asymptotic boundedness condition applies also for discrete changes my 1991 paper used a local analysis because it was following the structure of the analysis in robert d willig 1976 and alan randall and john r stoll 1980 i wanted to show that while randall and stoll appeared to extend willig s local result on wta versus wtp from price changes to changes in the quantity of a public good the relevant elasticity was in fact different and involved the substitution elasticity as well as the income elasticity i view these points by amiran and hagen as not two separate results but essentially the same result their asymptotic boundedness condition generalizes my zero elasticity of substitution condition to discrete changes the asymptotic boundedness condition can be expressed as follows assuming a bivariate utility function u x q and given a reference point x q associated with a reference utility level u u x q there exists some q q such that for all q q there exists no x such that u x q u in other words no amount of x can substitute for the reduction in public good from q to q q in the case of a zero elasticity of substitution q q but as amiran and hagen show in their theorem 1 this is unnecessarily restrictive when dealing with a discrete reduction in q furthermore their theorem 2 can be viewed as a special case of their theorem 1 in which q 0 which makes q an essential commodity it is well known in consumer theory that the wta to avoid the loss of an essential market good is infinite their theorem 2 extends this result to the case of an essential nonmarket good but as their theorem 1 shows essentialness is not necessary for an infinite wta the boundedness condition is the key and this implies a fundamental lack of substitutability between money market goods and the public good

reputation and decision making under ambiguity a study of u s venture capital firms investments in the emerging clean energy sector this study examines the role of reputation on decision making under ambiguity drawing on social cognition and behavioral theories we propose that a firm s reputation exerts dual pressures on its decision making under ambiguity on the one hand a firm s reputation increases its aspirations for future performance and promotes its engagement in risky strategies to achieve them on the other hand preserving the already established reputation requires a firm to deliver consistent performance over time which promotes greater use of risk reduction strategies our analyses of the u s venture capital firms investments in the clean energy sector from 1990 to 2008 demonstrate that while reputable firms are more likely to invest in the emerging sector they also employ risk reduction strategies more extensively the sector s legitimation further influences these firms investment decisions both directly and through its interaction with firm reputation

discussion of audit committee financial expertise and earnings management the role of status by badolato donelson and ege 2014 abstract badolato et al 2014 bde examine the effectiveness of audit committee financial expertise they find that financial expertise does not deter irregularities unless the audit committee also has high status i review prior research on financial expertise to place the current study in the literature and for guidance in assessing the paper s assumptions and empirical specifications bde s conclusions run counter to many of the prior findings and to broad patterns in the data i discuss how empirical research design choices and self selection may affect the paper s conclusions

price and advertising signals of product quality we present a signaling model based on ideas of phillip nelson in which both the introductory price and the level of directly uninformative advertising or other dissipative marketing expenditures are choice variables and may be used as signals for the initially unobservable quality of a newly introduced experience good repeat purchases play a crucial role in our model a second focus of the paper is on illustrating an approach to refining the set of equilibria in signalling games with multiple potential signals

short run marginal medical costs from booze and butts evidence from the states this article uses a panel data set of u s states over the 1980 to 2007 period to estimate the demands for medical care cigarettes and beer the estimation process generates own price income and cross price elasticities for all three goods implied per capita beer and cigarette consumption elasticities of per capita health care expenditures suggested by our baseline estimates are 0 83 and 0 14 respectively these results are robust to a number of specification tests simulations suggest that yearly marginal medical costs amount to approximately 12 per bottle and 27 cents per cigarette in the short run in 2012 dollars these results are likely to be driven by the much larger corresponding increases in the consumption of binge drinkers and heavy smokers

effects of social capital and power on surviving transformational change the case of initial public offerings we examined how social capital and the power of venture capitalists and founderceos affect ipo firm survival using data from 218 u s initial public offerings conducted in 1992 we found that average management team tenure and an ipo deal s network embeddedness decreased the likelihood of failure during a firm s first five years as a public entity founder ceo presence at the time of an ipo interacted with ceo ownership to decrease the likelihood of failure and ceo ownership and venture capitalist ownership concentration also decreased that likelihood evolutionary perspectives on organizations are often accompanied by the presumption that organizations face an increased risk of failure early in their lives owing to liabilities of newness aldrich 1999 stinchcombe 1965 as organizational goals and patterns of activity become routinized over time increased reliability in performance and accountability for actions taken enhance a firm s survival chances hannan freeman 1984 this process however also generates strong inertial pressures that not only discourage organizational change but also because of the potential for disruption to existing internal and external routines make change hazardous research findings suggest that even in older better established firms significant transformational events during their life cycles can effectively reset the clock and reintroduce risks associated with the liability of newness as firms struggle to adapt strategies internal operational and administrative processes and or external ties and relationships amburgey kelly barnett 1993 thus transformational change in organizational operations decreases efficiency and increases failure rates at least in the short term as resources and attention are diverted from normal routinized operating functions to processes involving adaptation and reorientation haveman 1992

which ties matter when the contingent effects of interorganizational partnerships on ipo success this paper investigates the contingent value of interorganizational relationships at the time of a young firm s initial public offering ipo we compare the signaling value to young firms of having ties with two types of interorganizational partnerships endorsement relationships such as those with venture capital firms and investment banks and strategic alliance partnerships we propose that under different equity market conditions potential investors in an issuing firm attend to different types of uncertainty attention to these different types of uncertainty affects investors perceptions of the relative value of a young firm s different kinds of endorsements and partnerships and hence ipo success results from a sample of young biotechnology firms show that ties to prominent venture capital firms are particularly beneficial to ipo success during cold markets while ties to prominent investment banks are particularly beneficial to ipo success during hot markets a firm s strategic alliances with major pharmaceutical health care firms did not have such contingent effects implications for understanding the contingent value of interorganizational ties are discussed copyright 2003 john wiley sons ltd

contingent valuation and social choice the contingent valuation method for estimating the existence value of natural resources is examined for psychophysical robustness statistical reliability and economic sensibility extensions of standard models for willingness to pay and suitable econometric techniques for analyzing these models are developed the analysis is applied to a series of experiments on the value of preserving wilderness areas in the western united states the results call into question the reliability of the cv method for estimating existence values

elasticities of demand and willingness to pay for environmental services in sweden are environmental services luxuriesor necessities are low income groupsrelatively more willing to pay forenvironmental improvements than high incomegroups the discussion on the shape of theenvironmental kuznets curve and environmentaljustice call for analyses that approach thesequestions following a survey based approachfor modelling the demand for public goods thispaper provides estimates of income and priceelasticities of demand for reduced marineeutrophication effects in the case of thebaltic sea using data from five swedishcontingent valuation studies point estimatesindicate that reduced marine eutrophicationeffects can be classified as a necessity and anordinary and price elastic service confidenceintervals show however that the classificationas a necessity is not statisticallysignificant income elasticities of willingnessto pay not to be confused with incomeelasticities of demand are estimated for abroad range of environmental services insweden a basic finding is that income tends toinfluence willingness to pay positively andsignificantly the elasticity estimates are inmost cases greater than zero but less thanunity indicating that the benefits ofenvironmental improvements tend to beregressively distributed in a cost benefitanalysis of a project suggesting environmentalimprovements distributional concerns thereforecall for an introduction of weights or at leasta sensitivity analysis of how weighting wouldchange decisions about the project s socialprofitability

using the delphi method to value protection of the amazon rainforest abstract valuing global environmental public goods can serve to mobilize international resources for their protection while stated preference valuation methods have been applied extensively to public goods valuation in individual countries applications to global public goods with surveys in multiple countries are scarce due to complex and costly implementation benefit transfer is effectively infeasible when there are few existing studies valuing similar goods the delphi method which relies on expert opinion offers a third alternative we explore this method for estimating the value of protecting the amazon rainforest by asking more than 200 environmental valuation experts from 37 countries on four continents to predict the outcome of a contingent valuation survey to elicit willingness to pay wtp for amazon forest protection by their own countries populations the average annual per household values of avoiding a 30 forest loss in the amazon by 2050 assessed by experts vary from a few dollars in low income asian countries to a high near 100 in canada germany and norway the elasticity with respect to average ppp adjusted per household incomes is close to unity results from the delphi study match remarkably well those from a recent population stated preference survey in canada and the united states using a similar valuation scenario

contingent valuation theoretical advances and empirical tests since the noaa panel beyond a simple cost effectiveness role and for many policy issues where all the goods or impacts at issue are not readily priced in the market the relevance of economics depends to a large degree on the ability to use contingent valuation cv and other closely related stated preference approaches the government s use of cv as a tool to place a monetary value on damages from the exxon valdez oil spill brought forth strong industry objections to the use of cv in response the national oceanic and atmospheric administration noaa one of the trustee agencies in the exxon valdez case commissioned a blue ribbon panel chaired by kenneth arrow and robert solow to review the use of cv in natural resource damage assessment proceedings the panel s report arrow et al and transmittal letter to the noaa general counsel concluded cv studies can produce estimates reliable enough to be the starting point for a judicial or administrative determination of nat

the role of time value in convertible bond call policy abstract since the seminal work of ingersoll 1977b the optimal time in which a firm should redeem its outstanding convertible bonds has received large attention by the financial literature several studies have put forward a number of possible costs and benefits for a firm if it interrupts the life of its convertible bonds prior to their contractual maturity however in this paper we argue that the managerial decision to call back a convertible bond is mainly driven by a fundamental variable almost neglected up until now the time value extraction from bondholders conversion option accordingly we propose a measure for the effective convenience of calling which we define as net time value advantage and we show using a survival analysis that it is more effective than previously proposed measures in explaining the firms observed call policy

the relationship between the income elasticities of demand and willingness to pay abstract the relationship between income and willingness to pay for collectively provided public environmental goods is investigated we show that while the income elasticity of willingness to pay and the ordinary income elasticity of demand are related knowledge of one is insufficient to determine the magnitude or even the sign of the other the income elasticity of willingness to pay is influenced by additional factors which are generally unobservable examples are provided to illustrate the degree to which the two income elasticities may diverge our results indicate that even when goods are demand luxuries they may or may not have income elasticities of willingness to pay which are greater than one

venture capitalist certification in initial public offerings this paper provides support for the certification role of venture capitalists in initial public offerings consistent with the certification hypothesis a comparison of venture capital backed ipos with a control sample of nonventure capital backed ipos from 1983 through 1987 matched as closely as possible by industry and offering size indicates that venture capital backing results in significantly lower initial returns and gross spreads in effect the presence of venture capitalists in the issuing firms serves to lower the total costs of going public and to maximize the net proceeds to the offering firm in addition we document that venture capitalists retain a significant portion of their holdings in the firm after the ipo the ability of third party specialists to certify the value of securities issued by relatively unknown firms in capital markets that are characterized by asymmetric information between corporate insiders and public investors has attracted much academic interest in recent years several authors including james 1990 blackwell marr and spivey 1990 and barry muscarella peavy and vetsuypens 1991 have developed and tested models based at least in part on the formal certification hypothesis presented in booth and smith 1986 a related body of work represented by deangelo 1981 beatty and ritter 1986 titman and trueman 1986 johnson and miller 1988 carter 1990 simon 1990 and carter and manaster 1990 has examined how investment bankers and auditors help resolve the asymmetric information inherent in the initial public offering ipo process in this paper we examine whether the presence of venture capitalists as investors in a firm going public can certify that the offering price of the issue reflects all available and relevant inside information we hypothesize that venture capitalists can perform this function that it will be an economically

founder ceo succession and the paradox of entrepreneurial success in the last few decades we have developed a substantial body of knowledge about ceo succession however except for some studies of family businesses that lack direct applicability to nonfamily ceo succession the past studies of succession have not examined the very first succession event in a firm when the founder ceo is replaced on a large scale basis the critical differences between later stage succession and founder ceo succession include the higher level of attachment between founder ceos and the firms they create the much larger equity holdings of founder ceos which give them much more control of the firm the fact that many founder ceos remain in the firm even though it is being run by their successors and the fact that nearly all early stage succession events involve outside successors in contrast to later stage succession research which has focused on the insider outsider distinction these differences make it hard to extrapolate from later stage succession findings to founder ceo succession therefore in order to examine founder ceo succession i used field research and grounded theory building to study the factors that should affect founder ceo succession in internet start ups i find that there are two central intertemporal events that may affect founder ceo succession the completion of product development and the raising of each round of financing from outside investors i develop testable hypotheses about how each of these events affect the rate of succession and then test these hypotheses using an event history analysis of a unique dataset containing the succession histories of 202 internet firms my findings point to multiple paradoxes of success in which the founder ceo s success at achieving critical milestones actually causes the chance of founder ceo succession to rise dramatically

how do social defenses work a resource dependence lens on technology ventures venture capital investors and corporate relationships interorganizational relationships offer many potential benefits but they also expose firms to dangers such as misappropriation which pull partners apart this tension between collaboration and competition is central to tie formation especially for young technology firms that have both a high need for resources and high appropriability of their own resources prior work has examined legal and timing defenses that enable interorganizational ties by such low power firms we focus here on social defenses in a longitudinal study of equity tie formation between young firms and established corporate sharks spanning five technology based industries and 25 years we unpack the effects of social defenses and find intriguingly that centrally positioned third parties are a particularly powerful social defense and that third party social defenses are especially significant when more traditional defenses are unavailable we thus offer the insight that third party chaperones central venture capital investors play a key role in helping young firms to mitigate and navigate vulnerabilities while mobilizing resources

networks as the pipes and prisms of the market1 this article draws an analytical distinction between two types of market uncertainty egocentric which refers to a focal actor s uncertainty regarding the best way to convert a set of inputs to an output desired by a potential exchange partner and altercentric which denotes the uncertainty confronted by a focal actor s exchange partners regarding the quality of the output that the focal actor brings to the market given this distinction the article considers how the value of structural holes and market status vary with these two types of uncertainty the article proposes that the value of structural holes increases with egocentric uncertainty but not with altercentric uncertainty in contrast the value of status increases with altercentric uncertainty but declines with egocentric uncertainty thus actors with networks rich in structural holes should sort into markets or market segments that are high in egocentric uncertainty high status actors should sort into markets that are low in egocentric

a spatial model of housing attributes theory and evidence the last decade has witnessed rapid growth of an empirical literature designed to estimate and interpret hedonic housing price functions although early studies see kain and quigley 1970 and grether and mieszkowski 1974 lacked an explicit theoretical foundation recent papers see linneman 1981 and witte et al 1979 reflect the impact of rosen s 1974 implicitmarket analysis of hedonic price determination in spite of this empirical focus on the pricing of housing attributes theoretical work in housing economics has relied almost exclusively on housing service models in which housing is unrealistically portrayed as a unidimensional commodity in a recent attempt to reconcile the empirical and theoretical traditions brueckner 1980 developed a rosen type model of housing attributes which borrows heavily from the housing service approach in the model consumers value two housing attributes floor space and yard space developers react to a consumer bid rent function which relates dwelling rent to the levels of the attributes in choosing profitmaximizing characteristics of housing complexes among the theoretical questions addressed by the model those concerning the spatial behavior of floor and yard space per dwelling are of particular interest will dwelling size floor space increase with distance to the central business district cbd as in the standard model will yards be larger farther from the cbd the next section of the paper sketches the theory and its predictions providing an