natural resources and sub national economic performance does sub national democracy matter abstract the differentiation in the impact of resources on economic growth is often explained by the specifics of institutional factors the aim of this paper is to investigate how sub national political differences influence the effect of natural resources on economic growth using a dataset of russian regions this paper demonstrates that sub national democratization influences the growth effects of resources and considers possible mechanisms for this influence the paper finds that in russia natural resources are only capable of promoting growth in the regions with non democratic political systems that at the same time have an efficient and non corrupt bureaucracy

management ownership and market valuation an empirical analysis we investigate the relationship between management ownership and market valuation of the firm as measured by tobin s q in a 1980 cross section of 371 fortune 500 firms we find evidence of a significant nonmonotonic relationship tobin s q first increases then declines and finally rises slightly as ownership by the board of directors rises for older firms there is evidence that q is lower when the firm is run by a member of the founding family than when it is run by an officer unrelated to the founder

does the form of compensation matter abstract the role of fee contracts in the agency relation between investment bankers and client firms in tender offers is investigated using a sample of offers between 1978 and 1986 different fees have different payoff functions which can be used by firms to create incentives and by bankers to signal differences in abilities the effectiveness of fee contracts in resolving agency problems in tested with mixed results the evidence suggests that fee contracts are used as a tool by both firms and bankers and that contracts influence tender offer outcomes but that contracting is only a partial solution to the agency problem

agency relationships in family firms theory and evidence does owner management necessarily eliminate the agency costs of ownership drawing on agency literature and on the economic theory of the household we argue that private ownership and owner management expose privately held owner managed firms to agency threats ignored by jensen s and meckling s 1976 agency model private ownership and owner management not only reduce the effectiveness of external control mechanisms they also expose firms to a self control problem created by incentives that cause owners to take actions which harm themselves as well as those around them jensen 1994 p 43 thus shareholders have incentive to invest resources in curbing both managerialand owner opportunism we extend this thesis to the domain of the family firm after developing hypotheses which describe how family dynamics and specifically altruism exacerbate agency problems experienced by these privately held owner managed firms we use data obtained from a large scale survey of family businesses to field test our hypotheses and find evidence which suggests support for our proposed theory finally we discuss the implications of our theory for research on family and other types of privately held owner managed firms

regime cycles democracy autocracy and revolution in post soviet eurasia research on regime change has often wound up chasing events in the post soviet world because it has frequently assumed that regime change if not simple instability implies a trajectory toward a regime type endpoint like democracy or autocracy a supplemental approach recognizes that regime change can be cyclic not just progressive regressive or random in fact regime cycles are much of what we see in the postcommunist world where some states have oscillated from autocracy toward greater democracy then back toward more autocracy and with recent colored revolutions toward greater democracy again an institutional logic of elite collective action focusing on the effects of patronalpresidentialism is shown to be useful in understanding such cyclic dynamics explaining why revolutions occurred between 2003 and 2005 in ukraine georgia and kyrgyzstan but not in countries like russia azerbaijan and uzbekistan

the euro and its impact on the number size performance and regional spread of european mergers and acquisitions mccarthy k j and dolfsma w the euro and its impact on the number size performance and regional spread of european mergers and acquisitions regional studies the macroeconomic effects of the euro have been extensively studied the literature has however paid significantly less attention to the microeconomic consequences and few authors have considered if and how the euro has impacted firm level decision making this paper explores if how and in what way the euro has impacted one firm level decision whether to merge with or acquire another firm this paper builds a sample of 19 362 acquisitions announced in the period 1990 2014 it shows that the euro has dramatically increased the number size and performance of european mergers and acquisitions importantly it also notes that the euro has altered the geographic spread of european acquisitions the paper reports that since the introduction of the euro acquirers have made increasingly distant acquisitions and have preferred targets in periphera

the redistributive effect of public housing in hong kong public housing programmes in hong kong affect half of the population directly and the other half indirectly this paper assesses the redistributive effect of public rental housing on income distribution it uses a subsidised to market rent ratio method and an imputed rent method to convert transfer in kind of public rental housing into equivalent monetary value empirical results show that the provision of public housing alleviates the income inequality problem however the amount of public expenditure required achieving the same improvements in gini coefficient and other inequality measures is small relative to the actual public expenditure on housing policy makers should thoroughly review the existing public housing programmes

political instability and economic performance evidence from revolutionary mexico what is the relationship between political instability and economic growth this article examines this question using insights from the new institutional economics applied to a canonical case revolutionary mexico the authors argue that investment and growth during and after the revolution were less affected by political instability than one might predict based on the extant theoretical and empirical literature they find that while investor expectations output and productivity were sensitive to the interdiction of factor and product markets during the years of intense revolutionary violence 1914 17 the periods of political instability before 1910 13 and afterward 1918 34 had relatively minor effects on investor confidence investments in new plant and equipment rates of entry and exit by firms industrial structure and productivity growth

democracy and economic growth a historical perspective recent studies appear to show that democracy has no robust association with economic growth yet all such work assumes that the causal effect of democracy can be measured by a country s regime status in a particular year t which is correlated with its growth performance in a subsequent period t 1 the authors argue that democracy must be understood as a stock rather than a level measure that is a country s growth performance is affected by the number of years it has been democratic in addition to the degree of democracy experienced during that period in this fashion democracy is reconceptualized as a historical rather than a contemporary variable with the assumption that long run historical patterns may help scholars to understand present trends the authors speculate that these secular historical infiuences operate through four causal pathways each of which may be understood as a type of capital physical capital human capital social capital and political capital this argument is tested in a cross country analysis and is shown to be robust in a wide variety of specifications and formats

foreign direct investment and the euro the first five years this paper assesses the main influences on foreign direct investment fdi flows between the major economies in the first five years of economic and monetary union emu using previously unpublished data specially provided by eurostat it concludes that the huge wave of fdi that reached the eurozone after emu was largely a manifestation of the end of century takeover boom a global phenomenon of which the euro was only a subsidiary cause but much of the boom in euro economies fdi disappears if flows to and from the belgium luxembourg economic union bleu dominated by transhipment via luxembourg are removed on that basis intra zone fdi turns out to have been weak after emu both in relation to previous trends and as a share of major economies global fdi flows however the euro appears to have given a modest stimulus to inflows from other major investing economies while the uk share of the latters outflows has fallen moderately in the post emu period the policy implications are discussed

south korean chaebols and value based management south korean industrial conglomerates chaebols are discussed in the context of value based management vbm recent economics and finance literature on the diversion of corporate resources from the firm to the controlling shareholders tunneling for which chaebols are notoriously known is discussed chaebols have engaged in empire building and expropriation of minority shareholders distorting the process of efficient resource allocation in south korea and became the root cause of the 1997 financial crisis we argue that the 1997 crisis should be viewed as a consequence of chaebols systematic deviation from the guiding principles of vbm we use tunneling within chaebols as an example of the need to directly address prohibition of the expropriation of minority shareholders as a primary postulate of vbm we argue that vbm should require that the value generated by the firm not be expropriated from minorities or any stakeholders by dominant shareholders we also examine moral and ethical considerations and present explanations as to why the unethical practice of tunneling has been tolerated by the south korean public we show that public opinion on tunneling is changing and that the treatment of minority shareholders by chaebols controlling families is becoming increasingly unacceptable to south koreans

one money one market the effect of common currencies on trade currency unions their dramatic effect on international trade a gravity model is used to assess the separate effects of exchange rate volatility and currency unions on international trade the panel data bilateral observations for five years during 1970 90 covering 186 countries includes 300 observations in which both countries use the same currency i find a large positive effect of a currency union on international trade and a small negative effect of exchange rate volatility even after controlling for a host of features including the endogenous nature of the exchange rate regime these effects statistically significant imply that two countries sharing the same currency trade three times as much as they would with different currencies currency unions like the european emu may thus lead to a large increase in international trade with all that that entails andrew rose

sub rosa resistance and the politics of economic reform land redistribution in post soviet ukraine this article examines obstacles to economic reform in ukraine s transition to a market based economy existing explanations for failures of reform in postcommunist states privilege societal actors as in the case of przeworski s j curve or state actors acting in a private rent seeking capacity as in hellman s partial reform equilibrium other explanations focus on weak state capacity however there is evidence to suggest that some groups of individuals who stall or halt market reforms may do so in their capacity as state actors their resistance to reform may be sub rosa state actors may comply with formal institutional requirements of reform even as they seek to preserve the status quo this tendency is evident in the privatization of land the focus of this article this article proposes an explanation for reform failures which suggests that some resistance to economic liberalization may derive from the efforts of state actors to protect the public good

public private entanglement entrepreneurship in lebanon s hybrid political order while the literature is clear that political influence and clientelism characterises the investment decisions of entrepreneurs and the performance of their firms when governance is weak it is less understood how governance systems and entrepreneurs interact particularly when governance is of a hybrid nature we address this issue in this paper by studying how entrepreneurs obtain access to electricity in lebanon showing that the hybrid political order imposes a high cost on electricity we furthermore find that a hybrid political order channels entrepreneurial talent into lobbying and bribery the key constraint that emerges from the hybrid political order in this case is the corrupt organisation of governance of the electricity sector this results in higher prices because bribes for contracts have to be earned back in entrenchment of oligopolies because contracts often come with political protection

regulatory arbitrage in cross border banking mergers within the eu expanding the cross country footprint of an organization s profit making activities changes the geographic pattern of its exposure to loss in ways that are hard for regulators and supervisors to observe this paper tests and confirms the hypothesis that differences in the size and character of safety net benefits available to banks in individual eu countries help to account for cross border merger activity our results suggest that central bankers need to develop statistical procedures for assessing the consequences of differences in supervisory strength and weakness in partner countries we believe that the methods used here can help in this task

clarifying frank knight s discussion of the meaning of risk and uncertainty frank knight s 1921 famous distinction between risk and uncertainty has entered the jargon of economics and decision theory yet it appears to have gone unnoticed that his formulation suffers from an elementary confusion this note locates the source of the problem and proposes a reformulation that avoids it it is safe to say that frank knight 1921 is more widely quoted than read on his epony mous distinction between risk and uncertainty this of course is a fate that befalls many authorities and at least in the present case is probably not particularly serious for the knightian distinction has acquired a currency of its own that is both reasonably unambiguous and relatively widely understood certainly the convention of using the term risk to describe decision situations in which probabilities are available to guide choice and uncertainty to describe decision situations in which information is too imprecise to be summarised by probabilities is deeply ingrained in both economic theory and decision theory 1 that said and as those who are familiar with it will know the long disquisition on the meaning of risk and uncertainty that appears in chapter 7 of knight s risk uncertainty and profit is well worth reading 2 not only is his categorisation of different kinds of probability situation a good deal more subtle than the simple risk uncertainty dichotomy might imply he also has many interesting things to say about induction social laws the metaphysics of chance and the psychology of decision making under uncertainty in view of the many positive aspects of knight s discussion then not to mention how often it continues to be invoked it is particularly unfortunate that it turns out to suffer from an elementary confusion the purpose of what follows is to locate the source of this confusion and to propose a reformulation of knight s position that avoids it the hope is that readers may then be able to benefit from the many insights in knight s discussion

the agency problems embedded in firm s equity investment we find that agency problems are embedded in firm s excess and abnormal equity investments that are mainly dictated by controlling shareholder s motives and ethical choices manifested in ownership and board structure the excess equity investment is gauged with respect to industry average the abnormal equity investment is specifically referred to the number of nominal investment companies that are fully controlled by the controlling owners while subject to little governance our empirical evidences of 345 taiwanese non financial listed firms show that firm s excess and abnormal equity investments are negatively correlated with controlling shareholder s cash flow rights while are positively correlated with the control cash flow deviation and board affiliation the results are supportive of the positive incentive hypothesis and the negative entrenchment hypothesis put forth by la porta et al 2002 journal of finance57 1147 1171 and claessen et al 2002 journal of finance57 2741 2742 the negative relation between equity investment and firm s value further supports the agency postulation that corporate excess and abnormal equity investments represent a leeway for controlling shareholder to exploit wealth of minority shareholders this study potentially contributes to the literature of business ethics by portraying an empirically testable linkage from controlling owner s ethical choices to his actions and therefore firm s value

ownership and firm innovation in a transition economy evidence from china we examine innovation performance of firms in a transition economy from an ownership perspective we focus specifically on the relationship between ownership structures and firm innovation performance drawing on data from 548 chinese firms we find volume of patent registration to be most strongly influenced by foreign ownership in the firm along with firm affiliation within a business group the influence of state and institutional ownership on innovation performance is positive but lagged contrary to expectations insider ownership leads to lower innovation performance and concentrated ownership has no significant impact our study has two principal contributions firstly we utilize a comprehensive treatment of ownership characteristics overcoming weakness in previous studies that have used a more narrow focus on ownership type secondly we contribute to understanding of how firms in transition economies build indigenous capabilities for innovation by drawing attention to the interplay of foreign and domestic control of agents innovation

economic integration and the profitability of cross border mergers and acquisitions abstract the 1990s was a decade of increased economic integration the decade also witnessed a sharp increase in cross border mergers and acquisitions from a theoretical perspective the increase in international mergers in more integrated economies is rather puzzling it is a well established result that due to the business stealing effect mergers in integrated markets are not likely to be profitable a reasonable conjecture would therefore be that closer integration of markets would reduce the attractiveness of cross border mergers and acquisitions the present paper demonstrates that this is not necessarily the case economic integration may trigger cross border acquisitions by reducing the business stealing effect and by reducing the reservation price of the target firm the paper thus provides explanations to the observed increase in cross border mergers in a world of more integrated economies

managerial ownership of voting rights abstract managers of firms with dual classes of common stock can choose different quantities of votes for a given cash flow interest by choosing different quantities of the two securities we study managerial stock holdings in 45 dual class firms and find that vote ownership per se is an important motivation for these holdings in that corporate officers and their families hold a median 56 9 of the votes and 24 0 of the common stock cash flows we also find significant family involvement in many sample firms and document four case studies in which explicit acquisition premiums were paid for superior voting shares

same as it ever was europe s national borders and the market for corporate control abstract national borders continue to be strong barriers for mergers and acquisitions in europe using regional data we construct a gravity model and find that the restraining impact of national borders decreased by more than 17 percent between 1991 and 2007 however no significant change has occurred since the mid 1990s i e four years before the introduction of the euro in comparison we run a corresponding analysis in the united states using the 10 federal regions as country equivalents the resulting quasi border effect in the united states is weaker than that in the european union yet its decline by 43 percent is much stronger in the same period we conclude that european integration policy has had little effect on fostering m a cross border transactions

q and the tax bias theory abstract a growing body of literature analyzes the variation in q the ratio of financial market value to asset current replacement cost and makes inferences about attributes such as monopoly power profitability managerial performance etc these studies ignore potential biases embedded in q that result from non neutral tax policies this study examines the association between q and tax biases and establishes that differences in accumulated depreciation tax shields explain significant variation in q the implication that q should be adjusted for tax biases before use in empirical research is examined further adjusting q for tax biases at least with the factors herein leads only to minor changes in econometric analyses

strikes and labor organization in hybrid regimes xisting theories of labor protest depend on independent organizations representing workers however in many countries most workers are either not organized at all or are in labor unions intended for control not representation this is particularly the case in partially liberalized or hybrid regimes where despite the introduction of electoral competition autonomous democratic organizations representing labor are not well developed yet such workers do protest drawing on an original new datasetfrom one hybrid regime post communist russia i develop a theory of labor protest and of the institutional mechanisms used by elites to influence it instead of being a function of union membership or characteristics of the information environment as the existing literature would have it protest occurs when it is in the interest of powerful elements of the elite or when economic conditions are truly desperate e

towards an optimal public housing policy the prevalent practice of public participation in housing is taken as indicating a revealed public preference for better housing for the poor assuming that sufficient external benefit exists to justify public housing this paper attempts to derive analytically the best public housing strategy the proposed conditional bidding mechanism consists of the free but not entirely open market renting or selling of public housing units to eligible target group households only market allocation according to the conditional equilibrium price is shown to be more efficient and more equitable than administratively based allocation schemes

trade and the variety of democratic institutions students of comparative politics have long acknowledged the importance of such institutional factors as electoral systems parliamentary versus presidential rule and the strength of parties but they have either regarded the institutions as given or have explained them entirely in domestic terms associating proportional representation for example with the intensity of social cleavages in economically advanced democracies however these institutional aspects can be plausibly linked to dependence on trade proportional representation the parliamentary system strong parties and large electoral districts have survival value for developed democracies exposed to trade that the recently revived agitation for proportional representation in the united kingdom has been cast explicitly in terms of economic necessity and dependence on trade adds force to this argument and suggests the need for further historical research on other cases of institutional adaptation and change

transparency political polarization and political budget cycles in oecd countries we investigate the effects of fiscal transparency and political polarization on the prevalence of electoral cycles in fiscal balance while some recent political economy literature on electoral cycles identifies such cycles mainly in weak and recent democracies in contrast we show conditioning on a new index of institutional fiscal transparency that electoral cycles in fiscal balance are a feature of many advanced industrialized economies using a sample of 19 oecd countries in the 1990s we identify a persistent pattern of electoral cycles in low er transparency countries while no such cycles can be observed in high er transparency countries furthermore we find in accordance with recent theory that electoral cycles are larger in politically more polarized countries

measuring european financial integration in this paper we present a set of specific measures to quantify the state and evolution of financial integration in the euro area five key markets are considered namely the money corporate bond government bond credit and equity markets building upon the law of one price we have developed two types of indicators that can be broadly categorized as price based and news based measures we have complemented these measures by a number of quantity based indicators mainly related to the evolution of the home bias results indicate that the unsecured money market is fully integrated while integration is reasonably high in the government and corporate bond markets as well as in the equity markets the credit market is among the least integrated especially in the short term segment

decentralization and inflation commitment collective action or continuity do political and fiscal decentralization make it easier or harder to control inflation statistical analysis of average annual inflation rates in a panel of 87 countries in the 1970s and 1980s found no clear relationship between decentralization and the level of inflation political decentralization however does appear to reduce change in countries relative inflation rates over time by creating additional veto players federal structure may lock in existing patterns of monetary policy whether inflationary or strict among the mostly developed countries that started with low inflation inflation tended to increase more slowly in federations than in unitary states among the mostly developing countries that started with high inflation inflation tended to increase faster in the federations there is evidence that political decentralization locks in a country s degree of practical central bank independence whether high or low and the relative hardness or softness of budget constraints on subnational governments

laws of attraction regulatory arbitrage in the face of activism in right to work states past research recognizes that firms exploit regulatory variations to their advantage but depicts such regulatory arbitrage as a dyadic process between firms and regulators we extend this account b

policy uncertainty in hybrid regimes evidence from firm level surveys cross national surveys suggest that regulatory and policy uncertainty is an important constraint on investment in developing countries yet there has been little direct empirical investigation of the sources of this uncertainty this article presents evidence of an inverted u shaped relationship between firms perceptions of policy uncertainty and political regime type firms in hybrid regimes report higher levels of concern over policy uncertainty than those in either more authoritarian regimes or liberal established democracies the authors argue that the explanation lies with a combination of polarized political competition and limited access to credible information and test their theory using survey data of around 10 000 firms from the world bank european bank for reconstruction and development s business environment and enterprise performance survey from 27 postcommunist countries and five organisation for economic co operation and development countries methodologically the authors propose a means

corporate performance and managerial remuneration an empirical analysis abstract economic theories of efficient compensation predict a positive relationship between executive pay and corporate performance and yet efforts to document this relationship have been largely unsuccessful in this paper we argue that previous cross sectional studies have omitted important variables which seriously bias their results using data that focus on individual executives over time we find that executive compensation is strongly positively related to corporate performance as measured by shareholder return and growth in firm sales the results are robust to the stock market performance measure utilized

an analysis of the stock price reaction to sudden executive deaths implications for the managerial labor market abstract certain characteristics of managerial employment arrangements and of the managerial labor market make shareholder wealth dependent on an executive s continued employment these wealth effects are investigated by examining the common stock price reaction to unexpected deaths of senior corporate executives abnormal stock price changes are documented for a sample of fifty three events these abnormal stock price changes are associated with the executive s status as a corporate founder and with measures of the executive s talents and decision making responsibility and of the transaction costs associated with renegotiating or terminating the employment agreement

does home bias affect firm value evidence from holdings of mutual funds worldwide this study finds strong evidence that home bias affects firm valuation at both country and firm levels at the country level increasing the bias of domestic investors toward home equity lowers the market valuation of home equity at the firm level firm value increases as the compositions of local equities held by domestic and foreign investors tend toward the firms global market capitalization weights but decreases as their weights deviate from global weights overall the evidence is consistent with the optimal global risk sharing hypothesis that the greater risk sharing between domestic and foreign investors in international capital markets reduces the cost of capital and hence enhances market valuation

mitigating risk in international mergers and acquisitions the role of contingent payouts previous internationalization studies have focused on the entry modes employed by multinational firms but have not considered the contractual heterogeneity that underlies each mode it is important to examine these contractual details as the firm may be able to obtain some of the benefits typically associated with one entry mode while selecting another in the case of international mergers and acquisitions m as a key contractual variable is whether the parties agree to a performance contingent payout structure which can mitigate the risk of adverse selection in this paper we examine the antecedents of contingent payouts in the form of earnouts and stock payments the results indicate that firms lacking international and domestic acquisition experience turn to contingent payouts when purchasing targets in high tech and service industries firms tend to avoid contingent payouts in host countries with problems with investor protection and legal enforceability

does the bonding effect matter in a more integrated capital market world abstract this paper examines the bonding effect of cross listing before and after the stock market liberalization reforms in china consistent with the bonding hypothesis we find that chinese firms with foreign listings attain higher valuations than firms without foreign listings we also find that they manage earnings less than comparable purely domestic listed firms and have more informative stock prices further investigation indicates that the divergence in earnings quality between cross listed and non cross listed firms shrinks dramatically after the chinese stock market liberalization reforms in 2001 and 2002 overall the results suggest that the bonding effect is mitigated in an increasingly integrated capital market world

defining the federal role in housing back to basics abstract the several objectives of government intervention in the housing sector and the economic rationale for them are briefly reviewed the case for and efficiency of this intervention is then examined pursuant to two objectives ensuring the availability of adequate and affordable housing to low income households and encouraging homeownership present approaches are found wanting in both cases the paper concludes with suggested modifications that appear to be reasonable on budgeting efficiency and political grounds

asset specificity and the political behavior of firms lobbying for subsidies in norway previous research into endogenous trade policy has described extensively the political incentives of firms with specific assets but no studies have shown directly that firms behave as predicted we adopt insights from transaction costs economics to develop measures of asset specificity and to investigate how variation in these measures affects the political behavior of firms in particular we examine the lobbying choices of norwegian firms in the 1980s given available subsidy funds from norway s oil boom and some government decisions in the 1970s firms with more specific assets faced potentially greater losses from adjusting to new activities in the face of competitive pressures and thus had greater incentives to lobby for subsidies to protect themselves joint contacting of parliament and government on behalf of firm interests by representatives of both management and labor should be particularly likely where firms had specific assets data analysis shows that asset specificity as indicated by r d intensity and job immobility predicts joint contacting independently of plausible alternative explanatory variables like firm size and export orientation

the structure of ownership and the theory of the firm the separation of ownership from control produces a condition where the interests of owner and of ultimate manager may and often do diverge and where many of the checks which formerly operated to limit the use of power disappear in creating these new relationships the quasi public corporation may fairly be said to work a revolution it has divided ownership into nominal ownership and the power formerly joined to it thereby the corporation has changed the nature of profit seeking enterprise 1

inside the family firm the role of families in succession decisions and performance this paper uses a unique dataset from denmark to investigate the impact of family characteristics in corporate decision making and the consequences of these decisions on firm performance we focus on the decision to appoint either a family or an external chief executive officer ceo the paper uses variation in ceo succession decisions that result from the gender of a departing ceo s first born child this is a plausible instrumental variable iv as male firstchild firms are more likely to pass on control to a family ceo relative to female first child firms but the gender of a first child is unlikely to affect firms outcomes we find that family successions have a large negative causal impact on firm performance operating profitability on assets falls by at least four percentage points around ceo transitions our iv estimates are significantly larger than those obtained using ordinary least squares furthermore we show that family ceo underperformance is particularly large for firms in high growth industries and for relatively large firms overall the empirical results demonstrate that professional non family ceos provide extremely valuable services to the organizations they head

rent control its rationale and effects this paper discusses the rationale behind rent control and analyses its effects using a capital theory framework in combination with traditional bid rent analysis the experience in hong kong and o

who owns the media the authors examine patterns of media ownership in 97 countries around the world they find that almost universally the largest media firms are controlled by the government or by private families government ownership is more pervasive in broadcasting than in the printed media government ownership is generally associated with less press freedom fewer political and economic rights inferior governance and most conspicuously inferior social outcomes in education and health the adverse effects of government ownership on political and economic freedom are stronger for newspapers than for television the adverse effects of government ownership of the media do not appear to be restricted solely to instances of government monopoly the authors present a range of evidence on the adverse consequences of state ownership of the media state ownership of the media is often argued to be justified on behalf of the social needs of the disadvantaged but if their findings are correct increasing private ownership of the media through privatization or by encouraging the entry of privately owned media can advance a variety of political and economic goals especially those of meeting the social needs of the poor

markup pricing in mergers and acquisitions this paper studies the relation between the premiums in takeover bids involving exchange listed target firms from 1975 91 and the pre announcement stock price runups the evidence shows that the pre bid runup and the postannouncement increase in the target s stock price the markup are generally uncorrelated with little substitution between the runup and the markup the runup is an added cost to the bidder this finding has important implications for assessing the costs of insider trading it also raises interesting questions about the role of information from public capital markets in private takeover negotiations

who is afraid of political risk multinational firms and their choice of capital structure this paper investigates how multinational firms choose the capital structure of their foreign affiliates in response to political risk we focus on two choice variables the leverage and the ownership structure of the foreign affiliate and we distinguish different types of political risk such as expropriation unreliable intellectual property rights and confiscatory taxation in our theoretical analysis we find that as political risk increases the ownership share tends to decrease whereas leverage can both increase or decrease depending on the type of political risk using the microdatabase direct investment of the deutsche bundesbank we find supportive evidence for these different effects

the perils of polarization economic performance in the postcommunist world perhaps the most striking feature of the postcommunist transformation is the tremendous variation in rates of economic growth across countries to account for these differences this article develops an alternative to the j curve and partial reform views that currently dominate discussions of the politics of economic reform this approach treats economic performance as a political struggle between ex communist and anticommunist factions engaged in a war of attrition over economic and political resources using a pooled time series analysis of economic growth across twenty five postcommunist countries for the period 1990 98 it finds that political polarization between ex communist and anticommunist factions has had a devastating effect on economic growth where these competing factions have had roughly equal power and have struggled over the economic rules of the game as in bulgaria or ukraine economic growth has been slow in contrast where either ex communist or anticommunist factions have dominated the political scene as in estonia or uzbekistan economic performance has been much better in addition economic growth has followed the electoral calendar in polarized countries as elections approach and the odds of a change in economic policy increase growth rates have plummeted in polarized countries these findings have implications for studies of the postcommunist transformation the political business cycle and the politics of economic reform more generally

entrenchment governance and the stock price reaction to sudden executive deaths abstract to study managerial entrenchment i use the stock price reaction to unexpected senior executive deaths if a highly effective manager dies unexpectedly the stock price reaction should be negative if however death removes an entrenched manager when the board would or could not the stock price reaction should be positive while individually age and tenure only weakly correlate with the stock price reaction to a sudden death the reaction is strongly positive 6 8 if 1 the executive s tenure exceeds 10 years and 2 abnormal stock returns over the last three years are negative