the cost of market versus regulatory discipline in banking1 abstract we present evidence that insured deposit financing shields banks from the full costs of market discipline moody s downgrades indicators of increasing risk are associated with negative abnormal equity returns that are increasing in the bank s reliance on insured deposits moreover banks raise their use of insured deposits following increases in risk these findings cast doubt on the ability of capital market participants to effectively discipline bank behavior within the current regulatory environment more generally our findings highlight the potential for regulation to undermine market discipline in regulated industries

corporate philanthropy ownership type and financial transparency drawing on stakeholder theory and the concept of enlightened self interest we argue that firms that actively engage in corporate philanthropic giving also tend to demonstrate greater concern for investors interests by providing more transparent financial information and avoiding corporate misconduct moreover the relationships between corporate giving financial information transparency and corporate misconduct vary significantly according to the firm s ownership type which affects the fundamental motivations for corporate philanthropy in a sample of chinese publicly listed firms from the 2003 2009 period we find a positive relationship between corporate giving and financial transparency and note that the relationship is stronger for non state owned enterprises non soes we also find a significantly negative association between corporate giving and corporate misconduct for non soes but not for soes taken together these findings suggest that responsibility to both stakeholders and shareholders is a vital part of building trust and reputations in china s non soe sector

corporate philanthropic disaster response and ownership type evidence from chinese firms response to the sichuan earthquake this article examines whether the charitable giving amount and likelihood of firm response to catastrophic events relate to firms ownership type using a unique dataset of listed firms in china where state ownership is still prevalent based on the data of chinese firms response to the 2008 sichuan earthquake we find that the extent of corporate contributions for state owned firms following this disaster is less than that for private firms state owned firms are also less likely to respond in this disaster compared to private firms the results also reveal that firm size profitability geography cash resource available and leverage affect firms philanthropic disaster response behavior in china

preferential trading arrangements as strategic positioning abstract we analyze a three country model of trade negotiations in which countries can form bilateral free trade areas bilateral customs unions or a trilateral preferential trading arrangement and can continue negotiating after reaching an agreement in contrast to the literature on multilateral bargaining the set of agreements can form a nonpartitional network while in contrast to the network literature players can reach multilateral agreements patient enough countries only reach bilateral agreements if insiders gain more than outsiders which allows them to manipulate the status quo in subsequent negotiations however a hub and spoke pattern may then emerge and insiders then dissipate the advantages of strategic positioning we also use variants on the model to explain why a us commitment not to bargain bilaterally sustained progress at gatt negotiations and the rarity of open access preferential trading arrangements

tariff retaliation versus financial compensation in the enforcement of international trade agreements the authors analyze whether financial compensation is preferable to the current system of dispute settlement in the world trade organization that permits member countries to impose retaliatory tariffs in response to trade violations committed by other members they show that monetary fines are more efficient than tariffs in terms of granting compensation to injured parties when there are violations in equilibrium however fines suffer from an enforcement problem since they must be paid by the violating country if fines must ultimately be supported by the threat of retaliatory tariffs they fail to yield a more cooperative outcome than the current system the authors also consider the use of bonds as a means of settling disputes if bonds can be posted with a third party they do not have to be supported by retaliatory tariffs and can improve the negotiating position of countries that are too small to threaten tariff retaliation

cultural values and international differences in business ethics we analyze ethical policies of firms in industrialized countries and try to find out whether culture is a factor that plays a significant role in explaining country differences we look into the firm s human rights policy its governance of bribery and corruption and the comprehensiveness implementation and communication of its codes of ethics we use a dataset on ethical policies of almost 2 700 firms in 24 countries we find that there are significant differences among ethical policies of firms headquartered in different countries when we associate these ethical policies with hofstede s cultural indicators we find that individualism and uncertainty avoidance are positively associated with a firm s ethical policies whereas masculinity and power distance are negatively related to these policies

endogenous free trade agreements and the multilateral trading system i evaluate in this paper the impact of free trade areas ftas on the world trading system i use an oligopolistic political economy model where the external tariffs of fta members as well as the decision to form ftas are endogenously determined in this context i show that ftas are primarily beneficial to the multilateral trading system this conclusion is based first upon the finding that ftas induce their member governments to lower their external tariffs and to do so deeply enough to enhance trade even between fta members and non members while this ensures gains for the latter in general fta members may not gain i show however that governments will endorse only welfare improving arrangements in spite of their political motivations as a result fta members benefit from ratified arrangements as well finally i find that ftas by reducing the role of special interests criteria in governments trade regime decisions also tend to enhance support for further liberalization at the multilateral level

a moral basis for corporate philanthropy the authors argue that corporate philanthropy is far too important as a social instrument for good to depend on ethical egoism for its support they claim that rule utilitarianism provides a more compelling though not exclusive moral foundation the authors cite empirical and legal evidence as additional support for their claim

bank ceo pay performance relations and the effects of deregulation the authors test the deregulation hypothesis that posits that bank ceo compensation became more sensitive to performance as bank management became less regulated they observe a significant increase in pay performance sensitivities from their 1976 81 regulation subsample to their 1982 88 deregulation subsample these increases in pay sensitivities after deregulation are observed for salary and bonus stock options and common stock holdings the authors observe increases in the pay performance relation associated with high capitalization ratio banks consistent with providing incentives for wealth creation while even larger increases in pay performance sensitivity for lower capitalization ratio banks suggest an federal deposit insurance corporation moral hazard problem copyright 1995 by university of chicago press

bilateralism and free trade we study a setting with many countries in each country there are firms that can sell in the domestic as well as foreign markets countries can sign bilateral free trade agreements that lower import tariffs and thereby facilitate trade we allow a country to sign any number of bilateral free trade agreements a profile of free trade agreements defines the trading regime our principal finding is that in symmetric settings bilateralism is consistent with global free trade we also explore the effects of asymmetries across countries and political economy considerations on the incentives to form trade agreements

the clash of liberalizations preferential versus multilateral trade liberalization in the european union there has been an explosion in the number of preferential trade agreements in the past decade preferential trade agreements are characterized by liberalization with respect to only a few partners and thus they can potentially clash with and retard multilateral trade liberalization despite this important concern with preferential trade agreements there is almost no systematic evidence on whether they actually affect multilateral trade liberalization the authors model the effect of preferential trade agreements on multilateral trade liberalization and show that preferential trade agreements slow down multilateral trade liberalization unless they have a common external tariff and allow for internal transfers next they use detailed data on product level tariffs negotiated by the european union in the past two multilateral trade rounds to structurally estimate their model the authors confirm the main prediction the european union s preferential trade agreements have clashed with its multilateral trade liberalization and find that the effect is quantitatively significant moreover they also confirm several auxiliary predictions of the model and provide new evidence on the political economy determinants of multilateral liberalization in the european union

bilateralism multilateralism and the quest for global free trade abstract we develop an equilibrium theory of trade agreements in which both the degree and the nature bilateral or multilateral of trade liberalization are endogenously determined to determine whether and how bilateralism matters we also analyze a scenario where countries pursue trade liberalization on only a multilateral basis we find that when countries have asymmetric endowments or when governments value producer interests more than tariff revenue and consumer surplus there exist circumstances where global free trade is a stable equilibrium only if countries are free to pursue bilateral trade agreements by contrast under symmetry both bilateralism and multilateralism yield global free trade

profit maximisation vs agency an analysis of charitable giving by uk firms the charitable giving of a large sample of publicly quoted uk firms is analysed within a model that explores the profit maximisation and managerial utility enhancement motives for giving the empirical method draws a distinction between the decision to participate in giving and the determination of the amount of corporate contributions firm size and advertising intensity are found to be positively associated with the probability of participation in giving stricter corporate governance and the rate of directors remuneration are negatively related to the probability of participation among givers the rate of giving is related positively to r d intensity the rate of directors remuneration and corporate profitability and negatively to firm indebtedness

political connection ownership structure and corporate philanthropy in china a strategic political perspective this paper investigates whether philanthropic giving decisions and amount of charitable giving are related to firms political connections and ownership type to this end chinese firms listed on either the shenzhen or shanghai stock exchange between 2004 and 2011 are examined where government interference in the business sector is prevalent state ownership structure is dominant and corporate political connections prevail our analyses show 1 a significant and positive relationship between political connections and the likelihood and extent of firm contributions 2 a significant and negative relationship between state ownership and extent of firm contributions and 3 a stronger relationship between political connections and corporate philanthropy in non state owned firms these findings with regard to the relationship between corporate giving political connections and ownership type have important implications for understanding corporate giving behavior in china and in emerging markets in general

corporate governance of banks a survey this paper reviews the empirical literature on the corporate governance of banks we start by highlighting the main differences between banks and nonfinancial firms and focus on three characteristics that make banks special i regulation ii the capital structure of banks and iii the complexity and opacity of their business and structure next we discuss the characteristics of corporate governance in banks and how they differ from the governance of nonfinancial firms we then review the evidence on three governance mechanisms i boards ii ownership structures and iii executive compensation our review suggests that some of the empirical regularities found in the literature on corporate governance of nonfinancial institutions such as the positive negative association between board independence size and performance do not hold for banks also existing work provides no conclusive results regarding the relationship between different governance mechanisms and various measures for banks performance we discuss potential explanations for these mixed results

corporate philanthropic giving advertising intensity and industry competition level this article examines whether the likelihood and amount of firm charitable giving in response to catastrophic events are related to firm advertising intensity and whether industry competition level moderates this relationship using data on chinese firms philanthropic response to the 2008 sichuan earthquake we find that firm advertising intensity is positively associated with both the probability and the amount of corporate giving the results also indicate that this positive advertising intensity philanthropic giving relationship is stronger in competitive industries and firms in competitive industries are more likely to donate this study thus provides evidence suggesting that even in the wake of catastrophic events corporate philanthropic giving is strategic

the effects of firm size and industry on corporate giving recent downward trends in corporate giving have renewed interest in the factors that shape corporate philanthropy this paper examines the relationships between charitable contributions firm size and industry improvements over previous studies include an irs data base that covers a much broader range of firm sizes and industries as compared to previous studies and estimation using an instrumental variable technique that explicitly addresses potential simultaneity between charitable contributions and profitability important findings provide evidence of a cubic relationship between charitable giving and firm size and evidence of strong industry effects the plus minus plus regression coefficient sign pattern for the cubic firm size model suggests that small and large firms give more relative to total receipts with lower giving ratios among medium size firms one interpretation for this finding is that small firms are close to the communities they serve while high visibility creates a need for large firm philanthropy strong industry effects provide evidence of inter industry differences in giving culture and or different public relations requirements across industries

the invisible hand and the grabbing hand evidence from a survey of 105 shop owners in moscow and warsaw shows that the reliance on private protection as well as the burden of regulation and corruption are much greater in moscow the evidence suggests that the invisible hand model of government better fits the warsaw local government and the grabbing hand model is more appropriate for moscow the evidence implies that the singular focus on the speed of economic reforms to understand the success of transition is misplaced and that the quality of government may be as essential this abstract was borrowed from another version of this item

an absence of transparency the charitable and political contributions of us corporations although stockholders may benefit from information regarding the frequently substantial charitable and political contributions of the corporations they own us corporations are typically not required to disclose any information about such payments in annual financial statements or information submitted periodically to regulatory agencies this lack of transparency is confounded by disclosure requirements of private foundations which a corporation may choose to establish for the purposes of administering charitable giving for the corporation the resulting disclosure fog engendered by extant regulations may be confusing to those corporation owners who would like to know what corporation contributions are being made to charities and politicians this article enumerates the magnitude of the charitable and political gifts of 40 of the most generous public corporations in the usa the current disclosure requirements for public companies the role of foundations rationales for withholding relevant information from owners and ethically questionable strategies that corporations may use to manage those disclosures for their benefit

does ownership always matter abstract the objective of this paper is to explain and illustrate the complex relationship between ownership arrangements and enterprise performance it is commonly argued that efficiency will be lower in the public sector than the private because enterprise objectives deviate from maximisation of profits and because monitoring arrangements are inadequate due to the absence of capital market discipline we argue that public ownership does make the owner manager relationship more complicated because the chain of principals and agents is expanded objectives are politically determined and these are conveyed by a policy making administrative structure to management but the relative efficiency of public as against private ownership actually depends on the efficacy of capital market monitoring on the political and constitutional system on the information and sanctions available to policy makers and on the nature of the management market variation in these factors can help to explain the different natures and roles of the public sector between countries

does firm size comfound the relationship between corporate social performance and firm financial performance there has been some theoretical and empirical debate that the positive relationship between corporate social performance csp and firm financial performance ffp is spurious and in fact caused by a third factor namely large firm size this study examines this question by integrating three meta analyses of more than two decades of research on 1 csp and ffp 2 firm size and csp and 3 firm size and ffp into one path analytic model the present study does not confirm size as a third factor which would confound the relationship between csp and ffp that is even if firm size is controlled for across studies comprising on average over 15 000 observations csp and ffp remain positively correlated showing a true score corrected path coefficient p of 0 37

takeovers improve firm performance evidence from the banking industry the hypothesis that takeovers provide managers with the incentive to maximize firm value is tested by examining the relationship between profitability and state statutes governing takeover activity among banks the evidence indicates that firms in states with an active takeover market are more profitable when takeover activity is restricted increased use of other mechanisms that provide an incentive to maximize firm value such as concentration of equity ownership and management ownership of stock is observed however these alternative methods have a smaller effect on profitability and do not completely compensate for the absence of an active takeover market

does equity ownership matter for corporate social responsibility a literature review of theories and recent empirical findings based on the concept of shareholder primacy many scholars have argued that it is more important for businesses to earn profits for their shareholders than to provide benefits to society at large corporate social responsibility csr is often regarded as an investment that comes at the expense of shareholders in contrast research analyzing the connections between the equity ownership structure of a company and its level of csr engagement suggests that csr offers benefits to shareholders that go beyond direct financial returns from investments this study provides a comprehensive review and systematic assessment of theoretical considerations and approaches regarding different forms of equity ownership and their relationships to csr and it discusses the relevant benefits and motivations of shareholders the perceived value of these csr benefits varies among different types of shareholders as they assign unequal values to short term financial or to rather long term csr benefits based on a literature sample of 146 publications this review demonstrates central problems inherent in previous analyses given the ambiguous and partially contradictory findings of prior research this study identifies potential moderating influences that help clarify empirical evidence a contingency approach is suggested in future research as this can help resolve the problem of contradictory empirical findings and theoretical arguments

an investigation into the givings by large corporate donors to uk charities 1979 86 this paper the first study of its kind to date carried out for the uk is concerned with the scale and determinants of charitable givings by large corporate donors in the uk the investigation is carried out using pooled information on 53 companies over the 8 years from 1979 to 1986 during which period the rate of corporation tax fell from 52 to 35 a result of particular interest is that contributions were related positively to the rate of tax

the theory of preferential trade agreements historical evolution and current trends the theory of preferential trade agreements pta s or what might be described in policy terms as the general agreement on tariffs and trade gatt article xxiv sanctioned freetrade areas fta s and customs unions cu s has undergone two phases of evolution in two very different modes largely reflecting the contrasting policy concerns of the time in this paper we trace this evolution offering both a historical context and an intellectual coherence to diverse analytical approaches

does the market value corporate philanthropy evidence from the response to the 2004 tsunami relief effort this study investigates the market reaction to corporate press releases announcing donations to the relief effort following the december 2004 tsunami in southeast asia based on a sample of 79 u s companies results indicate a statistically significant positive 5 day cumulative abnormal return while differences in the timing of the press releases do not appear to have influenced market reactions the amount of the donations did overall the results appear to support godfrey s academy of management review30 777 798 2005 assertion that philanthropic giving must be perceived as being a genuine manifestation of the firm s underlying social responsiveness in order to increase firm value

corporate social and financial performance an investigation in the u k supermarket industry the comparison of corporate social performance with corporate financial performance has been a popular field of study over the past 25 years the results while broadly conclusive of a positive relationship are not entirely consistent in addition most of the previous studies have concentrated on large scale cross industry studies and often with a single variable for corporate social performance in order to produce statistically significant results this weakens the richness of understanding that might be obtained from a single industry study with multiple social variables which would also allow investigation of inter relationships between individual and sub sets of social performance measures and between individual and sub sets of social performance and financial performance measures there have also been criticisms that the results lack a rigorous theoretical basis and the paper demonstrates clearly how stakeholder theory must form the basis for this area of research following a review of the literature this paper presents the initial findings from a study of the u k supermarket industry which suggest that contemporaneous social and financial performance are negatively related while prior period financial performance is positively related with subsequent social performance positive relationships between both age and size of the company with social performance are also found

business ethics and finance in greater china synthesis and future directions in sustainability csr and fraud following the financial crisis and recent recession the center of gravity of global economic growth and competitiveness is shifting toward emerging economies as a leading and increasingly influential emerging economy china is currently attracting the attention of academics practitioners and policy makers there has been an increase in research interest in and publications on issues relating to china within high quality international academic journals we therefore organized a special issue conference in conjunction with the journal of business ethics jbe in lhasa tibet on may 19 20 2014 on business ethics in greater china past present and future the papers for the special issue focused on the intersection of ethics and finance and fit within one of the three themes environment and sustainability corporate social responsibility and fraud within these themes issues of intellectual capital protection gender equality political connections regional development investor protection corporate stewardship trust and corruption and corporate transparency each play a significant role in this paper we survey these studies and the related literature to provide a comprehensive coverage of business ethics and finance issues that affect china

corporate philanthropy in the u k 1985 2000 some empirical findings this paper briefly reviews the theories that seek to explain the phenomenon of corporate charitable donations and then provides a review of the empirical issues that have arisen in previous studies in this area the findings of an analysis of charitable donations data from the entire u k ftse index for the years 1985 2000 are then reported these findings include the observation of a time related increase in charitable donations which is compared with an earlier study to give a 24 year history of charitable donations in the u k the findings note little responsiveness of the monetary value of charitable donations to the economic performance of firms an international comparison over time against u s trends is also reported and shows how u s corporations have traditionally been more generous than u k firms but that the trend in the u s is downwards membership of a u k based tithing club the percent club is shown to be associated with higher profit performance against non members members charitable contributions against profit are shown to be higher than the ftse mean although short of the 0 5 target figure in cash terms the paper concludes with a brief discussion of these findings in relation to the theoretical positions advanced for corporate philanthropy

corporate philanthropy in the united kingdom the increasing demands placed on private welfare services and calls for business to fulfil its social responsibilities have heightened interest in corporate charitable donations in the united kingdom adjustments to the corporation tax system have been made to encourage companies to give more the article outlines the legal and fiscal background to company giving examines its magnitude and reports on a survey of company practice

do lenders value corporate social responsibility evidence from china drawing on risk mitigation theory this article examines whether the improvement of firms social performance reduces debt financing costs cdfs in china the world s largest emerging market employing both the ordinary least square ols and the two stage instrumental variable regression methods we find that improved corporate social responsibility csr reduces the cdf when firms csr investment is lower than an optimal level however this relationship is reversed after the csr investment exceeds the optimal level firms with extremely low or extremely high csr are subject to a higher cdf the results also suggest that the optimal csr level for small firms is higher than that for large firms this study is the first to document a u shaped relationship between csr and cdf and also the first to investigate this relationship within an emerging market context

do suppliers applaud corporate social performance the influence of corporate social performance csp on stakeholders is one of the focal issues in corporate social responsibility csr research using data of listed companies in china this paper examines whether csr behavior in the form of charitable donations garners a positive reaction from suppliers results derived from both level and change model regressions show that superior csp makes it easier for a firm to obtain trade credit from suppliers although the effect is significant only in non state owned enterprises non soes the results are robust to various measures of csp and endogeneity tests the results support the strategic philanthropy view and apply stakeholder theory in supply chain that strategic csr can help firms to attract suppliers and consolidate cooperative relationships with them which in turn benefits the firms in terms of more trade credit financing from suppliers this paper also shows that state owned enterprises and non soes have different csr intentions and use csr to achieve strategic goals in different ways the conclusions drawn from this study provide practical guidance on csr strategy suggesting that csr activities can help a firm in transition economies to enhance its corporate image establish and consolidate the good relationship with suppliers and obtain economic benefits or achieve long term business objectives

corporate reputation and philanthropy an empirical analysis this paper analyzes the determinants of corporate reputation within a sample of large uk companies drawn from a diverse range of industries we pay particular attention to the role that philanthropic expenditures and policies may play in shaping the perceptions of companies among their stakeholders our findings highlight that companies which make higher levels of philanthropic expenditures have better reputations and that this effect varies significantly across industries given that reputational indices tend to reflect the financial performance of organizations above other factors fryxell g e and j wang 1994 journal of management 20 1 14 and that elements of the literature emphasise that discretionary aspects of social responsibility including corporate donations may not be in the financial interests of organizations e g friedman m 1970 the social responsibility of business is to increase its profits new york times magazine september 13 this is a significant finding it suggests that philanthropic expenditures may play a significant role in stakeholder management and may in particular lead to stakeholders holding more positive impressions of philanthropic corporations

deregulation and the adaptation of governance structure the case of the u s airline industry deregulation provides a natural experiment for examining how governance adapts to structural changes in the business environment we investigate the evolution of governance structure characterized by ownership concentration compensation policy and board composition in the u s airline industry during a 22 year period surrounding the airline deregulation act of 1978 consistent with theory we nd that after deregulation i equity ownership is more concentrated ii ceo pay increases iii stock option grants to ceos increase and iv board size decreases airlines governance structures gravitate toward the system of governance mechanisms used by unregulated rms the adaptation process is gradual however suggesting that it is costly to alter organizational capital we also present evidence on the relation between governance structure and rm survival 1999 elsevier science s a all rights reserved jel classixcation g32 g38 j33 l93

investor protection and corporate governance recent research has documented large differences among countries in ownership concentration in publicly traded firms in the breadth and depth of capital markets in dividend policies and in the access of firms to external finance a common element to the explanations of these differences is how well investors both shareholders and creditors are protected by law from expropriation by the managers and controlling shareholders of firms we describe the differences in laws and the effectiveness of their enforcement across countries discuss the possible origins of these differences summarize their consequences and assess potential strategies of corporate governance reform we argue that the legal approach is a more fruitful way to understand corporate governance and its reform than the conventional distinction between bank centered and market centered financial systems

multilateralism and the endogenous formation of preferential trade agreements abstract this paper examines the interaction between preferential trade agreements ptas and multilateral tariff reduction in a model of imperfect competition a growing literature finds that the formation of ptas alters the incentives for and the sustainability of multilateral tariff reduction we show that the causation is not one sided multilateral tariff reduction also affects the formation of ptas specifically tariff reduction enhances the incentives to form a pta and increases the likelihood that it is self enforcing thus each round of multilateral tariff reduction should lead to a new wave of ptas this may help to explain the current trend towards regionalism

boards of directors ownership and regulation in this paper we examine whether regulation can be used to substitute for internal monitoring mechanisms percentage of outside directors officer and director common stock ownership and ceo chair duality to control for agency conflicts in a firm we find that in general the percentage of outside directors is negatively related to insider stock ownership but is not affected by ceo chair duality ceo chair duality is however less likely when insider stock ownership increases we find these internal monitoring mechanisms to be significantly less related with regulated firms banks and utilities we conclude that to the extent that regulations reduce the impact of managerial decisions on shareholder wealth effective internal monitoring of managers becomes less important in controlling agency conflicts 2002 elsevier science b v all rights reserved

endogenously chosen boards of directors and their monitoring of the ceo author s hermalin benjamin e abstract this paper develops a model in which the effectiveness of a board s monitoring of the ceo depends on the board s independence the independence of new directors is determined through negotiations implicit or explicit between the existing directors and the ceo the ceo s bargaining position and thus influence over the board selection process depends on an updated estimate of the ceo s ability based on prior performance many empirical findings about board structure and performance arise as equilibrium phenomena in this model we also explore the implications of this model for proposed regulations of corporate governance structures please contact the program in law and economics at boalt hall school of law uc berkeley berkeley ca 94720 for a copy of this paper

the information content of bank exam ratings and subordinated debt prices do supervisory examinations of large commercial banking firms produce useful information not already reflected in market prices to investigate this question we apply a new research methodology to data on bank exam ratings and the subordinated debt risk spreads of their parent holding companies we find that government exams do produce new value relevant information that debenture prices do not immediately reflect this information and that the market prices the likely regulatory actions implied by this information these results have implications for market versus regulatory discipline at large banking firms and for proposals to make subordinated debt mandatory for these firms

is the gatt wto s article xxiv bad the gatt wto article xxiv prevents a customs union cu from raising its common external tariff in this paper we compare cu formation with and without this article xxiv constraint we show in a multi country oligopoly model that for a given cu structure article xxiv improves world welfare by lowering trade barriers however we also show that article xxiv has a composition effect on cu formation it affects the endogenous choice of cus by encouraging more symmetric cus article xxiv causes more trade to be subject to trade barriers as a result article xxiv may be bad for world welfare 2012 elsevier b v

opening the black box of csr decision making a policy capturing study of charitable donation decisions in china this policy capturing study conducted in china investigated the cognitive basis of managerial decisions to make a corporate charitable donation a global issue in the context of corporate social responsibility csr research and practice participants n 376 responded to a series of scenarios manipulating pressure from the five stakeholders government customers competitors employees and shareholders most commonly addressed by csr research the independent variables examined included organizational factors industry ownership previous company donation firm size firm age and perceived ceo attitudes toward charity and the participants personal values results indicate a large positive effect of shareholder and governmental pressure on the decision with lesser positive effects from customers and competitors surprisingly employee pressure had a negative effect on the decision to make a charitable donation further personal values and perceived ceo attitudes toward charity were significantly related to the decisions participants made in line with our theorizing the findings indicate that a combination of personal organizational and institutional factors was salient in the minds of decision makers

banks as monitors of other banks evidence from the overnight federal funds market this study provides evidence that banks are effective monitors of their peers by showing that the interest rate paid on federal funds transactions reflects differences in credit risk across borrowers in addition the size and relative importance in the funds market of the trading institutions are shown to affect the rates charged for overnight borrowing thereby providing insight into the nature of competition in the federal funds market transaction volume and size of transaction effects are uncovered as is evidence of relationship banking between banks these results are made possible by unique data identifying individual federal funds transactions copyright 2001 by university of chicago press

principal principal conflicts and corporate philanthropy evidence from chinese private firms the principal principal perspective suggests that controlling shareholders have excessive influence on corporate philanthropy and may direct corporate funds to charitable causes to support their personal interests analysis of a sample of chinese private firms listed on the shenzhen or shanghai stock exchange between 2004 and 2011 shows that 1 there is a significant and negative relationship between corporate giving and the share held by the largest shareholders suggesting that controlling shareholders are opportunistic in directing corporate charitable contributions 2 there is a significant and positive relationship between corporate giving and the political connections of the largest shareholders and their agents suggesting compatibility between corporate contributions and the personal interests of the controlling shareholders 3 there is a stronger negative relationship between corporate giving and the share of the company held by the largest shareholders in politically connected firms suggesting that political connections contribute to increased opportunistic corporate giving overall our study provides important evidence for the one dominant controlling shareholder phenomenon yigududa by testing and extending the principal principal framework and showing that the largest shareholders of chinese firms appear to donate to charitable causes that ultimately serve their personal interests at the expense of minority shareholders

a strategic model of social and economic networks we study the stability and efficiency of social and economic networks when self interested individuals can form or sever links first for two stylized models we characterize the stable and efficient networks there does not always exist a stable network that is efficient next we show that this tension persists generally to assure that there exists a stable network that is efficient one is forced to allocate resources to nodes that are not responsible for any of the production we characterize one such allocation rule the equal split rule and another rule that arises naturally from bargaining of the players

dared to care organizational vulnerability institutional logics and mncs social responsiveness in emerging markets a significant gap exists in our understanding of what explains the varying responses of multinational corporations mncs to social issues in emerging markets arguably in a setting where both market institutions and regulations and norms of corporate social responsibility are underdeveloped it is more difficult for corporations to take actions beyond those that serve their immediate economic interests proposing a social movement perspective on mncs responsiveness to social issues in emerging markets we identify the mechanisms by which online activists grab firms attention and force them to become more socially responsive a perception of organizational vulnerability and a home country institutional logic that is consistent with the demands of the online campaign provide political opportunity structures that hasten the corporate response but affect the magnitude of firm response differently we test our framework in the empirical context of corporate philanthropic action following the 2008 earthquake in sichuan province in china which triggered an online campaign that questioned mncs donations to the disaster relief effort our study contributes to the literature on heterogeneous organizational responses to social movements a better understanding of the antecedents for mncs social responsiveness in emerging markets and research on mncs

do bank regulations affect board independence a cross country analysis abstract based on the hand collected board structure data of 277 listed banks across 55 countries and the bank regulation and supervision database compiled by the world bank this paper provides the first cross country assessment of the impacts of bank regulations on board independence of banks in line with beck et al 2006 we examine the effects of two types of regulation policies the first involving the empowerment of supervisory agencies to monitor and discipline banks directly and the second focusing on encouraging private monitoring of banks through requiring disclosure of more accurate and complete information we find that empowering official supervisory agencies to discipline banks directly reduces board independence but encouraging private sector monitoring of banks increases it the findings suggest that the first type of regulations tends to crowd out the internal governance of banks while the second crowds in it we also find that the legal system with better investor rights protection and better contracts enforcement not only increases board independence but also enhances the crowding in effect of promoting private monitoring and decreases the crowding out effect of direct official supervision on board independence

social responsiveness profitability and catastrophic events evidence on the corporate philanthropic response to 9 11 in this study we seek to determine whether catastrophic events lead to corporate charitable giving unrelated to levels of firm profitability we examine the issue relative to the corporate philanthropic response to the 9 11 terrorist attacks of 2001 based on a sample of 489 fortune 500 companies we find that differences in the extent of corporate contributions following 9 11 are positively and significantly associated with differences in firms profitability further while the degree of connection to the catastrophic event led to higher levels of giving in comparison to the contributions of less connected firms differences in the extent of philanthropy are still related to short term profitability for the more connected firms the study thus provides evidence suggesting that even in the wake of catastrophic events corporate philanthropic giving is constrained by economic concerns

why did transition economies choose mass privatization in many transition countries privatization has taken the form of distribution of states assets at a zero price mass privatization and the state has retained some ownership in many companies we provide a rationale for these policies in terms of a political feasibility constraint preventing sale at a negative price the government may choose to retain some ownership in order to make the constraint bite in effect raising its bargaining power as a result mass privatization may actually have been revenue maximizing that is may have been rational in an economic sense as well as in the political sense previously claimed jel l33 p21

bank supervision and corruption in lending abstract which commercial bank supervisory policies ease or intensify the degree to which bank corruption is an obstacle to firms raising external finance based on new data from more than 2500 firms across 37 countries this paper provides the first empirical assessment of the impact of different bank supervisory policies on firms financing obstacles we find that the traditional approach to bank supervision which involves empowering official supervisory agencies to monitor discipline and influence banks directly does not improve the integrity of bank lending rather we find that a supervisory strategy that focuses on empowering private monitoring of banks by forcing banks to disclose accurate information to the private sector tends to lower the degree to which corruption of bank officials is an obstacle to firms raising external finance in extensions we find that regulations that empower private monitoring exert a particularly beneficial effect on the integrity of bank lending in countries with sound legal institutions

multilateral stability and efficiency of trade agreements a network formation approach we study the endogenous network formation of bilateral and multilateral trade agreements by means of hypergraphs and introduce the equilibrium concept of multilateral stability we consider multi country settings with a firm in each country that produces a homogeneous good and competes as a cournot oligopolist in each market under endogenous tariffs we find that the existence of a multilateral trade agreement is always necessary for the stability of the trading system and that the formation of preferential trade agreements is always necessary for achieving global free trade we also find that global free trade is efficient but not necessarily the only multilaterally stable trade equilibrium when countries are symmetric heterogeneous in terms of market size we derive conditions under which such a conflict between overall welfare efficiency and stability occurs

corporate philanthropy and stock price crash risk evidence from china how to mitigate stock price crash risk has become a focus in the theoretical and practical fields building on the work of kim et al j bank finance 43 1 13 2014b this paper investigates the relation between corporate philanthropy and crash risk under the unique chinese institutional background the results show that both state ownership and the 2005 split share reform attenuate the mitigating effect of corporate philanthropy on crash risk specifically the negative relation between corporate philanthropy and crash risk is less pronounced for state owned enterprises than for non state owned enterprises and it is also less pronounced after firms accomplish the split share reform further this effect is more pronounced for firms with greater financial risks and poorer performance our paper contributes to the growing literature on the determinants of stock price crash risk and the economic consequences of corporate philanthropy it also offers useful guidance to firms that are seeking to reduce stock price crash risk in emerging markets

free trade networks abstract the paper examines the formation of free trade agreements ftas as a network formation game we consider an n country model in which possibly asymmetric countries trade differentiated industrial commodities we show that if all countries are symmetric the complete fta network is pairwise stable and it is the unique stable network if industrial commodities are not highly substitutable we also compare ftas and customs unions cus as to which of these two regimes facilitates global trade liberalization noticing that unlike cus each signatory of an fta can have another fta without consent of other member countries

why do corporations give to charity this paper explores whether corporate contributions should be tax dedu ctible within the more general context of an examination of the profi t and utility maximization motives driving contributions the theoret ical section develops a formal structural model of the contributions process illustrates comparative statics and derives a set of empiri cally testable hypotheses using a new source of firm data the empir ical results indicate that profit maximization is an important motive driving contributions this finding supports the current tax deducti ble status of contributions up to a seldom encoun tered ceiling and favors a reform that allows firms to treat contributions as ordinary business expenses copyright 1988 by the university of chicago

preferential trade agreements and multilateral tariff cooperation are preferential trade agreements ptas building or stumbling blocks for multilateral trade liberalization i address this question in an infinitely repeated tariff game between three countries engaged in intraindustry trade under oligopoly the central result is that when countries are symmetric a free trade agreement fta undermines multilateral tariff cooperation by adversely affecting the cooperation incentive of the nonmember whereas a customs union cu does so via its effect on the cooperation incentives of members however when countries are asymmetric with respect to either market size or cost there exist circumstances where ptas facilitate multilateral tariff cooperation

donate money but whose an empirical study of ultimate control rights agency problems and corporate philanthropy in china using empirical evidence gathered from chinese listed companies this article explores the relationship between micro governance mechanisms and corporate philanthropy from a corporate governance perspective in china s emerging market ultimate controlling shareholders of state owned enterprises soes are reluctant to donate their assets or resources to charitable organizations in private enterprises pes marked by more deviation in voting and cash flow rights such donations tend to be more likely however the ultimate controllers in pes refuse to donate assets or resources they control or own which implies that corporate philanthropy by pes comes at the cost of others through assets or resources owned by minority shareholders even after devastating natural disasters such as the 2008 wenchuan earthquake the controlling shareholders continue to express reluctance to donate any assets they control despite widespread evidence that corporate philanthropy boosts corporate growth and profitability these ultimate controllers indicate no intention to donate their own money as a means to improve corporate performance

going home and helping out returnees as propagators of csr in an emerging economy this paper extends nascent work on returnees as agents of socio economic change by examining whether education training abroad affects the corporate social responsibility csr of privately held firms during the early stages of an emerging economy s transition integrating theory and research from the international business and csr literatures we argue that returnee led firms are likely to exhibit higher levels of csr than local led firms due to both the direct and indirect effects of an owner manager s international experience we examine our hypotheses using nationally representative data collected in 2002 and 2004 through separate surveys of private enterprises in china our findings document the positive impact of education training abroad on two csr measures sustainability initiative scope and charitable donation intensity we also contribute evidence of the direct and indirect effects associated with an owner manager s returnee status with the indirect effects stemming primarily from the greater size and profitability of returnee led firms