the impact of ict investment and energy price on industrial electricity demand dynamic growth model approach the authors investigate the effects of information and communications technology ict investment electricity price and oil price on the consumption of electricity in south korea s industries using a logistic growth model the concept electricity intensity is used to explain electricity consumption patterns an empirical analysis implies that ict investment in manufacturing industries that normally consume relatively large amounts of electricity promotes input factor substitution away from the labor intensive to the electricity intensive moreover results also suggest that ict investment in some specific manufacturing sectors is conducive to the reduction of electricity consumption whereas ict investment in the service sector and most manufacturing sectors increases electricity consumption it is concluded that electricity prices critically affect electricity consumption in half of south korea s industrial sectors but not in the other half a finding that differs somewhat from previous research results reasons are suggested to explain why the south korean case is so different policymakers may find this study useful as it answers the question of whether ict investment can ultimately reduce energy consumption and may aid in planning the capacity of south korea s national electric power

information technology and productivity evidence from country level data this paper studies a key driver of the demand for the products and services of the global it industry returns from it investments we estimate an intercountry production function relating it and non it inputs to gdp output on panel data from 36 countries over the 1985 1993 period we find significant differences between developed and developing countries with respect to their structure of returns from capital investments for the developed countries in the sample returns from it capital investments are estimated to be positive and significant while returns from non it capital investments are not commensurate with relative factor shares the situation is reversed for the developing countries subsample where returns from non it capital are quite substantial but those from it capital investments are not statistically significant we estimate output growth contributions of it and non it capital and discuss the contrasting policy implications for capital investment by developed and developing economies

tax havens and disclosure aggregation multinational firms have been accused by politicians regulators and citizen groups of shifting profits to low tax geographic areas we present evidence that multinational firms with tax haven operations tend to aggregate their geographic disclosures to a greater extent the results are consistent with managers attempting to avoid criticism by reducing the transparency of their tax avoidance activities we find these results to be stronger for larger firms with higher political costs and for firms in natural resources industries in retail industries or with low competition the evidence is relevant to policymakers and others interested in multinational firms financial reporting and tax activities

mitigating the pro cyclicality of basel ii policy discussions on the recent financial crisis feature widespread calls to address the pro cyclical effects of regulation the main concern is that the new risk sensitive bank capital regulation basel ii may amplify business cycle fluctuations this paper compares the leading alternative procedures that have been proposed to mitigate this problem we estimate a model of the probabilities of default pds of spanish firms during the period 1987 2008 and use the estimated pds to compute the corresponding series of basel ii capital requirements per unit of loans these requirements move significantly along the business cycle ranging from 7 6 in 2006 to 11 9 in 1993 the comparison of the different procedures is based on the criterion of minimizing the root mean square deviations of each adjusted series with respect to the hodrick prescott trend of the original series the results show that the best procedures are either to smooth the input of the basel ii formula by using through the cycle pds or to smooth the output with a multiplier based on gdp growth our discussion concludes that the latter is better in terms of simplicity transparency and consistency with banks risk pricing and risk management systems for the portfolio of spanish commercial and industrial loans and a 45 loss given default lgd the multiplier would amount to a 6 5 surcharge for each standard deviation in gdp growth the surcharge would be significantly higher with cyclically varying lgds rafael repullo jesus saurina and carlos trucharte

multinationality and firm performance the moderating role of r d and marketing capabilities researchers in international business have long been interested in understanding the relationship between the multinationality of a firm and its market performance this article contributes to this research stream by incorporating firm heterogeneity in examining the multinationality performance relationship the findings based on a time series cross sectional analysis of firms from 12 different industries over a seven year period indicate that the impact of multinationality on both financial and operational performance is moderated by firm s r d and marketing capabilities

performance and potential of information technology an international perspective abstract rising information content of economic activity worldwide is making the use of information technology it increasingly relevant in a broad range of countries and activities effective planning and organizational capabilities are essential to successful adoption of the new technologies authors in this issue have concluded that managerial skills and entrepreneurship are key to effective use of it in addition to human capital development it diffusion requires a strategy for generating large investments in telecommunications while proactive measures at accelerating the diffusion of it have their place they need to be complemented by reduction of barriers to the international flow of services and investment

dodging the grabbing hand the determinants of unofficial activity in 69 countries across 69 countries higher tax rates are associated with less unofficial activity as a percent of gdp but corruption is associated with more unofficial activity entrepreneurs go underground not to avoid official taxes but to reduce the burden of bureaucracy and corruption dodging the grabbing hand in this way reduces tax revenues as a percent of both official and total gdp as a result corrupt governments become small governments and only relatively uncorrupt governments can sustain high tax rates 2000 elsevier science s a all rights reserved

earnings shocks and tax motivated income shifting evidence from european multinationals this paper presents a new approach to estimating the existence and magnitude of tax motivated income shifting within multinational corporations existing studies of income shifting use changes in corporate tax rates as a source of identification in contrast this paper exploits exogenous earnings shocks at the parent firm and investigates how these shocks propagate across low tax and high tax multinational subsidiaries this approach is implemented using a large panel of european multinational affiliates over the period 1995 2005 the central result is that parents positive earnings shocks are associated with a significantly positive increase in pretax profits at low tax affiliates relative to the effect on the pretax profits of high tax affiliates the result is robust to controlling for various other differences between low tax and high tax affiliates and for country pair year fixed effects additional tests suggest that the estimated effect is attributable primarily to the strategic use of debt across affiliates the magnitude of income shifting estimated using this approach is substantial but somewhat smaller than that found in the previous literature

taxes tariffs and transfer pricing in multinational corporate decision making three interrelated aspects of u s multinational corporation activity are analyzed here the ability to shift profits from high tax countries to low tax countries the impact of host country taxes and tariffs on the distribution of real capital and the influence of these policies on international trade patterns of the united states and host countries the cross sectional empirical analysis indicates that the observed pattern of reported profits in high and low tax countries is consistent with income shifting behavior and that real investment responds to host country effective tax rates and tariffs the united states appears both to import more from and export more to low tax countries where mnc investment is greater but this bilateral focus must be amplified to consider multilateral effects if trade benefits are to be projected copyright 1991 by mit press

the impact of high tech capital on productivity evidence from australia i introduction the bulk of the empirical research on the relationship between high tech capital investment and productivity has been based on data for the united states given the relatively large size of the high tech capital sector in the u s economy it is likely that the united states is a special case most economies resemble australia s in being net importers of high tech capital not producing high tech capital was often cited as a weakness in these economies relative to the united states however since the end of the late 1990s tech boom there has been a reappraisal of whether the production or the use of high tech capital is most beneficial hence to shed light on this debate the main purpose of this paper is to empirically examine the relationship between high tech capital use and the multifactor productivity mfp of 10 industries in the australian market sector using annual data for 1966 2002 alternative specifications of production functions are considered and estimated alternative measures of high tech capital are included with combinations of computers software and electronics capital in the first production function high tech capital is allowed to be more or less productive than other capital to determine whether there is a relationship between high tech capital and mfp it is also possible to test whether there are excess returns to high tech capital for robustness testing purposes a second production function is specified with high tech capital as a separate input into production other potential sources of mfp growth such as public capital research and development stocks and microeconomic reform are also included in the production functions we find evidence of a positive relationship between high tech capital and mfp in the market sector there is less evidence however of excess returns to high tech capital which suggests that current investment levels are not inadequate the results by industry suggest that the benefits of investing in high tech capital are not distributed evenly across the economy with only some industries experiencing a positive relationship between high tech capital and mfp the structure of this article is as follows in section ii the theoretical contribution of high tech capital to mfp and the evidence to date is reviewed in section iii the methodology is outlined in section iv data sources and trends are described in section v the results are presented and interpreted and section vi concludes ii the impact of high tech capital on output and productivity the theory and evidence the impact of investment in high tech capital has been the subject of debate between new economy sceptics and optimists for several years it is widely accepted that mfp has increased substantially in u s high tech producing industries in which the rate of technological change has been phenomenal over the past 40 years several publications have found a quantifiable contribution by computer producing industries to u s output growth 1 however australia is not generally regarded as a producer of computers data from the organisation for economic co operation and development oecd 1998 indicate that the high tech share of australian manufacturing value added was 4 5 in 1995 compared to 15 8 in the united states therefore the substantial u s economy wide mfp improvements specifically associated with its computer producing industry are unlikely to be replicated in the australian economy over the past 30 years there has been rapid accumulation of high tech capital in many countries australia was the third most intensive user of high tech capital in the oecd in 1995 behind the united states and new zealand simon and wardrop 2002 find that this rapid accumulation of high tech capital may have substantially contributed to australia s economic growth during the 1990s this accumulation has been driven by technological change in high tech producing industries lowering the price of high tech capital

does hometown advantage matter the case of institutional blockholder monitoring on earnings management in korea this study uses a large sample of korean firms to examine institutional blockholders influence on corporate earnings management the korean market is an interesting setting to study institutional monitoring because it is dominated by chaebols which are characterized by ineffective internal governance mechanisms we find evidence that institutional blockholders deter opportunistic financial reporting and such activities are the most evident among domestic institutional blockholders foreign institutional blockholders especially those with short term investment objectives lead to more discretionary reporting our findings are robust to various empirical models and endogeneity checks moreover this study offers new insight into the proximity advantage of domestic institutional investors with regard to monitoring information it also highlights institutional investors roles in shaping corporate governance in emerging markets in which sound corporate governance has become increasingly important for firms long term sustainability one important policy implication is that regulatory authorities should aim to promote institutional investors participation in these markets

payoffs from investment in information technology lessons from the asia pacific region abstract this paper examines the factors influencing investment in information technology it and the payoffs from investment in it use on productivity and economic growth in 12 asia pacific countries for 1984 1990 it finds a significant positive correlation between growth in it investment and growth in both gdp and productivity over the seven year period countries with higher growth rates in it investment achieved consistently higher growth rates of gdp and productivity this finding is consistent with the notion of it led development it challenges the so called productivity paradox or the notion that investment in it has not paid off in productivity improvements

research note determinants of country level investment in information technology investment in information technology it is an important driver of economic growth and productivity in the united states and other developed countries but as yet it is not shown to be a significant driver in developing countries previous research suggests that it investment and complementary assets are insufficient for developing countries to realize economic benefits this research note examines the factors that influence it investment in developed and developing countries to determine how greater investment might be stimulated to achieve productivity gains we use the flexible accelerator model of investment and find that it is a good predictor of country level it investment we also extend the model to include country level variables and find a negative relationship between it investment and interest rates but positive and significant relationships between investment openness to trade and telecommunications infrastructure when we include interaction effects between national income levels and country variables we find that the impacts of interest rates size of the financial sector teledensity and intellectual property rights are strongest in shaping it investment for developed countries in contrast we find that the impact of openness to trade is greater for developing countries as is the size of government and education levels

financial regulatory reform after the crisis an assessment this is a survey of progress with the postcrisis global g20 reform of the financial system in five key areas of new regulation 1 making financial institutions more resilient 2 ending too big to fail 3 making derivatives markets safer 4 transforming shadow banking and 5 improving trade competition and market transparency the resiliency reforms particularly bank capital regulations have been increasingly successful in improving financial stability but have been accompanied by some reduction in secondary market liquidity i review specific areas where reforms are far from complete or have even been counterproductive this paper was accepted by gustavo manso finance conflict of interest statement the author s webpage at http www stanford edu duffie provides related research and disclosure of potential conflicts of interest

anonymous shell companies a global audit study and field experiment in 176 countries to test whether firms behave consistently with international law prohibiting anonymous incorporation we conducted a global audit study and field experiment using data from 1639 incorporation firms in 176 countries we requested anonymous incorporation and randomly assigned references to international law threat of penalties norms of appropriate behavior or a placebo we find a substantial number of firms willing to flout international standards and show that those in oecd countries proved significantly less compliant with rules than in developing countries or tax havens firms in tax havens displayed significantly greater compliance and were sensitive to experimental interventions invoking international law

negative swap spreads and limited arbitrage since october 2008 fixed rates for interest rate swaps with a thirty year maturity have been mostly below treasury rates with the same maturity under standard assumptions this implies the existence of arbitrage opportunities this paper presents a model for pricing interest rate swaps where frictions for holding bonds limit arbitrage i show analytically that negative swap spreads should not be surprising in the calibrated model swap spreads can reasonably match empirical counterparts without the need for large demand imbalances in the swap market empirical evidence is consistent with the relation between term spreads and swap spreads in the model

software industry entry strategies for developing countries a walking on two legs proposition abstract two themes run through the following analysis first countries without a relatively active and up to date software sector will find it increasingly difficult to catch up in terms of capital outlays labor skills and the growing importance of technology changes organization and management in software production they will not have for example software management experience to undertake increasingly large and complex software development projects a quality consciousness and the institutional and support infrastructure for marketing and forming product development alliances with dominant international firms in the sector second the learning curves for domestic and international market activities are quite different the domestic software market being an important base for skills experience and establishing a track record that may later be applied to exports two developing countries india and brazil have used different development strategies for their software industries and as could be expected with disparate results both the brazilian and the indian software industries are trying to walk on one leg the domestic leg in the case of brazil and the export leg in the case of india both countries have at least some potential for moving to a two legged model assessment of these two industries suggests that countries need to pay more attention to domestic opportunities since these have high returns in terms of gaining experience and innovation in software production and provide training that allows a broadening of software exports

affiliated firms and financial support evidence from indian business groups abstract we investigate the functioning of internal capital markets in indian business groups we document that intragroup loans are an important means of transferring cash across group firms and are typically used to support financially weaker firms evidence suggests that an important reason for providing support may be to avoid default by a group firm and consequent negative spillovers to the rest of the group consistent with such spillovers the first bankruptcy in a group is followed by significant drops in external financing investments and profits of other firms in the group and an increase in their bankruptcy probability

unraveling the mne wage premium whereas ib has extensively studied mnes generic positive impact on host economies but rarely on employee wages economics research has only shown an overall mne wage premium we unravel this premium considering multiple levels of analysis and accounting for host country contextual contingencies to unveil mnes different positive or negative distributional effects using unique micro level data from over 40 000 employees in 13 countries we examine mnes distributional effects for employees gender experience and immigrant status the influence of host country property rights protection and labor regulation and interplays with region and industry effects mnes distributional effects show marked differences that largely depend on the host country context and that are positive for experienced and foreign born employees in developed countries but negative for females working in developing countries whereas in developed countries the gender wage gap is smaller in mnes than in domestic firms as hypothesized we find evidence of a larger wage gap in developing countries the analysis also reveals that the higher host countries level of property rights protection the lower the mne wage premium our study points at the need to reassess statements about the generic positive impact of mnes in host countries particularly in developing countries and discusses further research implications

international corporate governance a review and opportunities for future research we review four decades of research about the corporate governance of multinational corporations mncs which we label international corporate governance icg we identify and discuss three main streams of research that draw on different conceptualizations and theoretical lenses of corporate governance after synthesizing their respective findings we propose several avenues for future research that integrate these three streams of research with the goal of developing a more nuanced understanding of icg we hope this review article will inspire international business scholars to continue examining how corporate governance can be an effective tool for mnc success

risk in banking and capital regulation this paper investigates the role of bank capital regulation in risk control it is known that banks choose portfolios of higher risk because of inefficiently priced deposit insurance bank capital regulation is a way to redress this bias toward risk utilizing the mean variance model the following results are shown a the use of simple capital ratios in regulation is an ineffective means to bound the insolvency risk of banks b as a solution to problems of the capital ratio regulation the theoretically correct risk weights under the risk based capital plan are explicitly derived and c the theoretically correct risk weights are restrictions on asset composition which alters the optimal portfolio choice of banking firms the recent increase in bank failures especially after the 1980 and 1982 deregulatory acts has again ignited a controversy over the risk portfolio of the banking industry given the importance of this sector there has been increased scrutiny of the industry s motives for risk taking and possible regulatory changes to improve its stability these investigations have centered around two rather complementary areas the first of these is the role of deposit insurance and how its current pricing procedure encourages risk taking and justifies current bank regulations the works of buser chen and kane 4 kane 9 and benston et al 2 have made substantive contributions the authors demonstrates the way in which our current fixed rate insurance system rewards risk taking by the firm and insulates it through deposit insurance from the market discipline that needs to exist to ensure proper risk evaluation this realization has led these authors to propose a series of regulatory changes to encourage proper portfolio choice within the industry these include a shift to market value accounting risk based deposit insurance premiums and additional capital regulation the last of these serves as a method of coinsurance whereby higher capital levels require the bank to absorb greater losses in the event of failure and encourage additional prudence in management in essense it is one method of risk reduction that may offset the risk preference imposed on the industry due to the inappropriate insurance pricing because the amount of capital influences the probability of bank insolvency and thus the soundness of the entire banking system the regulators ceteris paribus prefer more capital to

markets transparency and the corporate bond market for decades corporate bonds primarily traded in an opaque environment quotations which indicate prices at which dealers are willing to transact were available only to market professionals most often by telephone prices at which bond transactions were completed were not made public the u s corporate bond market became much more transparent with the introduction of the transaction reporting and compliance engine trace in july 2002 beginning that date bond dealers were required to report all trades in publicly issued corporate bonds to the national association of security dealers which in turn made transaction data available to the public in this paper we describe trading protocols in the corporate bond market and assess the impact of the increase in transparency on the market we review how trace has affected the costs that corporate bond investors paid to bond dealers for their transactions we canvass the opinions of a variety of finance professionals and consider articles in the trade press to obtain a broader view of the impact of transparency on the corporate bond market

comparing capitalisms understanding institutional diversity and its implications for international business this paper examines the role of institutional analysis within the field of international business ib studies within ib institutions matter but the view of institutions tends to be thin utilizing summary indicators rather than detailed description and thus approaches institutions as unidimensional variables that impact on particular facets of business activity this paper argues that ib research would be usefully advanced by greater attention to comparing the topography of institutional landscapes and understanding their diversity a number of alternative case based approaches are outlined that draw on a growing comparative capitalisms literature in sociology and political science the paper develops a number of empirical examples to show the utility and limits of these approaches for ib scholars

why pay more corporate tax avoidance through transfer pricing in oecd countries this paper presents suggestive evidence of income shifting in response to differences in corporate tax rates for a large selection of oecd countries we use a new method to disentangle the income shifting effects from the effects of tax rates on real activity our baseline estimates suggest that a substantial share of the revenues from a unilateral increase in the corporate tax rate is lost because of a decline in reported income

corporate bond market transaction costs and transparency using a complete record of u s over the counter otc secondary trades in corporate bonds we estimate average transaction costs as a function of trade size for each bond that traded more than nine times between january 2003 and january 2005 we find that transaction costs decrease significantly with trade size highly rated bonds recently issued bonds and bonds close to maturity have lower transaction costs than do other bonds costs are lower for bonds with transparent trade prices and they drop when the trace system starts to publicly disseminate their prices the results suggest that public traders benefit significantly from price transparency

or forum design of risk weights banking regulations set minimum levels of capital for banks these requirements are generally formulated through a ratio of capital to risk weighted assets a risk weighting scheme assigns a weight to each asset or category of assets and effectively functions as a linear constraint on a bank s portfolio choice it also changes the incentives for banks to hold various kinds of assets in this paper we investigate the design of risk weights to align regulatory and private objectives in a simple mean variance framework for portfolio selection by setting risk weights proportional to profitability rather than risk the regulator can induce a bank to reduce its overall level of risk without distorting its asset mix because the regulator is unlikely to know the true profitability of assets we introduce an adaptive formulation in which the regulator sets weights by observing a bank s portfolio the adaptive scheme converges to the same combination of weights and portfolio choice that would hold if the regulator knew the asset profitability we also investigate other objectives including steering banks to a target mix of assets adding robustness mitigating procyclicality and reducing system wide risk in a setting with multiple heterogeneous banks

the taxation of domestic and foreign banking abstract using bank level data for 80 countries in the 1988 1995 period this paper examines taxation of domestic and foreign owned banks the profitability of foreign banks is found to rise relatively little with their domestic tax burden perhaps reflecting the availability of foreign tax credits and profit shifting opportunities the paper also examines whether domestic and foreign banks pay different amounts of domestic tax taxes paid by foreign banks are shown to rise relatively little with the local statutory tax this evidence supports the hypothesis that foreign banks engage in relatively extensive profit shifting

multinationality and performance among british manufacturing companies over the period 1972 84 profitability among 304 large british manufacturing companies was positively related to their degree of multinationality moreover increases in overseas production were strongly associated with increases in sales and profitability the profitability of multinational growth over the whole period was independent of its destination supporting the view that the primary source of the superior performance of multinationals was competitive advantage rather than the higher rate of profit in the industries of other countries

capital requirements and the behaviour of commercial banks abstract i study the consequences of capital regulations on the portfolio choices of commercial banks elaborating on previous work by kareken and wallace 1978 koehn and santomero 1980 and kim and santomero 1988 i obtain the following results if the objective of commercial banks is maximization of the market value of their future profits value maximizing banks capital regulations cannot prevent banks from choosing very specialized and very risky portfolios risk based insurance premia are in fact the relevant instrument for that purpose on the other hand if banks behave as portfolio managers utility maximizing banks capital regulations can be effective but only if the weights used in the computation of the ratio are proportional to the systematic risks of the assets their betas because of limited liability of commercial banks a minimum capital regulation or a closing rule may become necessary as well to prevent failing banks from betting for resurrection

the influence of governance infrastructure and corporate governance on profit shifting in this article we develop a conceptual model to examine the influence of quality of country level governance infrastructure and corporate governance effectiveness on profit shifting we empirically test propositions derived from the model with a unique firm level data set and using multiple indicators of governance infrastructure quality and corporate governance mechanisms we estimate that on average about 6 of total pre tax income is shifted out of foreign owned firms in india we show that governance infrastructure that improves collective action and transparency in both the foreign and host country reduces shifting on the other hand secure property rights and efficient contracting in the foreign country increases shifting we also find that monitoring by foreign institutional investors restricts shifting

a reexamination of mean variance analysis of bank capital regulation abstract the mean variance framework has been used to analyze the effects of bank capital regulation on the asset and bankruptcy risk of insured utility maximizing banks this literature claims that more stringent capital regulation will increase asset risk and can increase bankruptcy risk these conclusions are notable because they are opposite to those obtained for insured value maximizing banks in this paper we show that the utility maximization literature does not support its conclusions regarding the effects of bank capital regulation because it has mischaracterized the bank s investment opportunity set by neglecting the option value of deposit insurance

a market evaluation of the risk based capital standards for the u s financial system abstract this paper evaluates u s risk based capital guidelines by comparing stock market measures of institutions risk with current regulatory risk based capital measures the first part of the evaluation compares overall market and regulatory risk based capital measures of current capital adequacy required capital and the capital infusion required to meet the capital requirement the second part compares regulatory risk weights on individual risk categories with market determined risk weights the results suggest that the market and risk based capital standards agree to some extent on the adequacy of institutions current capital and required capital infusion but that their measures of asset risk are not positively correlated further the 100 percent risk category for banks and the 50 and 200 percent categories for s ls do distinguish activities that are riskier by market measures however the market model makes limited distinctions among the other categories in addition the results suggest that some off balance sheet activities for banks may reduce asset risk

international profit shifting within multinationals a multi country perspective abstract we model the opportunities and incentives generated by international tax differences for international profit shifting by multinationals the model considers not only profit shifting arising from international tax differences between affiliates and parent companies but also from tax differences between affiliates in different host countries our model yields the prediction that a multinational s profit shifting in a country depends on a weighted average of international tax rate differences between all countries where the multinational is active using a unique dataset containing detailed firm level information on the parent companies and subsidiaries of european multinationals and information about the international tax system we test our model and empirically examine the extent of intra european profit shifting by european multinationals on average we find a semi elasticity of reported profits with respect to the top statutory tax rate of 1 3 while shifting costs are estimated to be 0 6 of the tax base international profit shifting leads to a substantial redistribution of national corporate tax revenues many european nations appear to gain revenues from profit shifting by multinationals largely at the expense of germany

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

governance infrastructure and us foreign direct investment this paper examines the statistical importance of governance infrastructure as a determinant of us foreign direct investment fdi in broad terms governance infrastructure represents attributes of legislation regulation and legal systems that condition freedom of transacting security of property rights and transparency of government and legal processes our econometric analysis uses a two stage estimation procedure in the first stage the probability that a country is an fdi recipient is estimated the results indicate that countries that fail to achieve a minimum threshold of effective governance are unlikely to receive any us fdi countries that receive no us fdi are typically countries that do not promote free and transparent markets that have ineffective governments and that often have legal systems that are not rooted in english common law in the second stage the analysis is restricted to those countries that did receive fdi flows the estimated equations focus on the determinants of the amount of fdi received given that a country is a recipient of us fdi governance infrastructure including the nature of the legal system is an important determinant of the amount received

managing valuable knowledge in weak ip protection countries although knowledge assets provide multinational corporations mncs with competitive advantages in foreign markets it can be difficult for firms to protect their knowledge in foreign countries especially countries with weak intellectual property ip protection building on and extending the knowledge management institutional theory and expatriate literatures this article explores whether home country expatriates can substitute for weak ip protection and drive an increase in more and more valuable knowledge transfers to foreign operations located in weak ip protection countries because of their ties to headquarters knowledge of parent firm assets priorities and routines and activities in local operations i argue that home country expatriates can transform the local operation to offer higher protection for parent firm knowledge in weak ip countries in ways that local managers cannot the results from a comprehensive panel of us multinationals suggest that home country expatriates can substitute for weak ip protection but that this effect is contingent on the manufacturing and knowledge capabilities of foreign operations for higher value parent firm knowledge transfers overall this article extends our understanding of the global management and protection of knowledge by mncs by exploring how organizational practices can buffer country level institutional deficiencies for firm knowledge

the governance impact of a changing investor landscape within the backdrop of comparative corporate governance research we draw on the managerial reporting and impression management literatures to examine how the type level and nature of foreign shareholders infused with their own governance logic influence initial managerial earnings optimism and how foreign ownership shapes earnings guidance in a stakeholder oriented setting drawing on japanese data and addressing endogeneity concerns our results show that under the presence of foreign owners managers are more optimistic in their initial earnings forecasts but that in subsequent revisions they are more likely to provide timely adjustments of their earnings forecast and avoid making last minute adjustments this research illustrates how foreign practices travel across borders and contributes to understanding triggers to governance and strategic changes

analyzing the relationships between information technology inputs substitution and national characteristics based on ces stochastic frontier production models abstract this research examines four interrelated issues at the country level the value of information technology it inputs substitution and complement the complementarity phenomenon created by it and national characteristics and the productivity paradox jointly and critically from a global perspective using the so called productive efficiency as the performance measure to that end we develop the three factor constant elasticity of substitution ces stochastic production frontier model and apply it to a set of panel data from 15 countries over the period 1993 2003 along with the traditional two factor ces models within the one and two equation frameworks in the two equation setting six national characteristics are selected as the contributing factors of the productive efficiency the findings include i the value of it as measured by the productive efficiency is duly recognized ii the productivity paradox is found to be absent from the production process in a majority of developed and developing countries considered rejecting the existing argument that the paradox exists only in developing economies but does not exist in developed countries however the developed countries have used it capital in their production systems more productively efficiently than the developing nations iii traditional capital non it capital traditional labor and it capital are not pairwise substitutable contrary to the notion that they are pairwise substitutable at the firm level iv constant returns to scale as commonly assumed are not supported by the data v different national characteristics affect a country s output represented by gross domestic product or gdp and its productive efficiency differently and vi the complementarity phenomenon is observed in most of the countries developed and developing under study

efficiency of large double auctions we consider large double auctions with private values values need be neither symmetric nor independent multiple units may be owned or desired participation may be stochastic we introduce a very mild notion of a little independence we prove that all nontrivial equilibria of auctions that satisfy this notion are asymptotically efficient for any alpha 0 inefficiency disappears at rate 1 n 2 alpha