hedging and coordinated risk management evidence from thrift conversions we provide an explanation for hedging as a means of allocating rather than reducing risk we argue that when increases in total risk are costly firms optimally allocate risk by reducing increasing exposure to risks that provide zero positive economic rents our evidence shows that mutual thrifts that convert to stock institutions increase total risk following conversion consistent with their increased abilities and incentives for risk taking they achieve this increase by hedging interest rate risk and increasing credit risk we provide some evidence that risk management activities are related to growth capacity and management compensation structure attained at conversion

education and invention abstract modern growth theory puts invention on the center stage inventions are created by individuals raising the question of whether we can increase the number of inventors to answer this question we study the causal effect of msc engineering education on invention using data on u s patents finnish inventors and the distance to the nearest technical university as an instrument we find a positive effect of engineering education on the propensity to patent and a negative ols bias our counterfactual calculation suggests that establishing three new technical universities resulted in a 20 increase in the number of uspto patents by finnish inventors

the limits of capital transcending the public financer private producer split in industrial r d abstract a near consensus has emerged supporting the public funding of industrial r d as a solution to a host of market failures however the common policy prescription urges government to go no further than minimal market enhancing intervention largely keeping the state to the role of financer of privately conducted r d by focusing on three general issues in the context of industrial r d trust coordination and motivation this article develops an argument for a more expansive government role two models of state intervention are at the center of the analysis public production of r d and state sponsorship of inter firm and inter organizational networks it is argued that both these models have distinct advantages as well as weaknesses in addressing common challenges to industrial r d production informed by the positive experiences of different states that have moved in recent years from high technology industries periphery to the center this article explains how the two models of state intervention address the various problems associated with pure private production it is concluded that while even advanced countries with well developed markets might find it advantageous to actively intervene in industrial r d the two models should especially be considered in cases of economies that suffer from weak market signals low retention of value added functions limited professional capacities and limited institutional thickness and networks

mutual holding companies evidence of conflicts of interest through disparate dividends abstract the mutual holding company mhc structure establishes a dual class stock that creates a unique opportunity to transfer wealth from thrift depositor owners to new minority shareholders through the disparate payment of dividends we show that mhcs are priced higher than comparable non mhcs and dividend policy is a significant component of this valuation we also show that mhc thrifts pay significantly higher dividends than non mhc thrifts and that an office of thrift supervision ots ruling reducing the potential for disparate dividends between the two classes of shareholders resulted in lower dividends these results have policy implications of special significance given that the ots reversed its position in 2000 and because of the current controversy over the use of the mhc structure in the financial service industry

off season tourists and the cultural offer of a mass tourism destination the case of rimini abstract this paper assesses the potential implications on off season tourism of enhancing the cultural offer of rimini a popular italian seaside holiday destination hosting about 12 million overnight stays per year since more than 9 million of these stays are concentrated in the summer season in the last 20 years rimini has been undergoing a policy of seasonality smoothing which mainly pivots around business and cultural tourism this assessment has been carried out through discrete choice experiments submitted to a sample of about 800 tourists who visited rimini outside the summer months since tourism can be viewed as a composite good which overall utility depends on how the component characteristics are arranged the choice experiments allow to disentangle the importance and the willingness to pay of tourists for different attributes of the holiday the choice model incorporates a number of possible changes to actual tourism features which are also the subject of public debate including them in hypothetical alternative holiday packages the conditional logit analysis of the choice experiments can highlight any synergy or trade off between cultural and business tourism results suggest that business and leisure tourists share many features related to the use of the territory while there are important trade offs between these two groups and cultural tourists since business tourists have a higher willingness to extend their stay a softer budget and their demand is also complementary to the demand of summer tourists brau scorcu vici 2009 from the destination point of view investing in this market segment would be the best option although a second best however cultural tourists share with the local population of rimini many aspects of the demand of territory figini castellani vici 2009 hence cultural tourism can play a fundamental role in the intermediate season as a tool for smoothing seasonality to diversify investments and to give value to the city s cultural heritage

entry and competitive dynamics in the mobile telecommunications market abstract we propose an extension of the gans stern gans j s stern s 2003 the product market and the market for ideas commercialization strategies for technology entrepreneurs research policy 32 2 333 350 framework that includes entry by existing firms an incumbent firm possessing complementary assets and strong appropriability is in a formidable position teece d j 1986 profiting from technological innovation implications for integration collaboration licensing and public policy research policy 15 6 285 305 however a de alio entrant can leverage complementary assets to enter along a new technological trajectory and then develop appropriability we illustrate how several mobile telecommunications firms ericsson nokia and samsung pursued this strategy to catch up with the market leader motorola we also identify several shortcomings in motorola s approach it was too inward looking in developing technologies but ironically not inward looking enough in exploiting its most valuable patents

modeling structural and temporal variation in the market s valuation of banking firms hidden capital exists whenever the accounting measure of a firm s net worth diverges from its economic value such unbooked capital has on balance sheet and off balancesheet sources this paper develops a model to estimate both forms of hidden capital and to test hypotheses about their determinants in effect the analysis expands the twoindex model by endogenizing the market and interest rate sensitivities of any stock and decomposing each sensitivity into on balance sheet and off balance sheet elements for a sample of banks during 1975 1985 the model finds considerable variation in both forms of hidden capital to the extent that an accounting representation of a firm s net worth diverges from its economic value the firm is said to have hidden capital two sources of hidden capital exist accountants misvaluations of portfolio positions that accounting principles designate as on balance sheet items and the systematic neglect of off balance sheet sources of value that these principles do not permit to be formally booked this paper develops a model for estimating both types of hidden capital the model makes direct use of accounting information on the bookable positions of a firm and separates bookable from unbookable sources of value we use regression analysis to partition the market value of a firm s stock i e its market capitalization mv into two components recorded capital reserves and unrecorded or hidden net worth hidden capital is in turn allocated between values that are unbooked but bookable through asset turnover or writedowns on a historical cost balance sheet under generally accepted accounting principles gaap and values which gaap currently designates as an unbookable offbalance sheet item we estimate the net unbooked value of on balance sheet positions by estimating an intermediate variation ratio k this variable expresses the ratio of the market value to the book value of the collected components of a firm s bookable

innovation in israel 1968 1997 a comparative analysis using patent data abstract the israeli high tech sector is widely regarded as a hotbed of cutting edge technologies and as the growth engine of the israeli economy in the 1990s and beyond in this paper we present a close up portrait of innovation in israel for the past 30 years with the aid of highly detailed patent data we use for that purpose all israeli patents taken in the us over 7000 as well as us patents and patents from other countries for comparative purposes the time path of israeli patenting reveals big jumps in the mid 1980s and then again in the early 1990s reflecting underlying shocks in policy and in the availability of relevant inputs israeli ranks high in terms of patents per capita compared to the g7 the asian tigers and a group of countries with similar gdp per capita finland is strikingly similar taiwan s patenting has grown extremely fast and is now on par with israel south korea is rapidly closing the gap the technological composition of israeli innovations reflects quite well worldwide technological trends except that computers and communications the fastest growing field in the us has grown even faster in israel the weak side resides in the composition of israeli assignees the actual owners of the intellectual property rights just 35 of israeli patents were assigned to israeli corporations a much lower percentage than in most other countries relatively large shares went to foreign assignees to universities and the government and to private inventors on the other hand israeli patents are of good quality in terms of citations received and getting better over time us patents command on average more citations but not in computers and communications or in biotechnology and israeli patents are significantly better than those of the reference group of countries

thrift stock returns and portfolio interest rate sensitivity abstract in practice the interest rate sensitivity of depository institution di net worth is measured in terms of maturity mismatches arising from nominal contracts in their financial portfolios academic studies also frequently invoke nominal contracting to explain a positive covariation observed between di stock returns and bond returns for a sample of thrifts reporting detailed financial data 1984 1992 this study estimates monthly changes in their financial portfolio values due to changes in interest rates these portfolio value changes are found to be unimportant in explaining the thrifts stock returns and are unable to account for a positive covariation between the stock returns and bond market returns potential weaknesses in the tests seem inadequate to explain the results explanations other than nominal contracting may warrant more consideration in relating dis net worth to interest rate changes

federal deposit insurance regulatory policy and optimal bank capital this paper seeks to explain the combination of explicit and implicit pricing for deposit insurance employed by the fdic essentially the fdic sells two products insurance and regulation to span the product space it must and does set two prices we argue that the need to establish regulatory disincentives to bank risk taking is the heart of the controversy over the adequacy of bank capital and that the ability to close risky banks before exhausting their charter value i e the value of their right to continue in business stands at the center of these disincentives and in front of the fdic s insurance reserves just as a book shouldn t be judged by its cover a government agency shouldn t be judged by the words behind its initials with the fdic federal deposit insurance corporation the agency s name describes only part of its formal operations the fdic is quasi governmental has a regional structure and sells deposit insurance however the initials fail to convey the fdic s critical place in the governmental regulatory structure as the sole federal overseer of the approximately 8900 state chartered commercial banks that have chosen not to belong the federal reserve system reflecting the federal reserve s membership problem the number of these banks is growing year by year besides selling deposit insurance at bargain explicit rates the fdic performs four regulatory functions 1 entry regulation it passes on new banks applications for deposit insurance and on branch and merger proposals as well thereby protecting the value of existing bank charters 2 examination two thirds of fdic employees are concerned with inspecting bank records and supervising managerial activity 3 regulation of deposit rates and conditions for withdrawal by tradition fdic policies on these matters conform entirely with regulations applicable to federal reserve member banks and 4 disposition of failed banks when an insured bank fails the fdic usually chooses not to liquidate it 2

knowledge stocks knowledge flows and innovation evidence from matched patents and innovation panel data successful innovation depends on knowledge technological strategic and market related in this paper we explore the role and interaction of firms existing knowledge stocks and current knowledge flows in shaping innovation success the paper contributes to our understanding of the determinants of firms innovation outputs and provides new information on the relationship between knowledge stocks as measured by patents and innovation output indicators our analysis uses innovation panel data relating to plants internal knowledge creation external knowledge search and innovation outputs firm level patent data is matched with this plant level innovation panel data to provide a measure of firms knowledge stock two substantive conclusions follow first existing knowledge stocks have weak negative rather than positive impacts on firms innovation outputs reflecting potential core rigidities or negative path dependencies rather than the accumulation of competitive advantages second knowledge flows derived from internal investment and external search dominate the effect of existing knowledge stocks on innovation performance both results emphasize the importance of firms knowledge search strategies our results also re emphasize the potential issues which arise when using patents as a measure of innovation

measuring the true profile of taxpayer losses in the s l insurance mess abstract this research shows that conservative methods of projecting and discounting cash flows if applied to information already collected in the fhlbb s reporting system would have reflected the size of the s l deposit insurance losses long before taxpayers were aware of the extent of the mess official data show fslic reserves of 4 6 billion in 1986 in sharp contrast our conservative estimate puts imbedded losses for that year at 45 3 billion these methods prove insensitive to arbitrariness in the assumptions needed to operationalize the discounting process and measure the extent of guilty knowledge it is fair to presume officials possessed supporting an incentive breakdown theory of the problem over presumptions of innocent ignorance the policy implication is that taxpayers need to impose on government regulatory agents a better information system and better enforcement of those agents obligations to the public

on competition risk and hidden assets in the market for bank credit cards abstract the market for credit cards has been the subject of recent attention and controversy because of high profits earned on credit cards and substantial premiums on the resale of credit card receivables this paper estimates risk return profiles for credit card banks and explores the role of intangible assets in determining resale premiums on credit card receivables in addition the effects on the resale market of securitization and the opportunity cost of acquiring new accounts are analyzed using alternative measures of risk and alternative control groups we find for the years 1989 to 1995 that credit card banks earned significantly higher returns on assets but that these returns were associated with greater risk taking analysis of premia for the years 1993 to 1995 suggest that acquiring banks pay higher premia for mid sized regional accounts than for larger national portfolios perhaps because of richer cross selling opportunities

the pricing of interest rate risk evidence from the stock market this paper addresses the issue of whether firms are required to pay an ex ante premium to investors for bearing the risk of interest rate changes a two factor apt model with the market and changes in the yield on long term government bonds as factors is employed the paper shows that empirically most of the interest sensitive stocks are in the utility industries and that there is reasonable evidence that the interest factor is priced in the sense of the apt several sources for the interest sensitivity are considered and regulatory lags are focused on as a likely candidate some firms exhibit ex post sensitivity in their stock returns to unanticipated changes in interest rates are these firms required to pay investors ex ante for bearing this risk of interest rate changes the framework for examining pricing of unanticipated interest rate changes is a two factor apt model with the market and changes in the yield on long term government bonds as factors the issue is whether the interest rate change premium is significant to study this the paper uses full information maximum likelihood fiml estimation on groups of twenty five individual firms with both cross equation constraints and withinequation nonlinear constraints on the parameters as mandated by the apt model whether the risk of unanticipated changes in interest rates is priced in the market is of particular interest with regard to regulated firms regulated firms especially electric utilities turn out to comprise the big majority of firms that are sensitive to unanticipated interest rate changes after some preliminary investigation the analysis focuses on electric utilities much empirical work on the apt relies on factor analysis e g roll and ross 30 bower bower and logue 5 use factor analysis in comparing the apt and the capm to explain utilities returns the present paper however uses observable variables at the macro level chan chen and hsieh cch 7 and chen roll and ross crr 8 also examine apt models with specific macroeconomic factors cch and crr use a traditional fama macbeth type of cross sectional estimation approach in the premia calculations rather than a fiml approach gibbons and stambaugh have applied fiml techniques to models using only the market as an explanatory variable gibbons 20 used a noniterative algorithm on portfolios of firms equivalent to a two step cross sectional approach stam

linking the technological regime to the technological catch up analyzing korea and taiwan using the us patent data this article examines the relationship between the technological regime and the technological catch up using us patent data this study first extends the notion of technological regimes as more appropriate for the catching up context before it goes on to develop the quantitative expressions of technological regime variables then it investigates in which technological classes technological catch up tends either to occur or not to occur and what affects the speed of the catch up this study has found that catching up is more likely to happen in those technological classes with shorter technological cycle time and more initial stock of knowledge and that among those candidate classes the actual speed of catch up varies depending on appropriability and knowledge accessibility this implies that the factors that determine the occurrence of catch up and the speed of catch up are different comparing the level of technological capability of the advanced and catching up economies the article has found that catching up countries tend to achieve high levels in the technological sectors with shorter cycle time easier access to knowledge and higher appropriability whereas the advanced countries show the exactly opposite performances the study also confirms the organizational selection hypothesis such that the firms of different organizations and strategies show divergent degrees of fitness in the different environment or technological regime we find that the korean firms find themselves more fitted to technological regimes featured by low appropriability and high cumulativeness persistence whereas the taiwanese firms are more fitted to technological regimes featured by high appropriability and low cumulativeness persistence our findings are consistent with the following characterization of the firms in korea and taiwan the korean firms dominated by the so called chaebols especially in patent registrations are characterized as less flexible large diversified conglomerates and pursing more independent r d and learning strategies the taiwanese firms are characterized as more flexible network based specialized firms and pursuing more cooperative r d and learning strategies copyright 2006 oxford university press

a penny for your quotes patent citations and the value of innovations the use ofpatents in economic research has been seriously hindered by the fact that patents vary enormously in their importance or value and hence simple patent counts cannot be informative about innovative output the purpose of this article is to put forward patent counts weighted by citations as indicators of the value of innovations thereby overcoming the limitations of simple counts the empirical analysis of a particular innovation computed tomography scanners indeed shows a close association between citation based patent indices and independent measures of the social value of innovations in that field moreover the weighting scheme appears to be nonlinear increasing in the number of citations implying that the informational content of citations rises at the margin as in previous studies simple patent counts are found to be highly correlated with contemporaneous rd however here the association is within afield over time rather than cross sectional

linking induced technological change and environmental regulation evidence from patenting in the u s auto industry a b s t r a c t this article uses a carefully screened patent database in automobile emission control technologies and a detailed regulatory action analysis to examine firms innovation in response to u s technology forcing auto emissions standards enacted between 1970 and 1998 the study finds that under the performance based technology forcing pbtf auto emissions regulations both automakers and compo nent suppliers innovated and introduced more advanced emission control technologies for automobile applications the study also shows that stringent pbtf regulation temporarily induced domestic u s firms to become more innovative than foreign firms that operated in the local u s market during the early phase of the regulatory regime findings of this research strongly imply that government intervention in the form of technology forcing regulation can drive firms to invest in technological innovation

valuation of diversified banks new evidence abstract this paper reconsiders the effect of diversification on bank valuation our objective is to provide new evidence based on a unified estimation framework that places particular emphasis on separating the effects of diversification specialised banks vs diversified banks from those of bank type investment banks vs commercial banks consistent with prior studies we find a significant diversification discount at the end of the 1990s our main finding is that it decreases over time and practically vanishes after the financial crisis we do not find support for the hypothesis that the diversification effect is influenced by geographical or regulatory factors the valuation impact of bank characteristics varies over time particularly in the financial crisis but this structural break does not explain the observed decrease of the diversification discount we show that the pre crisis discount is considerably smaller in a robust regression which in part is driven by banks with a large share of non interest income

estimating the benefits of targeted r d subsidies we study the expected welfare effects of targeted r d subsi dies using project level data from finland we model the application and r d investment decisions of firms and the subsidy granting decision of the public agency in charge of the program our model and institutional environment allow us to identify different benefits and costs of the r d subsidy program we find that expected effects of subsidies are very het erogeneous and estimated application costs low on average the social rate of return on targeted subsidies is 30 to 50 but spillover effects of subsidies are smaller than effects on firm profits

the sensitivity of bank stock returns to market interest and exchange rate risks abstract this paper presents and estimates a multifactor model of bank stock returns that incorporates market return interest rate and exchange rate risk factors a model of the optimizing behavior of an international banking firm is used to derive the sensitivity coefficients of the alternative factors regression equations are estimated that are based on either actual or unexpected values of the underlying factors with a post october 1979 time dummy variable and with a money center bank dummy variable standard results are obtained for the market and interest rate variables while new results are derived for the exchange rate variable the specific effects of the latter variable are found to be dependent on the time period of observation and the money center status of banks

tax incentives and r d activity firm level evidence from taiwan this paper investigates the effect of tax incentives on r d activities in taiwanese manufacturing firms specifically we assess the potential r d enhancing effect on recipients of r d tax credits compared with their non recipient counterparts moreover the potential difference in the r d enhancing effect between high tech and non high tech firms is also examined utilizing a firm level panel dataset during 2001 and 2005 empirical results obtained by propensity score matching show that recipients of r d tax credits appear on average to have 93 53 higher r d expenditures and a 14 47 higher growth rate for r d expenditures than non recipients with similar characteristics the r d enhancing effect of r d tax credits is not found to be particularly relevant to high tech or non high tech firms we further employ a generalized method of moment gmm of the panel fixed model to control for the endogeneity of r d tax credits and firm heterogeneity in determining r d expenditure various estimates based on the entire sample and high tech firms are quite similar and there is a significantly r d enhancing effect of r d tax credits this result suggests that the r d preferential policy has induced more r d expenditure by firms in taiwan while the existence of the r d enhancing effect brought on by tax incentives is intuitive the estimates can provide insightful implications for the r d tax policy