cultural conflict and merger failure an experimental approach we use laboratory experiments to explore merger failure due to conflicting organizational cultures we introduce a laboratory paradigm for studying organizational culture that captures several key elements of the phenomenon in our experiments we allow subjects in firms to develop a culture and then merge two firms as expected performance decreases following the merging of two laboratory firms in addition subjects overestimate the performance of the merged firm and attribute the decrease in performance to members of the other firm rather than to situational difficulties created by conflicting culture

formulating research policy on expert advice abstract national research assessments represent the principal policy used by countries with public university systems to improve the quality of their universities research they typically employ expert panels of local academics to assess journal quality and use such assessments to reward publications we propose a model of how experts assess quality and test this model using data from the recent australian assessment controlling for objective quality we show that experts cognitive biases dominate their assessments consequently such assessments exaggerate the quality of the experts research and understate that of their colleagues our model can explain 95 of the variation in assessments

aging and productivity among economists economists productivity over their careers and as measured by publication in leading journals declines very sharply with age there is no difference by age in the probability that an article submitted to a leading journal will be accepted rates of declining productivity are no greater among the very top publishers than among others and the probability of acceptance is increasingly related to the author s quality rather than the author s age

patterns of research productivity in the business ethics literature insights from analyses of bibliometric distributions in any academic discipline published articles in respective journals represent production units of scientific knowledge and bibliometric distributions reflect the patterns in such outputs across authors or producers closely following the analysis approach used for similar studies in the economics and finance literature we present the first study to examine whether there exists an empirical regularity in the bibliometric patterns of research productivity in the business ethics literature our results present strong evidence that there indeed exists a distinct empirical regularity it is the so called generalized lotka s law of scientific productivity pattern the number of authors publishing n papers is about 1 n c of those publishing one paper we discuss the likely processes that underlie the productivity pattern postulated by the generalized lotka s law we find that the value of the exponent c is equal to about 2 6 for the comprehensive bibliometric data across the two leading business ethics journals the observed research productivity pattern in the business ethics area a relatively young discipline is interestingly very consistent with those found in much older related business disciplines like economics accounting and finance we discuss the general implications of our findings

zero as a special price the true value of free products when faced with a choice of selecting one of several available products or possibly buying nothing according to standard theoretical perspectives people will choose the option with the highest cost benefit difference however we propose that decisions about free zero price products differ in that people do not simply subtract costs from benefits but instead they perceive the benefits associated with free products as higher we test this proposal by contrasting demand for two products across conditions that maintain the price difference between the goods but vary the prices such that the cheaper good in the set is priced at either a low positive or zero price in contrast with a standard cost benefit perspective in the zero price condition dramatically more participants choose the cheaper option whereas dramatically fewer participants choose the more expensive option thus people appear to act as if zero pricing of a good not only decreases its cost but also adds to its benefits after documenting this basic effect we propose and test several psychological antecedents of the effect including social norms mapping difficulty and affect affect emerges as the most likely account for the effect

syndicated loan announcements and the the market value of the banking firm this paper examines valuation effects on the stocks of fifteen participating money center banks of 774 announcements of syndicated loans representing announcements of investment decisions for the lenders the authors find that announcements of ldc loans in the 1970s especially those to latin american borrowers are associated with negative abnormal returns to the lending banks while announcements of loans to u s corporate borrowers in the 1980s especially those for takover finance are associated with positive abnormal returns while a number of testable predictions are consistent with the negative abnormal returns for latin american loans they explain response to takeover loans with a return to liquidity hypothesis copyright 1995 by ohio state university press

life after takeover economic consequences of takeovers are investigated by analyzing profitability of enterprises acquired a s a direct or indirect white knight consequence of tender offer s target companies pre tender profitability averaged 0 97 percentag e points below peer industry norms nine years after takeover acquir ed lines of business had operating income assets percentages 3 10 poi nts below those of non tender lines with similar industry bases mark et shares and merger accounting methods most of the targets postta keover profit decline stemmed from asset value writeups there is no indication that on average the acquirers raised their targets operat ing profitability net of merger related accounting adjustments copyright 1987 by blackwell publishing ltd

lending terms and aggregate productivity abstract several empirical studies suggest that lending terms are eased in expansions and tightened in recessions thereby influencing the mix of financed entrepreneurs we study a model of adverse selection in competitive financial markets and show that lending terms deteriorate with the aggregate state under two general conditions if exogenous increments to entrepreneurs productivity raise returns to investment and or tighten the credit line needed to screen out a given entrepreneur type competition results in contracts with less screening two endogenous effects on productivity emerge production scales grow closer to optimal but lower productivity entrepreneurs enter the mix of producers the positive negative effect dominates at low high aggregate states

bank portfolio exposure to emerging markets and its effects on bank market value abstract this study estimates a model of banking company equity returns taking into consideration book value and market value measures of their exposure to emerging markets debt in this estimation general systematic market factors such as the rate of return on the s p500 stock index and yields on a constant maturity 5 year treasury note are held constant such that the exposure variables are accounting for effects due to banks exposure to emerging market debt the results although not uniform among banking companies support the hypothesis that the extent of exposure to emerging market debt are factored into the valuation of banking company equity contemporaneously the inclusion of a market value indicator adds to the explanation of equity returns of some banks it is also clear that knowing the extent of the exposure on a book value basis is important information alone that may allow investors to take account of or evaluate the effects of changes in banking company equity valuation from ldc debt exposures we also perform an event study for three major debt crises to determine whether the market recognizes the effects of these events on bank valuation the event study results show that there is little information from identifying the time period of the crises on banking company equity returns explanations for this are that the information of these possible crises has been embedded in bank changes in exposure and that the market valuation of the emerging market debt is already accounted for by our model

the journals of economics we examine the principal journals of economics with particular attention to the communication between journals as reflected by the network of interjournal citations during 1987 90 and the changes over the past century in the characteristics of the authors and the techniques they have used the numerical results and those of the statistical modeling of these results reinforce the importance of economic theory as an exporter of intellectual influence to applied economics the study includes an examination of the degree of specialization among different subfields of economics a statistical model is presented for measuring the flow of intellectual influence as measured by citations in terms of simple univariate scores

bank competition and credit standards this article offers an explanation for the substantial variation of credit standards and price competition among banks over the business cycle as the economic outlook improves the average default probabilities of borrowers decline this affects the profitability of screening and causes bank screening intensity to display an inverse u shape as a function of economic prospects low screening activity in expansions creates intense price competition among lenders and loans are extended to lower quality borrowers as the economic outlook worsens price competition diminishes and credit standards tighten significantly deposit insurance may contribute to the countercyclical variation of credit standards copyright 2004 oxford university press

trends in the publication of empirical economics this paper documents recent trends in the publication of empirical articles in general interest economics journals three measures of journal quality are estimated the author finds substantial differences in publication rates of empirical articles among top tier and second tier journals and shows that the empirical percentages among general interest journals has been converging of late he offers potential explanations for the negative relationship between measured journal quality and empirical publication rates as well as the recent convergence

financial intermediation and regime switching in business cycles the authors study a one sector growth model where capital investment is credit financed and there is an adverse selection problem in credit markets the presence of adverse selection creates an indeterminacy of equilibrium many equilibria display permanent fluctuations characterized by transitions between walrasian regimes and regimes of credit rationing cyclical contractions involve declines in real interest rates increases in credit rationing and withdrawals of savings from banks for some configurations of parameters all equilibria display cyclical fluctuations the authors provide sufficient conditions for deterministic cycles consisting of m periods of expansion followed by n periods of contraction to exist copyright 1998 by american economic association

the impact of economics on management abstract this article analyzes the impact of economics on management by examining citations of 71 management journals aer jpe econometrica and qje have the highest impact industrial organization journals also have a particularly large impact the share of economics in management citations drops from 9 91 percent until 1995 to 5 70 percent for 1996 2005 three possible explanations for this decrease are analyzed economics research became more mathematical because management is a younger discipline it grew faster than economics in quantity and quality of research and interdisciplinary spillover of research is slower than the spillover within a discipline only the second explanation is supported by the data

adverse selection and the financial accelerator many economists believe that credit market distortions create a financial accelerator which destabilizes the economy this paper shows that when credit market distortions arise from adverse selection they sometimes stabilize the economy rather than destabilize it the stabilizing forces are closely related to forces that cause overinvestment in static models when investment projects are equity financed or when contracts are written optimally the distortions always stabilize the economy thus stabilizing equilibria are a robust feature of the model the empirical distinction between accelerator and stabilizer equilibria is subtle many empirical tests are unable to distinguish between accelerator and stabilizer equilibria

european economics an analysis based on publications in the core journals abstract in this paper we provide a ranking of european economics institutions and countries based on publications in a core set of 10 economic journals from 1991 to 1996 we find that the three leading universities in europe are the london school of economics tel aviv university and oxford university while the three top ranked countries are the u k france and israel

financial intermediation business failures and real business cycles in this paper a general equilibrium business cycle model is construct ed that when subjected to real disturbances mimics observed qualita tive comovements among real output money business failures risk pr emia intermediary loans and prices in contrast monetary disturban ces generate cycles that have several inconsistencies with empirical evidence thus providing support for real business cycle theory at th e expense of monetary theories of the business cycle financial inter mediation arises endogenously in the model and intermediation matters for business cycle behavior a credit supply mechanism acts in tande m with an intertemporal substitution effect in propagating stochastic disturbances copyright 1987 by university of chicago press

reaction of british bank share prices to citicorp s announced 3 billion increase in loan loss reserves abstract this study assesses the impact of citicorp s announcement of a 3 billion increase in loan loss reserves on may 19 1987 on the share prices of british banks the announcement may have had an impact on british banks because like citicorp the major british ones have a high degree of exposure to the debt of less developed countries ldcs musumeci and sinkey detected a favorable reaction of u s money center banks to the announcement because of disparate bank characteristics and regulations between the u s and the united kingdom share prices of british banks may be affected in a different manner than u s banks the results of our study indicate that british bank share prices were adversely affected by the announcement our findings confirm that 1 the strategy of a bank in one country may not only influence other banks in that country but foreign banks as well and 2 the effects on banks can be dependent on the country of origin

contributions to financial crisis research an assessment of the literature in social science citation index journals from 1990 to 2008 research in the field of financial crisis has generated a considerable amount of literature in the past yet there has neither been any study to assess the contributions to the literature made by individuals or institutions nor any to measure the impact of the articles and researchers this study represents an attempt to 1 investigate the major journals in publishing financial crisis research 2 assess the contributions of individual researchers and institutions using the credited contribution approach and 3 measure the impact of individual publications and individual researchers on the financial crisis literature through citation analysis based on the publications in social science citation index ssci journals from 1990 to 2008 the findings provide a useful benchmark for assessing individual and institutional research productivity and trends for future research and venues for publications are identified

on the relation between reschedulings and bank value the effect of developing country loan reschedulings on large u s banks is investigated using an event study methodology the major finding concerns the evolving nature of the impact of loan reschedulings during 1978 80 reschedulings had a positive effect on bank returns in contrast to the negative impact found for the 1981 83 period an explanation for these results is provided by a model of the rescheduling process that recognizes the noncompetitive aspects of rescheduling negotiation copyright 1989 by american economic association

experimental evidence on the evolution of the meaning of messages in sender receiver games an experiment this paper experimentally investigates the evolution of message meanings when talk is cheap we consider communication between a privately informed sender and a receiver when the sender s message does not affect payoffs directly sender receiver games introduced by jerry green and nancy stokey 1980 and vincent p crawford and joel sobel 1982 provide the simplest stylized environment in which communication is essential communication is the only way to link the receiver s action to the sender s private information in addition sender receiver games have been widely used to study communication in accounting economics finance and political science intuition strongly suggests that effective communication will evolve when the players interests are closely aligned however there is always a nash equilibrium in which the sender randomizes uniformly across all messages such babbling equilibria are proper roger b myerson 1978 blume 1994 and even strategic stability elon kohlberg and jeanfrancois mertens 1986 does not rule out uninformative equilibria in general in response a literature developed that formulates equilibrium selection criteria by appealing to the existence of a commonly understood language matthew rabin 1990 steven a matthews et al 1991 joseph farrell 1993 that can be used to formulate credible deviations from equilibrium unfortunately the selection criteria from this literature are frequently strong enough to remove all equilibria from consideration in addition these arguments are vulnerable to stiglitz s observation in koo cho and david m kreps 1987 that successful deviations from equilibrium may induce further deviations which in turn may undermine the credibility of the original deviations both problems can be avoided by a dynamic approach as in rabin and sobel 1996 we also adopt a dynamic perspective but do not require messages to have a priori meanings instead distinct meanings may emerge endogenously this is important for communication across cultures and for language change 2 we are guided by recent results of blume department of economics university of iowa iowa city ia 52242 dejong department of accounting university of iowa iowa city ia 52242 kim department of economics sung kyun kwan university seoul 110 745 korea sprinkle department of accounting university of wisconsin madison wi 53706 we thank joyce berg vince crawford robert forsythe joel horowitz deirdre mccloskey forrest nelson larry samuelson gene savin joel sobel and especially two anonymous referees for their advice and suggestions we benefitted from comments and discussions resulting from presentations at the 1994 summer meetings of the econometric society the 1996 social learning workshop at suny stony brook the io me gt workshop at the university of iowa the university of bonn the university of bielefeld the center for economic research at tilburg university ohio state university seoul national university and texas a m university we are grateful for financial support from the college of business administration at the university of iowa the ira b mcgladrey institute and the national science foundation

the impact of sovereign risk on the market valuation of u s bank equities abstract this paper tests whether the august 1982 advent of the latin american debt crisis affected the implicit value of commercial bank loans to major latin american debtors and hence the value of equities in contrast to previous studies the analysis provides an explicit derivation of the theoretical impact of such an effect uses a more efficient pooled cross sectional time series estimating technique addresses the question of whether ex ante required returns on bank equities also were affected and compares the estimates to the behavior of the direct market for latin american bonds the results imply that the crisis did cause significant debt discounting as well as an increase in required returns however unlike the bond market most of this equity effect was delayed 6 9 months

the relative impacts of economics journals 1970 1990 our data collection and database assembly efforts were assisted by john p sophocleus mark gwartney michele butler and scott ralston we received extremely valuable computer programming assistance from jon brunson and edward novak constructive comments were receivedfrom two anonymous reviewers financial supportfrom the faculty development committee at salisbury state university is gratefully acknowledged

leading institutional contributors to the elite economic journals given the prestige enjoyed by several economic departments there is a natural curiosity regarding their contributions to the economic literature this article analyses the appearance of all academic institutions worldwide in the eight leading economic journals the blue ribbon eight from 1991 to 2005 we cite those institutions who appear the most and analyse the composition of appearances across all eight journals to assess their degree of diversity while it is tempting to use these measures as a ranking of institutions the analysis is meant to be purely an historical appreciation of the contributions of these admirable institutions

the institutional concentration of authors in top journals of economics during the last two decades this paper addresses the institutional concentration of authors in 15 top economics journals from 1977 to 1997 the concentration of authors phd affiliations is substantially higher than the concentration of authors current affiliations relating input indicators such as population number of universities with economics departments or manpower in economics to publication output reduces the us dominance considerably whereas israel and the united kingdom come out excellently exporters and importers of phds among universities are identified concentration ratios like the herfindahl index lack a clear time trend nevertheless the position of the united states has been weakening in recent years

agent based modeling public choice and the legacy of gordon tullock the future of modeling in public choice may be glimpsed by examining its evolution in economics for problems that are influenced by heterogeneity of actors social networks or emergence the arising of a complex system from simple phenomena such as adam smith s invisible hand economists increasingly are turning to agent based modeling agent based modeling is a form of computational analysis that focuses on agents rather than on aggregates in his long career as a founding scholar of public choice gordon tullock repeatedly followed the agent oriented approach of methodological individualism many of tullock s models are thus highly amenable to further exploration using that method as agent based modeling becomes more and more popular the importance of tullock s work will continue to grow

the reaction of bank stock prices to the international debt crisis abstract in this paper we develop a cross sectional regression approach to estimate the impact of foreign loan exposure on the pricing of u s bank stocks a new approach is required because news about foreign loan problems may arrive incremently over time rather than reaching the market on a few specific dates the way earnings and dividend announcements do consistent with this interpretation we find that foreign loan exposure had a significant impact on the pricing of u s bank stocks during the years 1982 and 1983 but that the stock prices adjusted continually over the two year period rather than jumping on a few particular days

bank capital regulation and the valuation effects of latin american debt moratoriums abstract we examine effects of the mexican and bolivian debt moratoriums on bank share prices and analyze whether bank capital regulation influences these returns we hypothesize that investors perceived that capital deficient banks with exposure to this debt would sustain greater regulatory costs due to increased pressure from regulators to strengthen their capital bases or to reduce leverage consistent with this hypothesis we find that the impact of these debt moratoriums on bank stock returns is more unfavorable for capital deficient banks than for banks that met regulatory standards of capital adequacy

the great crash of 2008 and the reform of economics the 2008 economic crash led to remarkable shifts of opinion among world leaders does this crisis create favourable conditions for the reform and revitalisation of economics itself from a subject dominated by mathematical techniques to a discipline more oriented to understanding real world institutions and actors and why were warnings of financial collapse not heeded recent shortcomings are partly related to the global triumph of market individualist ideology and partly to the exaggerated roles of modelling and quantification these failures of economics are partly peculiar to the discipline and also a result of other wider institutional and cultural forces

first author conditions this paper provides a theoretical explanation for the persistent use of alphabetical name ordering on academic papers in economics in a context in which market participants are interested in evaluating the relative individual contribution of authors it is an equilibrium for papers to use alphabetical ordering moreover it is never an equilibrium for authors always to be listed in order of relative contribution in fact we show via an example that the alphabetical name ordering norm may be the unique equilibrium althoug multiple equilibria are also possible finally we charaterize the welfare properties of the noncooperative equilibrium and show it to produce research of lower quality than is optimal and than would be achieved if coauthors were forced to use name ordering to signal relative contribution

too much investment a problem of asymmetric information this paper shows that under plausible assumptions the inability of lenders to discover all of the relevant characteristics of borrowers results in investment in excess of the socially efficient level raising the rate of interest above the free market level will restore optimality this conflicts with generally held views and is contrasted with the stiglitz weiss model it is shown that the assumptions which yield overinvestment support debt as the equilibrium method of finance however under the stiglitz weiss assumptions used to derive an underinvestment result equity is shown to be the equilibrium method of finance

cross function and same function alliances how does alliance structure affect the behavior of partnering firms firms collaborate to develop and deliver new products these collaborations vary in terms of the similarity of the competencies that partnering firms bring to the alliance in same function alliances partnering firms have similar competencies whereas in cross function alliances partners have very different competencies on examining managers view of these alliances we find that on average same function alliances are expected to perform better than cross function alliances holding fixed the level of inputs a game theoretic analysis shows that this apprehension about cross function alliances is consistent with a pareto inferior equilibrium a pareto superior equilibrium however suggests that partners in cross function alliances may invest more in their alliances than those in same function alliances it is also often believed that increasing the number of partnering firms is not conducive for collaborative effort our analysis shows that this belief is correct for same function alliances but not for cross function alliances we test these equilibrium predictions in an experiment where we exogenously vary the type of alliance and the number of partnering firms the experimental results lend support for the pareto superior equilibrium partners in cross function alliances invested more than their counterparts in same function alliances and this difference in investment levels increased with the number of partnering firms we extend our model to consider alliances where firms have an opportunity to learn from their partners and later leverage this knowledge outside the scope of their alliance though such learning increases the resources committed by alliance partners in the learning phase it decreases investment in the subsequent competition and also dampens the overall investment across the two stages in addition an increase in interalliance competition decreases investments in the focal alliance but increases investment in the competition outside the scope of the alliance

cash flows and credit cycles aggregate productivity falls in recessions and rises in expansions several empirical studies suggest that the systematic behavior of lending standards with laxer tighter standards applied during expansions recessions is responsible for reverting trends in aggregate productivity we build a dynamic model that rationalizes these findings adverse selection in credit markets emerges as a potential source of macroeconomic instability the key idea modeled is that in order to effectively signal their type to financiers productive entrepreneurs must suffer a cost the effective cost of signaling rises with higher cash flow brought about by stronger economic fundamentals because higher cash flow makes it easier for the unproductive type to mimic the productive type competition among the financiers then results in suboptimally lax lending standards low productivity entrepreneurs obtain financing the producer composition effect inducing a recession this in turn creates conditions weak economic fundamentals and low cash flow conducive to the emergence of tighter lending terms the strong composition effect leading to an economic recovery

just another niche in the wall how specialization is changing the face of mainstream economics there is considerable discussion on so called mainstream pluralism that is on the co presence of a variety of research programmes in today s mainstream economics that 1 significantly deviate from the neoclassical core 2 are pursued by different often separate communities of researchers and 3 have their origins outside economics the literature tends to regard mainstream pluralism as a transitory state towards a new post neoclassical mainstream this paper advances a new interpretation it suggests that the changing and fragmented state of mainstream economics is likely to persist over time under the impact of specialization as a self reinforcing mechanism and the creation of new specialties and approaches also through collaboration with researchers from other disciplines

the international debt crisis and bank security returns in 1982 this research investigates the reaction of bank security returns to the 20 august 1982 mexican request for the rescheduling of its external debt empirical results show that the reaction of bank stocks was rapid and significantly negative within six days of the published announcem ent prices had adjusted to reflect levels of individual bank exposure which re futes the much longer time impliedin other studies of this event the authors c onclude that the marketreaction was essentially efficient rational and orderly copyright 1987 by ohio state university press

on the efficiency of least squares regression with security abnormal returns as the dependent variable monte carlo procedures are used to compare the finite sample performance of several estimators that may be used in cross sectional regressions with security abnormal returns as the dependent variable alternative models of event induced increases in stock return variance are examined for the event clustering scenario event clustering implies crosssectional correlation and heteroskedasticity in market model prediction errors violating one of the fundamental ordinary least squares ols assumptions i i d disturbances nonetheless provided that the conditions for asymptotic validity derived by greenwald 1983 are met the ols estimator is well specified in finite samples further for sufficiently large cross sections there is no advantage to several other more complex estimators

subdiscipline specific journal rankings whither applied economics in light of widespread specialization of research and teaching it seems appropriate to supplement the existing general rankings of economics journals with subdisciplinespeci c rankings that is the primary objective of this paper the availability of subdiscipline speci c rankings also permits both i alternative journal ranking methods for the general discipline that account for the breadth of a journal s impact across specialized elds and ii estimation of the relative weights implicitly associated with each eld in traditional disciplinary journal rankings the results are robust to the exclusion of self citations

entry and exit of manufacturing plants over the business cycle abstract this paper analyzes the plant level entry and exit over the business cycle we document basic patterns of entry and exit of u s manufacturing plants between 1972 and 1997 we find that the entry rate is more cyclical than the exit rate we also find that the differences in productivity and employment between booms and recessions are particularly larger for entering plants than for exiting plants our new finding suggests that the selection at the entry margin may be more important than the selection at the exit margin in understanding the plant level dynamics over the business cycle

depositor behavior under macroeconomic risk evidence from bank runs in emerging economies depositor behavior has been associated with bank specific characteristics random runs or contagion episodes using evidence on the 2000 02 bank runs in argentina and uruguay this paper shows that macroeconomic risk is also important few macroeconomic shocks can quickly cause large runs macroeconomic risk affects deposits regardless of traditional bank specific characteristics furthermore bank exposure to macroeconomic factors can explain differences in deposit withdrawals during crises the evolution of bank specific characteristics is mainly driven by macroeconomic factors while the informational content of bank specific variables declines overall depositors seem responsive to risk in a broader sense than that often considered by the literature

the brady plan the 1989 mexican debt reduction agreement and bank stock returns in the united states and japan the authors investigate the impact of the menu approach to debt rescheduling on the market value of two major creditors u s and japanese banks they try to understand how major creditor banks are affected by debt reschedulings and the menu choices they make so that debt deals can be structured in a way that appeals to both creditors and debtor countries they measure the stock market s reaction to the announcement of the brady plan and the mexican debt reduction agreement the brady plan was implemented through the menu approach which acknowledges creditor heterogeneity and provides financing packages that meet the country s financing requirements while still allowing the banks to reduce their exposure the mexican agreement provides an opportunity to test the impact of the brady plan s implementation by examining individual bank s menu choices exposure levels and the market s reaction they explore whether banks were able to make optimal portfolio choices when confronted with the obligation to participate they show that stock prices for different groups of banks reacted quite differently to focal events among all banks u s multinationals showed the strongest positive reaction to the brady announcement and the mexican agreement u s non multinationals do not appear to have been significantly affected by these international debt related events the reaction experienced by all japanese banks was much weaker than that of u s multinationals and was negative for the brady announcement and the initial mexico announcement the authors contend that the lack of a strong reaction was because of the japanese banks relatively low exposure to developing country risk they see the negative market reaction as a reflection of the expectation that a u s initiated debt reduction strategy would not be favorable for japanese banks indeed after the menu choices were announced the market recognized that the japanese banks were treated fairly and corrected itself they do not find that banks that made different choices were treated differently by the market so banks were able to negotiate menu choices in their best interest and to make portfolio choices consistent with their business objectives the results here confirm that the menu approach to debt restructuring may benefit both the creditor banks and the debtor countries

the relationship between the brazilian interest payments moratorium and bank equity returns evidence from the london stock exchange 1 this study examines the effects of the brazilian interest payments moratorium announcement on the equity return levels of several large us and european commericial banks traded on the london stock exchange the empirical evidence suggests that in general the equity prives of the sample banks immediately reflected the relevant information associated with the announcement however some degree of pricing inefficiency was determined to exist as the market was unable to discriminate among banks of the basis of exposure to brazilian loans

entrepreneurial activity risk and the business cycle abstract this paper analyzes a model in which the risk associated with entrepreneurial activity implies that the amount of such activity is procyclical and results in amplification and intertemporal propagation of productivity shocks in the model risk averse agents choose between a riskless project and a risky project with higher expected output the entrepreneurial activity agents who become entrepreneurs need to bear part of the project specific risk for incentive reasons more agents become entrepreneurs when productivity is high because agents are more willing to bear risk and need to bear less risk for incentive reasons furthermore cross sectional heterogeneity can be countercyclical

the reaction of bank stock prices to news of derivatives losses by corporate clients abstract from march through may of 1994 several large nonfinancial firms announced millions of dollars in losses from derivatives deals especially those arranged by bankers trust accompanying these announcements and related news stories were allegations that bankers trust had either misrepresented lied or deceived its clients using sur methods we investigate how these announcements affected bankers trust and three portfolios of banks dealers nondealers and nonusers our results indicate significant cumulative abnormal returns of 12 14 bankers trust 5 56 13 dealer banks and 2 45 32 nondealer user banks the evidence suggests an intra industry information transfer effect consistent with rational pricing the replacement cost of derivative contracts is an important factor in explaining the variation in abnormal returns across banks

the brazilian default announcement and the contagion effect hypothesis abstract in this paper we use stocl market data to test several hypotheses regarding possible investor reaction to the february 20 1987 brazilian default both the traditional event study approach and a generalized least squares regression using brazilian exposure as an explanatory variable for abnormal returns are used a sample of 46 bank holding companies all listed on the new york or american srock exchanges is divided into groups of no low and high brazilian exposure we find that the initial stock market reaction to the default represents a rational investor response to new bank specific information however the stock market reaction also reveals that not all relevant information was contained in the disclosure announcement further we find some evidence of a contagion effect related to size

are acquisitions by utility firms beneficial utility firms are subject to peculiar regulatory characteristics that may allow for unique wealth effects resulting from acquisitions the wealth effects derived from acquisitions of utility firms is measured and the analysis reveals negative wealth effects for acquirers and positive wealth effects for targets however the wealth effects are generally less favorable for utility firm acquirers than other acquirer firms because of the regulatory barriers that prevent them from pursuing attractive targets

endogenous credit cycles this paper studies models of credit with limited commitment and therefore endogenous debt limits there are multiple stationary equilibria plus nonstationary equilibria in which credit conditions change simply because of beliefs there can be equilibria in which debt limits display deterministic cyclic or chaotic dynamics as well as stochastic sunspot equilibria in which they fluctuate randomly even though fundamentals are deterministic and time invariant examples and applications are discussed we also consider different mechanisms for determining the terms of trade and compare the setup to other credit models in the literature

research note the researcher as a consumer of scientific publications how do name ordering conventions affect inferences about contribution credits when researchers from different fields with different norms collaborate the question arises of how name ordering conventions are chosen and how they affect contribution credits in this paper we answer these questions by studying two disciplines that exemplify the two cornerstones of name ordering conventions lexicographical ordering i e alphabetical ordering endorsed in economics and nonlexicographical ordering i e ordering according to individual contributions endorsed in psychology inferences about credits are unambiguous in the latter arrangement but imperfect in the former because alphabetical listing can reflect ordering according to individual contributions by chance we contrast the fields of economics and psychology with marketing a discipline heavily influenced by both based on archival data consisting of more than 38 000 journal articles we show that the three fields have different ordering practices in two empirical studies with 351 faculty and graduate student participants from all three disciplines as well as in a computer simulation we show that ordering practices systematically affect and shape the allocation of perceived contributions and credit whereas strong disciplinary norms in economics and psychology govern the allocation of contribution credits a more heterogeneous picture emerges for marketing this lack of strong norms has detrimental effects in terms of assigned contribution credits

didmca and bank market risk theory and evidence abstract this paper examines the theoretical and empirical consequences of the depository institutions deregulation and monetary control act of 1980 on the market risk of the us banking industry we survey several theoretical arguments linking deregulation of deposit interest rates to market based measures of bank risk capital market data for a sample of large commercial bank holding companies provides evidence that deregulation has accompanied increases in both systematic and nonsystematic measures of bank risk

the effect of discretionary price control decisions on equity values abstract the macro literature presents conflicting evidence on the effects of price controls in this study the fact that the macro economic effect of wage and price controls is the aggregation of the micro economic effects is used to implement a different approach to measure the effects of price controls the effect of price controls is inferred from examining the impact of discretionary regulatory decisions on the equity values of individual firms during phase ii of nixon s economic stabilization program the empirical results indicate that violators of the regulations incurred significant abnormal losses that were unrelated to the explicit penalties this suggests that implicit penalties were imposed on offending firms the analysis of price increase decisions provides weak evidence that these price commission decisions had an impact on equity values

the impact of an unexpected political resignation on exchange rates based on the theory of economic regulation political shocks are examined as unexpected events in the light of the efficient markets hypothesis and a political resignation is taken as an example of such an event the hon j dawkins mp resigned as the federal treasurer of the australian government on friday 17 december 1993 there have been a number of studies on the effect of economic and political events on stock prices this study considers the impact of dawkin s resignation on the foreign exchange rates of the major traded currencies in australia the traditional event study methodology based on the market model and the lesser used multivariate methodology of seemingly unrelated regressions are used for the analysis the sample of currencies is considered both as a portfolio and on an individual basis with efficiency of the currency markets being tested for anticipatory event related and persistence effects the paper concludes by contrasting the findings of the two methodologies the study repo

core journals in economics gaines h liner this article ranks core journals in economics using the textbook citation method rankings are produced from citations in graduate level microeconomics macroeconomics and econometrics textbooks textbooks used in the study were chosen through responses from a survey of professors in top tier economics departments the top nine journals or core journals from this study correlate closely in rank with the results of two comparison studies second tier journals identified in this study correlate less closely in rank with second tier journals in comparison studies jel a i introduction between 1970 and 1990 the number of published pages in economics journals more than doubled laband and piette 1994 and during the early 1970s budgets of libraries devoted to journals grew in percentage terms several fold relative to those devoted to books liebowitz and palmer 1984 laband and piette 1994 reported that between 1976 and 1985 at least 55 new economics journals commenced publication although not all journals are considered general interest journals many emphasize the importance of economic theory in their submission instructions to authors with this increased emphasis on research scholars and administrators alike have acquired an increased sensitivity to how journals rank in quality influence or impact the variety of methods used to rank journals departments and authors attests to the increased concern individuals place on such issues the social sciences citation index ssci institute for scientific information 1986 has figured prominently as a source of data in a variety of studies burton and phimister 1995 laband and piette 1994 liebowitz and palmer 1984 and stigler et al 1995 provide recent examples another approach occasionally used in ranking of economics departments involves choosing citation data from the premier core or principal journals departmental rankings are then based on the number of journal articles or pages published by members of their faculty in these journals graves et al 1982 burkitt and baimbridge 1995 conroy et al 1995 scott and mitias 1996 and dusansky and vernon 1998 have used variations of this approach others have surveyed deans and chairpersons for their own rankings of journals see enomoto and ghosh 1993 for one recent example a potential weakness of this approach is that survey respondents can be influenced by recent and not so recent literature on the subject and by each other some earlier studies have attempted to rank journals by their quality see liebowitz and palmer 1984 for a review and beed and beed 1996 for a criticism of attempts to measure journal quality because an objective ranking of journals by their quality is difficult if not impossible most recent studies mentioned above have attempted to rank journals based on their impact or their influence ranking the number of citations to journal articles in other journal articles provides only one path to measuring the potential impact a journal has on individuals and the profession and ultimately the broader community davis 1998 pointed out that the often used ssci data under represent journals that share content with other social sciences a second problem noted is that not all of any journal s citations are identified by citing journal in every case the list is truncated and some portion of a journal s citations are simply entered as all other davis 1998 62 moreover the percentage of citations in the all other category is not necessarily the same from journal to journal this might bias raw counts of citations as well as attempts to adjust for impact by adjusting for the number of pages or the number of characters in the cited journals however these biases tend to have less impact on rankings of core journals than less highly ranked journals in attempts to rank authors of journal articles using ssci data alexander and mabry 1994 noted that the ssci does not include in the counts the second and subsequent authors of multiple author articles

the influence of economics articles on business research analysis of journals and time trends this article examines the influence of economics on business research using citation data the share of economics in citations from business is 10 78 until 1995 but only 6 95 for 1996 2003 four potential explanations for this decline are discussed interdisciplinary spillover of research is slower than within a discipline the increasing use of mathematics in economics made economics less useful for business scholars economics articles are by their nature more long lived than business articles business has grown recently more quickly than economics the data support the second and fourth explanations different research spillover occurs but lasts no more than two years

bank stock returns and economic growth previous research has established i that a country s financial sector influence future economic growth and ii that stock market index returns affect future economic growth we extend and tie together these two strands of the growth literature by analyzing the relationship between banking industry stock returns and future economic growth using dynamic panel techniques to analyze panel data from 18 developed and 18 emerging markets we find a positive and significant relationship between bank stock returns and future gdp growth that is independent of the previously documented relationship between market index returns and economic growth we also find that much of the informational content of bank stock returns is captured by country specific and institutional characteristics such as bank accounting disclosure standards banking crises enforcement of insider trading law and government ownership of banks

why bank credit policies fluctuate a theory and some evidence in a rational profit maximizing world banks should msdntain a credit policy of lending if and only if borrowers have positive net present value projects why then are changes in credit policy seemingly correlated with changes in the condition of those demanding credit this paper argues that rational bank managers with short horizons will set credit policies that influence and are influenced by other banks and demand side conditions this leads to a theory of low frequency business cycles driven by bank credit policies evidence from the banking crisis in new england in the early 1990s is consistent with the assumptions and predictions of the theory

endogenous cycles in a stiglitz weiss economy the literature on financial imperfections and business cycles has focused onpropagation mechanisms in this paper we model a purereversion mechanism such that the economy may converge to a two period equilibrium cycle this mechanism confirms that financial imperfections may have a dramatic amplification effect unlike in some related models contracts are complete indexation is not assumed away the welfare properties of a possible stabilizing policy are analyzed the model itself is a dynamic extension of the well known stiglitz weiss model of lending under moral hazard although stylized the model still captures some important features of credit cycles

industry structural inefficiency and potential gains from mergers and break ups a comprehensive approach an efficiency indicator of industry configuration allowing for entry exit of firms is presented which accounts for four sources components 1 size inefficiencies arising from firms which can be conveniently split into smaller units 2 efficiency gains realized through merger of firms 3 re allocation of inputs and outputs among firms 4 technical inefficiencies the indicator and its components are computed using linear and mixed integer programming data envelopment analysis models a method to monitor the evolution of these components in time is introduced data on hospitals in australia show that technical inefficiency of hospitals accounts for less than 15 of total industry inefficiency with 40 attributable to size inefficiencies and the rest to potential mergers and re allocation effects