learning and wage dynamics we develop a dynamic model of learning about worker ability in a competitive labor market the model produces three testable implications regarding wage dynamics 1 although the role of schooling in the labor market s inference process declines as performance observations accumulate the estimated effect of schooling on the level of wages is independent of labor market experience 2 timeinvariant variables correlated with ability but unobserved by employers such as certain test scores are increasingly correlated with wages as experience increases and 3 wage residuals are a martingale we present evidence from the nlsy that is broadly consistent with the model s predictions

angel investors around the world we document that the choice between disintermediated individual angel investments and intermediated private equity and venture capital investments depends on legal economic and cultural differences we find evidence of this using pitchbook s comprehensive data on more than 5000 angel and 80 000 private equity and venture capital investments in 96 countries from 1977 to 2012 the data further indicate that investee firms funded by angels are less likely to successfully exit through either an ipo or an acquisition these findings are robust to propensity score matching methods as well as to clustering standard errors and excluding u s observations among other approaches

the free cash flow hypothesis for sales growth and firm performance business is business and business must grow dr seuss the lorax the paper investigates the agency argument that sales growth in firms with free cash flow and without strong governance is less profitable than sales growth for firms without free cash flow it also tests whether strong governance conditions improve the performance of firms with free cash flow and or limit the investments in unprofitable sales growth consistent with agency theory firms with free cash flow gain less from sales growth than firms without free cash flow but different governance conditions affect sales growth and performance in different ways having substantial management stock ownership mitigates the influence of free cash flow on performance despite allowing higher sales growth in contrast outside blocks held by mutual funds reduce sales growth substantially but does not increase performance from sales growth copyright 2000 john wiley sons ltd

who appropriates centrality rents the role of institutions in regulating social networks in the global islamic finance industry this study explains and tests the effects of country level institutions on the distribution of centrality rents between two sets of actors in an interorganizational network building on the literature on corporate elites we propose that a cohesive elite following organizational logics other than profit maximization diverts centrality rents and induces costs on firms and that macro institutions act as external governance mechanisms to shape this relationship we develop our theory in the emerging islamic finance industry where shariah scholars connect firms and constitute a religious corporate elite while central scholars in this network create legitimacy for firms they also shirk and cause information leakage suggesting a negative centrality performance relationship for the firms country level institutions such as government regulation and democracy we argue ameliorate these effects by influencing this religious elite s institutional logic and restraining their actions while institutions developed from within the industry strengthen the power of the elite testing our theory in a network of 367 scholars and 396 institutions over 31 countries using multi level methods we indeed find a negative centrality performance relationship that is ameliorated by stronger government regulation but exacerbated by better developed industry specific institutions as well as a negative relationship between democratic and regulatory institutions and centrality

sheepskin effects in the returns to education some previous discussions have dismissed screening theories of education partly on the ground that diploma years of education do not confer especially large earnings gains similarly most empirical research on earnings functions has assumed an absence of sheepskin effects we report evidence however of substantial and statistically significant sheepskin effects although this suggests that the previous dismissals of the screening hypothesis were premature our evidence of sheepskin effects is amenable to nonscreening interpretations also according to screening theories of education individuals with more schooling tend to earn more not because or at least not solely because schooling makes them more productive but rather because it credentiates them as more productive a frequently cited article by layard and psacharopoulos 1974 however dismissed the importance of the screening hypothesis on the grounds that several of its refutable predictions were not supported by available evidence one of these was the sheepskin prediction that wages will rise faster with extra years of education when the extra year also conveys a certificate after surveying a number of studies layard and psacharopoulous henceforth lp concluded that rates of return to dropouts are as high as to those who complete a course which refutes the sheepskin version of the screening hypothesis since publication of the lp paper an undergraduate labor economics textbook has cited lp s analysis of sheepskin effects as telling criticism of the screening hypothesis a prominent proponent of the screening hypothesis riley 1979 has accepted lp s summary of the empirical evidence but responded that some versions of the screening hypothesis do not imply sheepskin effects in the meantime the ongoing flood of empirical research on earnings functions typically has continued to treat the natural logarithm of the wage rate as a linear or occasionally quadratic function of years of education with no allowance for discontinuities in diploma years 2 the estimated rates of return used by lp were based on data that did not disaggregate dropouts earnings by how many years of school they had completed lp acknowledged we would have preferred to show the earnings gain associated with each year of the course including the year when it was successfully completed this note presents a reanalysis of sheepskin effects based on the type of data lp wished they had the results contain very strong evidence of sheepskin effects after all the next section describes our analysis and the following section summarizes and discusses our

does productive capital affect the order of resource exploitation abstract the purpose of this paper is to show that in a general equilibrium framework it is not always optimal to exploit resources in strict sequence beginning with the lowest cost deposit even if it is possible to accumulate productive capital indeed if there is an exogenous upper bound on the flow of the substitute it is always optimal to consume it simultaneously with a lower cost stock moreover it may be optimal to consume the high cost substitute before using a lower cost resource

social influence and mne strategic response to political risk a global network approach abstract according to the conventional view of mne host country relations mnes faced with political risk condition their strategic responses on each party s relative power positions or bargaining influence drawing insight from network theory institutional theory and international relations research i argue that firm sensitivity to political risk is contingent upon a complementary concept social influence social influence arises through the mutual embeddedness of mne and host government in a complex global network of nations to test my hypotheses i construct a global network of trade relations that i combine with a unique transaction level dataset from the global petroleum industry my results demonstrate that social influence as modeled by home host structural equivalence moderates the effects of political risk further my findings provide support for a conceptual and empirical distinction between social influence and the traditional bargaining influence examined in the literature

the effect of a worldwide tax system on tax management of foreign subsidiaries under a worldwide tax system firms pay taxes on their domestic income and repatriated foreign income whereas under a territorial tax system repatriated foreign income is exempt from taxation we examine whether worldwide tax systems reduce the incentives of multinational corporations to engage in tax management in their foreign subsidiaries using two quasi natural experiments we show that multinationals lower the effective tax rates in their foreign subsidiaries after countries switch from a worldwide to a territorial tax system thus multinationals subject to a worldwide tax system face competitive disadvantages compared to competitors from countries with a territorial tax system

foreign venture capitalists and the internationalization of entrepreneurial companies evidence from china we use a comprehensive database of venture capital backed companies from china to test whether and how foreign venture capitalists vcs can facilitate international initial public offerings of entrepreneurial companies foreign vcs increase the likelihood that a portfolio company will list on a foreign exchange and use a top lawyer banker or accountant when doing so the propensity to list overseas is moderated by the number of venture backers the fund s size and governance in the domestic market foreign vcs encourage foreign listings in domestic backed companies we take steps to address sample selection and endogeneity concerns overall we show that foreign vcs encourage internationalization in entrepreneurial companies

on the internationalization of corporate boards the case of nordic firms this study investigates the internationalization of corporate boards using a sample of 346 non financial listed nordic firms during 2001 2008 given a high level of international activity these firms have surprisingly few foreign directors the picture of international expertise changes considerably however if we also count the international experience of national directors the percentage of foreign directors is related primarily to financial internationalization rather than foreign sales and thus presumably to the monitoring rather than advisory functions the international experience of the nationals covaries with foreign sales and increases with the share of foreign directors thus both sources of international expertise should be considered when analyzing board internationalization

responding to public disclosure of corporate social irresponsibility in host countries information control and ownership control we extend the internalization literature by theorizing on how public disclosure of corporate social irresponsibility csi can damage reputation based firm specific advantages of multinational companies mncs and how foreign subsidiary governance can subsequently be used as strategic responses specifically we distinguish between two foreign subsidiary governance mechanisms information control and ownership control that the prior literature has often assumed operate in parallel and posit that they function in divergent directions in this context furthermore we explain how two host country characteristics press freedom and regulatory quality amplify the need for mncs to utilize different governance mechanisms as responses to csi disclosure

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

the impact of foreign board membership on firm value abstract this study examines the effect of foreign anglo american board membership on corporate performance measured in terms of firm value tobin s q using a sample of firms with headquarters in norway or sweden the study indicates a significantly higher value for firms that have outsider anglo american board member s after a variety of firm specific and corporate governance related factors have been controlled for we argue that this superior performance reflects the fact that these companies have successfully broken away from a partly segmented domestic capital market by importing an anglo american corporate governance system such an import signals a willingness on the part of the firm to expose itself to improved corporate governance and enhances its reputation in the financial market

the market reaction to international cross listings evidence from depositary receipts abstract this paper examines the stock price impact of international dual listings the sample consists of 181 firms from 35 countries that instituted their first depositary receipt program over the period 1985 1995 the market reaction to a depositary receipt program is larger in magnitude and more pervasive than previously reported the stock price reaction is related to choice of exchange geographical location i e emerging or developed markets and avenues for raising equity capital i e public versus private offerings

do venture capital firms benefit from international syndicates this paper examines the benefits of syndicating with foreign venture capital vc firms for domestic vc firms in emerging markets we find that the vc firms that are domestic to their invested companies and previously syndicated with foreign partners invest proportionately more frequently in riskier ventures after gaining syndication experience with foreign vc firms a larger number of their portfolio companies are successfully exited thereby suggesting improved performance we hypothesize that this outcome is due to the organizational learning effects while the previous research has shown benefits for foreign vc firms our results show that domestic vc firms also benefit from international syndication through improved investments

the liability of foreignness in capital markets sources and remedies the accelerating pace of global capital market integration has provided new opportunities for firms to raise capital abroad through global debt issues cross listings and initial public offerings in foreign stock exchanges however existing empirical evidence suggests that foreign firms tend to be at a disadvantage compared with domestic firms and they often suffer from investors home bias the objective of this paper is to understand why firms are facing problems when accessing capital in foreign markets and possible mechanisms that can help to mitigate these problems it expands the liability of foreignness lof research beyond the product market domain to include liabilities faced by firms attempting to secure resources in foreign capital markets we identify key differences between product and capital markets related to information environment time structure of transactions and linkages between buyers and sellers we analyze institutional distance information asymmetry unfamiliarity and cultural differences as the main sources of capital market lof cmlof we suggest possible mechanisms that managers can employ to mitigate cmlof and overcome investors home bias bonding signaling organizational isomorphism and reputational endorsements we also outline directions for further theoretical and empirical development of the cmlof research

internal equity financing and the performance of multinational subsidiaries in emerging economies we examine the internal equity financing of the multinational subsidiary which retains and reinvests its own earnings internal equity financing is a type of firm specific advantage fsa along with other traditional fsas in innovation research and development brands and management skills it also reflects subsidiary level financial management decision making here we test the contributions of internal equity financing and subsidiary level financial management decision making to subsidiary performance using original survey data from british multinational subsidiaries in six emerging countries in the south east asia region our first finding is that internal equity financing acts as an fsa to improve subsidiary performance our second finding is that over 90 of financing sources including capital investment by the parent firms in the british subsidiaries come from internal funding our third finding is that subsidiary level financial management decision making has a statistically significant positive impact on subsidiary performance our findings advance the theoretical empirical and managerial analysis of subsidiary performance in emerging economies

can foreign firms bond themselves effectively by renting u s securities laws abstract the study tests the functional convergence hypothesis which states that foreign firms can leapfrog their countries weak legal institutions by listing equities in new york and agreeing to follow u s securities law evidence shows that the sec and minority shareholders have not effectively enforced the law against cross listed foreign firms detailed evidence from mexico further shows that while some insiders exploited this weak legal enforcement with impunity others that issued a cross listing and passed through an economic downturn with a clean reputation went on to receive privileged long term access to outside finance as compared with legal bonding reputational bonding better explains the success of cross listings

related lending and banking development does related lending have positive or negative effects on the development of banking systems we analyze a unique cross country data set covering 74 countries from 1990 to 2007 and find that related lending on average does not have any effect on the growth of credit we do find however that there are conditional relationships related lending tends to retard the growth of banking systems when rule of law is weak whereas it tends to promote the growth of banking systems when rule of law is strong we also find that related lending appears to be associated with looting when banks are owned by non financial firms but that it does not do so when non financial firms are owned by banks our results indicate that whether related lending is positive or pernicious depends critically on the institutional context in which it takes place there is no single best policy regarding related lending these findings are robust to alternative specifications including iv regressions

fragmenting global business processes a protection for proprietary information this study shows that when sourcing business services in foreign countries the fragmentation of processes across production units acts as an operational level adjustment variable for firms to adapt their information protection approach to the regulative environment of the host country they have selected and to the possibility to use internal controls over the activities performed abroad we hypothesize that when the above mechanisms are not available firms are more likely to fragment processes across multiple foreign production units instead of collocating all process tasks in the same unit thanks to it enabled integration capabilities firms can exploit the complementarities between the dispersed fragments of a process while reducing the misappropriation hazard of individual fragments empirical results and robustness tests are strongly congruent with these hypotheses we find also that the propensity to turn to the process fragmentation protection mechanism increases with firm host country specific experience and with the alternative value of the proprietary information involved in the activity sourced abroad

foreign earnings management of us multinational companies the role of decision rights us multinational corporations mncs need to allocate decision rights between parent companies and subsidiaries to manage global operations this article examines how the allocation of decision rights affects foreign earnings management of mncs i find that the extent of foreign earnings management increases when parents retain centralized decision rights but internal cross border frictions between parents and their foreign subsidiaries and the external local legal environment in which foreign subsidiaries operate can mitigate foreign earnings management despite parents having centralized decision rights this study provides evidence on how the decision structures of mncs affect where earnings are managed

vagabond shoes longing to stray why foreign firms list in the united states abstract how do firms that go public decide whether to list on a major stock exchange or locally using a unique data set on israeli ipos in the us and tel aviv we show that companies that list in the us are young and overwhelmingly high tech oriented we argue that high quality innovative firms are willing to incur additional costs associated with listing in the us in order to reveal their value and distinguish themselves from firms that issue stock back home costs of listing in the us include first day underpricing and relinquishing corporate control

explaining top management turnover in private corporations the role of cross country legal institutions and capital market forces we investigate private firms ability to identify and replace poorly performing managers across countries we document three main findings first private firms are more likely to retain poorly performing managers in countries where legal institutions that protect minority investors are weak second private firms are more likely to retain poorly performing managers than public firms only in countries where governance mechanisms inherent in public equity markets limit managerial entrenchment in public firms third private firm managers are less likely to be replaced even when poor performance continues for relatively long horizons overall our findings provide new evidence on the potential vulnerability of minority shareholders in private firms

the effect of attending the flagship state university on earnings a discontinuity based approach abstract this paper examines the effect of attending the flagship state university on the earnings of 28 to 33 year olds by combining confidential admissions records from a large state university with earnings data collected through the state s unemployment insurance program to distinguish the effect of attending the flagship state university from the effects of confounding factors correlated with the university s admission decision or the applicant s enrollment decision i exploit a large discontinuity in the probability of enrollment at the admission cutoff the results indicate that attending the most selective state university causes earnings to be approximately 20 higher for white men

extraction capacity and the optimal order of extraction the least cost first extraction rule for deposits with different extraction costs previously has been shown to be invalid in general equilibrium this paper demonstrates that this rule also does not hold in partial equilibrium when extraction capacity is limited necessary and sufficient conditions for several surprising extraction orders are presented if extraction from a high cost resource is constrained it may be optimal to begin extraction from a high cost deposit or backstop strictly before extracting from a lower cost deposit if extraction from a low cost resource is limited it may be optimal to exhaust a high cost deposit strictly before the low cost deposit is exhausted or to abandon extraction temporarily from a high cost deposit and then to exhaust it later the analysis demonstrates how extraction constraints affect the order of extraction and shows that certain cost reversals are caused by limited extraction capacity rather than by the general equilibrium definition of extraction costs

on the optimal order of natural resource use when the capacity of the inexhaustible substitute is limited consider a general equilibrium framework where the marginal cost of extraction from several deposits of an exhaustible resource is constant in terms of an inexhaustible perfect substitute and differs between deposits the instantaneous rate of production form the inexhaustible resource is subject to a capacity constraint

more detail on the pattern of returns to educational signals this paper develops a multiperiod model in which workers are matched with jobs according to imperfect educational signals and their subsequent productivities depend on both their inherent ability and on the quality of the job match the model outlines a sequential process in which underpaid employees reveal their true productivities and overpaid employees are detected by the firm until every match is perfect the model produces increasing returns to above median educational signals early in a worker s career a new feature that earlier models did not capture estimates using data from the current population survey are consistent with the theoretical result and are suggestive of a concave time pattern for the returns to educational signals

solving theoretical and empirical conundrums in international strategy research linking foreign entry mode choices and performance several theoretical and empirical developments in the literature on foreign entry mode and performance and on international strategy more generally were influenced or prefigured by brouthers 2002 jibs decade award winning paper regarding theory brouthers is an archetype of the integration of transaction cost and institutional perspectives i argue that it is also relevant to the growing literature that aims at synthesizing these and other perspectives methodologically brouthers 2002 contributed several uniquely direct and rich measures furthermore it not only displayed awareness of endogeneity specifically self selection issues but also was among the pioneers in the comparative analysis of governance choices for a given firm or transaction i elaborate on the promising if challenging use of such what if imputation to identify the impact of more or less well aligned choices overall i argue that such methodological advances cannot be decoupled from the conceptual advances that enable them and which they reinforce

how much of the diversification discount can be explained by poor corporate governance we investigate whether the diversification discount occurs partly as an artifact of poor corporate governance in panel data models we find that the discount narrows by 16 to 21 when we add governance variables as regression controls we also estimate heckman selection models that account for the endogeneity of diversification and dynamic panel generalized method of moments models that account for the endogeneity of both diversification and governance we find that the diversification discount persists even with these controls for endogeneity however in selection models the discount disappears entirely when we introduce governance variables in the second stage and in dynamic panel gmm models the discount narrows by 37 when we include governance variables

performance and governance in microfinance institutions accepted version of article published in the journal journal of banking finance published version available on science direct http dx doi org 10 1016 j jbankfin 2008 11 009

do international investors enhance private firm value evidence from venture capital we examine the impact of international venture capital investors on private firm success spanning 81 countries over the years 1995 2010 the data examined indicate that relative to deals in which the investor base is purely domestic private firms that have an international investor base have a higher probability of exiting via an initial public offering ipo and higher ipo proceeds the evidence is consistent with the view that while the benefits of internationalization may be difficult and costly to manage for those firms that succeed in managing cross border coordination costs there is potential value for an ipo firm the benefits relative to the costs of internationalizing the investor base for private firms sold in acquisitions by contrast are much less pronounced the most important source of this benefit appears to be access to capital

explaining interaction effects within and across levels of analysis many manuscripts submitted to the journal of international business studies propose an interaction effect in their models in an effort to explain the complexity and contingency of relationships across borders in this article we provide guidance on how best to explain the interaction effects theoretically within and across levels of analysis first in the case of interactions within the same level of analysis we suggest that authors provide an explanation of the mechanisms that link the main independent variable to the dependent variable and then explain how the interaction variable modifies these mechanisms moreover to ensure that the arguments are theoretically complete we suggest that authors theoretically rule out the potential reverse interaction effect between the main variable and moderating variable second in the case of interactions across levels of analysis we suggest that authors identify the cross level nature of the moderating relationships specify the level of analysis of the main relationship and the nested nature of the cross level influences and theoretically explain these cross level influences additionally we suggest that authors pay particular attention to nesting in order to theoretically rule out reverse interactions

the signaling role of promotions further theory and empirical evidence an extensive theoretical literature investigates the role of promotions as a signal of worker ability we extend the theory by focusing on how the signaling role of promotion varies with education and then investigate the resulting predictions using a longitudinal data set that contains detailed information concerning the internal labor market history of a medium sized firm in the financial services industry our results support signaling being important for understanding the differences between promotion practices concerning bachelor s and master s degree holders while the evidence concerning the importance of signaling for high school graduates and phds is mixed

government ownership and corporate governance evidence from the eu the ongoing global financial crisis has led to the largest increase in state intervention since the great depression direct government ownership in publicly traded corporations has increased dramatically since 2008 how will this increase in public ownership affect the governance of these erstwhile private companies we examine the impact of government ownership on corporate governance using a sample of firms from the european union a region that is relatively familiar with active government participation our main finding is that government ownership is associated with lower governance quality we further show that while government intervention is negatively related to governance quality in civil law countries it is positively related to governance quality in common law countries finally we find that the preferential voting rights of golden shares are especially damaging to governance quality

from the editors can i trust your findings ruling out alternative explanations in international business research the complex nature of international business research with its cross country and multilevel nature complicates the empirical identification of relationships among theoretical constructs the objective of this editorial is to provide guidance to help international business scholars navigate this complexity and ensure that readers can trust their findings we provide suggestions for how to rule out alternative explanations explaining key considerations not only in empirical analyses but also in theory building and in research design our discussion covers both qualitative and quantitative studies because we believe that it is imperative to understand how trustworthiness is established in both traditions even for international business researchers who self identify with only one this enables scholars to have a broader scope of knowledge when interpreting past research in the field and to be more adept at explaining their design choices to a diverse audience

creditor protection laws debt financing and corporate investment over the business cycle we examine how legal creditor rights are related to debt financing and corporate investment over the business cycle using firm level data from 40 countries we find that creditor rights are associated with greater debt financing and investment during economic downturns but creditor rights have a significantly smaller effect during expansions the beneficial effects of creditor rights during recessions are stronger for firms that are more likely to have severe shareholder bondholder agency problems we also find that during recessions relative to expansions strong creditor rights are associated with a smaller decline in net capital flows our findings are consistent with credit market frictions increasing during recessions and with stronger creditor rights decreasing the negative effects of these frictions overall the results suggest that better creditor protection laws help moderate the decline in debt financing and investment during recessions

the alberta dilemma optimal sharing of a water resource by an agricultural and an oil sector we fully characterize the optimal time paths of production and water usage by an agricultural and an oil sector that share a limited water resource we show that for any given water stock if the oil stock is sufficiently large it will become optimal to have a phase during which the agricultural sector is inactive followed by a phase during which both sectors are active again the agricultural sector will always be active in the end as the oil stock is depleted if agriculture is not constrained by the given natural inflow of water then oil extraction will always end with a phase during which oil production follows a pure hotelling path otherwise oil production never follows a pure hotelling path because its full marginal cost must always reflect not only the imputed rent on the finite oil stock but also the positive opportunity cost of water usage the case of oil and agriculture sharing a water resource is but one example our analysis provides a framework to generalize the hotelling rule to other cases where the full marginal opportunity cost of extracting a nonrenewable resource depends on the endogenous activity of some other sector of the economy

the tortuous evolution of the role of culture in ib research what we know what we don t know and where we are headed this paper takes stock of the literature on culture in international business by looking back in terms of evaluating what we know and what we do not know and looking forward by identifying emerging trends and outlining avenues for future research unresolved issues gaps and limitations include 1 narrow conceptualization of culture and fragmented approach to the study of culture 2 failure to adopt a multilevel approach and insufficient attention to level of analysis 3 insufficient attention to context and process 4 failure to adopt a more dynamic view of culture 5 tendency to equate country with culture and failure to explore other national differentiators and 6 western centric approach to the study of culture suggestions on redressing the unresolved issues include 1 broadening the definition of culture and transcending the values based approach to include schemas norms and memes 2 paying more attention to process context by exploring the situation dependent and dynamic nature of culture and 3 entertaining alternative research designs methods such as emic approaches qualitative methods experimental designs neuroscience based methods and replication studies while these may represent a major departure from methodologies popular in our field their use can hopefully help us overcome the fragmented discipline based approach which has contributed to the persistent problems that have plagued the study of culture in ib in the past

endogeneity and the dynamics of internal corporate governance abstract we use a well developed dynamic panel generalized method of moments gmm estimator to alleviate endogeneity concerns in two aspects of corporate governance research the effect of board structure on firm performance and the determinants of board structure the estimator incorporates the dynamic nature of internal governance choices to provide valid and powerful instruments that address unobserved heterogeneity and simultaneity we re examine the relation between board structure and performance using the gmm estimator in a panel of 6 000 firms over a period from 1991 to 2003 and find no causal relation between board structure and current firm performance we illustrate why other commonly used estimators that ignore the dynamic relationship between current governance and past firm performance may be biased we discuss where it may be appropriate to consider the dynamic panel gmm estimator in corporate governance research as well as caveats to its use

competing land uses and fossil fuel and optimal energy conversion rates during the transition toward a green economy under a pollution stock constraint abstract we study the transition to a carbon free economy in a model with a polluting non renewable resource and a clean renewable resource transforming primary energy into ready to use energy services is costly and more efficient energy transformation rates are more costly to achieve renewable energy competes with food production for land and the food productivity of land can be improved at some cost to avoid catastrophic climate damages the pollution stock is mandated to stay below a given cap when the economy is not constrained by the cap the efficiency of energy transformation increases steadily until the transition toward the ultimate green economy when renewable energy is exploited its land use rises at the expense of food production food productivity increases together with the land rent but food production drops the food and energy prices increase and renewables substitute for non renewable energy during the constrained phase the economy follows a constant path of prices quantities efficiency rates food productivity and land rent a phenomenon we call the ceiling efficiency paradox

internationalization and performance degree duration and scale of operations we assess the theoretical underpinnings and associated empirical findings of the three stage sigmoid curve relationship between degree of internationalization doi and performance by re examining the results reported in one of the prominent studies in the literature we further conduct our own analyses of 23 474 observations of 2 620 us manufacturing firms over the period 1976 2008 and account for self selection of firms into different degrees of internationalization by using a generalized propensity score estimator both sets of results show that the relationship between doi and performance conforms to a mostly negative sigmoid curve and does not support the three stage theorization further examination reveals that two major conceptual and empirical shortcomings underlie the disparity between the theoretical predictions of the three stage model and these empirical findings first whereas theory relies overwhelmingly on enhanced scale of operations as a causal mechanism through which internationalization contributes to performance empirical studies preclude proper identification of scale related benefits second theory and empirics tend to confuse temporary difficulties experienced upon entry into international markets with examining the benefits realizable at different levels of doi regardless of the firm s short term difficulties in realizing those benefits our empirical results show that correcting for each of these shortcomings contributes to diminishing the theory empirics gap

fifty years of methodological trends in jibs why future ib research needs more triangulation we analyze methodological trends in empirical research in jibs from 1970 2019 our results point to the prevalence of the following patterns there has been an increase in the use of 1 large scale longitudinal cross national datasets 2 complex analytical techniques including the incorporation of multiple analytical techniques within the same study but 3 a decline in the diversity of methods in use we relate these trends to the underlying social technical and communicative conventions in the journal during the 50 year period the observed patterns are consistent with theory that posits scientific fields entrench a dominant paradigm over time resulting in a restricted set of methodological options being selected such restrictions jeopardize the quality of research because the study of any phenomenon requires the use of multiple methodological procedures to avoid the systematic biases errors omissions and limitations introduced by any single option therefore we propose the use of triangulation as a strategy for building methodological alternatives into research designs institutionalization of this principle in the field of international business has the potential to enhance both the rigor and scope of inquiry of future research

tranching in the syndicated loan market around the world loan tranching allows banks to manage risk and facilitate firm financing which may be essential for firms that cannot access investors from stock markets we analyze the determinants and benefits of loan tranching by pooling the tranches of individual loans to create the largest cross country sample of syndicated loans covering more than 150 000 loans from multinational and domestic firms we find that in addition to market deal and borrower characteristics legal and institutional differences impact loan tranching strong creditor protection and efficient debt collection increase the probability of tranching and reduce tranche spreads ultimately promoting firms access to debt we also find evidence that tranching facilitates the financing of multinational firms abroad due to the transfer of legal and cultural institutions to foreign subsidiaries overall our results suggest that tranching plays an important role in reducing a country s financial development gap and promotes firms access to debt

understanding the determinants of managerial ownership and the link between ownership and performance comment abstract himmelberg et al j financial econom 53 1999 353 384 argue that fixed effects estimators should be used in examination of the relationship between managerial ownership and firm performance i show that managerial ownership while substantially different across firms typically changes slowly from year to year within a company with rational managers maximising long term utility small one year changes in ownership are not likely to reflect notable changes in incentives that would lead to substantive within year changes in performance by relying on within variation fixed effects estimators may not detect an effect of ownership on performance even if one exists

an evolutionary approach to understanding international business activity the co evolution of mnes and the institutional environment this paper examines the co evolution of mne activities and institutions external and internal to the firm we develop a theoretical framework for this analysis that draws on the more recent writings of douglass north on institutions as a response to complex forms of uncertainty associated with the rise in global economic interconnectedness and of richard nelson on the co evolution of technology and institutions we link historical changes in the character of mne activities to changes in the institutional environment and highlight the scope for firm level creativity and institutional entrepreneurship that may lead to co evolution with the environment we argue that the main drivers for institutional entrepreneurship are now found in the increasing autonomy of mne subsidiaries thus mne agency derives from more decentralized forms of experimentation in international corporate networks which competence creating nodes of new initiatives can co evolve with local institutions unlike most other streams of related literature our approach connects patterns of institutional change in wider business systems with more micro processes of variety generation and experimentation within and across individual firms this form of co evolutionary analysis is increasingly important to understanding the interrelationships between mne activities and public policy

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

job assignments signalling and efficiency this article analyzes a model in which information about a worker s ability is only directly revealed to the firm employing the worker other firms however use the worker s job assignment as a signal of ability three results recur throughout the analysis first wage rates tend to be more closely associated with jobs than with ability levels second there is frequently an inefficient assignment of workers to jobs i e even when a firm has complete information about a worker s output third the severity of this inefficiency tends to be negatively correlated with the level of firm specific human capital in the economy

on the use of instrumental variables in accounting research abstract instrumental variable iv methods are commonly used in accounting research e g earnings management corporate governance executive compensation and disclosure research when the regressor variables are endogenous while iv estimation is the standard textbook solution to mitigating endogeneity problems the appropriateness of iv methods in typical accounting research settings is not obvious drawing on recent advances in statistics and econometrics we identify conditions under which iv methods are preferred to ols estimates and propose a series of tests for research studies employing iv methods we illustrate these ideas by examining the relation between corporate disclosure and the cost of capital

from the editors how to write articles that are relevant to practice although the journal of international business studies is not a practice oriented journal thinking deeper about the practical relevance of our articles can only help enrich them and help decision makers implement better decisions however while many academic articles in social sciences go to great lengths to explain their theoretical and empirical impact in many cases their explanation of practical relevance is a paragraph in the conclusion section with a few cursory ideas that appear to be an afterthought rather than an integral part of the article here we provide suggestions for crafting a practical implications section that is relevant for decision makers

constrained by hours and restricted in wages the quality of matches in the labor market this paper examines the explicit loss born by workers who face constraints in their working hours by analyzing differences in actual and desired hours and wages men tend to be underemployed while women are evenly split between over and underemployment losses in surplus are generally small but 10 of underemployed men and women experience losses of more than 34 or 50 of surplus respectively the loss measure is also an important determinant in predicting labor market transitions meaning increases in surplus losses generate a higher probability of changing from workers present jobs or changing the number of hours jel j22 j41

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

integration oriented strategies host market corruption and the likelihood of foreign subsidiary exit from emerging markets extant research has found that more pronounced levels of corruption in foreign host emerging markets increase the likelihood that subsidiaries established by multinational enterprises mnes from developed countries will exit we synthesize insights from the organizational perspective of corruption and the integration responsiveness paradigm to propose that integration oriented strategies will weaken the positive relationship between corruption and the likelihood of exit at high levels of host market corruption we develop and test hypotheses pertaining to the main effect of corruption on the likelihood of subsidiary exit as well as the moderating impacts of a firm s equity ownership strategy and its expatriate staffing strategy upon this relationship we theorize that uncertainty operates as the mechanism that underpins the corruption market exit relationship and that an mne s strategic choices with respect to its subsidiary investments contribute to reducing this uncertainty we find that an increase in the foreign investing mne s equity ownership share negatively moderates the positive relationship between corruption and the likelihood that foreign subsidiaries established by developed market mnes will exit host emerging markets when corruption is high however the marginal effects results do not support the expatriate staffing strategy hypothesis our work provides guidance to developed country mnes that seek insights with respect to the utility of strategies that might be implemented in host emerging markets characterized by more pronounced levels of corruption

the supply of corporate directors and board independence empirical evidence on the relations between board independence and board decisions and firm performance is generally confounded by serious endogeneity issues we circumvent these endogeneity problems by demonstrating the strong impact of the local director labor market on board composition specifically we show that proximity to larger pools of local director talent leads to more independent boards for all but the largest quartile of s p 1500 using local director pools as an instrument for board independence we document that board independence has a positive effect on firm value operating performance fraction of ceo incentive based pay and ceo turnover the author 2013 published by oxford university press on behalf of the society for financial studies all rights reserved for permissions please e mail journals permissions oup com oxford university press

foreign independent directors and the quality of legal institutions foreign directors can affect firm value through their advising and monitoring functions however the demand for these directors as well as their effect on firm performance is likely to be influenced by firm and country level characteristics in a large sample of non us firms we find that foreign directors are more likely to be associated with firms that have more foreign operations and an international shareholder base and firms that are located in countries with a limited supply of potentially qualified domestic directors countries with a smaller less well educated populace and lower levels of capital market development we also find that the association between foreign directors and firm performance is more positive in countries with lower quality legal institutions and when the director comes from a country with higher quality legal institutions than the firm s host country our study highlights the importance of considering national demographic factors and levels of capital market development when modeling the supply and demand for foreign directors and also underscores the importance of institutional quality in the foreign director s home and host country when assessing the effect of that director on firm performance

the geography of equity listing why do companies list abroad this paper documents aggregate trends in the foreign listings of companies and analyzes their distinctive prelisting characteristics and postlisting performance in 1986 1997 many european companies listed abroad mainly on u s exchanges while the number of u s companies listed in europe decreased european companies that cross list tend to be large and recently privatized firms and expand their foreign sales after listing abroad they differ sharply depending on where they cross list the u s exchanges attract high tech and export oriented companies that expand rapidly without significant leveraging companies cross listing within europe do not grow unusually fast and increase their leverage after cross listing foreign listings are becoming an increasingly important strategic issue for companies and stock exchanges alike as companies become global in their product market and investment strategies direct access to foreign capital markets via an equity listing can yield important benefits at the same time the international integration of capital markets has led to unprecedented levels of competition among stock exchanges in this competitive struggle the winners are the exchanges that manage to attract more foreign listings and the attendant trading volume and business opportunities despite the importance of these issues still little is known about which exchanges succeed in capturing more listings from abroad and why this question is intimately related to a second issue namely which advantages companies expect to get from a foreign listing securing cheap equity capital for new investment allowing controlling shareholders to divest on a liquid market preparing for foreign acquisitions or simply enhancing the compa

intertemporal depletion of resource sites by spatially distributed users mineral deposits and other exhaustible resources are scattered around the globe as are their users yet the theory for analyzing depletion of such resources assumes that all resource sites and all users are located in the same place when applying the theory therefore one is forced to disregard what often seems to be an important real world consideration our purpose here is to generalize harold hotelling s 1931 theory of exhaustible resources to accommodate situations in which resource sites and their users are spatially distributed our analysis has many applications it can be applied to a conventional exhaustible resource like oil alternatively it can be applied to an unconventional exhaustible resource like scarce landfill space shipments of solid waste to landfills in other states or countries have become a prominent public policy issue eduardo ley et al 2000 finally our analysis can be applied in situations where the space reflects not geographical location but characteristics of the resource e g the sulfur content hardness and so forth of coal which users find distinctive 2 only two theoretical papers in resource economics have introduced spatial considerations 3 jean jacques laffont and michel moreaux 1986 studied the extraction of resources from sites located along a line segment with all users at one end charles kolstad 1994 was the first to consider spatially distributed users in his formulation consumers are distributed uniformly along a line segment with resource sites at each end kolstad s approach although innovative requires that the set of users be parti

specialization and non renewable resources ricardo meets ricardo abstract the one demand hotelling model fails to explain the observed specialization of non renewable resources we develop a model with multiple demands and resources to show that specialization of resources according to demand is driven by ricardian comparative advantage while the order of resource use over time is determined by ricardian absolute advantage an abundant resource with absolute advantage in all demands must be initially employed in all demands when each resource has an absolute advantage in some demand no resource may be used exclusively the two by two model is characterized resource and demand specific taxes are shown to have significant substitution effects

labor market regulations and cross border mergers and acquisitions this article exploits changes in country level employment protection regulations as a source of plausibly exogenous variation in labor laws and finds that these regulations play an important role in cross border merger activity over the 1991 2009 period countries that tighten employment regulations attract more foreign acquirers especially those from countries with relatively more flexible labor regulations the results appear to be robust to alternative specifications importantly these patterns are pronounced in those recipient country sectors in which foreign acquirers may find attractive targets at bargain prices sectors with relatively high productivity and skill the article also provides evidence suggesting that because pro labor reforms allow foreign acquirers to cherry pick more skilled and productive local firms these transactions are associated with greater deal synergies and improved post merger operating performance

globalization of corporate risk taking we explore how the interconnected nature of global finance affects corporate risk taking we show that a common global factor known to be associated with fluctuations in cross border banking is also strongly associated with common co movements in corporate risk taking across a diverse universe of international firms our study contributes to the international business literature as the first comprehensive investigation of how global financial conditions induce greater synchronization of risk taking across regions and sectors

the anglo american financial influence on ceo compensation in non anglo american firms this study examines the impact of anglo american financial markets on ceo compensation starting from a sample of norwegian and swedish listed firms we analyse this effect as manifested in the capital market anglo american cross listing and in the market for corporate control anglo american board membership these effects are analysed together with the geographically broader effect of the product and service market internationalisation of the firm we conclude that all three effects contribute positively to the level of ceo compensation we argue that the higher ceo compensation found in firms exposed to anglo american financial influence as compared with firms not subject to such influence reflects institutional contagion the demand for and supply of viable ceo candidates and a pay premium for increased risk of dismissal

from the editors explaining theoretical relationships in international business research focusing on the arrows not the boxes distinctive features of articles accepted by the journal of international business studies are that they are multidisciplinary in scope and interdisciplinary in content and methodology and they make a substantial theoretical contribution to international business studies failure to meet this last requirement is an often cited reason given by reviewers for article rejection sometimes reviewers mean that a manuscript does not conform to the dominant paradigm in that it is not the next logical step in the study of a phenomenon or they mean that there is little if any integration of several theories used to explain a phenomenon however perhaps the most common underlying meaning when reviewers cite lack of a theoretical contribution for rejection is that the nature of the relationships proposed is not well explained while the first two meanings may be influenced by the specific discipline or methodology involved this final one is not in this editorial we provide a set of guidelines that authors can use to ensure that their paper meets the standard of explaining the logic of the relationships they propose

investor protection and the value impact of stock liquidity this paper investigates the effect of investor protection on the value impact of stock liquidity using a sample of firms from 40 countries for the period between 1996 and 2010 we show that investor protection is positively associated with the value impact of stock liquidity this association is robust to the difference in differences approach based on a natural experiment further evidence shows that the positive effect of home country investor protection on the liquidity valuation association attenuates in countries with globally integrated capital markets

valuation effects of foreign company listings on u s exchanges this study examines post listing equity price performance of foreign firms which cross listed sponsored american depository receipts adrs on the new york and the american stock exchanges during the period 1982 1992 we use three valuation metrics price to book price to cash earnings and price to earnings which are adjusted for the home country and world industry indices to which the listing firm s stock belongs we find positive valuation effects associated with cross listing for both country benchmarked and industry benchmarked price ratios variables that proxy for home country characteristics such as governance styles disclosure quality market liquidity and so forth are unable to explain the cross sectional variation in the data our results thus suggest that cross listing in the u s enhances valuations for listing firms by simply reducing the overall effect of segmentation among different national securities markets

the effects of market segmentation and investor recognition on asset prices evidence from foreign stocks listing in the united states non u s firms cross listing shares on u s exchanges as american depositary receipts earn cumulative abnormal returns of 19 percent during the year before listing and an additional 1 20 percent during the listing week but incur a loss of 14 percent during the year following listing we show how these unusual share price changes are robust to changing market risk exposures and are related to an expansion of the shareholder base and to the amount of capital raised at the time of listing our tests provide support for the market segmentation hypothesis and merton s 1987 investor recognition hypothesis the globalization of u s capital markets has accelerated dramatically in the past decade increasing numbers of companies from overseas have chosen to either raise capital through global equity issues or prepare for future capital raising by way of cross listings on u s exchanges as of 1997 about 1 300 non u s companies have listed their shares for trading on the new york stock exchange nyse the american exchange amex the national association of securities dealers automation quotation nasdaq system or

partnering with leviathan the politics of innovation in foreign host state joint ventures forming international joint ventures ijvs with political institutions in emerging economies involves both benefits and risks for multinational enterprises mnes while political partners can provide ijvs with various resources their political status equips them with a strong position to appropriate rents in ijvs we address this tension by examining how host state ownership affects both innovation inputs and outputs in china based ijvs over 2008 2013 despite the potential government opportunism we find more r d investment innovation inputs made in ijvs with state partners than in those with private ones thus r d investment can be politically motivated and symbolically managed to ensure continued resource exchanges with the host state this political pressure is mitigated when foreign parents directly transfer home country based technology to ijvs when the host market dependence of ijv is weak and when ijvs are located in a deregulated region moreover we find foreign host state jvs deliver fewer innovation outputs measured by patent data than foreign private jvs which implies the failure of state partners to adequately absorb foreign technologies these findings highlight both the state partners powerfulness to boost ijv innovation investment and their limits in shaping ijv innovation outcomes and bear rich implications for the management of mne host government relationships

depletion of the environmental basis for renewable resources the economics of interdependent renewable and nonrenewable resources abstract this paper synthesizes familiar theories of nonrenewable and renewable resource economics in a two sector partial equilibrium analysis of efficient trade offs between renewable resource production and environmental development the irreversible impacts of coastal zone development provide a motivating example while development proceeds the efficient harvest of renewable resources may exceed the sustainable rate while development may involve several periods of growth and decline once development begins it proceeds without significant interruptions if a profitable renewable sector survives development ceases before exhausting all profitable opportunities interdependent stocks reduce distinctions between resource types because each sector exhibits features of the other

law finance and the international mobility of corporate governance we introduce the topic of this special issue on the role of financial and legal institutions in international governance with a particular emphasis on a notion of international mobility of corporate governance our discussion places the special issue at the intersection of law finance and international business with a focus on the contexts of foreign investors and directors country level legal and regulatory institutions facilitate foreign ownership foreign directors raising external financial capital and international m a activity the interplay between the impact of foreign ownership and foreign directors on firm governance and performance depends on international differences in formal regulatory institutions in addition to legal conditions informal institutions such as political connections also shape the economic value of foreign ownership and foreign directors we highlight key papers in the literature provide an overview of the new papers in this special issue and offer suggestions for future research

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

ownership structure investment and the corporate value an empirical analysis this paper examines the relation among ownership structure investment and corporate value focusing on whether ownership structure affects investment ordinary least squares regression results suggest that ownership structure affects investment and therefore corporate value however simultaneous regression results indicate that the endogeneity of ownership may affect these inferences suggesting that investment affects corporate value which in turn affects ownership structure the evidence shows that corporate value affects ownership structure but not vice versa these findings raise questions regarding the assumption that ownership structure is exogenously determined and bring into question the results in studies that treat ownership structure as exogenous

estimating the economic model of crime with panel data previous attempts at estimating the economic model of crime with aggregate data relied heavily on cross section econometric techniques and therefore do not control for unobserved heterogeneity this is even true of studies that estimated simultaneous equations models using a new panel data set of north carolina counties the authors exploit both single and simultaneous equations panel data estimators to address two sources of endogeneity unobserved heterogeneity and conventional simultaneity their results suggest that both labor market and criminal justice strategies are important in deterring crime but that the effectiveness of law enforcement incentives has been greatly overstated copyright 1994 by mit press

what s in a p reassessing best practices for conducting and reporting hypothesis testing research social science research has recently been subject to considerable criticism regarding the validity and power of empirical tests published in leading journals and business scholarship is no exception transparency and replicability of empirical findings are essential to build a cumulative body of scholarly knowledge yet current practices are under increased scrutiny to achieve these objectives jibs is therefore discussing and revising its editorial practices to enhance the validity of empirical research in this editorial we reflect on best practices with respect to conducting reporting and discussing the results of quantitative hypothesis testing research and we develop guidelines for authors to enhance the rigor of their empirical work this will not only help readers to assess empirical evidence comprehensively but also enable subsequent research to build a cumulative body of empirical knowledge

psychic distance and performance of mncs during marketing crises when multinational corporations face foreign marketing crises the psychic distance between the home and host country represents a distinct challenge this paper examines the curvilinear relationship between psychic distance and firm performance during marketing crises and the moderating role of marketing capabilities we test our hypotheses using an event study on a panel dataset of 217 firms based in 19 countries facing crises in 41 host countries the results show that 1 marketing crises are most harmful when the host country is either very close or far away and 2 firms can mitigate this effect with marketing capabilities

liability of foreignness natural disasters and corporate philanthropy this study examines how philanthropy can mitigate liability of foreignness lof in the aftermath of a national disaster a major disaster restructures the social landscape creating an avenue for corporate contributions to play a role in recovery and relief efforts this social restructuring offers a valuable opportunity for multinational enterprises mnes to establish strong local ties in turn mne contributions at such times have a stronger impact on their local acceptance thus mnes can use these events to strengthen their position in the community and mitigate lof using the context of a national disaster in india i test these arguments with a sample of 190 mnes and 660 domestic firms i found that in the aftermath of the disaster the increase in mne contributions was much larger and less strongly tied to promotional activities than the increase in contributions from domestic firms and this difference persisted over time moreover the performance implication of post disaster philanthropy was stronger for mnes than for domestic firms these findings suggest that philanthropy plays a more strategic role for mnes in the aftermath of a disaster and it has a pronounced effect on mitigating lof

from the editors endogeneity in international business research this essay builds on the exposition by thomas et al and focuses on analyzing cause and effect in international business research we attempt to explain how endogeneity problems occur and why they are so prevalent in international business research in a non technical fashion we then discuss the importance of explicitly identifying how the chosen research design best approximates a randomized controlled experiment finally we provide some guidelines on achieving this goal and emphasize the practices that seem most relevant to jibs reviewers in evaluating high quality international business research

direct foreign ownership institutional investors and firm characteristics in this paper we characterize foreign ownership using a dataset of ownership and attributes of swedish rms the analysis reveals that foreigners show a preference for large rms rms paying low dividends and rms with large cash positions on their balance sheets when we further analyze the preference for large rms we nd that market liquidity and presence in international markets measured through export sales or listings on other exchanges seem to characterize foreign holdings better than rm size alone foreigners also tend to underweight rms with a dominant owner importantly we demonstrate that most of the features associated with foreign ownership are driven by the fact that foreign investors typically are mutual funds or other institutional investors hence we identify an institutional investor bias rather than a foreign investor bias finally using ownership data on a country level we conclude that the results are particularly strong among u s investors who comprise the largest institutions among foreign investors 2001 elsevier science s a all rights reserved jel classixcation g1 g15

self disclosure at international cartels we study revelation behavior at illegal international cartels our hypotheses suggest that a resource advantage induces executives of large multinational enterprises mnes to be more likely to reveal the cartel and to cooperate with the antitrust agency during the prosecution stage moreover we expect the cultural background to influence the firm s inclination to reveal incriminating evidence empirical tests based on data about cartel breakdowns under the eu leniency program show that large mnes are indeed more likely to reveal the cartel however they largely fail to explain variation in legal actions along cultural dimensions