Competition,regulation and bribery

Bribery of government officials is commonly used to obtain contracts in many foreign countries. The Foreign Corrupt Practices Act of 1977 (FCPA) made it illegal for US firms to pay bribes, even in the absence of regulation on the bribe-taking side of the transaction. Opponents of the law claimed it would put US firms at a competitive disadvantage relative to foreign suppliers who were not subject to the same regulation. This paper models the effects of two types of anti-bribery regulation. In general, regulation of bribe takers reduces the disciplinary effect of competition and is ineffective in deterring bribery unless the penalties exceed the gains. The impact of regulation of bribe payers (i.e. suppliers) depends on whether the law is applicable to all bribe payers, firms' costs and the existence of contract price constraints on the purchasing side of the transaction. The results lead to empirically testable hypotheses about US exports to bribery-prone countries.     

Managers’ use of language in corrupt firms’ financial disclosures: Evidence from FCPA violators

This paper explores management’s use of language in financial disclosures of corrupt firms by looking at a sample of firms that have been prosecuted for violating the Foreign Corrupt Practices Act (FCPA). We find that the management of FCPA violators use more negative, less litigious, more complex and less conservative language when disclosing financials than non‐violators. The language effect prior to an FCPA prosecution is driven by firms with low corporate governance performance. By contrast, firms with high corporate governance use less complex and more conservative language before an FCPA prosecution than firms with low corporate governance performance. Furthermore, we find that after an FCPA prosecution the language becomes less litigious and complex than before the FCPA litigation.     

An analysis of foreign takeovers in the United States

Using a sample of 96 US companies taken over by foreign companies during the period 1975-87, we assess foreign takeovers in two stages: pre-takeover and takeover. We find evidence that foreign firms target US firms whose operations are related to their own operations and that have low market-to-book ratios, suggesting foreign bidders acquire firms that provide a greater opportunity for market entry and synergistic gains. The synergistic gains appear to result from the foreign buyer using its own intangible assets (e.g. managerial skills) to improve the target. We also find that foreign takeover activity is aimed primarily at US industries that themselves make high levels of foreign direct investments, implying that the bidders use takeovers as a quick way to counteract rival firms' moves. We find evidence that foreign takeovers take place in relatively mature, low-growth industries and that foreign targets are, on average, smaller than the non-targets. The wealth effect on the announcement of a takeover is significantly higher for foreign takeovers than for takeovers by domestic firms. Also, we find that foreign bidders pay a slightly higher premium for targets whose operations are related to their own.     

WINNERS AND LOSERS FROM DOLLAR DEPRECIATION

We examine the relationship between the US current account deficit, the international value of the dollar, and the dollar reserves of foreign central banks. The declining dollar could benefit US savers at the expense of foreign investors in the USA.     

ECONOMIC SANCTIONS: FAILED FOREIGN POLICY TOOL AND A COST TO AMERICAN BUSINESS

In recent years the US government has increased its use of economic sanctions in order to punish countries, organisations and individuals. This form of foreign policy has become an increasing burden on US business and adversely affects US competitiveness and perceived reliability in the global marketplace. In addition, economic sanctions are generally ineffective in producing the desired changes and often harm the people they were intended to help. This paper argues that economic sanctions are an increasing menace to US business, represent an ineffective tool of foreign policy, and do not meet generally accepted ethical standards.     

Foreign direct investment and global sourcing choices of firms in the US

This paper investigates factors affecting the global sourcing choices of firms in the US: (1) US investment abroad; (2) foreign direct investment in the US; (3) wage–productivity ratio; and (4) transaction cost. I found that there is a statistically significant association between the country of sourcing choices and foreign direct investment. Both the wage–productivity ratios and transaction costs are not statistically significant at the conventional significance level, but their regression coefficients show proper signs. The paper also examines the patterns of foreign direct investment among countries and compares transaction costs by income group. Copyright © 2000 John Wiley & Sons, Ltd.     

The impact of VIX on China’s financial market: A new perspective based on high-dimensional and time-varying methods

Based on the new perspective of high-dimensional and time-varying methods, this paper analyzes the contagion effects of US financial market volatility on China’s nine financial sub-markets. The results show evidence of non-linear Granger causality from the US financial volatility (VIX) to the China’s financial markets. Increased US financial volatility has a negative next-day impact on the stock, bond, fund, interest rate, foreign exchange, industrial product and agricultural product markets, and a positive next-day impact on the gold and real estate markets. US financial volatility has the greatest impact on industrial product market, following by stock, agricultural product, fund, real estate, bond, gold, foreign exchange, and interest rates. Major risk events such as the global financial crisis can cause an enhanced contagion effect of US financial volatility to China's financial markets. This paper supports the achievements of China's actions to prevent and resolve major financial risks in the period of the COVID-19 epidemic.     

后危机时代我国对外贸易发展问题研究

由于美国次贷危机及欧洲主权债务危机的持续影响,后危机时代的世界经济复苏势头缓慢,我国的对外贸易面临着巨大的挑战。本文介绍了当今我国对外贸易发展现状,重点分析了我国对外贸易发展存在的问题,指出了我国对外贸易发展的对策。     

The determinants of foreign direct investment: An analysis of US manufacturing industries

This study explores the determinants of foreign direct investment by analyzing the variation across US manufacturing industries in the extent of outward foreign direct investment. Three types of industry characteristics are hypothesized to explain this variation. Empirical support is found for four sources of ownership-specific advantages favoring foreign direct investment, new technology created through research and development, marketing abilities, organizational techniques and capital cost advantages. Support is found for the role of production scale economies in favoring centralization and hindering foreign direct investment, but results suggest only a weak role for transport costs in favoring decentralization and foreign direct investment. Producer concentration, perhaps reflecting oligopolistic competition, is positively related to foreign direct investment.     

Foreign location decisions by US transnational firms: An empirical study

The paper aims at identifying the variables that are significant in determining the choice of host countries for manufacturing subsidiaries of US transnational firms. The approach that is taken is to relate variables that on the basis on a priori theoretical reasoning influence foreign location decisions, with (a) total market penetration by US firms and (b) the choice these firms make between exporting to their foreign markets and on site manufacturing. Location decisions are viewed as emerging from the interaction of characteristics typical to the industry of the transnational firm and factors specific to potential host countries. Particular attention is devoted to finding out whether locational choices and market shares are interdependent. The sample of observations under investigation consists of the activities of US majority-owned subsidiaries, classified in fourteen industry groupings and operating twenty countries. Sub-samples of countries are also studied. It is found that for the European countries, in particular EEC members, market penetration is dependent on local manufacturing.     

The transmission of US economic policy uncertainty shocks to Asian and global financial markets

This paper proposes a novel approach to investigating the spillover effects of US economic policy uncertainty shocks on the global financial markets. Employing a factor-augmented vector autoregression (FAVAR), we model US economic policy uncertainty jointly with the latent factors extracted from equity prices, exchange rates, and commodity prices. We find that US economic policy uncertainty affects these factors significantly. A country-level analysis shows heterogeneous responses to an increase in US economic policy uncertainty. With regard to equities, US economic policy uncertainty adversely affects equity prices. However, its impact on the Chinese equity market is relatively small. As for foreign exchange markets, while many currencies depreciate in response to an increase in US economic policy uncertainty, the US dollar and the Japanese yen appreciate, reflecting their safe-haven status. The Chinese yuan, whose nominal exchange rate is closely linked to the US dollar, also appreciates in response to uncertainty shocks.     

我国外汇储备现状及其应对策略

外汇储备是考察一国对外贸易和经济的重要指标,它是一个国家经济实力体现,近年来,随着我国经济的不断发展,进出口贸易规模不断扩大,伴之而来的是我国的外汇储备屡创新高,目前我国的外汇储备已经超过2万亿美元。如何正确面对并合理应对高额外汇储备,以确保我国经济社会的可持续发展,己经成为广泛关注的热点话题。针对这一严峻的现实问题,本文分析了我国外汇储备的现状,提出了相应的优化措施。     

A deterministic analysis of change in international unit labor costs: Import implications for US industry

United States industry faces an import threat in the domestic market because foreign exporters achieve lower growth in their unit labor dollar cost. A deterministic analysis of the sources of change over the decade 1974–84 shows that although most foreign trade partners experienced a higher rate of growth in hourly labor compensation than the United States, they discounted this cost disadvantage by achieving more than offsetting cost reductions from growth in labor productivity and in the foreign currency to US dollar exchange rate.     

Changing Vertical Integration Strategies under Pressure from Foreign Competition: The Case of US and German Multinationals

This study contributes to the emerging body of research into the influence of foreign competition on firm scope. Industrial organization economics, the resource-based view of the firm, and transaction cost economics consistently predict vertical de-integration in the face of intensifying pressure from imports and foreign direct investment. We show this was the case for 407 US firms between 1987 and 2003. Results for a panel of 95 German firms reveal a similar reaction to pressure from an increase in imports, but show no reaction to increased exposure to incoming foreign direct investment during the same time frame.     

International Convergence of Accounting Practices: Choosing between IAS and US GAAP

This study examines reporting practices of a sample of foreign listed and domestic‐only listed companies from the United Kingdom, France, Germany, Japan and Australia to determine the extent to which companies voluntarily use “international” standards. Two types of use of non‐national standards in the consolidated accounts presented to the public are considered: adoption of “international” standards instead of national standards, and supplementary use where “international” standards are used in conjunction with national standards. “International” standards are defined as US GAAP or IAS (now IFRS). The study tests for a preference for either set of standards and considers the relationship of choice of regime with firm attributes. The results show significant voluntary use of “international” standards in all five countries and among foreign listed and domestic‐only listed companies. Companies using “international” standards are likely to be larger, have more foreign revenue and to be listed on one or more foreign stock exchanges. US GAAP is the predominant choice, but IAS are used by many firms in Germany and some in Japan. Firms listed in the United States' regulated markets (NYSE and NASDAQ) are more likely to choose US GAAP, but companies traded in the OTC market often select IAS. The study demonstrates for managers and regulators that there is considerable support for “international” standards, and that choice of IAS or US GAAP relates to specific firm characteristics which differ according to a firm's country of origin. Most use of “international” standards reflects individual countries' institutional frameworks, confirming the key role of national regulators and standard setters in assisting companies to achieve more comparable international reporting.     

THE POLITICAL EMBEDDEDNESS OF PRIVATE ECONOMIC TRANSACTIONS*

Governments are able to manipulate economic transactions in order to achieve foreign policy goals. This article addresses the question: can managers of multinational enterprises (MNEs) structure economic transactions in ways that will limit the costs resulting from government intervention? Using a transaction cost framework, the efficiency of alternative structures (exporting, joint ventures, licensing, or wholly owned subsidiaries) for protecting a firm's interests are assessed. We argue that the traditional focus on the dyadic relationship between supplier and buyer misses sources of transaction costs; by conceptualizing economic transactions as embedded in a political context, additional sources of transaction costs are revealed. We examine three cases of home government intervention in US MNE transactions with the Soviet Union. We find that the full range of structural alternatives is affected by government sanctions, although sanctions are imposed on exporting relationships first and removed last. We find that MNEs are, therefore, beginning to insulate international transactions by making their overseas subsidiaries more independent of US technology and supplies with the hope that the US government will be less likely to impose its will extraterritorially by intervening in foreign subsidiaries’private economic transactions.     

Political events and the foreign direct investment decision: An empirical examination

This study investigates the impact of political events on US manufacturing direct investment in Latin America. The relationship between foreign direct investment and political events (and economic factors) is examined through regression analysis of pooled time-series (21 years) and cross-sectional (8 countries) data. In contrast to previous studies using an econometric approach, this study finds that political events do affect direct investment decisions. Specifically, both intra-nation and inter-nation conflict and co-operation have an impact on US direct investment decisions concerning Latin American countries. In addition, the host country's market size and market growth affect these decisions by US multinational firms.     

Estimating and predicting multivariate volatility thresholds in global stock markets

We propose a general double tree structured AR‐GARCH model for the analysis of global equity index returns. The model extends previous approaches by incorporating (i) several multivariate thresholds in conditional means and volatilities of index returns and (ii) a richer specification for the impact of lagged foreign (US) index returns in each threshold. We evaluate the out‐of‐sample forecasting power of our model for eight major equity indices in comparison to some existing volatility models in the literature. We find strong evidence for more than one multivariate threshold (more than two regimes) in conditional means and variances of global equity index returns. Such multivariate thresholds are affected by foreign (US) lagged index returns and yield a higher out‐of‐sample predictive power for our tree structured model setting. Copyright © 2006 John Wiley & Sons, Ltd.     

Forced technology transfer and China

Innovation is the most important competitive advantage of the United States. However, the infringement of intellectual property and the forcing of US firms to transfer technology to foreign firms have become increasingly important issues in recent years. This article discusses the implications of China's forced technology transfer regime.     

Foreign Direct Investment in the UK 1985–1994: The Impact on Domestic Management Practice

Foreign direct investment (FDI) into the UK has grown considerably in recent years. US, French, German and Japanese companies have generally accounted for the largest share of this FDI. In addition to greenfield and expansion investment, a major vehicle for inward FDI has been the acquisition of UKcompanies.
This paper examines whether nationally distinct approaches to management were introduced, following acquisition, among a sample of 201 UK subsidiaries of French, German, Japanese,US and UK companies. It provides data on the extent of changes and the post-acquisition influence of the new parent, comparing changes between the four foreign nationalities and a UK control group.
The study indicates that the process of being acquired and controlled by a foreign parent company was often followed by significant changes in management practice. Some changes were common to all acquisitions, including those by UK companies. A shift towards performance-related rewards and a stronger quality emphasis in operations are two examples. In addition, there was also evidence of effects which differed between nationalities. These conformed to accepted characterizations of national management practice in the case of Japanese and US acquirers, but less so in the case of French and German acquisitions. The findings suggest that present views of French and German management practice require further investigation.