Social Preferences in the Lab: A Comparison of Students and a Representative Population

We report from a lab experiment conducted with a sample of participants that is nationally representative for the adult population in Norway and two student samples (economics students and non‐economics students). The participants make choices both in a dictator game (a non‐strategic environment) and in a generalized trust game (a strategic environment). We find that the representative sample differs fundamentally from the student samples, both in the relative importance assigned to different moral motives (efficiency, equity, and reciprocity) and in the level of selfish behavior. It is also interesting to note that the gender effects observed in the student samples do not correspond to the gender effects observed in representative sample. Finally, whereas economics students behave less pro‐socially than non‐economics students, the two student groups are similar in the relative importance they assign to different moral motives.     

Gender differences in e-commerce

Predictors of shopping online were compared for men and women using a sample of 365 college students. For the men, the only predictor of purchasing products online was the number of hours they spent online. For women, the predictors of making purchases online included anxiety about using computers and attitudes toward money, in addition to the number of hours spent online. The results were examined using OLS and MLE (logit and probit) regressions techniques, and the results from each technique compared and contrasted.     

Mixed Motives: An Empirical Analysis of ILO Roll-Call Voting

In this empirical paper, we look at individual voting behaviour of government delegates to the International Labour Organization (ILO). We distinguish between the instrumental motive for voting, which consists in the chance that one's vote may turn the balance in favour of one's preferred outcome, and non-instrumental motives, such as a desire for good reputation. Empirically, the two can be identified because two alternatives, abstaining and not participating in the vote, do not differ in their instrumental value, but are likely to differ with respect to reputation aspects. The model is estimated by a multinomial logit with country-specific unobserved heterogeneity, using roll-call votes on the final passage of ILO conventions from 1977 to 1995. The hypothesis that voting is only instrumental is clearly rejected by the data.     

The Allocation of German Aid: Self‐interest and Government Ideology

We investigate the importance of geo‐strategic and commercial motives for the allocation of German aid to 138 countries over the 1973–2010 period. We find that geo‐strategic and commercial motives matter. When we relate them to the political color of the German government in general, and the Ministry for Economic Cooperation and Development and the Federal Foreign Office in particular, we find their importance to be at least as strong under the socialist leadership. Socialist leadership decreases the amount of aid commitments, controlled for other factors.     

The variety of ICT adopters in the intra-firm diffusion process: Theoretical arguments and empirical evidence

This paper proposes to analyse intra-firm ICT diffusion with a specific focus on the differentiation of the types of ICTs adopted. Its theoretical foundations rest on three sources: (i) models of technology diffusion, (ii) Milgrom's and Roberts’ complementarity hypothesis (1990), and (iii) the neo-Schumpeterian theory of technological choices. Cluster analyses and a multinomial logit model are used to show the coexistence of four ICT adoption modes characterized by different ICT choices, as well as by different strategic, organizational and environmental patterns. The dataset is based on a cross-sectional survey of French firms, which was conducted in 2002.     

ARDL Approach to Test the Productivity Bias Hypothesis

The productivity bias hypothesis states that a relatively more productive country should experience a real appreciation of its currency. Most studies in the literature that have tested the hypothesis have employed cross‐sectional data. Only a few studies have used time‐series data and they have tested the hypothesis for only a small number of countries. In this paper the authors test the hypothesis by using time‐series data over the 1960–90 period for a sample of 44 countries and with a relatively new method of cointegration known as the ARDL approach. For most countries there is strong evidence supporting the hypothesis.     

Inflation in the Transition Economies: the post-Keynesian view

The notion that hostile takeovers must play a key role in corporate governance, by bringing purportedly efficient financial market pressures to bear on poorly performing managers, often underlies proposals for financial sector reform. This paper tests the most influential explanation of takeovers, the free cash flow theory of debt-financed restructuring, against a comprehensive sample of large U.S. hostile takeovers from the years 1978‐89. The tests provide little support for the free cash flow hypothesis: that over-retention of corporate resources, relative to investment opportunities, would distinguish targets from other companies. Firms with less debt are more likely to have been taken over. But this and closely related evidence is more consistent with the idea that the takeover and credit markets underwent a period of speculative overheating. Thus the role played by hostile takeovers in the corporate restructuring of the 1980s does not suggest that facilitating such activity should be a goal of present day financial reforms, in Europe or elsewhere     

Cost structures of banks grouped by strategic conduct

The hypothesis that the banking system consists of firms that use the same production technology is tested and rejected in this study. Six groupings of the population of commercial banks are identified using cluster analysis. The banks are grouped to reflect similar production technologies within groups but different technologies across groups as defined by the strategic conduct (i.e., activities) of the banks. The results suggest that banks in different clusters employ production processes that feature different degrees of substitutability between factors of production, and that the estimates of input substitutability for those groups look quite different from those estimated based on the full population of commercial banks. The impact of the homogeneity production technology assumption on the measurement of cost efficiency is also assessed. The results show that partitioning the industry by strategic conduct reduces the average inefficiency in the industry. These results support those found by others who used similar partitioning criteria but a more narrowly defined sample of banks.     

On testing the logistic assumption in binary dependent variable models

This paper shows that the LM test for the validity of the logistic distribution commonly assumed in Binary Dependent Variable Models (i.e., the logit model) developed by Poirier (1980) can be obtained from a simple artificial regression. Monte Carlo simulations examine the small sample behaviour of the test statistic in comparison to the Information Matrix test for the logit model developed by Orme (1988) and Davidson and MacKinnon (1989), and two versions of the Reset test for limited dependent variable models suggested by Pagan and Vella (1989). Our results suggest that the LM test compares favourably under the null. The tests also appear to have varying power properties against different alternatives which suggests that they should all be used in investigating the validity of the logit model.     

Takeovers and other influences on economic performance: a plant level analysis

The results of an empirical investigation into the effects of takeovers and other variables on corporate performance is reported. Our sample of 972 establishments is taken from the Workplace Industrial Relations Survey, 1984in which the plant is the unit of investigation and the assessment of performance is made by mangers. Using logit analysis we find that the main determinansts of relative financial performance are avoidance of takeover and strength of market position. The main determinants of growth of sales are profitability, change of ownership, smaller size and lack of market dominance. In these results we find support at the plant level for views on the effects of mergers, market dominance and the determinants of growth that have traditionally been demonstrated at the level of the firm.     

Limit Theorems for Estimating the Parameters of Differentiated Product Demand Systems

We provide an asymptotic distribution theory for a class of generalized method of moments estimators that arise in the study of differentiated product markets when the number of observations is associated with the number of products within a given market. We allow for three sources of error: sampling error in estimating market shares, simulation error in approximating the shares predicted by the model, and the underlying model error. It is shown that the estimators are CAN provided the size of the consumer sample and the number of simulation draws grow at a large enough rate relative to the number of products. We consider the implications of the results for the Berry, Levinsohn and Pakes (1995) random coefficient logit model and the pure characteristics model analysed in Berry and Pakes (2002) . The required rates differ for these two frequently used demand models. A small Monte Carlo study shows that the differences in asymptotic properties of the two models are reflected, in quite a striking way, in the models' small sample properties. Moreover the limit distributions provide a good approximation to the actual Monte Carlo distribution of the parameter estimates. The results have important implications for the computational burden of the two models.     

The effect of school resources on educational attainment: evidence from Denmark

We investigate the effect of school inputs in primary and lower secondary schools on the probability of eventually passing upper secondary or vocational education. Danish administrative register data for a large number of young people and their parents are used. Educational outcome and controls for family background are measured at the individual level, whereas school expenditure and controls for municipal socioeconomic characteristics are measured at the municipal level. As unobserved characteristics may be correlated for pupils within the same municipality, we estimate linear probability and logit models with random municipal‐specific effects in addition to standard OLS and logit models. With the full sample of pupils and the full set of controls, we find that expenditure per pupil has a statistically significant, but rather small, positive effect on educational attainment. Effects of teacher–pupil ratios are less significant. The expenditure effects are generally higher for pupils from disadvantaged backgrounds.     

The impact of foreign takeovers: comparative evidence from foreign and domestic acquisitions in Germany

This study provides the first evidence of foreign takeover effects on the performance of acquired firms in Germany that considers a general takeover effect through the comparison with domestic takeovers. A propensity score matching approach combined with a difference-in-differences (DiD) estimator were performed with new high-quality panel data for manufacturing enterprises, provided by German official statistics. The results indicate a negative impact of foreign takeovers on employment and no productivity improvements for the period 2007–2009. This evidence contradicts existing empirical evidence for Germany which suggests significant productivity improvements and no changes in terms of employment. These findings are of particular interest to Germany as one of the most important FDI inflow destinations worldwide. They contribute to the foreign ownership performance premium literature as well as improving the understanding of foreign acquisition consequences, a subject of utmost topicality.     

Asymptotics of trend stationary fractionally integrated ARMA models

The main contribution of this study is to provide asymptotic results for MLE applied to the trend stationary ARFIMA model and to implement a detailed simulation study. For small sample sizes, the bias for the fractional parameter, d, can be quite substantial when the other parameters are also estimated simultaneously.     

Modelling variety in consumption expenditure on food in India

In this paper we compute nutrient‐income elasticities for two macronutrients (calories and protein) and five micronutrients (calcium, thiamine, riboflavin, carotene and iron) using an all‐India sample of rural households for 1994. We show that in each case the respective elasticities are positive and significant. This lends support to our hypothesis that an increase in income would increase nutrient intake by varying amounts, contrary to some assertions. We then compute differences in the elasticity of substitution for non‐poor and poor across commodity groups and show that these differences, while significant, are small. This further corroborates our conclusion that increases in income of the poor would lead to greater increases in their nutrient intake as compared to the non‐poor, although the magnitudes will be small.     

Deciphering the motives behind corporate social responsibility (CSR) using managerial ownership: evidence from heteroskedastic identification

Motivated by agency theory, we investigate the effect of managerial ownership on CSR engagement. Exploiting a novel identification strategy and using a large U.S. sample of over 14,000 observations across 18 years, we find that higher managerial ownership diminishes CSR engagement significantly. As managers own a larger share of equity, they bear greater costs of CSR, leading to a reduction in CSR engagement. Further analysis, however, shows that not all CSR activities are motivated by agency problems. In particular, the CSR activities related to human rights and products appear to promote shareholders’ wealth. The results of this study are important as they show that there can be different motives behind different CSR activities. We contribute to the literature by shedding light on the motives behind CSR investments using a novel identification strategy.     

Small sample bias in conditional sum-of-squares estimators of fractionally integrated ARMA models

This paper considers estimation of the parameters for the fractionally integrated class of processes known as ARFIMA. We consider the small sample properties of a conditional sum-of-squares estimator that is asymptotically equivalent to MLE. This estimator has the advantage of being relatively simple and can estimate all the parameters, including the mean, simultaneously. The simulation evidence we present indicates that estimation of the mean can make a considerable difference to the small sample bias and MSE of the other parameter estimates.     

A model of takeovers of foreign banks

This paper investigates the determinants of the takeover of a foreign bank by a domestic bank whereby the former becomes a branch of the latter. Each bank is initially supervised by a national agency that cares about closure costs and deposit insurance payouts, and may decide the early closure of the bank on the basis of supervisory information. Under the principle of home country control, the takeover moves responsibility for both the supervision of the foreign bank and the insurance of the foreign deposits to the domestic agency. It is shown that the takeover is more likely to happen if the foreign bank is small (relative to the foreign banking market) and its investments are risky (relative to those of the domestic bank). Moreover, the takeover is in general welfare improving for both countries.     

Out of Africa? Locational determinants of South African cross-border mergers and acquisitions

South Africa is the Africa’s biggest source of outward foreign direct investment. This study examines the principal locational motives of cross-border mergers and acquisitions CBMA by South African firms for the 1990–2014 period. The role of inter-country cultural and economic linkages is also studied. Firm-level data of South African merger and acquisition activities in 74 host countries are used to estimate a number of model specifications that control for host-country economic, geographical, cultural and institutional characteristics. Estimations are carried out using random-effects negative binomial panel model. Capturing the host-economy market and enhancing efficiency are found to be the two major motives driving South African corporations’ CBMA activities. Natural resources acquisition seems a less important motive, while strategic assets such as patents and technology do not appear to be attractive. The role of cultural and economic linkages between the home and the host country is found to be substantial. South African firms prefer investing in Africa, particularly in countries bordering South Africa. In light of the study’s findings, South African CBMA activities can be compared with those from other emerging economies.