A pure hedonic theory of utility and status: Unhappy but efficient invidious comparisons

We examine status preferences where agents compare their own utility relative to the utilities of others. As long as status utility comparisons are not too intense, they do not affect either the competitive equilibrium or the set of efficient allocations. However, status utility comparison may substantially reduce average utility and dramatically increase utility inequality. Equating utility with happiness operationalizes the theory and provides an explanation of why invidious comparisons can generate so much unhappiness without much inefficiency. Our theory has very different welfare implications from other status theories, even when reduced form representations appear observationally equivalent.     

Corporate Governance and the Cost of Borrowing

This paper analyzes the theoretical link between governance (defined loosely as the degree of protection offered to outside shareholders), and the cost of borrowing. We find, consistent with empirical evidence, that improvements in governance reduce the likelihood of default. Also, we find that improvements in governance will monotonically increase or reduce the cost of debt, where the sign of the relationship depends on the firm's restructuring cost in default. Finally, we find that the strength of the governance mechanism can influence the incentives to carry out risk shifting.     

The entrepreneur’s mode of entry: the effect of social and financial capital

This article uses a French database of firms set up in 1998 to investigate the determinants of takeovers versus startups as a mode of entry. It focuses on two determinants that previous research has not fully analyzed: social capital and financial capital. Our findings suggest social capital affects the mode of entry. They show that entrepreneurs with social capital are more likely to create new firms from scratch than to take over existing firms. We confirm the effect of financial capital on the mode of entry. Bank loans are more often associated with takeovers than with startups and low initial wealth is more often associated with startups than with takeovers. These results show that finance affects the mode of entry.     

Understanding Agro-Holdings in Russia: A Commonsian Analysis

Agro-holdings in Russia are large-scale vertically integrated farms within the food processing industry which emerged in the economic, political, and social context inherited from the Soviet era and the post-Soviet market transition. Several economic researchers consider agro-holdings either as a transitory phenomenon or as a major innovation that enables economies of scale and scope. However, their sustainability does not support the idea of a transitory organizational form. Meanwhile, important aspects of their activity, as with the financing of social infrastructures and the partnership with public institutions, cannot be explained by the aim of productive efficiency. I argue that applying John R. Commons’ concepts of strategic transactions, going concerns, and futurity offers an insight enabling the understanding of agro-holdings in Russia as the result of actors’ capacity to form new working rules and compromises, reflected in going concerns that incorporate both the productive and distributive dimensions of their activity.     

The Determinants of Mergers and Acquisitions in Banking

This paper investigates the determinants associated with the likelihood of a bank becoming involved in a merger or an acquisition. Using a multinomial logistic regression and a Cox regression with time-dependent covariates, we investigate the determinants of being a target or an acquirer from a sample of 777 deals involving EU acquirers and 312 global targets over the period of 1991 to 2006. Both the multinomial logistic and Cox regressions identify the same determinants associated with becoming acquirers or targets. A higher likelihood of becoming an acquirer exists for larger banks with a history of high growth, greater cost X-efficiency, and lower capitalization. In contrast, banks are more likely to be targets if they have lower free cash flows, are less efficient, are relatively illiquid, and are under-capitalized. But, the predictive power of the two regressions is different as the multinomial logistic regression outperforms the Cox regression when predicting the likelihood of becoming an acquirer.     

Voluntary Disclosure of Information in a Setting in which Endowment of Information has Productive Value

Abstract:  This paper introduces a model capturing managers' disclosure policies in settings in which disclosure is rewarded by the financial market because disclosure implies that managers are endowed with information and endowment of information may potentially improve the firm's productive efficiency. It provides sufficient condition for a threshold disclosure equilibrium to obtain and compares disclosure policies in a setting in which endowment of information improves the firm's productive efficiency with disclosure policies in a setting in which endowment of information has no impact on the firm's productive efficiency. Managers' disclosure policies are shown to depend crucially on whether the endowment of information is exogenous or endogenous. When the endowment of information is exogenous, an increase in the usefulness of information in improving the firm's productive efficiency leads to a decrease in the disclosure threshold and hence an increase in the amount of information disclosed. In contrast, when the endowment of information is endogenous, an increase in the usefulness of information in improving the firm's productive efficiency has no effect on the disclosure threshold but leads to a decrease in the probability with which information is acquired and hence a decrease in the amount of information disclosed. As, in the threshold disclosure equilibrium, the net present value of information acquisition arising from any increase in production efficiency is negative, an increase in the usefulness of information in improving the firm's productive efficiency thus reduces the inefficiency caused by information acquisition.     

Mediation in professional relationships in France: tactics and outcomes

This study has two goals. First, it attempts to update the various tactics used by mediators in the context of professional relationships in France. Second, the study analyses the outcomes of the different aspects of mediator action. Tying together semi‐structured interviews with mediators and social negotiators involved in mediation and non‐participatory observation, the results show the existence of a range of diversified tactics that a mediator can mobilise based on his or her perception of the existence of dynamics for agreement. In contrast to existing Anglo‐Saxon research, the mediator in the French context feels entitled to become a genuine third party and have an impact on key issues during debates. Highlighting three contingent variables (level of conflictuality, mediator's mediating experience, negotiators' mediating experience) puts the mediator's intrusion into perspective.     

Analyzing firms' strategic investment decisions in a real options' framework

Within the context of investment under uncertainty, the real options literature has led to models that capture primarily the time to wait flexibility of monopolistic corporations' investment decision. In this paper, we propose an approach which relies on barrier options to model production and/or sales delocalization flexibility for multinational enterprises making decisions under exchange rate uncertainty. We then extend the model by introducing game theoretic considerations to show how the information set and the competitive structure of the market may lead firms to act strategically and exercise their delocalization options preemptively at an endogenously fixed exchange rate barrier.