Financial Performance of Foreign and Domestic Owned Companies in India

Foreign direct investment (FDI) is attracted into transitional economies like India for reasons like capital, technology, international markets, and managerial skills. Extant literature has focused on studying the impact of FDI inflows on financial performance at an aggregate level ignoring the differences in state regulations in industries. Further, in the case of India, the literature is confined to analysis in specific years. In this study, we examined whether foreign ownership has any impact on financial performance of firms in India over a period of time. We have conducted a pooled cross section time series analysis of 102 Indian pharmaceutical firms for the period 1998–2005. For the analysis, we used a novel, robust method of handling missing data thus making available twenty % more information than is otherwise possible. Foreign ownership is found to have a positive and statistically significant impact on the financial performance of pharmaceutical companies in India.     

The internationalization of competition policy: implications for international business

In the post–Uruguay Round World Trading System and with the creation of the World Trade Organization (WTO), a new set of agendas on the governance of the world economy has emerged. Among them are the relationship between trade and social policy, trade and the environment, and trade and competition policy. These issues are new in the sense that policymakers have, until now, avoided drawing direct‐policy linkages between them. The main reason for this is that traditionally social and competition policies have been domestic policy domains that international policymakers were prevented from influencing. While environmental policy has been subject to several international negotiations, the link between trade and the environment has been relatively under‐discussed in the GATT. Moreover, there have been few international agreements that have drawn a direct link between trade and the environment.¹ The focus of this paper is the relationship between trade and competition policy. In particular, this paper seeks to address the issues related to international competition policy and the concerns and problems faced by international business in this context. ¹ An exception being the agreement on trade in endangered species (CITES). © 2000 John Wiley & Sons, Inc.     

Aggregate insider trading: Contrarian beliefs or superior information?

We decompose realized market returns into expected return, unexpected cash-flow news and unexpected discount rate news to test the relation between aggregate market returns and aggregate insider trading. We find that (1) the predictive ability of aggregate insider trading is much stronger than what was reported in earlier studies, (2) aggregate insider trading is strongly related to unexpected cash-flow news, (3) market expectations do not cause insider trading contrary to what others have documented, and (4) aggregate insider trading in firms with high information uncertainty is more likely to be associated with contrarian investment strategy. These results strongly suggest that the predictive ability of aggregate insider trading is because of insider’s ability to predict future cash-flow news rather than from adopting a contrarian investment strategy. These results hold even after we control for non-informative trades and information uncertainty.     

Determinants of alliance partner choice: Network distance,managerial incentives,and board monitoring

Research Summary: We ask if managerial opportunism is a significant problem in alliance partner choice and examine the role of corporate governance mechanisms in explaining this choice. Using a sample of 313 alliances of U.S. firms from the pharmaceutical and biotechnology industries from 1992 to 2010, we find that managerial incentives lead to managerial preference for relationally risky distant partners over existing and new close partners. Further, board monitoring encourages managers to pursue existing and distant partners over new close ones, choices aligned with shareholder interests. In addition, we find that board monitoring substitutes for managerial incentives in alliance partner choice. We contribute to the literature on alliance partner choice to identify an important, and hitherto, unexplored perspective. Managerial Summary: This article examines whether managers and shareholders view alliance‐related risks differently, and how the divergent interests between managers and shareholders affect alliance partner choice. We argue that managers’ concern about their loss of employment and compensation from alliance failure impedes the choice of relationally risky alliance partners that may increase shareholder value. We also argue that managerial stock ownership and board monitoring mitigate this managerial propensity. Our findings suggest that stock ownership owned by managers and strong board monitoring are effective governance mechanisms to align managers’ interests with those of shareholders. Our study offers a novel perspective to understand alliance partner choice by viewing the firm as an entity comprised of fragmented interests.     

Long-run relationship between the unemployment rate and the current account balance in the United States: An empirical analysis

Portuguese Economic Journal - In recent years, political rhetoric implying international trade hinder employment has gained momentum. We argue that the dynamics between the unemployment rate and...     

Refining the Lorenz-ranking of rules for claims problems on restricted domains

The comparison of the central rules for claims problems, according to the Lorenz order, has been studied not only on the entire set of problems but also on some restricted domains. We provide new characterizations of the adjusted proportional rule as being Lorenz-maximal or Lorenz-minimal within a class of rules on the half-domains. Using this result, we rank the adjusted proportional, the minimal overlap, and the average-of-awards rules by analyzing whether or not these rules satisfy progressivity and regressivity on the half-domains. We also find that the adjusted proportional rule violates two well-known claim monotonicity properties.