On the sufficiency of regulatory enforcement in combating piracy

The literature on piracy has questioned the role of regulatory enforcement in the form of monitoring in deterring piracy. This article shows that for a wide range of penalty levels the equilibrium monitoring rate is such that it is optimal for the copyright holder to prevent piracy by expanding his output beyond the monopoly output level rather than producing the monopoly output level and investing in an anticopying technology. This result holds even when the monitoring cost is “sufficiently” high relative to the cost of investing in anti-copying technology.     

Cross-country IPOs: What explains differences in underpricing?

We study the impacts of country-level information asymmetry, investors' home-country bias, effectiveness of contract enforcement mechanisms, and accessibility of legal recourse on IPO underpricing in 36 countries around the globe. We find evidence consistent with all four of our hypotheses. First, we find a positive and significant effect of country-level information asymmetry on IPO underpricing. Second, our empirical evidence is consistent with the agency-cost-based explanation of IPO underpricing. We find that lower cost to entice the block holders, measured by domestic investors' home-country bias, reduces IPO underpricing. Third, we find that effective contract enforcement mechanisms help to reduce IPO underpricing. Finally, we find a positive relation between the accessibility of legal recourse and IPO underpricing.     

Co-creation as a risk-sharing strategy for the development of innovative EUV lithography technology in the semiconductor industry

Co-creation is becoming an innovative way for new technology development (NTD). We propose a four-staged co-creation model drawn upon a backdrop of ‘knowledge cloud’ for value creation and long-term customer commitment resulting in risk-sharing associated with NTD. The model is elaborated through the case of a leading semiconductor lithography equipment manufacturer (ASML) developing a new extreme ultraviolet lithography technology by engaging the major stakeholders in customer co-investment programme. The model is generic and applicable to any technology-driven industry and may include more stakeholders of same or allied technology.     

Rural-urban migration and family ties: an analysis of family considerations in migration behaviour in India

The importance of family considerations in mobility decisions of rural to urban migrants in India was investigated by analyzing evidence on urban rural ties. The empirical basis was a survey of migrant heads of households in Delhi conducted from October 1975 to April 1976. Only 14% of the migrants in the sample were accompanied by family members when they moved to Delhi, and at the time of the survey 44% of the sample were living on their own as nonfamilial households. 82% of the migrants reported having family members living in the area. In 1/3 of these cases the rural household contained the wife of the migrant. Over 3/4 of the sample visited their origin regularly, and 2/3 were sending money. Migration decisions are discussed in the context of the mutlicentered family, and urban rural family links are classified into several distinct types, and the importance of visits and remittances to origin for each of these types are investigated. An econometric analysis of conjugal separation is presented, and the determinants of remittances are investigated. The salient methodological innovations are a 7-part typology of urban rural familial links and the use of logit analysis in the identification of the important determinants of conjugal separation. Nearly 4/5 of the migrants visited their place of origin. The proportion reporting visits was higher for migrants who had family members at place of origin, but as many as 60% of the migrants not having family links maintained contact with rural residents through visits. If migrants recognized mutual kinship rights and obligations dictated by the social system, they maintained close functional ties with their kin. Only 56% of unmarried migrants living as nonfamilial units reported visits to origin compared to 92% of those living with their nuclear unit. For migrants who reported presence of family members at origin, there was no significant difference between landowners and nonlandowners in the proportion who reported visits. Married migrants who had left their wives in the rural area were more likely to visit origin during the agricultural busy periods. A majority of the migrants maintained economic links with the rural area, and in early all these cases financial flows were from the urban to the rural area. Remittances tended to be related positively to urban earnings and needs of the rural household and negatively to obligations in the urban household. There was no evidence of ties weakening over time, but migrants who planned to settle in the city remitted less. To an extent conjugal separation was temporary and reflected husbands and wives making the journey at different times. Migrants were also inhibited from bringing their wives to the city if they owned land at origin or had migrated to obtain cash for specific needs. A part of the explanation also lies in varying regional cultural and environmental characteristics.     

Corporate financing and anticipated credit rating changes

Firm circumstances change but rating agencies may not make timely revisions to their ratings, thereby increasing information asymmetry between firms and the market. We examine whether firms time the securities market before a credit rating agency publicly reveals its decision to change a firm’s credit rating. Using quarterly data, we show that firms adjust their financing structures before credit rating downgrades are publicly revealed. Specifically, firms on average increase their debt financing by 1.29 % before the disclosure of a rating downgrade, and this increase is due to the issuance of debt rather than the repurchase of equity. In contrast, firms do not take significant financing actions before credit rating upgrades.     

The Feasibility of Establishing an International Financial Center in Shanghai

This article examines the feasibility of establishing an international financial center in Shanghai by 2020. It analyzes the national regulations and incentives that need to be implemented and evaluates whether the financial market liberalization measures undertaken so far by China meet the requirements for the success of this strategy. It concludes that elevating Shanghai to a primary international financial center providing multiple financial services to domestic and foreign clients is decades away under the sequential approach to liberalization. However, in the short run, Shanghai can emerge as a regional financial center catering essentially to the funding needs of Chinese businesses.