Investment and capital structure decisions with strategic debt service under asymmetric information

This paper examines the agency problem due to manager-shareholder conflicts in a real option framework by incorporating strategic debt service. We show that when the equityholders’ bargaining power is weak, the optimal coupon is larger and the manager overinvests the project relative to the case without renegotiation, while the results are totally opposite when the bargaining power is strong. An increase in equityholders’ bargaining power reduces the manager’s value and the total social value. Especially, the social value can be improved by debt renegotiation when the systematic risk is high, which provides an explanation why Chinese government encourage the market-oriented debt restructuring.     

The impact of corporate fraud on director‐interlocked firms: Evidence from bank loans

We examine the impact of corporate fraud committed by one firm (the “fraudulent firm”) on other firms with interlocking directors (the “interlocked firms”), focusing on the debtholder side. We argue that the revelation of a fraudulent firm's fraud can damage the reputation of the interlocked firms because corporate governance can propagate via director interlocks. Empirically, we find that the interlocked firms' cost of debt is higher and the loan covenants become stricter after the fraud cases of the fraudulent firms are revealed. Consistent with the corporate governance propagation explanation, our results are weaker (stronger) for interlocked firms that have better (worse) pre‐event corporate governance standards. Our findings suggest that corporate fraud of fraudulent firms can affect other firms through director‐interlocks beyond shareholder value.     

Cyber Technology and the Arms Race

Cyber technology represents digital military capability with the purpose of causing damage to the military strength of a potential enemy. War using conventional weapons may be preceded by a strike using cyber technology. This paper introduces such technology into the theory of conflicts. The cost of war relative to the payoff from victory turns out to be crucial for the results on armament decisions. In the war game, two types of Nash equilibria may arise. One is subject to warfare while the other is not (‘equilibrium of terror’), depending on the perceived cost of war. In a symmetric war game, cyber capabilities are neutral with respect to the investments in conventional weapons, but they make wars more likely. Asymmetric access to cyber technology limits the international arms race with conventional weapons. A low success probability in the cyber programme encourages exercising the cyberattack option as the enemy may not have access to cyber capability. Uncertainty of the success of a cyber programme makes countries cautious when allocating resources not only to these programmes but also in conventional armament.     

Beyond Bureaucracy: How Prosecutors and Public Defenders Enforce Urban Planning Laws in São Paulo,Brazil

Cities need law to thrive, but it is not clear how abstract texts become tangible policy outcomes. Existing research on the role of law in urban affairs conceives law as either an algorithm that shapes urban life or a reflection of political disputes. The former assumes that the meaning of law is obvious; the latter claims it is irrelevant. In contrast to these views, I argue that laws are multipurpose instruments that acquire a specific function when enforced by those government agents who operate at the frontlines of public service. To understand what these agents do and why, I conducted a qualitative study of the Ministério Público and the Defensoria Pública in São Paulo, Brazil. Through this process, I found that these government agencies are not cohesive bureaucracies but heterarchies composed of distinct internal factions with different evaluative principles. Moreover, officials within them are not isolated from other entities in society but tightly entangled with them, and these connections influence what these officials do. Finally, enforcement agents are not always resigned to solving conflicts as they arise. Rather, they strive to find acceptable solutions in the interstices of existing conditions or even change the circumstances that created the conflict in the first place.     

Poverty and environmental degradation: A review and analysis of the nexus

There is much controversy surrounding the poverty-environmental degradation nexus. The predominant school of thought argues that poverty is a major cause of environmental degradation and if policy makers want to address environmental issues, then they must first address the poverty problem. Another school of thought argues that a direct link between poverty and environmental degradation is too simplistic and the nexus is governed by a complex web of factors. In this paper, a formal structure for analyzing the complex web of factors is formulated and used to review the existing literature on the links between poverty and the degradation of four natural resource sectors. The analysis highlights the important role institutional and market failure in encouraging agents from various income groups to exhibit unsustainable activities which in turn forces some of the agents to fall into poverty. Another important factor is the role of conflicts between different agents (income groups) in the povertyenvironmental degradation nexus. The analysis also highlights the presence of feedback loops between environmental degradation and poverty.     

Wars and capital destruction

In this paper, we propose a theoretical framework to investigate the impact of conflicts and wars on key macroeconomic aggregates and welfare. Using a panel data with 9 countries from 1870 onwards, we first show that the consumption-to-output ratio is minimal during WWII for participants. While this can be explained by an increase in public spending in the USA, this cannot be the case in other countries that participated in WWII, as they experience a large fall in output during wartime. To account for this, we build a variation of a Real Business Cycle model first proposed by Hercowitz and Sampson (1991). We extend the initial model to account for specific shocks that destroy private and public capital stocks – as conflicts do – by assuming an (exogenously) time-varying parameter in the law of capital accumulation. In addition, the model imbeds generalized TFP shocks capturing standard technological factors as well as the potential effects of war on the labor force. The model is estimated and used (i) to assess the importance of capital shocks during war episodes, and (ii) to quantify the welfare effects of conflicts. We show that capital shocks are crucial to account for the macroeconomic dynamics of countries that have experienced large war-related destruction, and that the welfare losses from fluctuations can be quite large when considering data samples that include major war episodes.     

中国出口贸易增长方式与可持续发展的思考

从1978年贸易总额206亿美元骤升至2005年的14 221亿美元,中国的对外贸易快速增长,但连续11年,中国遭遇的贸易摩擦均居世界第一。贸易摩擦发出强烈的警示:出口贸易应当从国内经济的薄弱环节着手,克服自身问题,建立起中国可持续的贸易增长模式。具体措施是:转变以数量增长为主导的旧有模式,代之以以质取胜、以效益为先导的贸易增长模式;加强出口产品的科技含量、增加服务产品的出口;注重资源的节约利用和环境的保护;提高出口企业的人力资本教育和福利,保持出口企业的可持续发展。     

公司治理的若干维度及与代理冲突之间的关系

现代企业在降低交易成本的同时,也产生了代理成本。基于缓解代理成本目的而提出公司治理概念在实证层面具有多个度量维度,并非所有维度下的公司治理对于代理冲突都具有相同的效应。基于国内外文献,文章分析了基于表现形式、行为主体和与制度环境关系的公司治理度量与代理冲突之间的关系。清晰认识公司治理的度量维度及与代理冲突之间的关系,有助于完善公司治理相关研究的假设的提出、度量变量的选择和研究结果的解释。     

Culture facts in business negotiation

Culture conflicts have become the mainly business transactions. This article seeks the resolutions to attitudes, sources of truth, and the gender in the negotiation. impediment to the development of international the issues of culture conflicts from the points of     

Conflicts of Interest and Research Quality of Affiliated Analysts in the German Universal Banking System: Evidence from IPO Underwriting

The quality of equity research by financial analysts is a prerequisite for an efficient capital market. This study investigates the quality of earnings forecasts and stock recommendations for initial public offerings (IPOs) in Germany. The empirical study includes 12,605 earnings forecasts and 6,209 stock recommendations of individual analysts for the time period from 1997 to 2004. The focus of this study is on analysing the potential conflicts of interest that arise when the analyst is affiliated with the underwriter of an IPO. In a universal banking system these conflicts of interest are usually more pronounced and therefore interesting to investigate. The empirical findings for the German financial market suggest that earnings forecasts and stock recommendations of the analysts belonging to the lead-underwriter are on average inaccurate and biased, indicating some conflicts of interest. Moreover, the stock recommendations of the analysts that are affiliated with the lead-underwriter are often too optimistic resulting in a significant long-run underperformance for the investor. In contrast, unaffiliated analysts provide better earnings forecasts and stock recommendations that result in a superior performance for the investor.