Black economic empowerment,legitimacy and the value added statement: evidence from post‐apartheid South Africa

We examine why companies in South Africa voluntarily provide a value added statement (VAS). The VAS can be used by management to communicate with employees and thereby establish a record of legitimacy. Since we want to establish if the VAS is used to establish symbolic or substantive legitimacy, we examine whether production of a VAS is associated with actual performance in labour‐related areas. To measure labour‐related performance, we use an independent Black Economic Empowerment (BEE) rating. We find that BEE performance is significantly and positively related to the voluntary publication of a VAS. Our results suggest that BEE performance and disclosure of a VAS are two elements of a strategy used by South African companies to establish their substantive legitimacy with labour.     

Balance Sheet Restructuring and Investment

Abstract
This article looks at the evolution of corporate balance sheets and investment over the past few years .
We find that many companies have significantly improved their balance sheets in this time. Leverage has been reduced, and this, coupled with lower nominal interest rates, has improved the interest cover and cash flows of the corporate sector. For many firms, the process of balance sheet repair has proceeded a long way so that the extent to which the financial position of firms will impinge on investment is much lower than it was a few years ago.
Looking further ahead, it appears that the rate of return to investing in capital is relatively high, at least when judged against the standards of earlier downturns. With the recovery picking up pace we should, therefore, see firms more inclined to expand their capital expenditure and less focused on financial restructuring.     

A rational foundation for wishful exchange rate forecasts

Professor Takatoshi Ito in a recent American Economic Review paper documents that exporters and importers have biased exchange rate forecasts and the biases are in opposite directions. At first glance, it is difficult to provide a rational foundation for such behavior. Professor Ito hypothesizes that these forecasts are the result of wishful expectations. However, if forecasts are stochastic, then minimization of a quadratic loss function results in a rational hedge applied to either $/¥ or ¥/$. The different perspectives of importers and exporters determines which form is hedged and determines the direction of the bias.     

"带形容词"的民主:比较研究中的概念创新

近年来,世界各国民主化的趋势使得学者们必须面对两个具有潜在矛盾的目标:其一是建立一个能涵盖各个国家不同经验、具有多样性的民主概念;其二是在不扩大概念的基础上扩大对这一大类案例的分析。本文认为这种双重挑战导致了概念创新的加速,产生了几百种民主的亚类型———也就是“带形容词”的民主。本文对出现的三种重要创新类型的优势和弱点进行了探讨,这三种类型是:对民主定义的“精确化”;对与民主相关联的大概念进行转化;以及建立不同的亚类型。鉴于这些重新定义民主概念的策略所产生的含义具有复杂的结构,我们显得老生常谈式的结论其实具有新的紧迫含义:学者们必须通过对他们所使用的民主概念进行清楚的定义和说明来为自己的研究定位。     

Managerial Equity Ownership and the Demand for Outside Directors

This paper examines the linkage between the use of outside directors and managerial ownership. We conjecture there are two linkages: the standard incentive‐alignment demand for monitoring when managers own little stock and an entrenchment‐amelioration demand when managerial stock ownership is high. As a consequence, we predict the association between managerial ownership and board composition will be nonlinear (U‐shaped if the entrenchment effect is sufficiently pronounced). Using UK data, we find that both quadratic and logarithmic models outperform the simple linear relationship assumed in prior research and that the substitution between managerial ownership and board composition is stronger than hitherto supposed.