Delegation and the regulation of U.S. financial markets

We analyze the institutional determinants of U.S. financial market regulation with a general model of the policy-making process in which legislators delegate authority to regulate financial risk at both the firm and systemic levels. The model explains changes in U.S. financial regulation leading up to the financial crisis. We test the predictions of the general model with a novel, comprehensive data set of financial regulatory laws enacted specifically between 1950 and 2009. The theoretical and empirical analysis finds that economic and political factors impact Congress’ decision to delegate regulatory authority to executive agencies, which in turn impacts the stringency of financial market regulation, and our estimation results indicate that political factors may have been stronger and resulted in inefficiencies.     

Dynamics of the Market for Corporate Tax‐Avoidance Advice*

This paper addresses the debate over aggressive tax‐planning models and analyzes the role of tax consultants. It focuses on the dynamic interaction between innovation and imitation of aggressive tax‐planning products and governmental tax regulation, and it highlights the importance of the length of regulatory lag in comparison with the time it takes the tax‐consulting industry to imitate newly innovated tax‐avoidance products. It reveals an alignment of interests between highly innovative tax‐consulting firms and the governmental tax legislator/regulator. The conclusions are also relevant for the policy debate on mandatory disclosure rules about aggressive tax‐planning models.     

Doing more and doing better are two different entities: Different patterns of family control and environmental performance

Family firms bear two types of agency costs, including type I and type II agency problems, in corporate environmental practices: (1) Outside executives at family firms hesitate to engage in environmental strategies, which can lead to drops in profits; (2) Controlling families employ opportunistically environmental management to achieve their interests. We argue that a primary cause for the agency problems lies on ineffective internal corporate governance at family firms, which can cause loss of managerial (or power) balance between outside executives and family executives. Our findings show that family firms with ownership and strategic control (FSC), which family executives and outside executives monitor and constrain each other, can achieve the highest environmental performance. Moreover, external controls, including product market competition and provincial environmental regulations, substitute effective internal control of FSC. The environmental performance premium of FSC is more prevalent when the production market competition is lower. Family firms with ownership, operational, and strategic control (FOSC) can achieve higher environmental performance within a province with more stringent environmental regulations.     

Foreign investment regulation and firm productivity: Granular evidence from Indonesia

When regulating foreign direct investment (FDI), countries often face a trade-off between pursuing national policy interests and suffering efficiency losses due to FDI restrictions. We demonstrate the presence of this trade-off in the case of a protectionist FDI policy in Indonesia. Using a yearly census of Indonesian manufacturing firms from 2000 to 2015, we link product-level changes in binding FDI regulation due to major regulatory tightening to changes in firm-level productivity. Controlling for an extensive set of fixed effects as well as potential political economy drivers of regulation, we show that a tightening of the regulatory environment was successful in reducing foreign capital reliance among regulated firms, and led to increases in FDI among non-regulated firms producing the same product. Despite compensating increases in domestic capital, regulated firms experienced relative productivity losses. This points towards either a less efficient allocation of domestic capital or a general inferiority of domestic capital as compared to foreign investments.     

Monitoring the foreign exchange rate benchmark fix

ABSTRACT

We develop a Manipulation Index (ManIx) that captures the potential manipulation intention of dealers during the World Markets/Reuters (WMR) benchmark (London Close) period at 4 pm London time through a unique algorithm and simulation. The application of this model (using a dataset with dealers’ identities) can identify banks that are prone to potential manipulative behavior. The results concerning the identified banks are validated by the regulatory investigations. Implementation of this algorithm allows regulators better direct their limited resources towards more targeted in-depth investigation.     

Optimal distribution of the injured in a multi-type transportation network with damage-dependent travel times: Two metaheuristic approaches

We study a location-allocation-routing problem for distribution of the injured in a disaster response scenario, considering a three-type transportation network with separate links. A circle-based approach to estimate the impacts of the disaster is presented. After formulating relations for computing the percentage of the injured, the destruction percentage and the damage-dependent travel times, the problem is formulated as an integer nonlinear program. We utilize a genetic algorithm and a discrete version of the imperialist competitive algorithm for solving large problems. An empirical study focused on earthquakes in Tabriz, Iran, illustrates applicability of the proposed model and performance of the proposed algorithms.     

Online marketing: When to offer a refund for advanced sales

Advance selling is a marketing strategy commonly used by online retailers to increase sales by exploiting consumer valuation uncertainty. Recently, some online retailers have started to allow refunds on products sold in advance. On the one hand this reduces the net advance sales, but on the other hand it allows a higher advance sales price. This research is the first to explore the overall effect of allowing a refund on profits from advance sales, identifying conditions where advance selling with or without refunds (or no advance selling at all) is best. We analytically compare the profits of three advance selling strategies: none, without refund, and with refund. We show that selling in advance and allowing a refund is optimal for products with a relatively small profit margin and small strategic market size, and that the added profit can be considerable. Our results guide managers in selecting the right advance selling strategy. To facilitate this, we graphically display, based on the two dimensions of regular profit margin and strategic market size, under what conditions the different strategies are optimal.     

Developing and assessing critical thinking skills in marketing students: The power of making explicit problem-solving processes

Applied research is a course that has been taught to develop and effectively assess critical thinking skills in marketing students. A modified version of the problem-solving model using explicit problem-solving processes is employed in the design of course material and delivery. Assessment data support students’ ability to critically think at both lower and higher levels. Assignments include creative and timely experiential exercises to reinforce important marketing concepts, encourage student interest, and develop critical thinking skills.     

Play fair! Innovating internal self-regulation in the market for profit

Regulation imposes compliance demands on business, but these controls by no means ensure that corporations will act ethically. Externally imposed controls by government or industry are prompts intended to move organizations to engage in a moral minimum. Such efforts are typically reactionary corrective measures, often crafted and applied after an ethical scandal occurs, and thereby offer limited effectiveness in providing systemic change. To provide insight on internally driven controls, this article examines how a newer form of monetized self-regulation, referred to as inverted moral markets, might be leveraged to motivate corporate ethical behavior. Inverted moral market (IMM) operations target firms suspected of unethical action, providing a type of market whistleblowing. Such activities are monetized through the sale of information to investors and by short selling. Rather than a desire to build moral strength, IMM firms are motivated by self-interest and profit. They can potentially ‘do good’ by imposing self-correction within the market, but without virtuous intent. We explore IMMs and the varied impacts their activities may have on the functioning of the overall market. We argue that a more balanced approach between internal and external regulation may enhance the environment for moral balance in a capitalist market system.     

省思与规制:我国跨境期货交易法律困境及应对

我国推进期货市场"走出去"及国际化战略须以跨境期货交易法律机制构建为前提。文章通过厘定跨境期货交易内涵边界及监管正当性,省思主要法律困境及应对思路,提出应致力于跨境期货交易立法监管理念创新,确立跨境交易监管认同机制,提升跨境期货衍生品交易经纪能力,适度扩大衍生品跨境投资参与主体范围,逐步取消QDII投资品种限制,并从跨境期货交易运行保障、立法监管、风险控制以及解纷机制等方面建构系统法律保护体系,切实保障跨境交易整体性金融安全。