Privatisation and Stock Market Efficiency: The British Experience

We present evidence that with its emphasis on wide-share-ownership the British privatisation program created heavy involvement of small investors in privatised stocks. Using standard market efficiency tests and maximum likelihood estimates of stationary fractional ARIMA models, we show that the pricing of privatised stocks in the London Stock Exchange was indeed inefficient, unlike the rest of the market. Together, these two pieces of evidence suggest that small investors, behaving like noise-traders, may be generating this inefficiency. Yet, we cannot rule out alternative explanations.     

The effect of interfirm dependence structures on governance mechanisms

Despite recent developments regarding the study of interdependence structures, previous research has rarely investigated the simultaneous effect of both interdependence magnitude and interdependence asymmetry on governance mechanisms among exchange parties. A survey of manufacturing companies has been used to test a theory about the interactive effect of buyer dependence and supplier dependence on inter-firm governance. The analysis of the survey supported the proposition that both buyers and suppliers that are highly dependent on each other (high interdependence magnitude and low interdependence asymmetry) may choose to rely on monitoring and the norm of information sharing. However, when a buyer's dependence is low regardless of the supplier's dependence level, the buyer does not rely on the norm of information sharing (buyer's relative interdependence advantage, buyer's relative interdependence disadvantage, and low interdependence magnitude). On the other hand, when the supplier's dependence on the buyer is low, the buyer relies on monitoring regardless of its dependence level (buyer's relative interdependence disadvantage and low interdependence magnitude). However, this study did not empirically measure performance. Further research should be done on the effect of congruence between the governance mechanism and its antecedents on buying performance.     

Does too much government spending depress the economic development of transition economies? Evidences from dynamic panel threshold analysis

This paper investigates the relationship between government size and economic growth and determines the optimal level of government spending to maximize economic growth. The paper applies a dynamic panel data analysis based upon a threshold model to test the threshold effect of government spending in 26 transition economies over the period spanning 1993–2016. According to the analysis results, government expenditures have a threshold effect on economic growth, and there is a non-linear relationship depicted as an Armey curve in these transition economies. The findings indicate that a government size above the threshold government spending level adversely affects economic growth, while a government size below the threshold level has a positive effect. Furthermore, there is a statistically significant relationship between the two variables above and below that optimal level, even if we divide the sample into developed and developing countries. Our findings suggest that governments in transition economies should consider optimal government size at around the estimated threshold level to support sustainable economic growth.     

Accounting Policies in the Extractive Industry: A Global and a Turkish Perspective

This paper investigates the influence of accounting standards on financial reporting for companies in the extractive industry. In Turkey, listed firms have prepared their financial reports according to the International Accounting Standards and the International Financial Reporting Standards (IAS/IFRS) since 2005, as has the European Union. The aim of this study is to determine the degree of compliance with IFRS 6, comparing global and Turkish extractive entities. We find that the entities reporting in accordance with IFRS 6 in Turkey are more likely to fail to declare their accounting policies, whereas global companies are more likely to be compliant with IFRS 6.     

The asymmetric moderating role of market orientation on the ambidexterity-firm performance relationship for prospectors and defenders

Drawing on the resource-based view of the firm and, in particular, the capabilities perspective of firm performance, the authors examine the relationship between ambidexterity and firm performance for two strategy typologies: prospectors and defenders. Ambidexterity, defined as the combination of two discrete capabilities (exploration and exploitation), should have a less negative effect on firm performance among prospectors that add exploitation to exploration than among defenders who add exploration to exploitation. Hence, this research predicts an asymmetric effect of ambidexterity on firm performance for prospectors and defenders. The authors further posit that a boundary-spanning culture, such as market orientation, can function as a metaculture by integrating the subunit cultures generated by exploration and exploitation. As a result, market orientation should mitigate the negative effect of ambidexterity on firm performance, albeit differently for prospectors and defenders, and thus point to an asymmetric moderating role of market orientation. The findings provide mixed results, which the authors discuss along with some theoretical and managerial implications.     

WHAT HAPPENED TO THE WILLINGNESS OF COMPANIES TO INVEST AFTER THE FINANCIAL CRISIS? EVIDENCE FROM LATIN AMERICAN COUNTRIES

In this article we investigate the changes in corporate investment dynamics in the aftermath of the global financial crisis. Using firm-level data from six Latin American countries from 2002 to 2015, we show that firms are less constrained and have greater ability to invest after the crisis. However, the willingness of firms to invest optimally is reduced. This is supported by strong evidence that during the postcrisis period investment–cash flow sensitivity disappears, investment-q sensitivity increases, and the estimated speeds of adjustment for target investment decrease. Moreover, after the crisis, firms notably increase their efforts to attain optimal cash and leverage levels. Our analysis implies that firms may not always be willing to invest optimally. The willingness to invest optimally appears to be time variant and moves together with the dynamics of cash and leverage policies, albeit in opposite directions.     

The Chilean Anti-cartel Experience: Accomplishments and Challenges

Review of Industrial Organization - We evaluate the Chilean law and enforcement record in the area of cartels. We identify the high probability of cartel detection, severe sanctions for detected...     

Energy efficiency and household behavior: the rebound effect in the residential sector

This article investigates the rebound effect in residential heating, using a sample of 563,000 households in the Netherlands. Using instrumental variable and fixed‐effects approaches, we address potential endogeneity concerns. The results show a rebound effect of 26.7% among homeowners, and 41.3% among tenants. We corroborate the findings through a quasiexperimental analysis, using a large retrofit subsidy program. We also document significant heterogeneity in the rebound effect, determined by household wealth and income, and the actual energy use intensity. The findings in this article confirm the important role of household behavior in determining the outcomes of energy efficiency improvement programs.