Regulated Efficiency, World Trade Organization Accession, and the Motor Vehicle Sector in China

This article is concerned with the interaction of regulatedefficiency and World Trade Organization (WTO) accession andits impact on China's motor vehicle sector. The analysis isconducted using a 23 sector–25 region computable generalequilibrium model. Regulatory reform and internal restructuringare found to be critical. Restructuring is represented by acost reduction following from consolidation and rationalizationthat moves costs toward global norms. Without restructuring,WTO accession means a surge of final imports, though importsof parts could well fall as production moves offshore. However,with restructuring, the final assembly industry can be madecompetitive by world standards, with a strengthened positionfor the industry.     

Conditional Cash Transfers, Schooling, and Child Labor: Micro-Simulating Brazil's Bolsa Escola Program

A growing number of developing economies are providing cashtransfers to poor people that require certain behaviors on theirpart, such as attending school or regularly visiting healthcare facilities. A simple ex ante methodology is proposed forevaluating such programs and used to assess the Bolsa Escolaprogram in Brazil. The results suggest that about 60 percentof poor 10- to 15-year-olds not in school enroll in responseto the program. The program reduces the incidence of povertyby only a little more than one percentage point, however, andthe Gini coefficient falls just half a point. Results are betterfor measures more sensitive to the bottom of the distribution,but the effect is never large.     

Analyst Hype in IPOs: Explaining the Popularity of Bookbuilding

The bookbuilding IPO procedure has captured significant marketshare from auction alternatives recently, despite the significantlylower costs related to the auction mechanism. In France, whereboth mechanisms were used in the 1990s, the ostensible advantagesof bookbuilding were advertising-related benefits. Book-builtissues were more likely to be followed and positively recommendedby lead underwriters. Even nonunderwriters' analysts promotebook-built issues more in order to curry favor with the IPOunderwriter for allocations of future deals. Yet we do not observevaluation or post-IPO return differentials that suggest thesetypes of promotion have any value to the issuing firm.     

On the protection of cultural goods

We identify cultural goods as goods which are valued differently by consumers at home than by individuals abroad, and which are produced under scale economies. It is shown that restrictions on the trade of cultural goods can raise welfare in both recipient and source countries.     

Accountability of independent directors: Evidence from firms subject to securities litigation

We examine which independent directors are held accountable when investors sue firms for financial and disclosure-related fraud. Investors can name independent directors as defendants in lawsuits, and they can vote against their reelection to express displeasure over the directors’ ineffectiveness at monitoring managers. In a sample of securities class action lawsuits from 1996 to 2010, about 11% of independent directors are named as defendants. The likelihood of being named is greater for audit committee members and directors who sell stock during the class period. Named directors receive more negative recommendations from Institutional Shareholder Services, a proxy advisory firm, and significantly more negative votes from shareholders than directors in a benchmark sample. They are also more likely than other independent directors to leave sued firms. Overall, shareholders use litigation along with director elections and director retention to hold some independent directors more accountable than others when firms experience financial fraud.     

Indexed and non-indexed insurance and the growth of group life insurance

This paper provides empirical evidence regarding the hypothesis that expectations of inflation reinforces the need for indexed insurance and decreases purchases of fixed-dollar contracts. A comparison between term life insurance and group life insurance is developed to demonstrate the positive effect of inflation on the growth of group life insurance.     

A model of periodic job training

This paper examines conditions under which a demand-constrained, cost-minimizing firm will provide industry-specific on-the-job-training to its employees, when a flexible stock of outside labor is available for hire. The term industry-specific is used to describe training with general components valued by other firms in the industry. This definition of on-the-job-training offers the possibility that trained workers could be poached by competing firms and provides limited opportunities for newly trained workers to seek alternative employment. The firm's decisions involve whether or not to invest in on-the-job-training, and whether to use in-house labor exclusively or a mix of in-house and outside labor. The cost-minimizing strategy is crucially dependent upon the mutual loyalty of the firm and its workers.This paper has benefited from numerous comments from the participants of the 41st International Atlantic Economic Conference in Paris, March 12–19, 1996.