Deregulation, consolidation and banks efficiency in Singapore: Evidence from event study window approach and Tobit analysis

A three-year window analysis together with the Data Envelopment Analysis (DEA) approach is employed to investigate the effects of mergers and acquisitions on the Singapore banking groups’ efficiency. The results suggest that the merger has resulted in a higher Singapore banking groups’ mean overall efficiency. We do not find evidence of more efficient acquirers compared to the targets and that the acquiring banks’ mean overall efficiency tends to improve from the merger with a more efficient bank. The Tobit regression results suggest that bank profitability has positive impact on bank efficiency, whereas poor loan quality has negative influence on bank performance. (JEL: G21, D24) All findings, interpretations, and conclusions are solely those of the authors’ and do not necessarily represent the views of the institutions to which they belong. We would like to thank the anonymous referees for their comments and suggestions. The remaining errors are of our own.     

Does the Porter Hypothesis Explain Expected Future Financial Performance? The Effect of Clean Water Regulation on Chemical Manufacturing Firms

Previous research provides opposing theoretical arguments regarding the effect of environmental regulation on financial performance. As one important argument, the Porter hypothesis claims that tighter regulation improves financial performance. This study provides empirical evidence on this debated effect. In particular, we employ panel data analysis to examine the effect of Clean Water Act regulation, as measured by permitted wastewater discharge limits, on expected future financial performance, as measured by Tobin’s q, for publicly owned firms in the chemical manufacturing industries. We find that tighter permitted discharge limits lower Tobin’s q; i.e., more stringent Clean Water Act regulation undermines expected future financial performance. By decomposing Tobin’s q into its constituent components—market value and replacement costs—and estimating each component separately, we find that tighter permitted discharge limits lower both components with a larger impact on market value, which implies that investors revise their expectations of the discounted present value of future profits in response to changes in Clean Water Act regulation.     

并购支付方式影响并购方绩效的实证分析

以2003—2008年我国1617例上市公司并购事件为研究对象,运用反事实分析法,研究了并购公司的并购支付方式———现金支付和股票支付对其在并购当年和次年的绩效的影响。结果表明:现金支付和股票支付对并购方绩效的影响基本相同;在两种并购支付方式下,并购当年和次年都出现增长的能力是营运能力,但其在并购次年的增幅小于并购当年,现金能力在当年有所恶化,但在次年得到改善;与现金支付方式相比,在股票支付方式下,并购方的盈利能力和营运能力更优,但偿债能力则相对较差,并购当年的现金能力相对较差,但在并购次年其改善幅度更大。最后推测我国国内上市公司的并购动机主要是业务拓展和战略扩张。     

Technology adoption decisions under a mixed regulatory system of tradable permits and air pollution fees for the control of Total Suspended Particulates in Taiwan

By using a newly proposed tradable permit system built under the current air pollution fee regulation for the control of Total Suspended Particulates in Taiwan as an example, a mixed-integer non-linear programming model that minimizes the total regulatory costs of firms is applied to investigate how different permit trading ratios and the design of banking might affect firms’ technology adoption decisions and permit trading behavior. By incorporating binary variables in the model to represent firms’ decisions as to whether or not to install new control equipment, the results show that when the unit air pollution fee rate is higher than the firms’ abatement costs, the design of banking causes many firms to install new control equipment that results in an over-reduction of emissions. If no air pollution fee is imposed, the trading ratio plays a more important role than the reservation rate for banking in determining the firms’ emission reduction strategies under a pure permit trading scheme. While the conclusion from this study that uses a non-uniformly mixed pollutant as an example may hold only when certain conditions are met, the framework can be applied to other uniformly mixed pollutants through parameter changes without any limitation. In addition, the modeling technique presented here offers policy-makers a very convenient approach to empirical analysis.      

Founders versus non-founders in large companies: financial incentives and the call for regulation

This paper is intended to question some of the premises in the ever increasing calls to regulate executive pay. We focus on founders, and extend Shleifer and Vishny’s (1989, Journal of Political Economy, 94, 461–488) manager-specific investments model by explicitly modeling managerial effort and pay performance sensitivity. Tests of this model on a data set of large companies, controlling for the endogeneity of managerial compensation, indicate that founders tend to be less responsive to performance incentives and generally more entrenched. At the same time, founders’ led firms are more valuable, supporting our predictions. This suggests that for founders, regulation of compensation may not be very effective.      

INDUSTRY TRADE BALANCE AND DOMESTIC MERGER POLICY: EMPIRICAL EVIDENCE FROM U.S. MERGER POLICY FOR MANUFACTURING SECTORS

The literature on antitrust in an open-economy setting is inconclusive with respect to the role played by trade balance on the tenor of domestic merger policy. Using a panel dataset composed of U.S. merger reviews by industrial sector over the 1982–2001 period, I empirically test the impact of sectoral trade balance on the level of antitrust scrutiny. The results suggest that larger trade balances lead to more vigorous antitrust scrutiny; thus "strategic" merger policy does not appear evident, and consumer surplus appears to guide U.S. merger policy even under the lure of international competitive gains.     

Does financial development promote International trade?

Using China’s panel data of 30 provinces during 1990–2003, this paper attempts to explore a possible link between financial development and China’s foreign trade. Four indicators are used to identify the role of financial development, which capture both the scale and efficiency feature of China’s regional financial development. The effects of other variables are also investigated, including traditional factor endowments, foreign direct investment, infrastructure and institutional quality, etc. In general, the estimation results suggest that financial development has a quantitatively large and robust effect on China’s manufactured goods trade, among which the financial efficiency indicators play a more significant role in promoting manufactured goods trade than those scale indicators. Sensitivity estimations show that the effect of financial development on China’s total trade essentially differs from that on trade in manufactured goods.      

A replication note on unemployment in the OECD since the 1960s: what do we know?

Nickell et al. (Econ J 115(500):1–27, 2005) argue that unemployment rates cointegrate with labour market institutions in a panel of OECD countries. This paper replicates their Maddala–Wu panel cointegration test and shows that this test is only valid when (i) the number of countries tends to infinity and (ii) the underlying country-specific cointegration tests are independent. Their finding of cointegration does not survive when small sample properties and heterogeneous cross-sectional dependencies are taken into account. We acknowledge financial support from the Interuniversity Attraction Poles Program, Belgian Science Policy, contract no. P5/21. The usual disclaimer applies.     

Empirical evidence on the operational efficiency of National Oil Companies

On the basis of application of both data envelopment analysis and stochastic frontier estimation applied to a panel of 78 firms, we present empirical evidence on the revenue efficiency of National Oil Companies (NOCs) and private international oil companies (IOCs). We find that with few exceptions, NOCs are less efficient than IOCs. In addition, much of the inefficiency can be explained by differences in the structural and institutional features of the firms, which may arise due to different firms’ objectives.     

Strategic incentives under vertical integration: the case of wireline-affiliated wireless carriers and intermodal competition in the US

In its review of the Cingular/AT&T Wireless merger, the FCC noted the potentially conflicting incentives of wireline-affiliated (vertically integrated) versus independent (non-integrated) wireless carriers to act as intermodal competitors in the wireline exchange access market. Specifically, because Cingular and Verizon Wireless are owned by wireline carriers, they may have an incentive to compete “less aggressively” within their parents’ wireline territories while AT&T Wireless, an independent wireless carrier, would not. This paper examines these and other hypotheses by examining pre-merger data on the wireless plans offered by the three carriers. The empirical analysis suggests that AT&T Wireless did not design its plans based upon a regional strategy, whereas Cingular offered substantially smaller-minute wireless plans within its parents’ wireline territories. However, the results also suggest that Verizon Wireless did not design its plans in a markedly different fashion within and outside of its parent’s wireline region. It is posited that these findings might reflect the differing ownership and control structures of Cingular and Verizon Wireless.      

Demand competition and investment heterogeneity in industries based on systemic technologies: evidence from the US long-distance telecommunications services industry, 1984–1996

Industries based on systemic technologies are often characterized by a dynamically evolving market structure. The market structure that provides the context for firms’ investment choices itself evolves due to the feedback effect of firms’ investments. In such cases, analyses of investment-performance relationship, purporting to explain sustainable competitive advantages, should ideally account for the endogeneity of the determinants of market structure—technology, demand, and policy—and firms’ investment choices. This paper focuses on the endogeneity of the demand-side determinants of market structure and firms’ demand-side investments under the assumed conditions of constant technology and policy environment. In doing so it contradicts the extant depiction of the evolution of industrial market structure in the above context as primarily caused by the evolution of underlying technological system in response to firms’ endogenous technological investments that generate sustainable competitive advantage for the dominant firms. A dynamic evolutionary model of demand competition captures the competition in the downstream market for basic industry product and its complements in an industry based on systemic technology during its post-interoperability stage. A natural experiment drawn from the US Long-distance telecommunications services industry during 1984–1996 allows testing the hypotheses drawn from the above model in a panel data setting.     

Causation between health and income: a need to panic

This article tests whether health has improved income or income has improved health in OECD countries over the last 50 years. A theoretical framework for both directions of causation is first outlined. A panel time-series approach is then taken and, unlike similar work, common shocks across countries (‘cross-sectional dependence’) are taken into account in the analysis using the PANIC (Panel Analysis of Non-stationarity in Idiosyncratic and Common components) approach of Bai and Ng. It is found that better health improves income more generally while income in turn also affects health. This finding is shown to be robust to dynamic specification.     

Does the merger paradox exist even without any regulations? Evidence from Germany in the pre-1914 period

This paper measures the market response triggered by merger announcements in an environment without regulations and without a strong separation of ownership and control in Germany. Based on event study methods applied to daily data and regression analyses, I evaluate whether the merger paradox existed, and how firm size, the way of financing a merger, and industry factors influenced the success of acquirers. Hence, my study can shed some light on commonly believed explanations for the bad performance of mergers. The whole portfolio of acquirers exhibited positive cumulated abnormal returns, which indicates a rejection of the merger paradox—but market values of some companies declined. Particularly, acquiring banks lost shareholder value, although the majority of mergers occurred in the banking industry. Caused by the new exchange law, banks were in a merger wave. Therefore, alternative explanations like the minimax-regret principle might explain why banks merged in spite of lacking success.     

Strategic managerial delegation and cross-border mergers

The purpose of this paper is to clarify the relationship between the market structure in equilibrium and the most preferred structure with respect to each country’s social welfare and/or total social welfare, when all existing firms can freely merge with each other in an international oligopoly under the segmented market assumption in three cases: the case wherein all the firms are entrepreneurial and the cases wherein they use two different types of managerial delegation contracts. We focus our attention on the coincidence/non-coincidence between the equilibrium market structure (EMS) and the most socially preferred structure with respect to each country’s social welfare and/or total social welfare, as each firm’s production efficiency varies. When each firm’s production efficiency is relatively low, in all the three cases, the EMS coincides with the most socially preferred structure with respect to each country’s social welfare and total social welfare in a large area of the physical trade cost. On the other hand, when each firm’s production efficiency is relatively high, in the cases wherein they use the two different types of managerial delegation contracts, there exists an area of each firm’s production efficiency such that the EMS does not coincide with the most socially preferred structure with respect to each country’s social welfare and total social welfare. Therefore, as each firm’s organizational structure proceeds from entrepreneurial to managerial delegation, a more active merger policy is needed with respect to each country’s social welfare and total social welfare.     

Spatial analysis of urban growth in Spain, 1900–2001

The purpose of this paper is to improve the knowledge of the Spanish urban system. We study the evolution of population growth among the group of 722 municipalities included in the Spanish urban areas over the period 1900–2001. A spatial SUR model is estimated for Zipf’s law and shows the existence of two main phases: divergence (1900–1980) and convergence (1980–2001). Then, the cross-sectional distribution of urban population is characterized by means of nonparametric estimations of density functions and the growth process is modeled as a first-order stationary Markov chain. Spatial effects are finally introduced within the Markov chain framework using regional conditioning. This analysis shows a low interclass mobility, i.e., a high-persistence of urban municipalities to stay in their own class from one decade to another over the whole period, and the influence of the geographical environment on urban population dynamism. Previous versions of this paper were presented at the 45th Congress of the European Regional Science Association (Vrije Universiteit, Amsterdam, Netherlands, August 23–27, 2005) and at the International Workshop on Spatial Econometrics and Statistics (Rome, Italy, May 25–27, 2006). We would like to thank two anonymous referees, M. Bosker, P. Cheshire, A. Carrington, B. Fingleton, R. Guillain, E. Lopez-Bazo, J. Paelinck and the other participants of these meetings for their valuable comments. Coro Chasco acknowledges financial support from the Spanish Ministry of Education and Science SEJ2006-14277-C04-01. The usual disclaimers apply.     

‘Give me a chance!’ An experiment in social decision under risk

This paper reports the results of a ‘probabilistic dictator game’ experiment in which subjects were given an option to share chances to win a prize with a dummy player. Using a within-subject design we manipulated two aspects of the decision, the relative cost of sharing and the nature of the lottery: the draws were either independent for the two players (‘noncompetitive’ condition) or one’s success meant other’s failure (‘competitive’ condition). We also asked for decisions in a standard, non-probabilistic, setting. The main results can be summarized as follows: first, a substantial fraction of subjects do share chances to win, also in the competitive treatments, thus showing concern for the other player that cannot be explained by outcome-based models. Second, subjects share less in the competitive treatment than in other treatments, indicating that procedural fairness alone cannot explain the data. Overall, these results suggest that models aiming at generalizing social concerns to risky environments will have to rely on a mix of distributive and procedural fairness.     

Creative Disasters? Flooding Effects on Capital,Labour and Productivity Within European Firms

This paper examines the impact of floods on the firms’ capital accumulation, employment growth and productivity by using a difference-in-difference (DID) approach and considering the firms’ asset structure. We find evidence that, in the short run, companies in regions hit by a flood show on average higher growth of total assets and employment than firms in regions unaffected by flooding. The positive effect prevails for companies with larger shares of intangible assets. Regarding the firms’ productivity a negative flood effect is observable which declines with an increasing share of intangible assets.      

If not only GDP,what else? Using relational goods to predict the trends of subjective well-being

In the last decade, a lively interdisciplinary discussion has grown around the evidence that, in the long-run, people’s subjective well-being is not significantly correlated with income growth. In other words, GDP growth does not predict the long run growth of subjective well-being. In this paper, we argue that there exists a different predictor of subjective well-being that works pretty well: sociability, i.e. the quality and quantity of social relationships (also referred to as relational goods). More precisely, we illustrate the role of sociability as a predictor of well-being, presenting the available evidence at both the within-country and the worldwide level. In particular, we discuss recent evidence from US cross-sectional data (General Social Survey, 1975–2004), cross-country time series (World Value Survey 1980–2005), and German panel data (German Socio-Economic Panel, 1996–2007). We conclude by indicating the most relevant open issues and suggesting future lines of research.     

Alternative evolutionary theories: A historical survey

Our overview has the objective of making our study relevant to bioeconomists. The need for the ‘alternatives’ to the Synthetic Theory of Evolution in social-economic studies was substantiated, for example, by Colombatto (Journal of Bioeconomics, 5, 1–25, 2003), who maintains that the natural-selection theory is ‘ill suited’ to describing evolutionary processes in economics. He proposed an alternative ‘non-Darwinian’ approach by equating the ‘non-Darwinian’ approach with a definite version of neo-Lamarckism. Yet, as we will show, there is a palette of alternative approaches within and beyond the neo-Lamarckism. We hope to give bioeconomists more choice in their theoretical modeling and constructing of analogies between biology and economics. It will also be shown that in the light of suggested definitions the concept of ‘universal Darwinism’ recently discussed in bioeconomics makes little sense as a generalizing category. In addition, in the concluding part of the paper we demonstrate that the majority of alternative approaches are far from being pigeonholed as archaic and once and for all wiped off the theoretical landscape. On the contrary, in recent years one can observe some revival of interest in the theoretical ‘heresies’.      

Mobile phone termination charges with asymmetric regulation

We model competition between two unregulated mobile phone companies with price-elastic demand and less than full market coverage. We also assume that there is a regulated full-coverage fixed network. In order to induce stronger competition, mobile companies could have an incentive to raise their reciprocal mobile-to-mobile access charges above the marginal costs of termination. Stronger competition leads to an increase of the mobiles’ market shares, with the advantage that (genuine) network effects are strengthened. Therefore, ‘collusion’ may well be in line with social welfare.