Competition to provide liquidity on the New York Stock Exchange

In order to be successful in attracting trading volume and generate revenue from trading fees, exchanges must allow potential traders to transact quickly at a known price. This is known as providing liquidity. On the New York Stock Exchange, liquidity comes from two sources: traders conducting business on the floor of the exchange and those who electronically send orders to the exchange from off-floor locations. On-floor traders have traditionally been alleged to have advantages over off-floor traders. If that is the case, then this might discourage off-floor traders from providing liquidity and reduce the efficiency of security markets. We find that on-floor traders do seem to enjoy some advantages in providing liquidity, although the differences are not great. This suggests that the New York Stock Exchange is warranted in several of its recent initiatives designed to level the playing field between on- and off-floor traders.     

The Effect of Timeliness and Credit Ratings on the Information Content of Earnings Announcements

This paper investigates the impact of timeliness and credit ratings on the information content of the earnings announcements of Greek listed firms from 2001 to 2008. Using the classical event study methodology and regression analysis, we find that firms tend to release good news on time and are inclined to delay the release of bad news. We also provide evidence that the level of corporate risk differentiates the information content of earnings according to the credit rating category. Specifically, firms displaying high creditworthiness enjoy positive excess returns on earnings announcement dates. In contrast, firms with low creditworthiness undergo significant share price erosions on earnings announcement days. We also observe a substitution effect between timeliness and credit ratings in relation to the information content of earnings announcements. Specifically, we find that as the credit category of earnings-announcing firms improves, the informational role of timeliness is mitigated.     

The rise and fall of a National Safety Promotion Programme:the case of Sweden

In 1982, when Sweden got a new Health Service Act, the health sector was given a new role - to collect, analyse and actively disseminate the knowledge it gained. A National Safety Promotion Programme was build up by the National Board for Health and Welfare, and a National Inter-sector Cooperation Group and medical advisory board were established. In 1992, the programme was transferred to the National Institute of Public Health. Later the Institute was given a new role and therefore the programme was relocated to the Swedish Rescue Service Agency. In some aspects we can see a parallel with the paradigm that was behind the Civil Protection Act 2003 and the Health Service Act 1982. It was a logic consequence to move the national programme to the rescue service sector. Within the National Rescue Service Agency the programme ended up in the line organisation, which lacked a cross-sector work orientation. The programme was closed down. In the article the reason for the decisions is described and also the background and the possibilities for the programme to act in different national boards as well as the preconditions for an inter-sector group.     

Turnaround and failure: Resource weaknesses and the rise and fall of Jarvis

Research employing the resource-based view (RBV) has overwhelming focused on the upside of resources, namely those that provide benefit to the firm. However, an emerging research stream suggests that the downside of resources, namely resource weaknesses, may be crucial in gaining a greater understanding of the key factors that contribute to firm performance and the ability to turnaround failing companies. We examine the infamous case of Jarvis, a firm that achieved a turnaround, but then experienced catastrophic failure. In so doing we explore the emergence of resource weaknesses, their nature and ability to combine to create a fatal organisational outcome.     

The rise and fall of the Merlin-Gerin Foundry Business: A case study in French corporate entrepreneurship

This case study discusses the history of the creation and development within an established French electrical firm of a new business, a high-tech foundry, by a dynamic entrepreneur. We follow the trajectory of this internal venture from launch to apogee, divestment, and closure over a period of 26 years.First, we outline a framework for the selection of the external and internal variables that will allow us to interpret the case within the present theories and practices of internal corporate venturing. This framework is also useful for analyzing some particular aspects that may be attributed to the specific culture and environment of the Merlin-Gerin company. Second, we present the case history, which can be summarized briefly as follows. In 1959, the foundry of Merlin-Gerin, a leading French manufacturer of electrical apparatus, could not compete with outside suppliers. Roger Huet, an expert in aluminum casting, was hired to revitalize the business with new technologies and develop the PRECIAL (PRECIsion ALuminum) process. In 1967, he was able to market low-weight, high-strength parts to European airplane manufacturers with sales reaching $10 million. In 1970, McKinsey recommended that scarce capital resources should be reserved for the core business and that the foundry should be sold. Amazingly, this decision was not implemented for 12 years, because Huet convinced management that the foundry was profitable and had a brilliant future thanks to its unique technological skills. The foundry was sold to Alcoa in 1982 and closed down in 1985. Table 1 highlights the main events and the key corporate and entrepreneurial actions and reactions that determined the evolution and the ultimate fate of the internal venture. Third, we discuss the key factors that contributed first to the success and then to the demise of the venture, such as the culture and climate of the Merlin-Gerin and the Alcoa companies, major changes in corporate strategy and policy, discontinuities and schisms in technology and market strategies, and the leading role of the entrepreneur.Fourth, we analyze, in retrospect, whether this internal venture made a contribution to the Merlin-Gerin Company and whether the 12-year delay in implementing the divestment recommendation by McKinsey was financially and socially justified. Finally, we compare the processes observed in this company with models of corporate entrepreneurship previously developed by scholars and draw conclusions about the critical factors of success for an internal corporate venture.In our opinion, there are two unusual aspects, in addition to the international setting, that make this case interesting for both scholars and practitioners.

1. 1. This internal venture continued for 26 years, an unusually long period compared to most corporate ventures (Fast 1979; Sykes 1986; Kanter et al. 1990, 1991b, 1992). The main reasons were the personality of the entrepreneur, his close relationship with the president, the unique technology, the initial market successes, the profitability and positive cash flow of the foundry, and, finally, corporate inertia.

2. 2. The recurring shift from agreement to disagreement of business goals and strategies between the corporation (first Merlin-Gerin and then Alcoa) and the entrepreneurial venture, which, in turn, led to alternate phases of cooperation and tension between the two parties.

Table 2 summarizes the evolution of the corporate and internal venture strategies and shows the gradual shift from strategic congruence to conflict that inevitably led first to the divestment and then to the closure of the foundry. Thus, some lessons could be drawn from this case on how to survive, if not to succeed, in the difficult game of corporate entrepreneurship.

1.

2.

     

The Impact of Internet Commerce on Do-It-Yourself Investing in the IT Sector

ABSTRACT

Recent advances in networking, telecommunications, and the Internet have greatly decreased the problem of information asymmetry for the small investor. Previously, brokerage firms maintained tight control over information thus “encouraging” the investor to partake of their services. The removal of this structural impediment has empowered small investors to take greater control of their personal financial affairs. For those interested in self-directed investing in the growing IT sector, Direct Stock Purchase programs (DSPs), Dividend Reinvestment programs (DRIPs), American Depository Receipts (ADRs), and IT Sector Mutual Funds offer many attractive benefits to shareholders and corporations alike. These investment programs of IT-related firms are examined here.     

In the eye of the storm: Isaac Seligman and the panic of 1873

This paper focuses on the activities of the Seligman investment banking firm during an intense six-week period following the outbreak of the panic of 1873 in New York City. Because of their conservative business strategies, the partners did not experience any genuinely serious financial stress. The firm's ability to facilitate monetary transatlantic transfers helped to ease credit conditions in the New York and London financial sectors. The text also cites evidence arguing that the US economy experienced a two-year recession rather than a major depression in the 1870s.     

The effect of new business formation on regional development over time: the case of Germany

We investigate the effects of new business formation on employment change in German regions. A special focus is on the lag-structure of this effect and on differences between regions. The different phases of the effects of new business formation on regional development are relatively pronounced in agglomerations as well as in regions with a high-level of labor productivity. In low-productivity regions, the overall employment effect of new business formation activity might be negative. The interregional differences indicate that regional factors play an important role.

The medical expense deduction and income levels: Progressive or regressive?

The medical expense deduction (MED) allows taxpayers to deduct from taxable income a proportion of their out-of-pocket medical insurance and health care expenses. Because the rate of subsidy is equal to the marginal tax rate previous studies have found MED to be a regressive tax mechanism biased toward benefiting higher-income taxpayers. The authors demonstrate, using GINI coefficients, that MED makes the tax structure more progressive than it would otherwise be and increases equality of after-tax incomes.     

New Technology Adoption,Business Strategy and Government Involvement: The Case of Mobile Commerce

SUMMARY

This research focuses on understanding how business organizations are likely to adopt mobile commerce (m-commerce) technology. Mobile commerce adoption represents a complex process that draws in variables external to the firm such as the environment in which the business operates and the government involvement, as well as variables internal to the company such as its business strategy and its organizational culture. A model is formulated and several research propositions are offered. They will help understand the mobile commerce applications adoption process. Implications of this model and further research avenues are discussed.     

The digital transformation of industrial players

Digitalization is transforming the industrial landscape. Smarter products, data-based services, and new business models promise to reshape the whole manufacturing industry. But just below the visible excitement lurk unexpected tensions and challenges that can make digital transformation an excruciating journey for industrial companies. In this article, we decipher the digital transformation strategy choices of leading industrial firms in a highly innovative country. We then identify four dominant tensions that managers need to sort out. We also provide guiding principles for selecting a digital transformation strategy capable of overcoming each of the identified tensions.     

Automatic adjustment clauses and allocative efficiency in public utilities

This paper presents a formal analysis of the efficiency effects of automatic adjustment clauses (AACs) is regulated industries. Using a two-input model of ex ante/ex post input choice and a general putty-clay technology, we analyze the relative extent of allocative distortions due to each of three alternative regulatory policies—periodic rate review with and without an AAC, and an AAC without any rate review—for the case of a regulated firm that chooses an ex post technology to maximize the present value of future profits.Our results indicate that the economic rationale for using AACs in industries already subject to intermittent rate review is not unambiguous, even in the face of severe cost inflation, and is particularly sensitive to the magnitude of the price elasticity of demand for output and the rate and direction of input price changes. We are forced to conclude that the use of AACs in regulated industries such as electric power, while originally justified on the basis of financial viability, may well carry significant economic costs in the form of allocative inefficiency that may outweigh the benefits.     

克鲁格曼经济思想评述

当代自由经济学派的代表人物——保罗·克鲁格曼,因其在贸易模式上所做的分析工作和对经济活动的区位理论的贡献,被授予2008年度的诺贝尔经济学奖。实际上,克鲁格曼是位严谨而多产的经济学家,独立撰写和编著的书已超过16本,并有数百篇论文和专栏文章面世,其专业著作的内容主要涉及国际贸易及国际金融领域。在国际贸易领域,他建立了新贸易理论,揭示了规模递增条件下的国际贸易规律。在国际金融领域,他对汇率目标区理论和第一代、第三代货币危机理论均有贡献。此外,他也被认为是新经济地理学的开创者之一。     

Employment effects of business dynamics: Mice, Gazelles and Elephants

Much of the theoretical work on industry dynamics focuses on the role of ‘noisy’ selection and incomplete information on firm entry and survival. We extend this research by looking at the impact of firm heterogeneity on employment effects for 320 U.S. Metropolitan Statistical Areas (MSA). We find that only start-ups with greater than 20 and less than 500 employees have persistent employment effects over time and only in large diversified metropolitan regions. Therefore, both the type of entry (Gazelles) and the characteristics of the region are important for employment growth.