Does Disclosure Regulation Work? Evidence from International IPO Markets*

This study examines whether IPO disclosure requirements mandated by countries’ securities laws are associated with variation in IPO underpricing in international IPO markets. Our empirical analysis uses a unique sample of 6,025 IPOs from 34 countries over the period from 1995 to 2002. We show for the first time that the stringency of disclosure requirements for IPO prospectuses is negatively associated with the extent of IPO underpricing, after controlling for various country‐ and firm‐level determinants of underpricing. Moreover, we find that the disclosure effect on IPO underpricing is moderated by the extent of a country’s capital market integration. Taken together, our findings are consistent with the view that increased disclosure regulation appears to reduce IPO underpricing and hence the cost of equity, and that institutional factors such as capital market integration play an important role in understanding the economic consequences of disclosure regulation in international IPO markets.     

Evaluation of Instructional Technologies in Cyberspace Economics Teaching: Does Hyperlink Really Matter?

This paper examines the impact from one of the most commonly used online instructional technologies, simulation and reference hyperlinks, on the learning outcomes over varied course assessments in MBA Economics online courses. The empirical results confirm the positive impact of effective hyperlink insertion on both overall performance and individual student’s performance over exams and discussion board. The learning pattern of voluntary hyperlink usage is also explored. For the average learning outcome improvement, a compulsory usage of hyperlinks should be designed. The evaluation of appropriate usage in the case can be of significant practice to school administrators seeking to implement a required instructional technology in a rigorous and pedagogically sound manner.     

The Functions of Australian Banks’ Branch Networks: The Diversification of Risks and Spatial Allocation of Capital

This paper examines the consequences of branch banking for the Australian economy. There is little evidence to show that branching increased the stability of Australian banking. During the 1893 crisis, banks with more extensive branch networks, particularly those that had rapidly expanded their networks during the long boom of 1866-89, were more likely to suspend payments. However, it is shown that branching increased the availability of capital and provision of banking services in rural areas. This occurred because, unlike unit banks, which were tied to a specific location, branch banks could internally reallocate capital from urban to rural regions at low cost.     

Does Economic Growth Really Benefit the Poor? Income Distribution Dynamics and Pro-poor Growth in Indonesia

We explore the nexus between poverty, inequality, and economic growth in Indonesia between 2002 and 2012, using several pro-poor growth concepts and indices to determine whether growth in this period benefited the poor. Our regression-based decompositions of poverty into growth and redistribution components suggest that around 40% of inequality in total household expenditure in Indonesia was due to variations in expenditure by education characteristics that persisted after controlling for other factors. We find that economic growth in this period benefited households at the top of the expenditure distribution, and that a ‘trickle down’ effect saw the poor receive proportionately fewer benefits than the non-poor. If reducing poverty is one of the Indonesian government's principal objectives, then policies designed to spur growth must take into account the possible impacts of growth on inequality.     

Real Exchange Rates and the Balance of Trade: Does the J-curve Effect Really Hold?

Open Economies Review - In this paper, we re-examine the relationship between trade flows, real effective exchange rates, and incomes by using the bilateral trade flows of 33 countries that form...     

Does Central Bank Financial Strength Really Matter for Inflation? The Key Role of the Fiscal Support

This paper examines whether weak central bank finances affect inflation by scrutinizing the key rationale for such a relationship: that the absence of Treasury support makes central bank finances relevant for price stability. Specifically, I ask whether central banks which are not likely to enjoy fiscal support when needed experience higher inflation as their financial situation deteriorates. I find this to be true among a large sample of 82 countries between 1998 and 2008. De facto potential fiscal support appears relevant, while de jure fiscal support, which I survey analyzing 82 central bank laws, does not appear to matter. The results also bring forward an explanation for the conflicting results of the previous empirical studies, which neglected this key component.     

Do Credit Cards Really Reduce Aggregate Money Holdings?

This paper discusses whether the use of credit cards reduces aggregate money holdings in an economy. Applying and modifying the Baumol-Tobin model (Baumol Quarterly Journal of Economics 66:545–556, 1952 and Tobin Review of Economics and Statistics 38(3):241–247, 1956), it studies how much money a credit card bank would normally maintain to support retail trade, and shows that whether or not the use of credit cards actually reduces the aggregate demand for money depends on how often consumers visit the bank and how long it takes to clear a check. With innovations in the banking industry such as ATMs, online banking, and other electric funds transfer services, the cost of visiting banks (i.e., switching funds between a checkable account and an interest-earning account) is now very low. For the whole economy, as a result, the use of credit cards may not necessarily reduce aggregate money holdings.     

Impact of International Remittances on Schooling in the Philippines: Does the Relationship to the Household Head Matter?

We study the impact of international remittances on schooling in the Philippines, taking into account the school‐age individual's relationship to the household head. This consideration is important because employment opportunities abroad may be taken at the expense of the quality of child rearing. Our estimation results indicate that there are, indeed, significant negative guardian effects on school attendance and education expenditures when children with overseas parents are looked after by a relative other than a parent or grandparent. However, these negative effects tend to be outweighed by the positive impact of remittance flows from overseas.     

Does Corporate Social Responsibility Really Make a Difference？ An Explorative Analysis for Chinese Companies

Many studies have been performed to assess the impacts of corporate social responsibility （CSR） on the financial performance of companies. There are, however, very few studies that analyze how CSR policies and instruments affect the realization of social and environmental CSR goals, such as the reduction of workplace accidents or CO2 emissions. Therefore, it remains uncertain to what extent CSR really contributes to sustainable development and whether it can serve as an alternative to government regulation to internalize external effects from market operation. The present study provides an explorative empirical analysis that aims to fill this gap. We employ regression analysis on a sample of 109 Chinese companies. The estimation results show that having a code of conduct stimtdates the implementation of other organizational CSR instruments, but CSR implementation only partly affects the realization of CSR goals. Having codes of conduct without implementing CSR does not have a significant impact on societal welfare.     

Are the Roots of the Modern Lex Mercatoria Really Medieval?

This article analyzes how trade was conducted between the tenth and thirteenth centuries. We claim that, as most exchange was simultaneous, differences between law codes did not pose a substantial problem and that mercantile guilds developed not to provide institutions comparable to the modern lex mercatoria, but rather to supply physical security. The development of nonsimultaneous exchange was made possible predominantly by the emergence of urban autonomy and urban law applicable to all merchants trading within town, so it appears that the importance of universally accepted commercial institutions in the Middle Ages has hitherto been vastly overrated.     

Does IMF conditionality benefit lenders?

Conclusions The purpose of this paper has been to assess whether official and private lenders benefit from IMF participation in rescheduling sovereign LDC debt via the Paris Club. If IMF participation increases the expected value of any existing or newly rescheduled official or private debt contracts, then lenders benefit. The transmission process can be via the immediate liquidity the IMF provides through various loan facilities, which allows for debt service payments to be met in a timely fashion, and/or through the increased ability of the sovereign to meet future debt service payments due to the conditions attached to IMF liquidity. The results from this paper suggest that the provision of immediate IMF liquidity provides a benefit to lenders but that the attached conditions do not. These results were obtained for a large sample of 84 LDCs over the sample period 1978-1987 and may differ when specific cases are considered. IMF participation reduced the average spread over LIBOR by 155 to 179 basis points, based on a simple model relating interest spreads to default probabilities. Heavily indebted sovereign borrowers may have experienced larger reductions. The design and implementation of IMF conditions has been criticized in the literature because they confer little benefit on the sovereign borrower. Our results support the consensus view that the conditions themselves have little effect. However, our contribution results from seeing the issue from the perspective of rational lenders who expend resources to evaluate IMF conditionality programs.     

Does the Domestic Value Added Induced by China＇s Exports Really Belong to China？

Since 2001, the exports of foreign‐invested enterprises (FIEs) have accounted for more than 50 percent of China's total exports. As foreign capital occupies a high proportion of the total capital of FIEs, most FIEs' capital gains are foreign factor income. Although these gains are calculated as a part of China's GDP, they do not belong to China's national income. To determine the real contribution of exports to China's welfare, the present paper analyses the impact of exports on China's national income using a non‐competitive input–output model capturing processing trade. The results show that every US$1000 of China's exports generates US$506.8 of national income. The real contribution of exports to China's welfare is much smaller than what we expected. This suggests that China should endeavor to improve the gains from international markets or find another engine to maintain its economic growth.     

The Aftermath of Anti-Dumping: Are Temporary Trade Barriers Really Temporary?

A consistent finding in the literature is that anti-dumping (AD) acts as a significant barrier to bilateral trade, in particular, during the time such measures are in force. Adding to a relatively scarce empirical literature, however, we identify adverse impacts of AD which survive well beyond its revocation. More specifically, while we cannot rule out a slight post-revocation recovery, we find empirical evidence that once affected bilateral trade does not fully recover on average following revocation. We use panel data at the Harmonized System four-digit (HS4) level of aggregation to produce these results and show that they are robust to the duration of AD cases, the time of their imposition and revocation, differentiation by economic sector and the nature of imposing countries. Several explanations for our observed empirical results seem plausible, and we provide a theoretical framework which suggests our results could be driven by market exit or underinvestment of targeted firms.

     

Does government intervention affect banking globalization?

Using data from British and American banks, we provide empirical evidence that government intervention affects the global activities of individual banks along three dimensions: depth, breadth and persistence. We examine depth by studying whether a bank's preference for domestic, as opposed to external, lending (funding) changes when it is subjected to a large public intervention, such as bank nationalization. Our results suggest that, following nationalization, non-British banks allocate their lending away from the UK and increase their external funding. Second, we find that nationalized banks from the same country tend to have portfolios of foreign assets that are spread across countries in a way that is far more similar than those of either private banks from the same country or nationalized banks from different countries, consistent with an impact on the breadth of globalization. Third, we study the Troubled Asset Relief Program (TARP) to examine the persistence of the effect of large government interventions. We find weak evidence that upon entry into the TARP, foreign lending declines but domestic does not. This effect is observable at the aggregate level, and seems to disappear upon TARP exit. Collectively, this evidence suggests that large government interventions affect the depth and breadth of banking globalization, but may not persist after public interventions are unwound.     

Does GDP Distort Mexico's Economic Performance?

Between 1961 and 1980, Mexico's gross domestic product (GDP) per capita grew nearly 3.50% annually. During the 1980s, however, it shrank about 0.50% per year. GDP figures suggest that there was sustained economic growth for the 1960s and 1970s, changing suddenly to contraction in the 1980s. This impression may be misleading. GDP does not account for housework or informal production outside households. Further, GDP also may be distorted by transactional activities, which are expenditures to support transactions, not actual output consumed. This study recalculates output for Mexico for the 1961-1990 sample period, controlling for transactional activities and nonmarket production. We find that GDP misstates Mexico's “actual” economic growth. In the 1960s, the economy expanded more quickly than GDP suggests. But in the 1970s, growth was less than half that of the 1960s. The economy indeed slumped in the 1980s, but not as terribly as the official figures indicate. Mexico's economy did not collapse suddenly in the early 1980s; actual economic growth had slowed dramatically during the 1970s.