Foreign Acquisitions,Domestic Multinationals,and R&D

Our aim in this paper is to evaluate the causal effect of foreign acquisition on research and development (R&D) intensity in targeted domestic firms. We are able to distinguish domestic multinational enterprises (MNEs) and non‐MNEs, which allows us to investigate the fear that the change in ownership of domestic MNEs to foreign MNEs leads to a reduction in R&D activity in the country. Overall, our results give no support to the fears that foreign acquisition of domestic firms leads to a relocation of R&D activity in Swedish MNEs. Rather, in this paper, we find robust evidence that foreign acquisitions lead to increasing R&D intensity in acquired domestic MNEs and non‐MNEs.     

Greening the Street-Level Procurer: Challenges in the Strongly Decentralized Swedish System

This article investigates the every-day street-level practice of green public procurement (GPP) in Sweden, a country with one of the most decentralized systems of public administration within the European Union (EU). The street-level procurement officers in Swedish local and regional government are in charge of purchases estimated to represent between 10% and 15% of Sweden’s GDP. This article examines the constraining and enabling factors behind the individual procurement officer’s choice of green procurement in textiles and clothing through a combination of qualitative interviews and a review of documentary sources. The analysis shows that while indirect support through European and national soft regulation and policy advice is imperative for “greening” procurement, the direct factors which influence the local outcome of GPP comprises factors on the local level: political commitment and environmental knowledge, the organizational structure of local government and the local interpretation of the regulatory framework. This study shows that a decentralized structure has possibilities of furthering ambitions of buying green if there are committed politicians and public officials, an optimal level of internal centralisation and an external support structure of knowledge and enabling rules.     

On the size distortion of tests after an overidentifying restrictions pretest

In the linear instrumental variables model, we provide theoretical and Monte Carlo evidence for the size distortion of a two‐stage hypothesis test that uses a test of overidentifying restrictions (OR) in the first stage. We derive a lower bound for the asymptotic size of the two‐stage test. The lower bound is given by the asymptotic size of a test that rejects the null hypothesis when two conditions are met: the test of OR used in the first stage does not reject and the test in the second stage rejects. This lower bound can be as large as 1 ? ε_P, where ε_P is the pretest nominal size, for a parameter space that allows for local non‐exogeneity of the instruments but rules out weak instruments. Copyright © 2011 John Wiley & Sons, Ltd.     

Booms, Busts, and Fraud

Firms sometimes commit fraud by altering publicly reported informationto be more favorable, and investors can monitor firms to obtainmore accurate information. We study equilibrium fraud and monitoringdecisions. Fraud is most likely to occur in relatively goodtimes, and the link between fraud and good times becomes strongeras monitoring costs decrease. Nevertheless, improving businessconditions may sometimes diminish fraud. We provide an explanationfor why fraud peaks towards the end of a boom and is then revealedin the ensuing bust. We also show that fraud can increase iffirms make more information available to the public.     

Capital Freedom,Financial Development and Provincial Economic Growth in China

For more than three decades, China has managed to combine rapid economic growth with a strictly regulated financial sector. The discrepancy between economic and financial development has raised the question of whether China might be an exception to the so‐called finance–growth nexus. This study examines the relationship between finance and growth at the provincial level in China using a new set of measures of capital freedom and financial development. The results indicate that capital freedom and financial development are associated with both higher income and growth rates. In particular, we find that the marketisation of financial institutions and strengthening of legal and government institutions have a particularly strong impact on income and growth in low‐income provinces.     

Alfred Marshall and the Concept of Class

The purpose of this article is to analyze Alfred Marshall's concept of class. Marshall's concept of class is not well-studied. His idea of class is different from what Weber and Marx have proposed. In contrast to many other economists, he has a discussion of class that is developed. It is shown that Marshall sees classes as made up of people whose work offers similar chances of developing their higher faculties. An integrated idea is that different class positions are associated with different discount rates of future outcomes. Marshall's class theory combines physical and mental components.     

Is there really a foreign ownership wage premium? Evidence from matched employer-employee data

Numerous studies on firm-level data have reported higher average wages in foreign-owned firms than in domestically owned firms. This, however, does not necessarily imply that the individual worker's wage increase with foreign ownership. Using detailed matched employer-employee data on the entire Swedish private sector, we examine the effect of foreign ownership on individual wages, controlling for individual and firm heterogeneity as well as for possible selection bias in foreign acquisitions. We distinguish between foreign greenfields and takeovers and compare foreign-owned firms with both domestic multinationals and local firms. Our results show a considerably smaller wage premium in foreign-owned firms than what has been found in studies conducted at a more aggregate level. Moreover, foreign takeovers of Swedish firms tend to have no or even a negative effect on wages.