The wealth effects of takeover bids regulation in the European Union

We investigate the wealth effects of the Takeover Bids Directive, enacted by the European Union (EU), on mergers and acquisitions. The directive aims at protecting target minority shareholders by restricting antitakeovers provisions and preventing managerial entrenchment. We test the regulation impact using a treatment sample of EU public acquisitions and a control sample from outside the EU. Our results suggest diverse effects of the regulation across treatment countries: acquirers from countries with better shareholder protection engage in more value-enhancing acquisitions postregulation that could otherwise be too costly. The regulation also increases the likelihood of firms becoming targets and raises market value.     

The road to business process improvement--can you get there from here?

Historically, "improvements" within the organization have been frequently attained through automation by building and installing computer systems. Material requirements planning (MRP), manufacturing resource planning II (MRP II), just-in-time (JIT), computer aided design (CAD), computer aided manufacturing (CAM), electronic data interchange (EDI), and various other TLAs (three-letter acronyms) have been used as the methods to attain business objectives. But most companies have found that installing computer software, cleaning up their data, and providing every employee with training on how to best use the systems have not resulted in the level of business improvements needed. The software systems have simply made management around the problems easier but did little to solve the basic problems. The missing element in the efforts to improve the performance of the organization has been a shift in focus from individual department improvements to cross-organizational business process improvements. This article describes how the Electric Boat Division of General Dynamics Corporation, in conjunction with the Data Systems Division, moved its focus from one of vertical organizational processes to horizontal business processes. In other words, how we got rid of the dinosaurs.     

The value of switching inputs in a biodiesel production plant

There has been a growing concern in recent years about the quality of the environment and dependence on fossil fuels to supply the world's energy needs, which has created an interest in the development of renewable and less polluting energy sources. One of these alternatives is the biodiesel fuel, which has many advantages over the fossil based diesel, or petro diesel. In this paper we use the real options approach to determine the value of the managerial flexibility embedded in a biodiesel plant that has the option to switch inputs among two different grain commodities. Our results indicate that the option to choose inputs has significant value if we assume that future prices follow stochastic processes such as Geometric Brownian Motion and Mean Reversion Models, and can be sufficient to recommend the use of input commodities that would not be optimal under traditional valuation methods. We also show that the choice of model and parameters has a significant impact on the valuation of this class of projects.     

Volunteer Labour Supply: the role of workers' motivations

Abstract In this paper we study the determinants of volunteering. We depart from previous literature that considers only economic incentives and investigate the role that extrinsic and intrinsic motivations play in shaping the supply of voluntary labour. We build on previous theoretical research and derive a framework for interpreting results from our econometric analysis. We consider a sample of Italian workers of which we can observe proxies of motivations and volunteering choices in three different sectors: social services, political activism and union activism. We make due allowance for the endogeneity of motivations and show that both types of motivations have an effect on volunteering. Consistently with theoretical models, we find extrinsic motivations to lower voluntary labour supply, whereas the opposite holds for intrinsic motivations .     

The Cost Channel of Monetary Transmission and Stabilization Policy in a Post-Keynesian Macrodynamic Model

This paper develops a macrodynamic model that takes into account the potentially inflationary consequences of interest rate manipulations through the cost channel of monetary transmission. Evaluations of the macroeconomic implications of the cost channel are common in the mainstream literature. But this literature uses supply-determined macro models and provides standard optimizing microfoundations for the various ways in which the interest rate can affect mark-ups, prices and ultimately the form of the Phillips curve. Our purpose is to study the implications of different Phillips curves, each embodying the cost channel and derived from Post-Keynesian, cost-based-pricing microfoundations, in a monetary-production economy. We focus on the impact of these Phillips curves on macroeconomic stability and the consequent efficacy of stabilization policy. Ultimately, our results suggest that the presence of the cost channel is less significant for stabilization policy than the general orientation of the policy regime. These results corroborate earlier findings that, in a monetary-production economy, more orthodox policy regimes are inimical to macro stabilization.     

A structural economic dynamics approach to balance-of-payments-constrained growth

This paper derives a balance-of-payments equilibrium growthrate analogous to Thirlwall's Law from a Pasinettian multi-sectormacrodynamic framework. The resulting formula, which we callthe Multi-Sectoral Thirlwall's Law, asserts that a country'sgrowth rate of per capita income is directly proportional tothe growth rate of its exports, with such a proportionalitybeing inversely (directly) related to sectoral income elasticitiesof demand for imports (exports). These income elasticities areweighted by coefficients that measure the share of each sectorin total imports and exports, respectively. It is shown thatseveral theoretical, empirical and policy implications can bedrawn from such a structural economic dynamics approach to balance-of-payments-constrainedgrowth.     

ENDOGENOUS TECHNOLOGICAL INNOVATION,CAPITAL ACCUMULATION AND DISTRIBUTIONAL DYNAMICS

This paper develops a post‐Keynesian dynamic model of accumulation, growth and distribution in which endogenous technological innovation plays a significant role. Firms’ rate of labour‐saving technological innovation is made to depend non‐linearly on the distributive (wage and profit) shares, with the latter determining both the incentives to innovate and the availability of funding to carry it out. As it turns out, the direction and the intensity of the effect of a change in distribution on the rates of accumulation and growth depend on the prevailing distribution, with a similar dependence applying—alongside the relative bargaining power of capitalists and workers—to the dynamic stability properties of the system. Hence, the model does not rely on full capacity utilization being reached for a change in the accumulation and growth regime to take place.     

Funding and School Accountability: The Importance of Private and Decentralised Public Funding for Pupil Attainment

We discuss the issue of how schools should be financed, concentrating on the role of private funding and public funding via subnational governments as accountability mechanisms in the provision of educational services. The historical evolution of school regulation in Italy and Spain has created differences in the percentage of pupils who attend private schools, the percentage of private school funding coming from public and private sources and the percentage of public school funding that comes from central or local government sources. We take advantage of these institutional diversities rooted in history to estimate the disciplining role of these different sources of funding in the context of an educational production function using Programme for International Student Assessment (PISA) data. Our results provide support to both accountability mechanisms and point to the presence of an important interplay between them.