CHARACTERIZATION AND ANALYSIS OF COOPERATIVE MERGERS AND THEIR RESULTS

This study characterizes the mergers and acquisitions undertaken in the Spanish agrifood sector during the period 1995–2005. First, it aims to establish the pre‐merger financial characteristics of the merging cooperatives in comparison with other firms in the agrifood sector. For this, the financial situation is analyzed in the different types of merger carried out (merger by formation or merger by acquisition), and the different roles played by the cooperatives (acquiring, acquired or involved in a merger in which a new cooperative is formed). The second and final objective is to determine whether these mergers have managed to improve the economic‐financial situation of the companies involved, either by increasing income and size or by reducing relative costs. For this purpose, several non parametric tests and a probit model were used. The results show that on average following a merger there were no statistically significant improvements in the economic‐financial indicators studied.     

IT INVESTMENT AND INTANGIBLES: EVIDENCE FROM BANKS

This paper models the investment behavior of a multi‐asset firm with market power that accumulates valuable intangible assets to complement the IT capital. The investment model is estimated using data from Spanish banks on assets of different nature: material (branches, financial), immaterial (advertising and IT), and intangible (training of workers). The paper estimates that the representative bank spends five additional Euros per Euro invested in IT‐related assets in complementary intangible assets or, equivalently, intangibles amount to approximately 10 percent of the economic value of the representative bank. The remaining economic value is distributed between 28 percent from rents attributed to market power, and 62 percent to the cost of market‐purchased assets.     

Coordinated Punishment and the Evolution of Cooperation

In this paper, we analyze a team trust game with coordinated punishment of the allocator by investors and where there is also a final stage of peer punishment. We study the effect of punishment on the reward and the investment decisions, when the effectiveness and cost of coordinated punishment depend on the number of investors adhering to this activity. The interaction takes place in an overlapping‐generations model with heterogeneous preferences and incomplete information. The only long‐run outcomes of the dynamics are either a fully cooperative culture (FCC) with high levels of trust and cooperation and fair returns or a non‐cooperative culture with no cooperation at all. The basin of attraction of the FCC is larger; the higher the institutional capacity of coordinated punishment, the higher the level of peer pressure and the smaller the individual cost of coordinated punishment.     

Wage Differentials in São Paulo's Labor Force

To explain the variation in the salaries of specialized workers in São Paulo's industries of transformation, we have used a model made up of five variables: the person's occupational preparation, the influence he may exert within the company because of his occupation, his age, his seniority in the company, and his time on the job. The data obtained for the total sample show clearly that the status of the worker within the company (occupational influence) as well as his occupational preparation and age, are powerful partial determinants of salary levels in São Paulo. On the whole, training is the most powerful of these variables because it has a strong direct effect on wages and because it has an indirect effect on wages through its impact on occupational influence level. Variables indicating experience in the company (seniority) and in the present job are almost negligible. The results suggest the presence of a modern industrial structure where one's technical preparation and position in the company are closely related and where these factors weigh far more heavily than experience on the job and in the company. Except for age, the viable variables used here are special cases of major status dimension: wealth (wages); power (occupational influence); informational status (occupatibnal preparation or education). Occupational prestige was also investigated and, in a stepwise regression, was found useless as a determinant of wages. In this research we explore, possibly for the first time, the use of a power variable, occupational influence, as a determinant of a reward variable, hourly wages. Though theoretically promising, power has previously been remarkably resistant to empirical analysis. Although our use of occupational influence has been successful, the introduction of new variables is always risky. We hope that others will conduct studies leading either to refinements in the use of this and similar indicators or to their rejection. Also, recent publications report only a small effect of most known variables on individual income differentials in the United States. Perhaps adding occupational influence might help. It is worth repeating that in the present data-set, this variable alone explains just about as much variance in hourly wages (23 per cent) as a set of 13 repressors does on job income (27 per cent) in data analyzed by Spaeth. The whole set of five variables is, of course, more effective here, with 36 per cent of the variance explained. These differences may be due to many factors. It would seem that education may be more influential in Brazil—or at least in this sample —than in the United States. Clearly, educated personnel are in shorter supply than in the United States, and the relative rewards may be greater. If this is true, the rewards for education should decrease as Brazil's education system improves. In any case, by its clear elimination of job experience and seniority, and its strong support for occupational training, occupational influence level, and age, we hope the present work may add to the growing body of evidence regarding the determinants of wage differentials, especially in Brazil and perhaps in other dynamic third world sectors.     

Non-Fundamental Speculation

We study an intertemporal asset market where insiders coexist with “non-fundamental” speculators. Non-fundamental speculators possess no private information on fundamental values of assets, but have superior knowledge about some aspect of the market environment. We show that the entry of these (rational) speculators can lead to reductions in market liquidity and in the information content of prices, even in an efficient market. Also, equilibrium trades display patterns of empirical interest. For example, speculators appear to chase trends and lose money after market “overreactions,” while insiders trade as contrarians and profit after such overreactions.     

Picking Winners? Investment Consultants’ Recommendations of Fund Managers

Investment consultants advise institutional investors on their choice of fund manager. Focusing on U.S. actively managed equity funds, we analyze the factors that drive consultants’ recommendations, what impact these recommendations have on flows, and how well the recommended funds perform. We find that investment consultants’ recommendations of funds are driven largely by soft factors, rather than the funds’ past performance, and that their recommendations have a significant effect on fund flows. However, we find no evidence that these recommendations add value, suggesting that the search for winners, encouraged and guided by investment consultants, is fruitless.     

Public Input Competition under Stackelberg Equilibrium: A Note

This paper examines the Stackelberg equilibrium for public input competition and compares it with the noncooperative Nash equilibrium. Given two asymmetric regions, we show that under the Nash equilibrium the more productive region tends to spend more on public input, which results in this region attracting more capital than the less productive region. The comparison of the two equilibria reveals that the leader region obtains a first‐mover advantage under the Stackelberg setting. This suggests that if regions interact with each other sequentially as in the Stackelberg equilibrium, then the regional disparity that is due to the heterogeneity of productivity is likely to be mitigated or enlarged, depending on which region performs the leadership role in the competition process.