On the robustness of international portfolio diversification benefits to regime-switching volatility

We examine if the benefits of international portfolio diversification are robust to time-varying asset return volatility. Since diversified portfolios are subject to common cross-country shocks, we focus on the transmission mechanism of such shocks in the presence of regime-switching volatility. Generally, market linkages are stable with little evidence of increased market interdependence in turbulent periods. Furthermore, risk reduction is consistently delivered for the US investor who holds foreign equity.     

What is the role of legal systems in financial intermediation? Theory and evidence

We develop a theory’ and empirical test of how the legal system affects the relationship between venture capitalists and entrepreneurs. The theory uses a double moral hazard framework to show how optimal contracts and investor actions depend on the quality of the legal system. The empirical evidence is based on a sample of European venture capital deals. The main results are that with better legal protection, investors give more non-contractible support and demand more downside protection. These predictions are supported by the empirical analysis. Using a new empirical approach of comparing two sets of fixed-effect regressions, we also find that the investor’s legal system is more important than that of the company in determining investor behavior.     

Differences in large and small firm responses to environmental context: strategic implications from a comparative analysis of business formations

Despite growing recognition of some strategic advantages held by small firms, little comparative research has been performed on the advantages and disadvantages accruing to firm size. In order to delineate the differential responses of small and large businesses to their environmental context, we perform a comparative analysis of the impact of industry structural characteristics on the formation of large and small businesses in a large sample of U.S. manufacturing industries from 1977 to 1987. The results suggest that small businesses possess certain resources that allow them to overcome some barriers which create greater difficulties for their larger counterparts, as well as allow small businesses to exploit certain industry opportunities more readily than larger ones. © 1998 John Wiley & Sons, Ltd.     

Capital budgeting, information timing, and the value of abandonment options

This paper investigates how an abandonment option influences the optimal timing of information in a sequential adverse selection capital budgeting model. While the divisional manager has imperfect private pre-contract information, headquarters can time whether the manager obtains perfect project information before (timely information) or after (delayed information) the contract is signed. In the absence of the abandonment option, headquarters favors timely (delayed) information if the investment costs are high (low). The presence of the abandonment option favors delayed information because under the timely information regime the value of the abandonment option is zero, whereas under the delayed information regime the value of the option is positive.     

Antitakeover provisions in corporate spin-offs

We analyze the relation between antitakeover provisions (ATPs) and the performance of spin-off firms. We find that firms protected by more ATPs before spin-offs have higher abnormal announcement returns and greater improvements in post-spin-off operating performance than firms with fewer ATPs. Further, firms that reduce the number of ATPs after spin-offs have greater improvements in operating performance than firms that do not reduce the number of ATPs. Finally, CEOs of pre-spin-off firms tend to retain more ATPs in parent firms and assign fewer ATPs to the spun-off units if they remain as the CEOs of the parents but not the spun-off units. Overall, our results indicate a positive relation between ATPs and the value gains to spin-offs.     

Single Market effects on productivity in the German insurance industry

The Single Market project of the European Commission was supposed to foster productivity growth in the financial service industry. We assess its consequences on productivity development in the German insurance industry, one of the largest insurance markets within the European Union, by applying Data Envelopment Analysis to a panel of German insurance companies. We estimate standard and bootstrapped efficiency scores for the years 1991 through 2006 and apply a test on scale efficiency based on bootstrapped statistics. Furthermore, we compute a Malmquist index and test for different types of productivity convergence across firms.     

What makes countries initiate WTO disputes on food-related issues?

This paper analyses relevant determinants for the probability to initiate a dispute on policy measures under the World Trade Organization (WTO) dispute settlement system. The empirical analysis differs from existing assessments by focusing on agro-food-related disputes and provides a more in-depth analysis of specific country and sectoral characteristics not considered in previous studies. Contrary to recent analyses of overall trade disputes, the results show that some determinants such as legal capacity and monetary means are not statistically significant. Own protectionist behaviour, endured protectionism, and the duration of WTO membership, however, could be identified as relevant determinants with the expected direction of impact.     

Soil conservation in Swiss agriculture—Approaching abstract and symbolic meanings in farmers’ life-worlds

This paper explores the significance of ‘life-worlds’ for better understanding why farmers adopt or reject soil conservation measures and for identifying basic dimensions to be covered by social learning processes in Swiss agricultural soil protection. The study showed that farmers interpret soil erosion and soil conservation measures against the background of their entire life-world. By doing so, farmers consider abstract and symbolic meanings of soil conservation. This is, soil conservation measures have to be feasible and practical in the everyday farming routine, however, they also have to correspond with their aesthetic perception, their value system and their personal and professional identities. Consequently, by switching to soil conservation measures such as no-tillage farmers have to adapt not only the routines of their daily farming life, but also their perception of the aesthetics of cultivated land, underlying values and images of themselves. Major differences between farmers who adopt and farmers who reject no-tillage were found to depend on the degree of coherence they could create between the abstract and symbolic meanings of the soil conservation measure. From this perspective, implementation of soil protection measures faces the challenge of facilitating interactions between farmers, experts and scientists at a ‘deeper’ level, with an awareness of all significant dimensions that characterise the life-world. The paper argues that a certain level of shared symbolic meaning is essential to achieving mutual understanding in social learning processes.     

Agroindustrialization, globalization, and international development: An overview of issues, patterns, and determinants

This paper offers an overview for a special issue on agroindustrialization, globalization, and international development. It sets out a conceptual framework for understanding the links among these three broad phenomena and then discusses emerging issues and evidence concerning the factors conditioning agroindustrialization in developing countries and the subsequent effects on employment, poverty, and the natural environment. We conclude with a research agenda.