Capital flight from the countries in transition: Some empirical evidence

This paper presents empirical evidence suggesting that the transition economies have tended to experience capital flight during periods of macroeconomic instability, such as high inflation and sharply declining output. The timing of these outflows, however, has differed somewhat across countries. Poland and Czechoslovakia experienced significant capital flight early in the transition process, but as reforms have progressed, capital outflows have slowed. By contrast, Russia registered a relatively steady flow of capital flight from 1991-94, with cumulative outflows totalling about $40 billion. Finally, capital flight from Hungary has been subdued, paralleling the gradual course of economic reforms and the country's comparative political stability.     

Fire sale acquisitions: Myth vs. reality

We provide empirical evidence on the conjecture that in economic crises, firms could be forced to sell at deep discounts, or fire sale prices. Using the conventional stock price near the announcement date, we find instead distressed firms in crisis periods receive a 30% higher offer premium than distressed firms in normal periods; they also receive a 34% higher premium than non-distressed firms in crisis periods. Acquirers also do not gain, at announcement and over the long-term. Acquirers, however, may perceive they realize fire sale discounts if the reference is the targets’ highest price in the previous 52 weeks.     

The Foreign Exchange Exposure Management Practices of Finnish Industrial Firms

This study employs questionnaire survey and financial accounting data to extend earlier empirical work on the foreign exchange (FX) exposure management practices of Finnish industrial firms. The paper concentrates on: (i) the form that FX corporate hedging policy takes; (ii) the control of FX procedures and trading; and, (iii) our respondents' perceptions about their ability to predict FX rate changes for hedging decisions. Our results indicate that the extent to which firms hedge FX exposure depends on the type of exposure and the form that FX hedging policy takes. Also, a significant number of the firms pursue FX hedging strategies on the expectation of attaining trading profits and this strategy appears to be accommodated within their FX policies. This feature is not explicitly demonstrated in previous studies. Finnish firms hedge a much higher proportion of both transaction and translation exposures compared to economic exposure. We partly attribute this emphasis to the requirements of the Finnish Accounting Act, which came into effect in 1993. The organisational, historical and financial settings of the firms also have significant impacts on exposure management practices. The overall implication of those results is that firms respond to changes in the financial, economic and regulatory environments in which they operate.     

The Structure of Sprawl: Identifying and Characterizing Employment Centers in Polycentric Metropolitan Areas

This paper applies a consistent framework to four comparably sized metropolitan areas to identify and characterize their employment centers. Employment centers are identified as places that exceed a threshold employment density and a threshold employment level. They are also characterized as specializing on the basis of location quotient analysis. We find clear evidence of specialization in every employment center in the four metropolitan areas studied. Our interpretation is that what we are observing is a systematic change in metropolitan structure rather than a random sprawling of firms. We also find some evidence that the size distribution of employment centers follows the rank-size rule. This suggests that there is structure not only in the distribution of economic activity among the employment centers but also in their size distribution. Because less than 50 percent of metropolitan employment is within employment centers, future research should focus on understanding the more diffuse employment patterns. The rank-size rule gives some guidance as to the expected size distribution of employment throughout the metropolitan area.     

Does Tax Planning Affect Analysts' Forecast Accuracy?

We investigate whether firms' tax planning affects the accuracy of analysts' forecasts. Tax planning can exacerbate the complexity of firms' operations through strategic choices to exploit tax laws. Because of its effect on firms' operations, tax planning can influence analysts' efforts to understand and forecast earnings. Specifically, if the additional complexity arising from tax planning makes firm attributes less representative of expected earnings, analysts may issue less accurate forecasts. Using auditor‐provided tax services (APTS) as a measure of tax planning, we find that, as firms spend more on tax planning, the accuracy of analysts' forecasts of both earnings per share and tax expense declines. We also document that firms with higher levels of APTS have greater year‐to‐year volatility in, and lower persistence of, effective tax rates and earnings. Our results suggest that increased firm complexity, due to greater tax planning, makes earnings and tax expense more difficult to forecast and that analysts do not properly adjust for these effects. Thus, when deciding to engage in tax planning, firms appear to make trade‐offs between potential tax savings and negative effects on earnings properties and analysts' forecasts.     

GNP and military mobilization

The remarkable shift from a limping United States recovery from the Great Depression of the 1930's to the relatively rapid and immensely successful World War II mobilization of the 1940's was far from an easy and orderly transition. The first official national income estimates in the United States were prepared in 1933 and were valuable in monitoring the recovery programs. They were especially helpful in determining the maximum potential resources for the wartime mobilization. This information was essential in setting goals that were both ambitious and feasible. Many difficulties were encountered in a feasibility dispute between civilian and military organizations and leaders. Changes in personnel, reorganizations and top level coordination led to massive production of armaments and truly making the United States the Arsenal for Democracy.     

An examination of factors associated with the integration of human resource management and strategic decision making

Conceptually, a central aspect of “strategic HRM” is the integration of the HR function with strategic decision making. Little is known, however, about the factors that influence integration or its subsequent effects. Using data from 148 diverse organizations, it was found that strategic type and whether or not top management views employees as strategic resources were associated with integration, but that labor market munificence and organizational growth were not. The results concerning the relationship between integration and performance were surprising; integration was associated with a lower evaluation of the HRM function by top management. © 1998 John Wiley & Sons, Inc.     

Spatial differentiation and price discrimination in the cement industry: evidence from a structural model

We estimate a structural model of the cement industry that incorporates spatial differentiation and price discrimination, focusing on the US Southwest over 1983–2003. We leverage the structure of the model to obtain consistent estimates of the underlying parameters using data on market outcomes that are substantially aggregated. Our results indicate that transportation costs around $0.46 per tonne‐mile rationalize the data. This friction enables relatively isolated plants to obtain higher prices from nearby customers. We further find that disallowing price discrimination would create $30 million in consumer surplus annually and show how the model can identify suitable divestitures in merger analysis.