Corruption and change: the impact of foreign direct investment

This study examines influences on the level of corruption in countries from a strategic perspective. Corruption is one of the country‐level influences on market entry, investment, and other decisions fundamental to strategic management at the international level. The study examines the impact on corruption of change in levels of foreign direct investment (FDI). It uses the Corruption Perceptions Index (CPI) scores computed by Transparency International for 1999 and 2000. Results indicate that the more rapid the rate of change in FDI, the higher the level of corruption. Higher levels of perceived corruption are associated with each of two dimensions of national culture: uncertainty avoidance and masculinity. Research and managerial implications are also discussed. Copyright © 2004 John Wiley & Sons, Ltd.     

Financial Returnees as New Agents in East Asia: The Case of Korean Private Equity Funds

Although the standing of Anglo-American capitalism has been badly damaged by the global economic crisis, the return of the state in emerging markets is by no means assured. Over the past decade, financial processes originating in Anglo-American markets, such as derivatives, hedge funds and mergers and acquisitions (M&A), have made quiet headway in emerging markets. One of the transmission channels is financial returnees, defined as elites returning to domestic finance from either global finance abroad or from foreign financial institutions in their home countries. Many financial returnees pursue business agendas that parallel the Anglo-American model, while portraying themselves as local for domestic constituencies. These actions are now especially visible in the rise of private equity funds in emerging markets. This article defines the concept of a financial returnee and charts the impact of these individuals in importing the Anglo-American private equity model to Asia with Korea as the primary case study. Once foreign-controlled, the private equity industry in Korea is now domestically-run and financial returnees have been integral in this sector's short but important history.     

Risk choice and emotional experience: a multi-level comparison between active and passive decision-making

Abstract

Previous studies have consistently indicated the important role of emotional experience in decision-making. While both active and passive decision-making coexist in our daily lives, whether and how active and passive decision-making induce different emotional experience remains unclear. In the present research we conduct three studies to examine differences in emotional experience associated with active and passive decisions at multiple levels. First, at the individual level, using both active and passive modes of the Balloon Analog Risk Task in a laboratory behavior study, we demonstrate that active decision-making is associated with more positive emotional experience compared to passive decision-making, including more happiness, less distress, a greater sense of control, and a stronger sense of achievement. Second, at the neural level, we use functional magnetic resonance imaging and find greater activation in the brain’s emotional circuits during active decisions compared to passive decisions, regardless of the decision outcomes. Finally, at the population level, we conduct a large-scale survey to capture the perception of emotional experience during real-world active and passive decisions, and our results confirm that active decisions engender a greater sense of achievement and sense of control and people prefer active decisions to passive decisions. These findings provide valuable insights into the role of emotion experience in decision-making research and practices.     

INDIFFERENCE PRICING FOR CONTINGENT CLAIMS: LARGE DEVIATIONS EFFECTS

We study utility indifference prices and optimal purchasing quantities for a nontraded contingent claim in an incomplete semimartingale market with vanishing hedging errors. We make connections with the theory of large deviations. We concentrate on sequences of semicomplete markets where in the nth market, the claim admits the decomposition . Here, is replicable by trading in the underlying assets , but is independent of . Under broad conditions, we may assume that vanishes in accordance with a large deviations principle (LDP) as n grows. In this setting, for an exponential investor, we identify the limit of the average indifference price , for units of , as . We show that if , the limiting price typically differs from the price obtained by assuming bounded positions , and the difference is explicitly identifiable using large deviations theory. Furthermore, we show that optimal purchase quantities occur at the large deviations scaling, and hence large positions arise endogenously in this setting.     

Estimating shadow price for symbiotic nitrogen and technical efficiency for legume‐based conservation agriculture in Malawi

Determining the value of legumes as soil fertility amendments can be challenging, yet this information is required to guide public policy and to incentivise prescribed land‐management practices such as conservation agriculture. We use a directional input distance function (DIDF) to estimate shadow prices for symbiotic nitrogen and the technical efficiency for mixed maize‐legume production systems in Malawi. The shadow prices reflect the trade‐off between fertiliser nitrogen and symbiotic nitrogen required to achieve a given quantity of output. Our results reveal considerable technical inefficiency in the production system. The estimated shadow prices vary across farms and are, on average, higher than the reference price for commercial nitrogen. The results suggest that it would be beneficial to redesign the current price‐support programs that subsidise chemical fertilisers and indirectly crowd‐out organic soil amendments such as legumes.     

Campaigning against poverty: The local authority role

The Record increase in income inequality and poverty over the last 15 years have major implications for local government. Yet an anti-poverty agenda has been conspicuous by its absence until recently in local authority strategies and debates. A national political campaign with all party local authority support is now underway, linked to a growing awareness of the need for local authorities to adopt a truly strategic approach in addressing issues of poverty and social justice at the local level.