The diversity of institutional rules as engine of change

The target paper by Elinor Ostrom in this Special Issue carries a clear message about her research agenda: be attentive to institutional diversity, be aware of the danger of ‘monoculture’ and ‘monocropping’ of rules. Although Ostrom was fully aware of the necessity to focus on relevant and simplified variables in order to build general explanations, she deliberately adopted a bottom-up research strategy that opposes the top-down approach dominating social sciences. Her framework, developed through extensive field studies, shows the central role of “clusters” of rules in defining institutions and understanding how they change. My discussion is organized around this privilege conferred to rules. Section 2 posits her contribution, particularly her IAD model, in relation to New Institutional Economics. Section 3 focuses on what I consider her main contribution: her analysis of rules as the strategic point through which changes happen. Section 4 discusses some methodological issues, and Sect. 5 concludes.     

How Does Perceived Effectiveness Affect Adults’ Ethical Acceptance of Anti-obesity Threat Appeals to Children? When the Going Gets Tough,the Audience Gets Going

Little is known on the appraisal of ethically questionable not- for-profit actions such as social marketing advertising campaigns. The present study evaluates the ethical acceptance by adults of anti-obesity threat appeals targeting children, depending on the claimed effectiveness of the campaign. An experiment conducted among 176 Belgian participants by means of an online survey shows that individuals’ acceptance of social marketing practices increases along with the claimed effectiveness of the campaign. As such it demonstrates that the audience adopts a pragmatic perspective, challenging the non-consequentialist stance of social marketers who refrain themselves from using these ‘questionable’ techniques although highly effective. The trade-off between ethical judgment and claimed effectiveness varies depending on whether the threats focus on the child’s physical integrity or social life. Individual characteristics such as parenthood and age also influence the relationship. All in all, it seems that people with stronger connections to the issue such as parents are more ready to compromise. These findings enrich our insights into consequentialism in social marketing campaigns, how people respond to controversial messages targeted at vulnerable group, and open new venues to social managers and public policy makers. Managerial implications and concrete advice on how to communicate with the various audiences are proposed, as well as suggestions for future studies.     

Government Underpricing of Share‐Issue Privatizations

Abstract *** :  The purposes of the paper are to determine whether governments underprice shares in fixed‐price share‐issue privatizations (SIPs) and, if so, what their motivations are for doing so. This paper develops three models of SIP underpricing: one based on revenue goals, one based on political goals and an inclusive model which supposes that the level of underpricing depends on both government revenue goals and political goals. These models are estimated using an international sample of 104 SIPs from 25 countries. We find that, on average, SIPs are underpriced by approximately the same amount as private sector initial public offerings (IPOs). This is not consistent with the sole goal of revenue maximization because SIPs should not require the same degree of underpricing as IPOs. The inclusive regression fits the data well and indicates that both revenue and political goals affect the level of SIP underpricing .     

The determinants of intra-industry trade: The case of the automobile industry

Zusammenfassung Die Bestimmungsgründe für den intra-industriellen Handel. Der Fall der Automobilindustrie. - In ihrem Artikel versuchen die Verfasser, die Entstehung und die jüngste Entwicklung des intra-industriellen Handels (IIH) unter Verwendung strengerer Definitionen für den europ?ischen Automobilsektor aufzuzeigen. Zus?tzlich zu früheren Erkl?rungen des IIH aus dem Blickwinkel der komparativen Vorteile oder der intra-industriellen Spezialisierung liefert der Aufsatz erstmalig einen deutlichen empirischen Befund für die m?gliche Beziehung zwischen firmeninternem und intra-industriellem Handel. Au?erdem halten die Verfasser eine umfassende Theorie für notwendig, um den IIH in Abh?ngigkeit von verschiedenen bilateralen Zusammenh?ngen zu erkl?ren.

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Résumé Les déterminants du commerce intra-branche: le cas du secteur de l’automobile. - Dans cette étude, nous nous sommes attachés à montrer l’existence et l’évolution récente du commerce intra-branche dans le secteur de l’automobile. Expliquer cette évolution en terme de pertes d’avantages comparatifs ou de spécialisation intra-branche a constitué notre objectif. Dans un contexte de commerce bilatéral, nous avons pu constater de multiples facteurs explicatifs, en particulier, nous avons mis en évidence, pour la première fois sur le plan empirique, la possibilité que des flux d’échanges intra-firme génèrent des échanges intra-branche. Cette étude atteste, également, la nécessité d’une théorie composite du commerce intra-branche.

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Resumen Las déterminantes del comercio intraindustrial: el caso de la industria automotriz. - En este trabajo se intenta mostrar el surgimiento y la evolución reciente del comercio intraindustrial (CII), particularmente de la industria automotriz en Europa. Además de dar las explicaciones tradicionales del CII desde el punto de vista de las ventajas comparativas o de la especialización intraindustrial, en este trabajo se présenta por primera vez una fuerte evidencia empirica en favor de la relación posible entre el comercio intraempresa y el CII. En este estudio también se postula la necesidad de una teoria amplia para explicar el CII en dependencia de varios contextes bilaterales.

     

Large Shareholder Entrenchment and Performance: Empirical Evidence from Canada

Abstract:  Recent empirical evidence indicates that the largest publicly traded companies throughout the world have concentrated ownership. This is the case in Canada where voting rights are often concentrated in the hands of large shareholders, mostly wealthy families. Such concentrated ownership structures can generate specific agency problems, such as large shareholders expropriating wealth from minority shareholders. These costs are aggravated when large shareholders don't bear the full costs of their decisions because of the presence of mechanisms (dual class voting shares, pyramids) which lead to voting rights being greater than the cash flow rights (separation). We assess the impact of separation on various performance metrics while controlling for situations when the large shareholder has (1) the opportunity to expropriate (high free cash flows in the firm) and (2) the incentive to expropriate (low cash flow rights). We also control for when the large shareholder has the power to expropriate (high voting rights, outright control and insider management) and for the presence of family ownership. The results support our hypotheses and indicate that firm performance is lower when large shareholders have both the incentives and the opportunity to expropriate minority shareholders.     

A Note on Seasonal Unit Root Tests

The seasonal unit root tests make it possible to determine the nature of the deterministic and stochastic seasonal fluctuations. In Section 2, we define the main seasonal time series models and the seasonal integration notion. Section 3 describes the HEGY test procedure.     

The Economic Impact of Chapter 11 Bankruptcy versus Out‐of‐Court Restructuring

Companies in financial distress have usually been able to choose between working out an agreement with their creditors (“private restructuring”) or entering into more expensive and lengthier formal Chapter 11 bankruptcy proceedings. But 2015 rulings in two cases by the U.S. District Court for the Southern District of New York may force distressed firms to enter Chapter 11 rather than seek negotiated out‐of‐court settlements. Using a large sample of U.S. companies that experienced financial difficulty during the period 2006–2014, the authors found that the companies that filed for bankruptcy and went through Chapter 11 proceedings experienced significantly more job losses and reductions of economic output than companies achieving out‐of‐court restructurings, both overall and on a per‐case basis. The authors' estimates of the overall losses in output associated with Chapter 11 bankruptcy cases ranged as high as 2.3% of 2014 GDP, as compared to at most 0.3% of GDP in the case of out‐of‐court negotiations. At the same time, the authors estimate that as many as 2.2 million job losses were attributable to cases involving bankruptcies while the out‐of‐court cases were associated with the loss of at most about 300,000 jobs. But, as the authors concede, these findings are exaggerated by a clear self‐selection bias—one that stems from the well‐documented tendency of more fundamentally profitable, and hence more solvent, companies to choose private restructuring over bankruptcy. Despite this limitation, the study provides a useful point of departure for future studies that aim to quantify the costs to the U.S. economy of limiting or removing the option of companies with valuable operations but the “wrong” capital structures to work out their financial difficulties outside of the bankruptcy court.     

Change of numeraire in the two-marginals martingale transport problem

In this paper, we apply change of numeraire techniques to the optimal transport approach for computing model-free prices of derivatives in a two-period setting. In particular, we consider the optimal transport plan constructed in Hobson and Klimmek (Finance Stoch. 19:189–214, 2015) as well as the one introduced in Beiglböck and Juillet (Ann. Probab. 44:42–106, 2016) and further studied in Henry-Labordère and Touzi (Finance Stoch. 20:635–668, 2016). We show that in the case of positive martingales, a suitable change of numeraire applied to Hobson and Klimmek (Finance Stoch. 19:189–214, 2015) exchanges forward start straddles of type I and type II, so that the optimal transport plan in the subhedging problems is the same for both types of options. Moreover, for Henry-Labordère and Touzi’s (Finance Stoch. 20:635–668, 2016) construction, the right-monotone transference plan can be viewed as a mirror coupling of its left counterpart under the change of numeraire.     

A cliometric counterfactual: what if there had been neither Fogel nor North?

1993 Nobel laureates Robert Fogel and Douglass North were pioneers in the “new” economic history, or cliometrics. Their impact on the economic history discipline is great, though not without its critics. In this essay, we use both the “old” narrative form of economic history, and the “new” cliometric form to analyze the impact each had on the evolution of economic history.     

Knowledge as a public good: efficient sharing and incentives for development effort

We consider Research-Development joint ventures where adverse selection arises in knowledge sharing, while there is moral hazard involved in the choice of private development efforts aimed at translating privately acquired and/or shared knowledge into valuable marketable innovations. We extend earlier work by Bhattacharya et al. [Bhattacharya, S., Glazer, J., Sappington, D., 1992. Licensing and the Sharing of Knowledge in Research Joint Ventures, J. Econ. Theory, Vol. 56, pp. 43–69.] to situations where one cannot identify a ‘most knowledgeable' partner, by giving conditions under which there exist transfers implementing both efficient first best knowledge sharing and subsequent development efforts.