Cross-listing and legal bonding: Evidence from mergers and acquisitions

Using a sample of foreign acquisitions of US targets, this study examines the extent to which cross-listing in the US leads to legal and regulatory bonding, and/or whether reputational bonding proxied by financial intermediaries monitoring, an often ignored component of the bonding mechanism, is an important factor in US investors decision to hold shares in cross-listed firms. We find that compared to US firms, cross-listed firms are less likely to use equity in takeovers of US targets. Further, cross-listed firms from countries with poorer legal protections are less likely to finance with equity and pay higher premiums than cross-listed firms from countries with better legal protections. Using analysts’ coverage and institutional following as proxies for financial intermediary monitoring, we find some support for the importance of reputational bonding. The evidence suggests that while cross-listing reduces barriers to investment, there are limits to its ability to completely subsume both the legal environment and the importance of the monitoring of financial intermediaries. This further suggests that the extent of actual legal and regulatory bonding by cross-listed firms may be more limited than often assumed.     

Global yield curve dynamics and interactions: A dynamic Nelson–Siegel approach

The popular Nelson–Siegel [Nelson, C.R., Siegel, A.F., 1987. Parsimonious modeling of yield curves. Journal of Business 60, 473–489] yield curve is routinely fit to cross sections of intra-country bond yields, and Diebold–Li [Diebold, F.X., Li, C., 2006. Forecasting the term structure of government bond yields. Journal of Econometrics 130, 337–364] have recently proposed a dynamized version. In this paper we extend Diebold–Li to a global context, modeling a potentially large set of country yield curves in a framework that allows for both global and country-specific factors. In an empirical analysis of term structures of government bond yields for the Germany, Japan, the UK and the US, we find that global yield factors do indeed exist and are economically important, generally explaining significant fractions of country yield curve dynamics, with interesting differences across countries.     

Two-Sided Search, Marriages, and Matchmakers

This article analyzes the provision of matching services in a model of two-sided search. Agents belong to two heterogeneous populations and are distributed on [0, 1]. Their utility is equal to the index of their mate. In a search equilibrium agents form subintervals and are only matched to agents inside their class. Marriage brokers match agents according to a centralized procedure. If the matchmaker charges a uniform participation fee, only agents of higher quality participate in the centralized procedure. If the matchmaker charges a commission on the matching surplus, only agents of lower quality go to the intermediary.     

Audit Office Reputation Shocks from Gains and Losses of Major Industry Clients

Our study reports evidence on the dynamic effects of client switches on auditor reputations and fee premia. Offices of large accounting firms that lose (gain) major industry clients experience a reputation shock leading to more same‐industry client losses (gains) over the next two years. There is also a shift in audit fees charged to other same‐industry clients when a major client loss (gain) results in an audit office losing (gaining) city‐level industry leadership. A major client loss or gain also creates a short‐term capacity shock to an audit office's ability to supply high‐quality audits. However, there is no evidence of reputation spillovers to other‐industry clients in the audit office, or to clients in other offices of the accounting firm.     

Monetary policy credibility and macrodynamics: evidence from Ghana

We compute a time-varying metric of monetary policy credibility based on Ghana’s experience, using both symmetric and asymmetric approaches. We then follow-up with some empirical evidence to address the linkages between macroeconomic developments and central bank credibility. The empirical results reveal high and low credibility cycles with an average duration of 2 years over the study period. Particularly, higher levels of credibility were associated with stable domestic currency and lower nominal interest rates. This reinforces the notion that efficient monetary policy delivers higher central bank credibility with better outcomes for macroeconomic variables. In contrast, the level of credibility tends to worsen in the wake of weakening macro fundamentals which are not adequately countered by monetary policy decisions. There is therefore the need for efficient monetary policy formulation to achieve a stable macroeconomic environment in Ghana. This will in the long-run build policy credibility towards attaining the central bank’s medium-term inflation target.     

Austrian business cycle theory: Empirical evidence

The Austrian approach to business cycles has been seldom examined in econometric terms. This paper first reviews the essentials of that approach and the recent application of the Austrian business cycle theory in the economics literature. Quarterly data for Germany, USA, England and France, 1980:1 through 2006:1, are used to explore business cycle facts and relations between terms structure of interest rates, relative prices, composition of aggregate expenditure and real GDP. Results are consistent with the hypothesis of the Austrian business cycle theory that monetary policy shocks explain cycles. The changes in term structure of interest rates and composition of aggregate expenditure are large enough to explain changes in aggregate economic activity.

Correlated equilibria, incomplete information and coalitional deviations

This paper proposes new concepts of strong and coalition-proof correlated equilibria where agents form coalitions at the interim stage and share information about their recommendations in a credible way. When players deviate at the interim stage, coalition-proof correlated equilibria may fail to exist for two-player games. However, coalition-proof correlated equilibria always exist in dominance-solvable games and in games with positive externalities and binary actions.     

Hospital staff shortage: the role of the competitiveness of pay of different groups of nursing staff on staff shortage

Shortages of nursing staff in OECD countries have been a preoccupation for policy makers. Shortages of staff may be the consequence of uncompetitive pay. In the private sector, employers in different regions can offer different pay rates to reflect local amenities and cost of living. Hospitals in the UK however cannot set the pay for their employees, and as a result they might therefore incur staff shortages. Moreover, occupational groups do not operate in isolation. Shortages of staff may also be the consequence of the competitiveness of pay of an alternative group of staff. This is investigated using two distinct groups of nursing staff: assistant nurses (ANs) and registered nurses (RNs) working in English hospitals in 2003–2005 using national-level data sets. We find that an increase by 10% of the pay competitiveness of RNs decreases the shortage of both the RNs and of ANs by 0.6% and 0.4%, respectively.