Frequency and Motives for Stock Dividends in a Unique Environment

We investigate the possible differences in the information content of stock dividends between firms that distribute stock dividends frequently (frequent distributors) and firms that distribute stock dividends infrequently (infrequent distributors) using a unique data set from Oman where the market microstructure frictions are either absent or limited. We find that infrequent stock dividend distributors have higher postdistribution operating performance relative to frequent distributors. We also find that the illiquidity measure is significantly related to the announcement effect only for frequent stock dividend distributors, whereas short‐term performance is significantly related to the announcement effect only for infrequent distributors. Our findings indicate that infrequent stock dividends are used mainly to convey favorable private information about the firms’ future prospects, and frequent stock dividends are used to reduce stock price to an optimal trading range in order to improve trading liquidity. JEL classification: G14, G35.     

Can Agents Be Better Off with Pay Caps?

A popular way to discipline the managers of companies or banks that got into trouble during the recent financial crisis has been to impose caps on managers' pay. Using a small extension of the standard principal–agent model, we argue that pay caps might serve the opposite purpose, because the agent might be better off with a pay cap. Specifically, we show that, given a fixed effort level to be implemented, the agent's expected utility can be decreasing in an upper bound for the agent's reward. The effect of pay caps on the general structure of optimal incentive contracts is also characterized. While an improvement of contracting information always helps the principal, it might increase or decrease the marginal cost of imposing pay caps.     

Corporate Lobbying and Firm Performance

Corporate lobbying activities are designed to influence legislators, regulators and courts, presumably to encourage favorable policies and/or outcomes. In dollar terms, corporate lobbying expenditures are typically one or even two orders of magnitude larger than spending by Political Action Committees (PAC), and, unlike PAC donations, lobbying amounts are direct corporate expenditures. We use data made available by the Lobbying Disclosure Act of 1995 to examine this more pervasive form of corporate political activity. We find that, on average, lobbying is positively related to accounting and market measures of financial performance. These results are robust across a number of empirical specifications. We also report market performance evidence using a portfolio approach. We find that portfolios of firms with the highest lobbying intensities significantly outperform their benchmarks in the three years following portfolio formation.     

Likelihood evaluation of models with occasionally binding constraints

Applied researchers interested in estimating key parameters of dynamic stochastic general equilibrium models face an array of choices regarding numerical solution and estimation methods. We focus on the likelihood evaluation of models with occasionally binding constraints. We document how solution approximation errors and likelihood misspecification, related to the treatment of measurement errors, can interact and compound each other.     

Competition and collaboration between public and private sectors: the historical construction of the Spanish hospital system, 1942–86

Throughout history, healthcare, along with diet, has been an essential component of life and a country's welfare. In particular, a country's hospital system is a key indicator for analysing the level of welfare achieved by health coverage. From an economic history perspective, the study of hospital systems is relevant since they stem from public and private investment and produce positive externalities by creating employment and stimulating other economic sectors such as construction and health. Spain provides a significant case study for determining the factors of backwardness in the construction of a modern hospital system in a country on the European periphery. Moreover, it also helps us understand how, despite initial obstacles, this system had attained a significant degree of quality by the end of the twentieth century, as confirmed by its current international hospital rankings and even by the phenomenon of health tourism. The study analyses the creation of the Spanish hospital system during Franco's dictatorship and the transition to democracy. It reveals how the maintenance of a regressive tax system, the use of health policy as political propaganda, and disputes within the political elite of the dictatorship led to an inadequate and fragmented public hospital system, which had to collaborate with the private hospital system, was full of financial holes and tainted by corruption, and remained at the service of privileged groups.     

Multivariate choices and identification of social interactions

This paper considers the identification of social interaction effects in the context of multivariate choices. First, we generalize the theoretical social interaction model to allow individuals to make interdependent choices in different activities. Based on the theoretical model, we propose a simultaneous equation network model and discuss the identification of social interaction effects in the econometric model. We also provide an empirical example to show the empirical salience of this model. Using the Add Health data, we find that a student's academic performance is not only affected by academic performance of his peers but also affected by screen‐related activities of his peers.     

Does Interindustry and Intraindustry Information Help Predict Financial Distress?

This study investigates whether and how the accounting ratios of peer firms within the same industry (the industry peers) or firms within the industry of their customers (the downstream peers) help improve the predictability of sample firm financial distress. We document that the Z‐score factors of the companies with high correlation in stock returns help predict financial distress. The results show that accounting‐based ratios of the industry peers and the downstream peers enhance the accuracy of early warnings of financial distress, especially when prior returns of peer firms are highly correlated with the sample firm.     

Crowdsourcing and work: individual factors and circumstances influencing employability

The development of a fast and reliable Internet, new technologies online payment systems, and changes in work structure that enable and demand flexible working patterns have driven a move to a new form of Internet‐enabled labour exchange called crowdsourcing. Evidence from an in‐depth qualitative study is presented, focusing on selected users' interactions and experiences of working on two UK‐based crowdsourcing platforms. The paper shows that workers engaged in this form of labour exchange need to deploy existing employability skills and networks to effectively meet the challenges, and take advantage of the opportunities, that crowdsourcing presents. Individual factors and circumstances emerge as paramount for workers' continued engagement in this form of employment. Using selected components from an employability framework, the findings suggest that crowdsourcing can offer new pathways to practising skills and enhancing employability for some workers.     

Making sense of new technology during organisational change

This article examines how employees interpret the use of various social media and web 2.0 technologies by managers of an organisation during a merger process. The article explores the way in which managers use technology to give sense to the merger process, the corresponding sensemaking of employees and also how employees make sense of the use of technology itself. The findings show that new media enables the sharing of emotional sense about organisational processes between managers and employees and places employees with different levels of involvement with the process and at different points in the organisational hierarchy on equal footing. In spite of this, employees view the use of technology negatively and feel mastered by the technology itself. In discussing these unintended consequences of the use of this technology, the article further discusses the paradoxes that emerge from using new technology to give sense during organisational change.     

R&D Partnerships and Innovation Performance: Can There Be too Much of a Good Thing?

R&D collaboration facilitates the pooling of complementary skills, learning from the partner as well as the sharing of risks and costs. Research therefore stresses the positive relationship between collaborative R&D and innovation performance. Fewer studies address the potential drawbacks of collaborative R&D. Collaborative R&D comes at the cost of coordination and monitoring, requires knowledge disclosure, and involves the risk of opportunistic behavior by the partners. Thus, while for lower collaboration intensities the net gains can be high, costs may start to outweigh benefits if firms perform a higher share of their innovation projects collaboratively. For a sample of 2735 firms located in Germany and active in a broad range of manufacturing and service sectors, this study finds that increasing the share of collaborative R&D projects in total R&D projects is associated with a higher probability of product innovation and with a higher market success of new products. While this confirms previous findings on the gains for innovation performance, the results also show that collaboration has decreasing and even negative returns on product innovation if its intensity increases above a certain threshold. Thus, the relationship between collaboration intensity and innovation follows an inverted‐U shape and, on average, costs start to outweigh benefits if a firm pursues more than about two‐thirds of its R&D projects in collaboration. This result is robust to conditioning market success to the introduction of new products and to accounting for the selection into collaborating. This threshold is, however, contingent on firm characteristics. Smaller and younger as well as resource‐constrained firms benefit from relatively higher collaboration intensities. For firms with higher collaboration complexities in terms of different partners and different stages of the R&D process at which collaboration takes place, returns start to decrease already at lower collaboration intensities.