Changes in insider ownership and changes in the market value of the firm

The empirically-observed cross-sectional relation between the level of insider share ownership and the level of firm value has often been interpreted to mean that a change in share ownership can lead to a change in firm value. Such an interpretation has been criticized for ignoring potential endogeneity. In this paper, we perform two sets of tests to circumvent this alleged endogeneity. First, we measure changes in value over the 6-day interval around announcements of insider share purchases and find that the cross-sectional variability in changes in value is described by a curvilinear relation between firm value and insider ownership where the value of the firm first increases, then decreases, as insider share ownership increases. Second, we conduct tests to determine (1) whether the insider purchases are a response to changes in firm characteristics that require a new optimal equilibrium ownership level or (2) whether insiders are purchasing shares to signal that the firm is undervalued. We find no evidence to support these interpretations. Overall, our results are consistent with a causal interpretation of the empirical relation between insider ownership and firm value.     

THE EFFECTIVENESS OF ACTIVE LABOR MARKET POLICIES: A META‐ANALYSIS

This paper provides a meta‐analysis of microeconometric evaluation studies on the effectiveness of active labor market policies. The analysis is built upon a systematically assembled data set of causal impact estimates from 57 experimental and quasi‐experimental studies, providing 654 estimates published between January 1990 and December 2017. We distinguish between the short and longer term impacts in our analysis; at 6, 12, 24, and 36 months after program start. After correcting for publication bias and country‐specific macroeconomic characteristics, subsidized labor and public employment programs have negative short‐term impacts, which gradually turn positive in the longer run. Schemes with enhanced services including job‐search assistance and training programs do not have these negative short‐term effects, and stay positive from 6 until 36 months after program start.     

Upheaval in the boardroom: Outside director public resignations,motivations, and consequences

We investigate the motives and circumstances surrounding outside directors' decisions to publicly announce their board resignations. Directors who leave “quietly” are in their mid-sixties and professional directors, i.e., retirees, who are retiring entirely from professional life. Directors who announce their resignation are in their mid-fifties and active professionals. Half the time they say they are leaving because they are “busy.” These directors leave from firms with some weakness in their performance, but with no overt manifestations of cronyism such as excessive compensation of either the CEO or directors. The other half of the time directors leave while publicly criticizing the firm. These directors are finance professionals who were members of the audit and compensation committees. They resign from firms with weak boards and financial performance with evidence that managers have manipulated earnings upwards. Public criticism appears to pressure these boards to make management changes associated with improved stock price performance. We conclude that while such public resignations are motivated by the reputational concerns of directors, they can act as a disciplining device for poor board performance.     

The interplay of governance mechanisms in complex procurement projects

Although many studies have investigated governance in inter-firm relationships, little is known about the simultaneous use of several governance mechanisms in complex procurement projects and their impact on project outcomes. In a case study about a complex procurement project in the Norwegian oil and gas industry, we investigate the interplay of contractual incentives, authority and relational governance. The project faced many problems with cost overruns and schedule delays. The study clearly illustrates the interrelationships between governance mechanisms and their effect on project outcomes. The findings suggest that relational governance (trust) is only beneficial for project outcomes when it is accompanied by contractual incentives and control systems (authority). Relational governance in itself does not guarantee an effective and beneficial interplay of all three mechanisms in a way that positive project outcomes are generated.     

What drives corporate liquidity? An international survey of cash holdings and lines of credit

We survey chief financial officers from 29 countries to examine whether and why firms use lines of credit versus non-operational (excess) cash for their corporate liquidity. We find that these two liquidity sources are employed to hedge against different risks. Non-operational cash guards against future cash flow shocks in bad times, while credit lines give firms the option to exploit future business opportunities available in good times. Lines of credit are the dominant source of liquidity for companies around the world, comprising about 15% of assets, while less than half of the cash held by companies is held for non-operational purposes, comprising about 2% of assets. Across countries, firms make greater use of lines of credit when external credit markets are poorly developed.     

A proposed set of nine regions for the United States and the inequality of population densities

A nine-region division of the United States is discussed and compared with the U.S. Census and BEA (Bureau of Economic Analysis) regional groupings. The discussion includes the population density of the regions as well as the inequality of the population densities between and within regions. First version received: October 1999/Final version received: February 2000     

The Impact of the Indian Ocean Tsunami and the Nias Earthquake on the Spatial Distribution of Population in Northern Sumatra

After the Indian Ocean tsunami in 2004, Northern Sumatra experienced three shocks: a negative shock from the tsunami itself and the Nias earthquake that followed in 2005; a positive shock from the massive allocation of recovery funds; and another positive shock from the peace deal between the Indonesian government and the Free Aceh Movement, also in 2005. We analyse the consequences of these shocks on the spatial distribution of the population in Northern Sumatra, building on the approach developed by Davis and Weinstein (2002). We conclude that there have been no significant changes in the relative position of regions in Aceh and North Sumatra, considering their population size. Our model of estimated population growth suggests that the twin disasters had only a temporary impact, which supports the locational fundamentals theory. Our results also reveal that the peace deal is important in explaining the dynamics of population growth in the region.