Wealth effects of food and drug administration (FDA) decisions

Government regulations are an increasingly important component of the environment in which firms operate. Regulations may subject firms to large costs and possibly regulatory-induced risks, both of which may have effects on stockholders' wealth. In this paper we investigate the valuation effects of Food and Drug Administration (FDA) product approvals, rejections and disciplinary decisions on the firms that operate in the food and drug industries. We find that FDA decisions have very large wealth effects. The large price changes associated with approval and rejection decisions suggest that a significant amount of uncertainty about FDA decisions is present almost up to the announcement day. These results are somewhat surprising given the lengthy period of time involved in developing and reviewing drugs and the continuous flow of information received by the market about their potential. We also find some evidence of information leaks preceding FDA announcements. With respect to disciplinary decisions, the evidence from the data suggests that stockholders experience large losses associated with FDA actions. Since these losses represent lost stream of future illegal income, it appears that ignoring FDA rules may be quite profitable for firms that are not caught.     

Europe Needs More Lisbon to Make the ICT Investments Effective

While the renewed Lisbon strategy has emphasised the potential role that ICT can play in meeting the challenges of boosting growth and competitiveness in the EU, there is no clear understanding of the way ICT could complement the structural reform programme which is at the core of that strategy. The evidence presented in this paper suggests that higher market rigidities in the EU have deterred ICT investment and ICT contribution to GDP growth. The data used for ICT investment and ICT contribution to GDP growth is taken from the Groningen Growth and Development Centre database available at http://www.euklems.net. The views expressed by the authors are not necessarily those of the European Commission. Any errors are theirs alone.     

The rise and fall of spatial inequalities in France: A long-run perspective

This paper studies the evolution and determinants of spatial inequalities in France. To this end, we use a unique database providing data on value-added, employment, and population over the entire set of French “Départements” in 1860, 1896, 1930, 1982, and 2000. These data cover three sectors: Agriculture, Manufacturing, and Services. Firstly, we confirm the existence of a bell-shaped process of spatial concentration in Manufacturing and Services over time. In contrast, labor productivity has been converging across departments. Secondly, we find considerable agglomeration economies over the whole period. The spatial distribution of these gains is determined mainly by market potential in the first sub-period, 1860–1930, and higher education in the second, 1930–2000.     

Delphi in the assessment of research and development projects

Used as a means of communication between specialists of different backgrounds concerned with the same r and d project, the Delphi technique allows one to establish the typology of the opinions of sub-groups within the panel; this is often more interesting than simply determining the consensus to which the method generally leads. Factorial analysis treatment of the results of a Delphi study undertaken in 1970–1971 about the prospects for artificial hearts gives an example of such a typology and leads to a definition of some of the less known characteristics of the method : the dynamic character of opinion interaction and not simply the convergence of dissenting viewpoints and the substitution of the individual's logical consistency and coherence by that of the group. As a means of dialogue between decision maker and research specialists, the method favours free circulation and focusing of opinions and motivations towards building the future in a certain way.     

Does the trust game measure trust?

Could altruism explain observed choices in the standard trust game? With dominant altruism, trustors would give more to poor trustees. However, we find trustors to give no more to poor than to rich trustees, confirming trust as the dominant motivation for “trust like” choices.     

Understanding professionals' reactions to strategic change: the role of threatened professional identities

This article develops and demonstrates the utility of a framework for understanding professionals' reactions to strategic change in professional service firms as an interplay between a strategic intent, its manifestation in organizational roles and practices and its fit with existing professional identities. The application of the framework with three case studies shows that strategic changes may threaten different aspects of professional identities (self-enhancement, self-continuity and self-distinctiveness) which in turn tends to lead to different kinds of resistance from the professionals (exit, voice for opposition or voice for renegotiation). The article also links these different reactions to the locus of identification of professionals, which may be either ‘local’ or ‘cosmopolitan’.     

Using linguistics for creating better international brand names

International product sales are increasingly important for most companies. As a result, cross-border brand naming is becoming a significant marketing issue. This article describes linguistic assets such as phonetics (sounds), etymology (roots of words) and rhetoric (persuasive discourse) and proposes a comprehensive framework for analysing how these linguistic assets transfer (or do not transfer) to a number of target linguistic contexts. Using this analysis, managers should follow the ‘Joyce principle’ and attempt to build meaningful brand names across languages, thus adding value to their global brand names.     

The Effect Of International Acquisitions on Firm Leverage

To determine whether corporate international diversification leads firms to increase their leverage, we perform an event study that compares the leverage of corporations before and after they acquire foreign subsidiaries. We find that on average leverage increases from the first to the third year following the acquisition. When we examine the relation between additional debt financing after foreign acquisitions and the characteristics of these acquisitions, we find that in addition to such major determinants as size and profitability, debt financing is explained by geographical and industrial diversification effects.