Institution building and growth in transition economies

Drawing on the recent literature on economic institutions and the origins of economic development, we offer a political economy explanation of why institution building has varied so much across transition economies. We identify dependence on natural resources and the historical experience of these countries during socialism as major determinants of institution building during transition. Using natural resource reliance and the years under socialism to extract the exogenous component of institution building, we also show the importance of institutions in explaining the variation in economic development and growth across transition economies during the first decade of transition.     

Banking crises,financial dependence,and growth

This paper contributes to the literature that analyzes the mechanisms linking financial shocks and real activity. In particular, we investigate the growth impact of banking crises on industries with different levels of dependence on external finance. If banks are the key institutions allowing credit constraints to be relaxed, then a sudden loss of these intermediaries in a system in which such intermediaries are important should have a disproportionately contractionary impact on the sectors that flourished due to their reliance on banks. Using data from 38 developed and developing countries that experienced financial crises during the last quarter century, we find that those sectors that are highly dependent on external finance tend to experience a substantially greater contraction of value added during a banking crisis in countries with deeper financial systems than in countries with shallower financial systems. Our results do not suggest, however, that on net the externally dependent firms fare worse in deep financial systems.     

The monetary appreciation of paintings: from realism to Magritte

This study investigates how investments in paintings comparewith those in stocks in terms of risk–return trade-offusing Sharpe and Treynor ratios and Markowitz efficient frontiers.A large database was analysed consisting of more than 10,500auction prices of Belgian paintings over the period 1970–97.These paintings are the auctioned oeuvre of 71 internationallyrecognised painters representing the main artistic schools (fromsocial realism to surrealism) over the period 1850–1950.Hedonic art returns are corrected for auction location and auctionhouse, artistic school, painters' reputation, medium, signatureand painting size. Surrealism and luminism have been the mostpopular currents of art (in monetary terms), while expressionismand symbolism have gained (financial) esteem. This study concludesthat art investments underperform equity market investmentsowing to the high risk of investing in art and its high transactioncosts, resale rights and insurance premia. In addition, theMarkowitz efficient frontier shows limited diversification potentialfor art.     

Corporate Restructuring and Bondholder Wealth

This paper provides an overview of existing research on how corporate restructuring affects bondholder wealth. Restructuring is defined as any transaction which affects the firm's riskiness by changing its underlying capital structure. Thus, it reaches well beyond asset restructuring and includes transactions such as leveraged buyouts, security issues and exchanges, and the issuance of stock options. We identify significant gaps in the literature, emphasize the potential differences in bond performance between market‐ and stakeholder‐oriented corporate governance systems, and provide valuable insights into methodological advances. We find that many issues remain as the empirical evidence is often inconclusive and focuses almost exclusively on the US. Research on other countries remains constrained by the lesser development of their bond markets, but is equally imperative because the position and bargaining power of creditors vis‐à‐vis the firm differ substantially across countries and governance regimes.     

Addendum to L. Lauwers and L. Van Liedekerke, “Ultraproducts and aggregation” [J. Math. Econ. 24 (3) (1995) 217–237]

This addendum fills a minor gap in the key lemma of a paper by Lauwers and Van Liedekerke [Lauwers, L., Van Liedekerke, L., 1995. J. Math. Econ. 24 (3), 217–237].     

What determines the financing decision in corporate takeovers: Cost of capital,agency problems,or the means of payment?

How is a takeover bid financed and what is its impact on the expected value creation of the takeover? An analysis of the sources of transaction financing has been largely ignored in the takeover literature. Using a unique dataset, we show that external sources of financing (debt and equity) are frequently employed in takeovers involving cash payments. Acquisitions with the same means of payment but different sources of transaction funding are in fact quite distinct. Acquisitions financed with internally generated funds significantly underperform those financed with debt. The takeover financing decision is influenced by the bidder's pecking order preferences, its growth potential, and its corporate governance environment, all of which are related to the cost of external capital. The choice of equity versus internal cash or debt financing also depends on the bidder's strategic preferences with respect to the means of payment.     

Quality in Electronic Commerce B2C: Perceptions,Expectations and Importance

There are two academic and professional fields that are strategically important to today's firms: electronic commerce B2C (business to consumer) and Total Quality Management. Their joint appearance in the present scenario gives rise to opportunities and challenges on quality literature that need to be tackled. On that basis, this paper studies the predictive value of the alternative scales of quality in electronic commerce B2C: scale of perceptions, scale of difference (perception minus expectations) and scale of weighted differences. As a result, the measures of perceptions have more predictive value than other measures. However, the measures of expectations and the measures of importance have been considered for diagnostic proposes.     

Measurement of the efficiency of football teams in the Champions League

In the case of football it could be argued that the purpose of clubs is to win the competitions in which they participate. However, the assessment of football clubs from the efficiency would be relevant in judging whether the results have been obtained without waste. The chosen sample is football teams who played in the Champions League from 2003 to 2007 and the method of calculating the efficiency will be both the traditional version of the DEA as well as the version proposed by Andersen and Petersen (1993), which allows discrimination among efficient units. Copyright © 2010 John Wiley & Sons, Ltd.