FAIR RETIREMENT UNDER RISKY LIFETIME*

A premature death unexpectedly brings a life and a career to their end, leading to substantial welfare losses. We study the retirement decision in an economy with risky lifetime and compare the laissez‐faire with egalitarian social optima. We consider two social objectives: (1) the maximin on expected lifetime welfare, allowing for a compensation for unequal life expectancies, and (2) the maximin on realized lifetime welfare, allowing for a compensation for unequal lifetimes. The latter optimum involves, in general, decreasing lifetime consumption profiles as well as raising the retirement age. This result is robust to the introduction of unequal life expectancies and unequal productivities.     

The relevance of political affinity for the initial acquisition premium in cross‐border acquisitions

Research summary : In the context of economic nationalism, we investigate the relevance of political affinity between countries to the initial acquisition premium offered in cross‐border acquisitions. Political affinity is defined as the similarity of national interests in global affairs. We argue that political affinity affects how foreign acquirers anticipate their bargaining position in their negotiations with domestic target firms. With decreasing political affinity, the host government becomes increasingly likely to intervene against foreign firms in an acquisition deal. Consequently, foreign acquirers need to provide a more lucrative initial offer to dissuade target firms from leveraging government intervention to oppose the acquisition. Our prediction is supported by strong evidence that political affinity, as revealed by UN general assembly voting patterns, leads to lower initial acquisition premiums. Managerial summary : Media reports suggest that politics plays an important role in international business transactions. However, we still know very little about how bilateral political relations affect corporate decision‐making. In this article, we analyze the influence of the quality of bilateral political relations on the bidding behavior of foreign acquirers in cross‐border acquisitions. We argue that the host government is more likely to intervene against the foreign acquirer during deal negotiations if the quality of bilateral political relations is poor. A lower political affinity between countries therefore decreases the bargaining power of the acquirer and pushes up the initial bid premium the acquirer has to offer to the local target. Our empirical results confirm our argument. Copyright © 2015 John Wiley & Sons, Ltd.     

The impact of stocks and flows of organizational knowledge on firm performance: an empirical investigation of the biotechnology industry

The knowledge‐based view of the firm is a recent approach to understanding the relationship between firm capabilities and firm performance. Specifically, this approach suggests that knowledge generation, accumulation and application may be the source of superior performance. Other research has conceptualized organizational knowledge in terms of stocks of accumulated knowledge in the firm and flows of knowledge into the firm. This paper tests the relationship between stocks and flows of organizational knowledge and firm performance in the biotechnology industry. We suggest that a firm’s geographic location, alliances with other institutions and organizations and R&D expenditures are representative of knowledge flows, while products in the pipeline, firm citations and patents are indicative of knowledge stocks. Through factor analysis, we develop an aggregated measure of location from several variables. A regression model suggests that location is a significant predictor of firm performance as are products in the pipeline and firm citations. A major contribution of this investigation is the operationalization of geographic location and its statistically significant link to firm performance. Copyright © 1999 John Wiley & Sons, Ltd.     

The impact of online financial disclosure and donations in nonprofits

Decreased public confidence and trust in the nonprofit sector has fueled increased calls for transparency. In response, federal regulators and watchdog organizations have recommended that nonprofits voluntarily disclose their financial information on their own public websites. Despite the potential benefits of enhanced public confidence and trust, improved donor decision making, and increased donations, many nonprofit organizations have not adopted the recommended disclosure practices. We investigate the disclosure practices of 3,217 nonprofits and find that voluntary web disclosure of the IRS Form 990 is strongly correlated to donations, independent of other variables such as age, size, and fundraising expenditures. Further, fundraising is also clearly related to the performance indicators shown in the 990 disclosures, particularly the program ratio of program expenditures to total expenditures. This is true on a general level and when specifically compared to other nonprofits within particular sectors. As a result, nonprofits should seriously consider voluntarily posting their Form 990 results on their websites when it reflects favorably and strive to improve their financial performance if online disclosure would reflect poorly on the organization.     

Evolution of the chronic care role of the registered nurse in primary care

High-quality, accessible, and efficient primary care is needed as the U.S. health care system undergoes significant change. Advancing the role of registered nurses in the primary care setting is important to the solution. A large academic health center implemented five initiatives to improve the care of chronically ill patients through the expanded role of RNs in the context of the health care team. Role evolution of nurses in the pilots required some continuing education and some additional nursing support to release the pilot nurses from their usual duties. These strategies allowed the nurses to apply interventions that enhanced the coordination of care and promoted patient self-management skills. Some short-term improvements in health status were realized and barriers to self-care were identified and resolved.     

Free software on the market-side: the failure-story of free software services companies in France

ABSTRACT

This article investigates two research funding policies in a cooperative and a non-cooperative R&;D setting: subsidising private research (Spr) and subsidising public research (Spu). We show that R&;D cooperation with subsidies (either Spr or Spu) always performs better than R&;D cooperation with no subsidy. Furthermore, the Spr policy leads to better performance than the Spu approach does in terms of overall net surplus whether the firms cooperate or not in R&;D. Nevertheless, comparing the two research funding policies for the same level of public spending shows that the Spu policy with R&;D cooperation is in some cases more effective than the Spr policy, the latter becoming too costly for the government when spillovers are high.     

State English-only policies and English-language investments

Many states in the US have considered adopting ‘English-only’ legislation since the early 1980s. This paper argues that this legislation has a variety of expected and unexpected outcomes. Using the 1980 and 1990 Integrated Public Use Microdata Series (IPUMS), this study finds that Asian immigrants in general and Hispanic immigrants who arrived to the US prior to 1970 acquired more English fluency on average during the 1980s when residing in states that passed English-only (EO) legislation compared to their similar peers. The passage of such legislation also appears to have distorted residence decisions as well as the relative quality of immigrants between EO and non-EO states.     

Risk,uncertainty and monetary policy

The VIX, the stock market option-based implied volatility, strongly co-moves with measures of the monetary policy stance. When decomposing the VIX into two components, a proxy for risk aversion and expected stock market volatility (“uncertainty”), we find that a lax monetary policy decreases both risk aversion and uncertainty, with the former effect being stronger. The result holds in a structural vector autoregressive framework, controlling for business cycle movements and using a variety of identification schemes for the vector autoregression in general and monetary policy shocks in particular. The effect of monetary policy on risk aversion is also apparent in regressions using high frequency data.     

A panel data analysis of the effect of corruption on tourism

This study empirically tests the hypothesis that corruption has a negative effect on tourism. Having to pay bribes while on holiday or a business trip increases the costs of travelling to a country where corruption is prevalent. Tourists are thus more likely to travel to countries where these additional costs do not need to be incurred. This hypothesis is tested using a panel data set of over 100 countries and 16 years. The results indicate that a 1-point increase in the Corruption Perception Index (implying a decrease in corruption) results in a 2% to 7% increase in tourist inflows. In addition, tourist inflows rise with GDP per capita, openness and growth and are higher in countries with a temperate climate.