CONTROLLING BANKERS' BONUSES: EFFICIENT REGULATION OR POLITICS OF ENVY?

The positive relationship between bank CEO compensation and risk-taking is a well-established empirical fact. The global banking crisis has resulted in a chorus of demands to control bankers' bonuses and thereby curtail their risk-taking activities in the hope that the world can avoid a repeat in the future. However, the positive relationship is not a causative one. In this paper we argue that an implicit too-big-to-fail policy provides the incentive for banks to take excessive risks and design compensation packages to deliver high returns. A credible no-bailout policy will have a better chance of curbing excess risk-taking than controlling bankers' compensation.     

Human development and cross-border acquisitions

We examine the role of human development in US companies' decisions to engage in cross-border acquisitions. Utilizing the human development index (HDI) published by the United Nations Development Program (UNDP), we find that US firms make acquisitions in countries with strong HDI levels. Alternative factors such as institutional quality, life expectancy, telephone usage and school enrolments also have a positive influence on the cross-border acquisition decision. Further, we find a positive relationship between cross-border mergers and acquisitions (M&As) and HDI rankings relative to the United States. Our findings contribute to the literature that seeks to explain why so little capital flows from developed to developing economies.     

The New Europe

British people are right in wanting a 'wait and see' approach to the euro.
It carries potential dangers of increasing federalism. With the future path of the EU so unclear, Britain should be confident in her ability to adopt a cautious approach and, if necessary, to opt-out of the euro without jeopardising either her EU membership or international standing.     

International Trade and the Accumulation of Human Capital

Changes in the terms of trade affect both the incentives and the ability of individuals to purchase education in a credit-constrained economy. A model is developed that shows how individual decision-making is affected in a small economy when it opens up to trade. Empirical results indicate that credit constraints are an important factor influencing school enrollment rates, particularly in low income countries. As a result, countries with low human capital stocks tend to increase their accumulation of human capital with increased trade. The response in high income countries is more muted.     

When is the core equivalence theorem valid?

Summary An answer to the question of the title is provided. It is shown that under some conditions the core equivalence theorem holds true (if and) only if the price space is a vector lattice.Research of both authors was supported in part by a Chrysler Corporation grant to IUPUI.     

Is Trade Good for Your Health?*

We use a panel of 219 countries to examine the relationship between a country’s openness to international trade and several health outcomes and find that, in general, increased openness is associated with lower rates of infant mortality and higher life expectancies, especially in developing countries. We find evidence suggesting that some of the positive correlation between trade and health can be attributed to knowledge spillovers. In addition, openness is associated with sound economic policies which themselves are related to better health outcomes.     

Increasing Intellectual Bandwidth: Generating Value from Intellectual Capital with Information Technology

An organization's Intellectual Bandwidth (IB) is its capacity to transform External Domain Knowledge (EDK) into Intellectual Capital (IC), and to convert IC into Applied Knowledge (AK), from which a task team can create value. An organization's IB is an upper boundary on its ability to solve complex problems. To create value, members of an organization must search for knowledge, share it, and, bring it to bear on the issue at hand. The Intellectual Bandwidth of an organization must therefore be, to a certain extent, a function of the ability of its members to access data, information, and knowledge that is relevant in the context of the task at hand in order to understand the causes and consequences of their problem. They must reason about possible solutions and their potential consequences. Throughout the task they must communicate with other stakeholders and subject matter experts as they make a joint effort toward their goal. This paper develops a model of IB based on these and other concepts. It posits that IB is the product of a Hierarchy of Understanding and a Hierarchy of Collaboration. The paper suggests that the model may be useful for analyzing and deploying IT in ways that reduce the cognitive load of bringing EDK and IC to bear on the task at hand. Future research must focus on refining and validating constructs and developing measures of IB, and using those measures to find ways to increase the value derived from EDK and IC.     

Management development as a capital investment

Systematic management development efforts represent investments that will be returned over a period of time in the form of increased productivity for the organization. This article looks at the several ways in which an organization can maximize its return on investment in human resources.