Phasing Out an Inefficient Venture Capital Tax Credit

In 2005, the Government of Ontario, Canada, announced the phase out of the Labour Sponsored Venture Capital Corporation (LSVCC) tax credit, which will become effective in 2011. Some media attention has suggested this might lead to difficulty for Ontario entrepreneurs and emerging firms in raising capital. This study presents evidence from Ontario innovative healthcare firms that capital raising concerns are not related to the phasing out of the LSVCC tax credit, and this evidence is consistent with evidence of extreme underperformance of LSVCCs. However, amongst firms currently funded by LSVCCs, there is significant concern about the phase out of the tax credit, which is at least in part attributable to the terms within LSVCC shareholder agreements. Policymakers should account for firms currently funded by LSVCCs to efficiently facilitate the phase out of the tax credit.     

Office Building Capitalization Rates: The Case of Downtown Chicago

This paper is an empirical study of the capitalization rates for 132 office building sales in downtown Chicago from 1996 to 2007. The capitalization rate is hypothesized to be a function of the classic capital asset pricing model variable and variables intended to capture the expectation that the real market value of the building will change. The results show that the capitalization rate for office buildings incorporates a very low value for “beta.” A lower capitalization rate was associated with a smaller risk-free rate, a lower borrowing rate, class A buildings, newer buildings, buildings that had been renovated, a reduction in the vacancy rate in the downtown Chicago office market, and an increase in employment in the financial sector of the metropolitan area.     

Exchange trading rules and stock market liquidity

We examine stock exchange trading rules for market manipulation, insider trading, and broker–agency conflict, across countries and over time, in 42 stock exchanges around the world. Some stock exchanges have extremely detailed rules that explicitly prohibit specific manipulative practices, but others use less precise and broadly framed rules. We create new indices for market manipulation, insider trading, and broker–agency conflict based on the specific provisions in the trading rules of each stock exchange. We show that differences in exchange trading rules, over time and across markets, significantly affect liquidity.     

A RARITY SHOW OF MODERNITY: Sweden in the 1920s

This paper redresses a gap in the study of travel literature. It explores a geographical area—Sweden—that has received little scholarly attention, particularly during the period that the paper focuses on; the interwar years. The paper uses ideas of dirt and cleanliness to examine tourist constructions of difference between themselves and other people, as well as to conceptualize modernity. Cleanliness and dirt are themes that have been much discussed in contexts of colonial discourse, but their meanings and functions in a non-colonial setting have not been adequately explored. This paper argues that tourist perceptions of cleanliness and dirt can be used to mediate modernity, race, and the authenticity of cultural experiences.     

Distributional Effects of Lower Food Prices in a Rich Country

Controlling for differences in taxes and transportation costs, the Nordic Competition Authorities claims, in a report from 2005, that food prices are 11% higher in Sweden compared to the EU-15 countries. One explanation for this put forward in the report is the limited competition on this market which suggests there to be a potential for lower food prices. This paper focuses on distributional effects of a price decrease on food. Based on a simple model of household utility, the households demand for food is derived and estimated. Price and income elasticities for different income groups are then calculated based on these parameter estimates. Our results suggest that food is a normal good with an average income elasticity of approximately 0.18 and a price elasticity of 0.45. In addition, and of importance from a policy perspective, the results indicate the income elasticity to differ across income groups while price elasticities are constant.     

Provincial preferences in private equity

This paper identifies a strong tendency for Canadian private equity investors to finance entrepreneurs that reside in the same province. For all types of investors and entrepreneurial firms, in terms of the number of investments (13,729 transactions), 84.42% of investments were intra-provincial. In terms of the total value of these transactions ($20,193,896,909 in 1997 dollars), 61.15% of the investment value was intra-provincial. We provide evidence that both agency costs and information asymmetries systematically give rise to differences in the frequency of inter- versus intra-provincial investments, and compare the importance of agency versus institutional factors leading to home bias.      

Institutional Investors,Political Connections,and the Incidence of Regulatory Enforcement Against Corporate Fraud

We investigate two under-explored factors in mitigating the risk of corporate fraud and regulatory enforcement against fraud, namely institutional investors and political connections. The role of institutional investors in the effective monitoring of a firm’s management is well established in the literature. We further observe that firms that have a large proportion of their shares held by institutional investors have a lower incidence of enforcement actions against corporate fraud. The importance of political connections for enterprises, whether in a developed market such as the United States or an emerging market such as China, has been established by previous studies. However, we find evidence of another positive effect of political connections: they may reduce the incidence of enforcement action against corporate fraud. We also find that political connections play a more significant role in reducing regulatory enforcement incidents against non-state-owned enterprises and firms in weaker legal environments, whereas institutional ownership plays a more important role in reducing regulatory enforcement incidents against state-owned enterprises.