Competition and structural change in Eastern Europe

Widely publicized reform programs for East Europe which emphasize rapid privatization are questioned on the grounds that structural changes to assure workable competition take precedence and will take years. A mix of deconcentrated state, cooperative, worker-owned, private, and foreignowned business can be workable. Import competition and antitrust legislation have auxiliary roles.     

Development and the mystification of ‘cultural factors’: One destiny: Our common future in Africa,by A S van Niekerk

In One destiny: Our common future in Africa the author relates, in popular fashion, a series of incidents which convinced him that the basic difference between black and white in South Africa is cultural deep‐seated and the cause of underdevelopment and conflict He develops a circular argument in which world‐view is taken as the root of perceptions, values and activities. The effects of experience and economic and political factors are given secondary importance. This argument cannot accommodate social change and differentiation, and the author tends to concentrate on perceptions and events which he finds morally unacceptable. He gives an unbalanced assessment and an ethnocentric interpretation of African life. Possible reasons for this type of argument are explored and an alternative which takes its departure from the interaction between experience and perception is offered     

Stock Market Reactions to SFAS No. 96: Evidence from Early Bank Adopters

Statement of Financial Accounting Standards (SFAS) No. 96, “Accounting for Income Taxes,” issued by the Financial Accounting Standards Board (FASB) in December 1987 changed accounting for income tax recognition and accrual. The original deadline for implementation of SFAS No. 96 was December 15, 1988, and earlier adoption was encouraged. This study examines empirically the stock price impact of four pertinent announcement dates regarding SFAS No. 96 for 19 banks that adopted the statement in late 1987 and early 1988. Our results suggest that these early bank adopters have different characteristics from other banks that cause them to benefit from the changes in accounting for deferred taxes and explain their voluntary adoption of the standard.     

CAN INEFFICIENT TRADERS CREATE VALUE?

I examine the aggregate expected profit generated by informed traders of diverse ability in a competitive market. I assume that efficient traders get perfect information on asset values whereas inefficient traders get noisy information. In the presence of order size restrictions, I show that the aggregate expected profit generated by efficient and inefficient traders together can be higher than that generated by efficient traders alone. Thus, inefficient traders can create value in a constrained trading environment.     

Privatization in China's industry

This paper adopts property rights and organization theory perspectives to analyze the process of privatization of state enterprises and performance of newly created shareholding corporations in China. Relying on case study information, the paper concludes that although the shareholding corporations have contributed, to a certain extent, to better performance, their potentials have not been fully realized due to various economic environmental and ideological constraints.     

Cointegration Vector Estimation by Panel DOLS and Long‐run Money Demand*

We study the panel dynamic ordinary least square (DOLS) estimator of a homogeneous cointegration vector for a balanced panel of N individuals observed over T time periods. Allowable heterogeneity across individuals include individual‐specific time trends, individual‐specific fixed effects and time‐specific effects. The estimator is fully parametric, computationally convenient, and more precise than the single equation estimator. For fixed N as T→∞, the estimator converges to a function of Brownian motions and the Wald statistic for testing a set of s linear constraints has a limiting χ²(s) distribution. The estimator also has a Gaussian sequential limit distribution that is obtained first by letting T→∞ and then letting N→∞. In a series of Monte‐Carlo experiments, we find that the asymptotic distribution theory provides a reasonably close approximation to the exact finite sample distribution. We use panel DOLS to estimate coefficients of the long‐run money demand function from a panel of 19 countries with annual observations that span from 1957 to 1996. The estimated income elasticity is 1.08 (asymptotic s.e. = 0.26) and the estimated interest rate semi‐elasticity is ?0.02 (asymptotic s.e. = 0.01).     

Copyright Damages and Statistics

This paper discusses the statistical issues that arise in conducting an economic damages analysis in the context of a litigation matter involving copyrights. Calculating damages in copyright cases turns out to be a natural application for econometric modelling methods. Surprisingly, elementary statistical issues can be a source of significant debate between the experts in such matters. In this paper, we present a case study and illustrate how issues such as interpretation of p -values and what "rejection of the null hypothesis" really "means" in such matters.     

Initial Public Offerings: CFO Perceptions

We examine four issues pertaining to initial public offerings (IPOs) using a survey of 438 chief financial officers (CFOs). First, why do firms go public? Second, is CFO sentiment stationary across bear and bull markets? Third, what concerns CFOs about going public? Fourth, do CFO perceptions correlate with returns? Results support funding for growth and liquidity as the primary reasons for IPOs. CFO sentiment is generally stationary in pre‐ and post‐bubble years. Managers are concerned with the direct costs of going public, such as underwriting fees, as well as indirect costs. We find a negative relation between a focus on immediate growth and long‐term abnormal returns.     

Are differences in firm size transitory or permanent?

An Erratum for this article has been published in Journal of Applied Econometrics 18(2) 2003, 249 Previous empirical work on corporate growth rates using cross‐section or short‐panel econometric techniques suggests that growth rates are random but that some degree of mean reversion exists. This means that size differences between firms are transitory. Another, more natural way to explore the long‐run distribution of firm sizes is to examine data on the growth of particular firms over long periods of time. Using a sample of 147 UK firms observed continually for more than 30 years, our conclusions are that growth rates are highly variable over time and that differences in growth rates between firms do not persist for very long. Further, firms show no tendency to converge to either a common size or to a pattern of stable size differences over time. These results are compared and contrasted with standard approaches that suggest that firms reach and maintain stable positions in a skewed size distribution. Copyright © 2002 John Wiley & Sons, Ltd.