Research and development expenditure in regulated and unregulated markets

This paper examines research and development (R and D) expenditure by firms supplying a product to both a regulated and an unregulated market. An expression for the profit-maximizing R and D expenditure of firms operating in a dualistic market is derived from theory. This relationship is empirically tested with data from the South African pharmaceutical industry, which did not disprove the theory. The study finds the retention of the unregulated market for pharmaceuticals to be essential to provide R and D funds for the pharmaceutical industry.     

Is Inflation Always and Everywhere a Monetary Phenomenon?*

Using a sample of about 160 countries over the last 30 years, we test for the quantity theory relationship between money and inflation. When analysing the full sample of countries, we find a strong positive relation between long‐run inflation and the money growth rate. The relation is not proportional, however. The strong link between inflation and money growth is almost wholly due to the presence of high‐(or hyper‐) inflation countries in the sample. The relationship between inflation and money growth for low‐inflation countries (on average less than 10% per annum over the last 30 years) is weak.     

The contribution of manufacturing to shortening design cycle times

Shortening design cycle times, without increasing design costs or sacrificing quality has become an important management goal. In this paper, we will provide a short overview of the literature on shortening design cycle times. Building on this, we want to establish how manufacturing and the manufacturing/R&D interface can contribute to shorter development cycle times. The European Manufacturing Futures database will be used to test some of the literature findings on a sample of large European Manufacturers.     

Breaking up the collective farms

The de‐collectivization of Vietnamese agriculture was a crucial step in the country's transition to a market economy. The assignment of land‐use rights had to be decentralized and local cadres ostensibly had the power to capture this process. We assess the realized land allocation against explicit counter‐factuals. Depending on the region, we find that 95–99 percent of maximum aggregate consumption was realized by a land allocation that generated lower inequality overall, with the poorest absolutely better off. We attribute this outcome to initial conditions at the time of reform and actions by the centre to curtail the power of local elites.     

The sequencing of reform policies in China's agricultural transition*

This paper provides evidence regarding gains due to agricultural market liberalization in China. We empirically identify the different effects that incentive and farm restructuring reforms and gradual market liberalization have on China's agricultural economy during its transition period. We find that average gains within the agricultural sector due to reforms that improved incentives and increased decision‐making authority of producers exceed gains due to market liberalization by a large margin. Our method of analyzing the effects of transition policies on economic performance can be generalized to other reform paths in other transition economies.     

To Be or Not Be …'Too Late': The Case of the Belgian Semi-annual Earnings Announcements

In this study, we demonstrate that the average reporting lag of Belgian interim reports is large but has decreased slightly over the years 1991–1998. Contrary to US findings, we show that the disclosure of interim reports containing bad (good) news is not systematically delayed (speeded up). Interim reports are value relevant since good (bad) news, according to a naïve earnings expectations model, induces positive (negative) abnormal returns. The 'short term' timeliness of the information disclosure, however, seems not to matter at all.     

Legal Liabilities, Audit Accuracy and the Market for Audit Services

In quality-differentiated audit markets with client-firms of unknown types, insider-managers of client firms strategically select auditors who respond to legal liabilities to decide their care level. In this signaling game, uninformed-investors use the audit report and the auditors' identity for firm valuation. The analysis shows that increased legal liability increases the auditor's effort and audit accuracy but reduces the demand for high quality auditing because, apart from the increased audit costs, the adverse selection benefit of the worse type reduces with increased accuracy. Furthermore, alternative legal regimes and damage allocation rules alter informational efficiency of the financial market.     

Imoannatori and business angels: two models of informal capital provision

This article compares the role and objectives of informal capital provision in a trust‐based context (such as in industrial districts) and in a market‐based context. An example of the former is given by the activities of impannatori in the Prato (Florence, Tuscany) textile district, while the latter is associated with the activities of business angels. Impannatori are ‘pure entrepreneurs’ acting as final firms; they have two main functions: liaising with the final market and coordinating subcontracting activities. Another typical function of impannatori is to provide informal finance to subcontractors. Pure entrepreneurs, like impannatori in Prato, are typical of industrial districts in general. The article compares impannatori with business angels as both act as informal capital providers to small firms and start‐ups, often replacing and offering finance in parallel to the banking system. Despite the large number of studies on Italian industrial districts, informal capital provision within them has often been neglected. The novelty of the article is therefore to explore the role of impannatori as providers of informal credit to subcontractors for the functioning and the success of the textile district in Prato. It will be argued that a trust‐based context enables credit providers to reduce transaction costs and information asymmetry, therefore reducing the risk associated with informal lending. To do this we compare the impannatori model with business angels, highlighting differences and similarities. In order to assess the importance of impannatori within Prato we draw on ecological theories of organizations and investigate the co‐evolution of impannatori and subcontractors' populations. The empirical evidence we provide is consistent with the hypothesis that the two populations have evolved in symbiosis and that the informal credit provided by impannatori has been crucial for the economic development of Prato. Cet article compare le rôle et les objectifs d'une mise à disposition informelle de capitaux basée sur la confiance (comme dans les districts industriels) et sur le marché. Le premier cas est illustré par les activités des impannatori dans le secteur textile de Prato (près de Florence, Toscane), et le second est associé aux activités des business angels, investisseurs individuels fortunés. Les impannatori sont de véritables chefs d'entreprises du marché; leurs deux fonctions principales sont le lien avec le marché final et la coordination des activités de sous‐traitance. Un autre de leur rôle consiste à financer les sous‐traitants de manière informelle. Les vrais chefs d'entreprise, tels les impannatori de Prato, sont caractéristiques des districts industriels en général. L'article les compare aux business angels, car tous sont des fournisseurs de capitaux non‐institutionnels auprès de petites entreprises et start‐ups, remplaçant souvent le système bancaire ou offrant un financement parallèle. Malgré les multiples études sur les districts industriels italiens, la mise à disposition informelle de capitaux qui y existe a souvent été négligée. L'originalité de l'article est donc d'explorer le rôle des impannatori en tant que fournisseurs de crédit non‐institutionnels auprès des sous‐traitants en vue du fonctionnement et du succès du secteur textile de Prato. Un contexte de confiance permet aux fournisseurs de crédit de réduire le coût des transactions et l'asymétrie de l'information, limitant ainsi le risque associé au prêt informel. C'est pourquoi l'article compare le modèle des impannatori aux business angels, soulignant différences et similitudes. Afin d'évaluer la place des premiers à Prato, il s'inspire des théories écologiques des organisations et examine l'évolution conjointe des impannatori et des sous‐traitants. L'indice empirique ainsi obtenu corrobore l'hypothèse que les deux populations ont évolué en symbiose et que le crédit informel procuré par les impannatori a été essentiel à l'essor économique de Prato.