A theory of operational cash holding,endogenous financial constraints,and credit rationing

This paper develops a theory of operational cash holding. Liquidity shocks due to delayed payments must be financed using cash or short-term debt. Debt holders provide an irrevocable credit line given a firm's expected insolvency risk, and equity holders select optimum cash holding. The model demonstrates the trade-off between cash holding and investing in fixed assets. Introducing uncertain cash flows leads to precautionary cash holding if debt holders impose financial constraints. Precautionary cash holding, in turn, reduces insolvency risk enhancing access to short-term finance. The theory shows that credit rationing can occur in the absence of market frictions. Using U.S. data from 1998 to 2012, empirical findings suggest that the decline in credit lines has contributed to the increase in cash holding in line with theoretical predictions.     

Macroeconomic forecasting in Austria an agnostic viewpoint

Zusammenfassung In der vorliegenden Arbeit wird ein relativ einfaches Prognoseverfahren, nämlich Holt-Winters Exponential Smoothing, zur Vorhersage wichtiger makroökonomischer Größen, wie des Brutto-Inlandsproduktes und seiner Verwendungskomponenten, der Verbraucherpreise und der Arbeitslosenrate herangezogen. Es zeigt sich dabei, daß diese Technik —mit Ausnahme der Investitions- und Verbraucherpreisprognose — Vorhersagen liefert, die denen des WIFO mindestens gleichwertig sind.

---

---

Helpful comments of Johannes Ledolter, Kurt Rothschild, Fritz Schebeck, Erich Streißler and Gunther Tichy are gratefully acknowledged.     

On the Multi-Country Version of the Solow–Swan Model

I study a multi-country version of the Solow–Swan model of capital accumulation. Capital is perfectly mobile and flows instantaneously to countries providing the highest return. I show that, in general, the model possesses infinitely many stationary equilibria that differ from each other in terms of the world interest rate and world output. Analysing the dynamics of the model, I find that multiple equilibria exist for any given initial allocation of capital. Finally, I discuss a generalization of the golden rule to the multi-country version of the Solow–Swan model and show that it satisfies a Nash equilibrium property.
JEL Classification Numbers: F20, O41     

Der Relaunch des Journals für Betriebswirtschaft

Ohne Zusammenfassung     

Book Review: A German treatment of Business ethics

Karl Homann & Franz Blome-Drees (1992). Wirtschafts- und Unternehmensethik . Vandenhoeck & Ruprecht. Göttingen. pp. 207. paperback, 19.80 DM. ISBN 3-8252-1721-3     

Sold Below Value? Why Takeover Offers Can Have Negative Premiums

Many studies have acknowledged the existence of negative offer premiums where the initial bid undercuts the target's preannouncement market price. However, this phenomenon has not been explained. Negative premiums occur frequently and are no measurement error. We demonstrate theoretically and empirically that “hidden earnouts,” where target shareholders participate in the bidder's share of joint synergies, and corrections of overvaluation explain negative premiums. We find that target shareholders profit from the consummation of a takeover even if the announced offer has a negative premium. Our theory generalizes to low positive premiums with predictive power for the bottom 25% of all premiums.     

Organisational design implications of global sourcing: A multiple case study analysis on the application of control mechanisms

Global sourcing has become an intended practice for many multinational corporations. Organisational design implications of global sourcing are rarely considered although they are one of the main facets of a global sourcing strategy. By elaborating on the information processing perspective of contingency theory, we derive explanations for the application of different control mechanisms in the global sourcing context. Our findings from case studies at eight multinational companies suggest that variations in control mechanisms can be explained by two contingencies: (1) corporate organisational structure and (2) the distribution of purchasing expertise among subsidiaries. Based on these case study findings, we formulate ten propositions for future research.