Is Africa integrating? Evidence from product markets

This paper presents a price-based assessment of product market integration in Africa using disaggregated retail prices for 91 products and 12 African cities from 1991 to 2008. We find evidence of substantial deviations from the law of one price ? product price differences between the cities averaged 76% over the period – a result that is consistent with the presence of large barriers to trade in the continent. Mean price differences across cities fell by close to a quarter over the period, but the decline was concentrated in the early 1990s with little progress subsequently, despite the regional trade policies implemented by the countries. Gravity-style estimates reveal that reductions in external tariffs and global trends towards price convergence in the early 1990s are the key contributors to the trend in price integration amongst the African cities.     

Japanese buyers attitudes toward U.S. supply sources

This paper reports the findings of a mail survey of Japanese industrial buyers. Attitudes toward U.S. companies as supply sources were measured. Generally, Japanese buyers hold favorable attitudes but feel that U.S. firms do not practice the marketing concept in their international marketing efforts.     

Fallacies in the Stakeholding Debate

This paper reviews the logic underlying the fashionable stakeholding literature and finds it at variance with received economic theory. It concludes that many stakeholding views are flawed, particularly in regard to the rôle of profit which is seen as a constraint rather than an objective.     

How important is improving food availability for reducing child malnutrition in developing countries?

Do increases in the food supply per person in a country, i.e., national food availability, contribute substantially to reductions in malnutrition among its children? This paper sets out to answer this controversial question using panel data from 63 developing countries over 1970–1996. This paper gives evidence in support of a statistically significant and strong positive impact of national food availability on child nutrition, finding that increased food supplies have resulted in significant reductions in malnutrition since the 1970s despite population increases over the period. However, per‐capita food supplies have a declining marginal impact: their effect is quite strong for countries with very low food availability (e.g., most countries in sub‐Saharan Africa and South Asia), but weak or non‐existent for those with high levels (e.g., most countries in the Near East and North Africa). Further, non‐food factors, such as women's education and status and the quality of health environments, are also important determinants of children's nutritional status. Depending on the state of food availability in any particular geographic area and relative costs, these factors may merit greater priority in policies to reduce malnutrition.     

Political corruption shielding and corporate acquisitions

Corruption includes rent‐seeking behavior by public officials (e.g., lavish in‐kind benefits and monetary kickbacks for contracts/permits/regulatory leniency, improper political contributions/support, etc.) that can negatively affect firm valuations, performances, and strategic choices. Shielding strategies are used to diminish rent‐seeking attractiveness of firms. Acquisitions provide a better channel than cash or leverage for assessing the wealth effects of shielding strategies. We find that the mean 3‐day announcement returns for acquirers for a large sample of U.S. domestic acquisitions between 1990 and 2014 is significantly lower for firms headquartered in relatively higher corruption states. Our results survive an array of robustness tests.     

High‐Frequency Trading and the New Stock Market: Sense And Nonsense

The stock market has been transformed during the last 25 years. Human suppliers of liquidity like the NASDAQ dealers and NYSE specialists have been replaced by algorithmic market making; stocks that once traded on a single venue now trade across twelve exchanges and a multitude of alternative trading systems. New venues like dark pools, and new participants like high‐frequency traders, have emerged to take on prominent roles. This new market has had more than its share of controversy and regulatory scrutiny, particularly in the wake of Michael Lewis’s bestseller Flash Boys. In this article, the authors analyze five of the most controversial new market practices, including various high‐frequency trading strategies and dark pool activities. They set out a simple conceptual framework based on adverse selection and agency problems, and apply that framework to assess the welfare effects of each of the five practices. While much that is criticized is indeed objectionable, other controversial practices are much more complex than popularly imagined and may in fact be socially desirable. They conclude by evaluating a range of potential reforms to equity market structure.     

Déjà Vu All Over Again: The Causes of U.S. Commercial Bank Failures This Time Around

In this study, we analyze why commercial banks failed during the recent financial crisis. We find that traditional proxies for the CAMELS components, as well as measures of commercial real estate investments, do an excellent job in explaining the failures of banks that were closed during 2009, just as they did in the previous banking crisis of 1985–1992. Surprisingly, we do not find that residential mortgage-backed securities played a significant role in determining which banks failed and which banks survived. Our results offer support for the CAMELS approach to judging the safety and soundness of commercial banks, but call, into serious question the current system of regulatory risk weights and concentration limits on commercial real estate loans.     

The Impact of Past Syndicate Alliances on the Consolidation of Financial Institutions

The impact of past syndicate alliances on the consolidation of financial institutions is examined. The odds of two lenders combining increases with the intensity and exclusivity of their prior syndicated loan alliances. The impact is higher for international mergers and acquisitions (M&As) and for prior syndicate co-relationships where the acquirer and target were participant and lead, respectively. The odds of a particular lender being a target decreases as its return on equity (ROE) and earnings/price (E/P) ratios increase and as its size and growth opportunities decrease. The intensity and exclusivity of the syndicated loan alliances leading up to M&A announcements are significantly higher for non-US versus US M&As. The significantly lower short- and long-term performances for both acquirers and targets with prior syndicate co-involvements disappear in the presence of control variables that account for the less frequent use of cash payments, the greater incidence of divestitures, and the higher percentage of shares acquired through their M&As. Acquirers with versus those without past syndicate target co-involvements exhibit greater outperformance for control-firm benchmarked ROEs and lower underperformance for control-firm and prior-to-M&A benchmarked ROEs.