Segment Disclosure and Cost of Capital

We investigate whether segment disclosure influences cost of capital. Improved segment reporting is expected to decrease cost of capital by reducing estimation risk. However, in a competitive environment segment disclosure may also generate uncertainties about future prospects and lead to a larger cost of capital. Asset‐pricing tests confirm that segment disclosure is a priced risk factor. Also, segment disclosure reduces ex‐ante estimates of cost of equity capital and other measures connected to risk. These results suggest a negative relation between segment disclosure and cost of capital. Our results also show that competition reduces, but does not eliminate, the previous relationship.     

Host country's governance and the size of foreign investors

We find that smaller foreign investors are more sensitive to the quality of host country's governance than larger investors. This may be the case as smaller foreign firms have less bargaining power and are more sensitive to uncertainty and risk.     

Income-Related Biases in International Trade: What Do Trademark Registration Data Tell Us?

Rich countries trade more among themselves than with poor economies due to a closer match of exporter supply structures and importer preferences. In the literature, the closeness of supply and demand has traditionally been determined by the quality of products—as expressed in the Linder hypothesis. This paper examines an extension of the hypothesis by considering the extent of brand differentiation as another determinant of the closeness of supply and demand. The analysis employs information on international trademark registrations to test whether richer countries import more from countries exporting products of higher quality and greater brand differentiation. The hypothesis is confirmed in most consumer goods sectors. JEL no. F 10, O 34     

Institutional barriers to firm entry and exit: Case-study evidence from the Brazilian textiles and electronics industries

What are the main barriers to firm entry and exit in developing countries and how do they differ from barriers to firm operation and growth? How important is the institutional and regulatory framework in this respect? This paper examines such questions using case-study evidence from the Brazilian textiles and electronics industries. We find that not only these institutional barriers are high in Brazil but also that they seem to have risen since the early 1990s, and that their effects vary across sectors. We also provide evidence from a survey we carried out in 2005 suggesting that institutions are more important as barriers to entry than as barriers to firm operation and growth.     

Tough Love: Do Czech Suppliers Learn from their Relationships with Multinationals?*

Countries strive to attract foreign direct investment hoping that knowledge brought by multinationals will spill over to domestic producers. While the literature has cast doubt on the existence of spillovers within industries, it has found evidence of spillovers from multinationals to the supplying sectors. However, the existing studies rely on industry‐level proxies rather than information on actual relationships between suppliers and multinationals. This study goes one step further by employing a unique dataset from the Czech Republic where such relationships can be identified. It finds evidence consistent with both high productivity firms having a higher probability of supplying multinationals as well as suppliers learning from their relationships with multinationals.     

The Effects of Depression on Leisure: Varying Relationships Between Enjoyment,Sociability, Participation,and Desired Outcomes in College Students

Depression leads to negative mood and affect, difficulty experiencing enjoyment in chosen activities (anhedonia), and a reduced desire for social interaction. This study compared 974 college students with different levels of depression (minimal, mild, and moderate to severe) relative to their desired outcomes for leisure, and their enjoyment of, participation and sociability in, different types of chosen leisure activities. Findings indicated consistency in their desired outcomes students, yet there were differences in how social they chose to be, the extent to which they partook, and how much enjoyment they perceived during their leisure participation. In addition, in several activities only a mild state of depression was sufficient to produce differences in leisure involvement. The results question whether depressed individuals experience “leisure” in the same manner as nondepressed individuals and whether elements of “leisure” experiences stressing enjoyment and sociability are applicable for individuals with differing levels of nonclinical depression.     

The Impact of FDI on CO2 Emissions in Latin America

This paper uses panel Granger causality tests to study the relationship between sector-specific foreign direct investment (FDI) and CO₂ emissions. Using a sample of 18 Latin American countries for the period 1980–2007, we find causality running from FDI in pollution-intensive industries (“the dirty sector”) to CO₂ emissions per capita. This result is robust to controlling for other factors associated with CO₂ emissions and using the ratio of CO₂ emissions to GDP. For other sectors, we find no robust evidence that FDI causes CO₂ emissions.