Growth Capital‐Backed IPOs

Growth capital investing is the financing of growing businesses that are investing in tangible assets and the acquisition of other companies. Growth capital is common in retailing, restaurant chains, and health care management, and represents 12% of all venture capital (VC)‐backed initial public offerings (IPOs). Since 1980, investing in growth capital‐backed IPOs has produced mean three‐year style‐adjusted buy‐and‐hold returns of +25.2%, in contrast to style‐adjusted returns of approximately zero for other VC‐backed and buyout‐backed IPOs. One‐third of growth capital‐backed IPOs are rollups and these have produced much higher returns for investors than rollups without a financial sponsor.     

Does the Interactive Use of Headquarter Performance Measurement Systems in Foreign Subsidiaries Endanger the Potential to Profit from Local Relationships?

Managing distant subsidiaries is a challenge for headquarters of multinational companies. Performance measurement systems (PMS) can assist in this task. Taking a business network perspective, we study the moderating effect of the interactive use of PMS implemented by headquarters at subsidiaries on the relationship between subsidiary embeddedness and subsidiary performance. We test our hypotheses using survey data from 110 subsidiary managers in China. The results suggest that the multinational network surrounding the subsidiary affects overall headquarter control possibilities. Specifically, while interactive use may be helpful in situations of low local embeddedness of the subsidiary, it seems to have negative side effects on the subsidiaries’ ability to benefit from high local embeddedness.     

Lessons Learned: 50 Years of Information Technology in the Banking Industry – The Example of Deutsche Bank AG

Based on the lessons learned from the last 50 years, statements are derived of which the authors claim that these will continue to be valid in future: Information technology in the banking industry supports business processes – selecting and designing processes will continue to decide about economic success in future. The necessity of handling a growing business volume will still be the major driver for using new information technology in the banking industry. It will be even more important than the aim of reducing costs by automation. Industrialization of IT will also change the use of technology in the banking industry. Hence, banks do not necessarily have to run their systems alone but may outsource services if required. The definition of the major business fields will significantly influence the banks’ IT strategy and, among other factors, will decide on the market success of a bank. Technological development will have an increasing effect on the banking business, will change it, and enable new business models. Successfully dealing with technology-induced changes predominantly depends on a company’s employees.

Gifted kids or pushy parents? Foreign direct investment and plant productivity in Indonesia

This paper analyzes the causal relationship between foreign ownership and various aspects of plant performance using micro data from the Indonesian Census of Manufacturing. It examines the implications of foreign ownership in two different contexts: foreign acquisitions and foreign privatizations. To control for the possible endogeneity of FDI decision propensity score matching is combined with a difference-in-differences approach. The results indicate that foreign ownership leads to significant productivity improvements in the acquired plants. The improvements become visible in the acquisition year and continue in subsequent periods. After three years, the acquired plants exhibit a 13.5% higher productivity than the control group. The rise in productivity is a result of restructuring, as acquired plants increase investment outlays, employment and wages. Foreign ownership also appears to enhance the integration of plants into the global economy through increased exports and imports. Finally, productivity improvements and evidence of restructuring are also found in the context of foreign privatizations.     

How does(n't) Urban Shrinkage get onto the Agenda? Experiences from Leipzig,Liverpool, Genoa and Bytom

This article discusses the question of how urban shrinkage gets onto the agenda of public‐policy agencies. It is based on a comparison of the agenda‐setting histories of four European cities, Liverpool (UK), Leipzig (Germany), Genoa (Italy) and Bytom (Poland), which have all experienced severe population losses but show very different histories with respect to how local governments reacted to them. We use the political‐science concepts of ‘systemic vs. institutional agendas’ and ‘policy windows’ as a conceptual frame to compare these experiences. The article demonstrates that shrinkage is hardly ever responded to in a comprehensive manner but rather that policies are only implemented in a piecemeal way in selected fields. Moreover, it is argued that variations in institutional contexts and political dynamics lead to considerable differences with regard to the chances of making shrinkage a matter of public intervention. Against this background, the article takes issue with the idea that urban shrinkage only needs to be ‘accepted’ by policymakers who would need to overcome their growth‐oriented cultural perceptions, as has been suggested in a number of recent writings, and calls for a more differentiated, context‐sensitive view.     

Cancelling out early age gender differences in competition: an analysis of policy interventions

We study the willingness to compete of 588 children and teenagers aged ten to seventeen. We replicate the gender difference in tournament entry choices usually found in the literature for adults. We then show that policy interventions like quotas and preferential treatment help to close down the gender gap without leading to losses in efficiency, during or after a tournament. Given that differences in competitive behavior are prevalent from an early age, the application of interventions to promote females in competitions may be desirable already at early ages to promote equal chances for women on labor markets later on.     

Decentralized credit and monetary exchange without public record keeping

Summary. We relax a standard assumption on the matching technology in a search model of money. In particular, agents may remain in a long-term partnership as long as it is in their self-interest. With this simple modification, it is possible to support self-enforcing, intertemporal trade which resembles credit without a public record keeping device. We examine conditions for co-existence of currency and credit and the welfare gains/losses associated with the introduction of money.Received: 20 April 2003, Revised: 10 July 2003JEL Classification Numbers: E0.An earlier version of this paper was entitled Money and Search with Enduring Relationships. We wish to thank Narayana Kocherlakota, Rachel Kranton, Jeff Lacker, Andrei Shevchenko, Shouyong Shi, Ted Temzelides, Chris Waller, and especially David Andofolatto, Gabriele Camera, Drew Saunders, and Randy Wright for helpful comments on that earlier draft, as well as seminar participants at the University of Pennsylvania, Purdue University, American Economic Association Meetings, Summer Econometric Society Meetings, and NBER Summer Workshop. Corbae wishes to thank the Research Department at the Federal Reserve Bank of St. Louis for research support.Correspondence to: D. Corbae     

Budgeting in Times of Economic Crisis

This article examines how corporate reliance on budgets is affected by major changes in the economic environment. We combine survey and archival data from the economic crisis that began in 2008. The results indicate that budgeting became more important for planning and resource allocation but less important for performance evaluation in companies affected more strongly by the 2008 economic crisis. Additional evidence from interviews and data gathered in a focus group further illustrate these results and show the changes organizations have introduced to respond to the economic crisis. Taken together, and contrary to more general conclusions from the literature such as an overall increase or decrease in the importance of budgeting, we find that companies emphasize certain budgeting functions over others during economic crises.     

Local underwriter oligopolies and IPO underpricing

We develop a theory of initial public offering (IPO) underpricing based on differentiated underwriting services and localized competition. Even though a large number of investment banks compete for IPOs, if issuers care about non-price dimensions of underwriting, then the industry structure is best characterized as a series of local oligopolies. We test our model implications on all-star analyst coverage, industry expertise, and other non-price dimensions. Furthermore, we posit that venture capitalists (VCs) are especially focused on all-star analyst coverage, and develop the analyst lust theory of the underpricing of VC-backed IPOs. Consistent with this theory, we find that VC-backed IPOs are much more underpriced when they have coverage from an all-star analyst.