Long-term debt and overinvestment agency problem

We investigate the role of long-term debt in influencing overinvestments by analyzing the pattern of abnormal investments around a new debt offering by unlevered firms. Before being levered when the disciplining role of debt is missing, firms retain excessive amounts of cash. The introduction of debt leads to a dramatic decline in cash ratios and the relation is stronger for firms classified as having poor investment opportunities. For the sub-sample of firms that overinvest in real assets, issuing debt leads to a reduction in abnormal capital expenditures. The decline in overinvestments is explained by debt service obligations that reduce discretionary funds under managerial control. Further, the reduction in overinvestments has a positive impact on equity value. These conclusions hold in other settings where there is a dramatic change in firms’ capital structures providing strong support for the hypothesis that debt reduces overinvestments.     

Issues in the Design and Reform of Commodity Taxes: Analytical Results and Empirical Evidence

The motivation of this paper is two fold: (a) review the literature on design and reform of commodity taxes, (b) describe attempts at extending the traditional framework. The paper states the principal results in optimal commodity taxation with attention paid to assumptions made in their derivation. Empirical evidence on the structure of optimal commodity taxes is presented with special reference to the issue of uniformity versus selectivity, and the redistributive potential of commodity taxes. The paper, then, provides analytical and empirical evidence on the following extensions to the traditional framework: (i) presence of child subsidy and demographic effects on demand, (ii) fiscal federalism, (iii) tax evasion.     

Child Labor, Child Schooling, and Their Interaction with Adult Labor: Empirical Evidence for Peru and Pakistan

Using data from Peru and Pakistan, this article tests two hypotheses:there is a positive association between hours of child laborand poverty, and there is a negative association between childschooling and poverty. Both of these hypotheses are confirmedby the Pakistani data, but not by the Peruvian data. The reductionin poverty rates due to income from children's labor is greaterin Pakistan than in Peru. The nature of interaction betweenadult and child labor markets varies with the gender of thechild and the adult. In Peru rising men's wages significantlyreduce the labor hours of girls, whereas in Pakistan there isa strong complementarity between women's and girls' labor markets.Both data sets agree on the positive role that increasing adulteducation can play in improving child welfare.     

Generalised cost scaling: A new approach to demographic variables in demand analysis

A new approach to modelling equivalence scales and household demand systems is introduced and its usefulness empirically demonstrated. The empirical results suggest that price effects on the general equivalence scale are more important than utility effect.     

Extending Business Education Beyond Traditional Boundaries: A Case Study in Negotiated Problem Resolution in a Remote Regional Indigenous Community in Australia

It is widely accepted that the concepts and practices of management can only be of benefit when they are anchored to the contextual architecture of people, processes, structures, and technologies. The challenge of establishing a bridging program for providing managerial competencies to Australian Indigenous people has become a serious one for multinational mining companies. As the wings of globalization interact with the long-ignored reality of marginalized local milieu, a need for an innovative management education system has become a major imperative compelling multinational mining companies to work collaboratively with the government, educational institutions, and Indigenous communities. The article outlines a specific decision-making dilemma in an Indigenous context, while explaining the imperatives for educators, who have the challenging task of instructing potential graduates how to manage the unique contextuality of rural Australian Aboriginal communities. The article presents implications for large-scale modern multinationals as they move to geographically remote regions of the world where large number of marginalized local people need to be drawn into the workforce not only as an act of a social responsibility imperative, but also as sound business pragmatism.     

The Determinants of Child Labour and Child Schooling in Ghana

This paper investigates the main determinants of child labourand child schooling in Ghana, with special reference to theirinteraction. The study provides evidence on the impact of povertyand quality of schooling on child labour hours, taking intoaccount their potential endogeneity. The exercise distinguishesbetween cluster poverty and household poverty in the two-stageHeckman estimation procedure. In addition, it relies on a setof non-common regressors to identify the child labour hoursregression from the selection equation. Other methodologicalfeatures include simultaneous equations estimation of childlabour, child schooling and poverty, taking into account theirjoint endogeneity. The empirical results contain some evidenceof sharp rural urban differences, thus, pointing to the needto adopt region specific policies in enhancing child welfare.However, rural, semi-urban and urban Ghana agree on the effectiverole that improved school attendance can play in curbing childlabour.     

International Poverty Comparisons on Unit Record Data of Developing and Developed Countries

Cross country poverty comparisons on unit records have, rarely, involved both developing and developed countries. The present study attempts to fill this gap by comparing poverty across fourteen nations with diverse economic and demographic characteristics and at vastly different stages of economic development. The study contains evidence on (a) cross country variation in the equivalence scales estimated in the presence of both household size economies and adult/child relativities, (b) impact of demographic adjustment of the poverty line, that incorporate household size and composition changes, on the poverty rates, and (c) sensitivity of the poverty estimates and their rankings to the ‘equivalence elasticity’. The study finds that country rankings based on per capita GNP bear very little resemblance with that based on the aggregate poverty rates. The latter hide substantial variation in the poverty estimates across different household types.