The impact of political connections on government bailout: the 2008 credit crunch in the United States

Why is there so little money in contributions to political action committees (PAC) in United States’ politics? While there may be several explanations for this puzzle, we consider corporate PAC contributions as an insurance-like instrument that induces firms’ expectations of safeguard at times of grave need, with the 2008 credit crunch as a case in point. Given the unlikely occurrence of a credit crunch, few financial firms invest in PAC contributions. However, we find firms that make PAC contributions may gain ex ante benefits of corporate PACs as protection from financial distress by undertaking profitable but risky projects that later become illiquid assets while requiring the bailout money during the 2008 credit crunch. We also find that both consistent PAC investments over election cycles and subsequent lobbying activity to corporate PACs further allow firms to utilize their political ties as safeguard and demand additional bailout money. Our instrumental variable analysis confirms that firms with prior experience in political investments are found to enhance the likelihood and effectiveness of PAC contributions and related political investments.     

BANK LOAN SALES: A NEW LOOK AT THE MOTIVATIONS FOR SECONDARY MARKET ACTIVITY

Bank lending traditionally involves the extension of credit that is held by the originating bank until maturity. Loan sales allow banks to deviate from this pattern by transferring loans in part or in their entirety from their own books to those of another institution. I use a new methodology to test the validity of two hypotheses regarding banks' motivations for selling and buying loans: (1) the comparative advantage hypothesis, that banks with a comparative advantage in originating loans sell and those with a comparative advantage in funding loans buy; and (2) the diversification hypothesis, that banks lacking the ability to diversify internally use loan sales and purchases to achieve diversification. I also address the possibility that information asymmetries may increase the cost of participating in secondary markets. Particular attention is paid to the importance of affiliate relationships in overcoming informational barriers to participation. The empirical evidence presented here helps clarify the benefits of an active secondary loan market and generates predictions regarding the future of that market in a world of rapid consolidation and disappearing barriers to geographical expansion.     

HOW TO OVERCOME SHAREHOLDER APATHY IN CORPORATE GOVERNANCE – THE ROLE OF INVESTOR ASSOCIATIONS IN GERMANY

ABSTRACT: Investor apathy by private retail investors and highly diversified institutional investors is often blamed for poor managerial accountability and control of majority investors. Attempts to encourage shareholder activism tend to focus on large institutional investors and ignore retail investors. However, in Germany associations of private retail investors play an increasingly important role in organizing collective shareholder action and defining minority shareholder interests. The German example highlights a possible alternative to the US and UK model of shareholder activism, which is dominated by institutional investors.     

Application of EMSs in a hotel context: A case study

In the last decade, hotel companies have become increasingly interested in the application of environmental management systems (EMSs). However, research on the effectiveness of EMSs in the hotel industry has been sparse. This study aims to address this research gap by exploring and evaluating the application of EMSs in a hotel context. Various approaches to EMSs are identified in the literature on environmental management and EMSs, including six core EMS elements specific to the hotel industry context. To develop a rich and deep understanding of the application of EMSs in the hotel industry, a qualitative case study was conducted in which data were collected from three levels of employees, executive, supervisory and general, from an international hotel. A series of in-depth, semi-structured interviews were conducted and relevant documents were collected for analysis. Four influential factors were identified in the formation stage of the hotel's EMS: (1) Corporate governance, (2) Piloting activities, (3) Initial gap analysis and (4) Partnership with external consultancy. It was also found that the six elements identified in the environmental management literature play important roles in the implementation of EMS in this case. In addition, although EMSs can help promote a bottom-up approach to change, a top-down approach to implementing EMSs was more suitable for a hotel with a predominantly Chinese workforce, due to cultural issues. This study identified a number of factors specifically related to EMSs to complement mainstream environmental management research.     

Canadian trade unionism and wage parity for women: Putting the principle into practice

This article examines the conceptual impact of equal pay legislation on Canadian trade unionism. Ambiguous, largely voluntary, legislation poses major challenges to unions negotiating wage parity for their members. Furthermore, the movement finds itself caught between conflicting responsibilities as champion of the underpaid and protector of traditional interests. The authors examine this challenge within the context of the historic development, and fundamental principles of trade unionism. They conclude that many of the conflicts discussed arise directly from established union practices and must, therefore, be resolved by the movement and other affected parties together.