Player and Referee Roles Held Jointly: The Effect of State Ownership on China’s Regulatory Enforcement Against Fraud

Fair Trade companies have pulled off an astonishing tour de force. Despite their relatively small size and lack of resources, they have managed to achieve considerable commercial success and, in so doing, have put the fair trade issue firmly onto industry agendas. We analyse the critical role played by social capital in this success and demonstrate the importance of values as an exploitable competitive asset. Our research raises some uncomfortable questions about whether fair trade has ‘sold out’ to the mainstream and whether these companies have any independent future or whether their ultimate success lies in the impact they have had on day-to-day trading behaviour.     

The Deal Structuring Stage of the Venture Capitalist Decision‐Making Process: Exploring Confidence and Control*

This exploratory study examines the deal structuring stage of the venture capitalist decision‐making process. Here, the primary issues of concern are investor confidence and potential control of a venture in relation to the level of financing the investor provides and the structure with which the funding is delivered. Confidence comes in support of the entrepreneur, the venture itself, or a combination of the two, prior to capital transfer, but after the initial “invest or not invest” decision has already occurred. Findings support a multicriteria perspective of the pre‐investment decision‐making process and a distinct difference between entrepreneur confidence and venture confidence in the deal structuring stage.     

Location decision of heterogeneous multinational firms

We examine how multinational firms with heterogeneous total factor productivity (TFP) self-select into different host countries. Both aggregate- and firm-level estimates suggest that more productive French firms are more likely than their less efficient competitors to invest in relatively tough host countries. Countries with a smaller market potential, higher fixed costs of investment or lower import tariffs tend to have higher cutoff productivities and attract a greater proportion of productive multinationals. This self-selection mechanism remains largely robust when we control for unobserved firm and country heterogeneity and address potential TFP endogeneity.     

On the sources of private information in FX markets

We investigate the source of information advantage in inter-dealer FX trading using data on trades and counter-party identities. In liquid dollar exchange rates, information is concentrated among dealers that trade most frequently and specialize their activity in a particular rate. In cross-rates, traders that engage in triangular arbitrage are best informed. Better-informed traders are also located on larger trading floors. In cross-rates, the ability to forecast flows explains all of the advantage of the triangular arbitrageurs. In liquid dollar rates, specialist traders can forecast both order-flow and the component of exchange rate changes that is uncorrelated with flow.     

The Issue of Governance and the Role of the Regulator: Lessons from the California Deregulation Experiment

The deregulation of the California electricity industry began as a collaborative effort between the regulatory institutions, legislature, the regulated utilities and consumer stakeholders. However, the authorizing legislation failed to define the ongoing role and authority of the principal regulatory institution in the State—the Public Utilities Commission. As a consequence, roles and responsibilities were assumed largely by institutional initiative as opposed to a master plan with the result that competition for authority extended through State and Federal jurisdictions without formal resolution. Under the weight of an inverse relationship of wholesale to retail costs, the wholesale electricity market began to disintegrate. In response, the Federal Energy Regulatory Commission, the California Governor’s Office and the California Legislature began to exert or assert authority over operations and regulation of the market. The result was confusion, increased cost, limited response to extraordinary conditions and ultimately loss of regulatory control by the Public Utilities Commission. Options were available to forestall or avoid the eventual outcome but were not adopted or advocated in time. The lessons learned should help craft future deregulation efforts.     

The UK supermarket industry: an analysis of corporate social and financial performance

In a previous paper (Moore, 2001), the headline findings from a study of social and financial performance over three years of eight firms in the UK supermarket industry were reported. These were based on the derivation of a 16‐measure social performance index and a 4‐measure financial performance index. This paper discusses the formulationof the indices and then reports on: discussions with two supermarket firms concerning the overall results; inter‐relationships between individual financial performance measures; inter‐relationships between individual social performance measures; stakeholder group analysis; and inter‐relationships between turnover, age and gearing with social performance measures. The paper discusses these inter‐relationships, incorporating comments from the interviews with the two supermarket firms, and reports on both factor and cluster analysis. The interviews lend support for Preston and O’Bannon’s (1997) Available Funding Hypothesis in both its positive and negative form. The findings show that there are individual or combinations of related measures that could be used as surrogate measures for social and financial performance, instead of deriving a full index. However, the recommendation is that a full index continues to be used until there is further corroboration of these results. The findings also provide statistically significant support for the Negative Synergy Hypothesis (Preston and O’Bannon, 1997), show a statistically significant association between pre‐tax profits (both lagged and contemporaneous) with community contributions, and show that all statistically significant associations between individual social performance measures are positive – suggesting that they are mutually reinforcing. The association of size with social performance, noted in the previous paper, is also reinforced. Findings in relation to the proportion of women managers and the number of women on the Board and positive associations with other social and environmental performance measures raise interesting gender issues for business ethics. Factor analysis leads to no clear conclusions but cluster does show two or three clear clusters of firms, where size would seem to be the main but not sole factor. Further areas of research are noted.     

The Safeguard Clause, Asymmetric Information, and Endogenous Protection

When imports surge, governments often must seek simultaneously to satisfy protectionist pressures through increased tariffs, induce adjustment to foreign competition, and minimize consumer costs of protection. The WTO's safeguard clause can be viewed as an attempt to resolve these potentially conflicting goals since it allows governments to offer an implicit contract to protected industries to induce adjustment. In this paper, we show that with asymmetric information about costs, protected industries behave strategically which leads to under-adjustment. The safeguard clause therefore cannot optimally resolve the conflict among domestic political objectives.