Veblen's Theory of Institutional Change: An Explanation of the Deregulation of Japanese Financial Markets

A bstract In his 1915 essay "The Opportunity of Japan," Thorstein Veblen theorized that traditionai Japanese institutions would undergo evolutionary change as Japan exploited borrowed industrial technology and became integrated into the global business enterprise system. This article explains the recent liberalization of Japanese financial markets which followed Japan's rise to economic prominence within the context of Veblen's theory of institutional development of the enterprise system. The Japanese process of financial deregulation is reviewed, Veblen's predictions Japan are presented and an explanation provided for the liberalization of Japanese financial markets .     

Announced layoffs: Their effect on corporate financial performance

Conventional wisdom holds that when a firm gets into trouble due to lagging sales and rising costs, cutting the size of the organization to reduce fat and waste is a normal and effective response. In this study, evidence was found to suggest that just the opposite might be true. The financial performance of Fortune 100 companies was tracked over a five-year period—two years prior to the announced layoff, the year of the layoff announcement, and two years following it. Contrary to expectations, the results indicate that financial performance worsened, rather than improved, following announced layoffs. Strategic and human resource implications for the management of corporate downsizing are provided.     

Irrelevance of the soft budget constraint for the shortage phenomenon

Kornai's thesis that shortage results from demand expansions bred by the soft budget constraint, derives from his implicit assumption that price regimes of input and output firms are different. Since any firm is both an input and an output firm, which discards the assumption as logically untenable, excess demand can only turn up because of lower than contracted inputs of labor and management that are not offset by an adequate downward adjustment of earnings. Expansions of demand that appear to be autonomous, are incited by uncertain deliveries of inputs, that is, by inefficiency (of output firms) as well. A by far the largest part of excess demand can be explained by state preferences for fast growth. As planners are more successful in generating investment, and the ensuing consumer, demand than in expanding production, shortage is inevitable regardless of the character of the firms' budget constraints.     

The effect of rule 12b-1 on bond fund expense ratios

This paper presents empirical evidence that bond mutual funds which have adopted the use of 12b-1 fees have not achieved the goal of lowering expense ratios. Using a model specific to bond funds, as opposed to generic models used in previous studies on equity funds, the analysis confirms that the 12b-1 fee is an additional cost borne by shareholders of the fund without any additional benefit. However, this cost as a percent of the net asset value of the fund has decreased from 1991 through 1994. This reduction coincides with the submission of a proposed rule change by the National Association of Security Dealers concerning maximum sales charges imposed by mutual funds on December 28, 1990 and the implementation of limits on 12b-1 fees which became effective in July of 1993.     

Profit inefficiency of Indian farms: A system approach

This article attempts to measure the level of profit inefficiency of Indian farms using a stochastic profit function. In the process, the degree of misallocation of inputs and nonoptimal supply of output is also estimated. Likelihood ratio tests allow division of total observations into two groups-large and small farms. Results indicate that both groups are profit-inefficient due to misallocation of inputs and undersupply of output. However, small farms are less profit inefficient than their larger counterparts. Within each group relatively larger farms are less inefficient.The editor for this paper was Lennart Hjalmarsson.     

Revisiting managerial perspectives on dividend policy

We survey managers of Nasdaq firms that consistently pay cash dividends to determine their views about dividend policy, the relationship between dividend policy and value, and four common explanations for paying dividends. The evidence shows that managers stress the importance of maintaining dividend continuity and widely agree that changes in dividends affect firm value. Managers give the strongest support to a signaling explanation for paying dividends, weak to little support for the tax-preference and agency cost explanations, and no support to the bird-in-the-hand explanation. The study provides new evidence about how managers view dividend life cycles and residual dividend policy. The authors would like to thank two anonymous referees for helpful comments and suggestions, and Maheshan Fernando and Sumeet Chawla for providing research assistance.     

Listen and learn

After making a solicitation, a lot can be gained by listening to a donor's questions. Do not simply answer the question. Consider why they asked it in the first place.     

Slack-adjusted efficiency measures and ranking of efficient units

In non-parametric methods many units are calculated as efficient. The article suggests a method for ranking efficient units, not by their efficiency, but by importance as benchmarks for the inefficient units, in contrast to earlier suggestions in the literature which rank units high if they are specialized. However, the total potentials for improvement frequently remain unrevealed by calculating radial efficiency measures of the Farrell type only. The article therefore first develops efficiency measures that explicitly extend the radial measures to include slacks. The new measures are applied to a typical multidimensional small-sample data set for Norwegian employment offices.