Asymmetric Information in the Subprime Mortgage Market

Because of impersonal securitization in the secondary market, the ultimate investors in a mortgage have only a limited amount of information about the borrower??s characteristics. This creates an asymmetric information problem because of hidden knowledge on the part of the primary lenders, who naturally have much better access to this information. This is aggravated by the free rider problem when there are multiple investors. We discuss to what extent the secondary market then seeks to sort the loans to ameliorate this problem and what role reputations play. More importantly, however, the actions of the primary lender in terms of which kinds of loans they choose to approve are partly hidden, and this typical principal-agent situation importantly aggravates the incentive problem. To judge the nature and magnitude of this moral hazard dilemma, we use data to compare how well investors in the secondary mortgage market can predict default given the information they typically have access to as compared to the ability of primary lenders to similarly predict default given the larger set of information they typically will have access to. Finally, the implications of these results are indicated, particularly in light of the recent mortgage crisis.     

PUBLIC POLICY SUPPORT FOR AGRICULTURAL COOPERATIVES: AN ORGANIZATIONAL ECONOMICS APPROACH

This paper addresses the issue of whether nontraditional agricultural cooperatives should be eligible for receiving public policy support. We adopt an organizational economics approach that appears to better inform policy design and suggest critical questions that both policy makers and regulators need to address before introducing measures and sanctions. After discussing the introduction of innovative cooperative models characterized by a whole new set of ownership and control rights, we recast vaguely defined property rights problems as attempts to maximize efficiency and avoid organizational decline rather than to take advantage of excessive market power in highly concentrated oligopsonistic/oligopolistic markets.     

Firm-level export performance assessment: Review, evaluation, and development

Export performance is one of the most widely researched but least understood and most contentious areas of international marketing. To some extent, this problem can be ascribed to difficulties in conceptualizing, operationalizing, and measuring the export performance construct, often leading to inconsistent and conflicting results. This study reviews and evaluates more than 100 articles of pertinent empirical studies to assess and critique export performance measurements. Based on gaps identified in this evluation, guidelines for export performance measure development are advanced, suggesting, however, a contingency approach in their application. Several conclusions and implications for export strategy and future research are derived from this analysis. Constantine S. Katsikeas holds the Sir Julian Hodge Chair in Marketing and International Business at Cardiff Business School, Cardiff University. His main research interests lie in the areas of international marketing and purchasing, global strategic alliances, and competitive strategy. He has published widely in these fields and his articles have appeared inJournal of International Business Studies, Journal of International Marketing, (formerly Columbia)Journal of World Business, Journal of Business Research, Industrial Marketing Management, andManagement International Review, among others. Leonidas C. Leonidou is associate professor of marketing at the University of Cyprus. He obtained his Ph.D. in marketing from the University of Bath, and has research interests in international marketing, relationship marketing, strategic marketing, and marketing in emerging economies. He has published extensively in these fields and his articles have appeared in various journals includingJournal of International Business Studies, Journal of Business Research, Journal of International Marketing, andManagement International Review. Neil A. Morgan is assistant professor of marketing in the Kenan-Flagler Business School at the University of North Carolina, Chapel Hill. His research interests focus on strategic issues concerning marketing resources and capabilities, and marketing planning and implementation processes and their links with business performance. His work has appeared inJournal of the Academy of Marketing Science, Journal of Business Research, Industrial Marketing Management, British Journal of Management, European Journal of Marketing, and other journals.     

Does it really hurt? Making sense of varieties of anger

While research has shown that consumer anger causes a range of negative consequences, the conceptualization and measurement of this emotion remain inconsistent. Some studies link anger to consumer revenge motivated by a desire to hurt the company, while others associate anger with a desire to cooperate with the company. This inconsistency is caused by the fact that anger is a broad label used to refer to almost any brand failure. We argue that, rather than considering anger as a single construct, scholars should distinguish between a supportive facet of anger, which comprises feelings of annoyance, frustration and other mild negative feelings, and a vindictive facet of anger, which comprises feelings of intense anger, rage, and outrage. These two facets of anger reconcile divergent arguments presented in past research. Research benefits from moving beyond the generic label of anger to consider supportive and vindictive facets of anger that influence consumers' reactions under different circumstances. Only vindictive anger prompts consumers to take revenge and punish the company for unfair treatment. Supportive anger triggers instead a desire to solve the problem by cooperating with the company. This study presents important managerial implications for assessing and managing feelings of anger following brand failures.     

Crisis in regional economic cooperation (integration) among developing countries: A survey

The article analyses the meaning, theory and key policy instruments of economic integration among LDCs and reviews the experience of various regional cooperation efforts in the Third World.It starts from the basic premise that economic integration is not an end in itself nor are its outcomes value-free; rather its social legitimacy depends on the socio-economic and political interests which are served by regional cooperation. Power commanding local hegemonic groups as well as foreign economic and political actors (governments and the transnational enterprises) play a determining role in the orientation, content and performance of regional cooperation.The article also explores the implications for integration of certain structural economic characteristics of LDCs involving key production, technological, trade and distributional considerations. They are interpreted as calling for regional cooperation mechanisms which are non-wholistic in the sense that they are directed towards the fulfilment of specific objectives, activities and tasks which require (a) programmed yet not comprehensive harmonization policies, (b) a subordination of trade to a planned and significant expansion of economic activities in new fields, and (c) the pursuit of certain outcomes whose values are not adequately reflected by the market system and whose inducement requires more explicit government intervention.Finally the article argues that since regional cooperation is by its nature conflict-prone and subject to strong polarization forces, and since, furthermore, the above-raised considerations call for a significant role to be played by the member countries' governments, the viability of the process is subject to a continuous commitment and manifestation of political support.     

In re Lehman Brothers International (Europe): Positivism or the Rigour of Pedantry?

This paper examines the decisions of the Companies Court and Court of Appeal in the case of Lehman Brothers International (Europe) (in administration). It shows how the judges' undue focus on the literal meaning of the language used in Part 26 of the Companies Act 2006 had unfortunate consequences on the process of restructuring the company and contradicted the intention of the legislature. It therefore proposes that it may sometimes be important to revert to the erstwhile golden rule whereby judges may depart from the ‘plain meaning’ of the words used in a statute to avoid an absurd or unfair result. This may have prevented the judges from observing that a scheme under Part 26 can vary or extinguish a creditor's rights qua creditor, but cannot vary or extinguish property rights; although debt is a form of property. Copyright © 2011 John Wiley & Sons, Ltd.