The economic performance of the Russian economy in 2006 and a forecast for 2008–2010

This article examines the economic outcome of 2006 and builds a forecast for 2007–2010. The medium-term development risks of the Russian economy are analyzed.     

MANAGERIAL INCENTIVES AND CORPORATE DIVERSIFICATION STRATEGIES

Because the break-up of conglomerates typically produces substantial increases in shareholder wealth, many commentators have argued that the conglomerate form of organization is inefficient. This article reports the findings of a number of recent academic studies, including the authors' own, that examine the causes and consequences of corporate diversification. Although theoretical arguments suggest that corporate diversification can have benefits as well as costs, several studies have documented that diversified firms trade at a significant discount from their single-segment peers. Estimates of this discount range from 10–15% of firm value, and are larger for “unrelated” diversification than for “related” diversification. If corporate diversification has generally been a value-reducing managerial strategy, why do firms remain diversified? One possibility, which the authors label the “agency cost” hypothesis, is that top executives without substantial equity stakes may have incentives to maintain a diversification strategy even if doing so reduces shareholder wealth. But, as top managers' ownership stakes increase, they bear a greater fraction of the costs associated with value-reducing policies and are therefore less likely to take actions that reduce shareholder wealth. Also, to the extent that outside blockholders monitor managerial behavior, the agency cost hypothesis predicts that diversification will be less prevalent in firms with large outside blockholders. Consistent with this argument, the authors find that companies in which managers own a significant fraction of the firm's shares, and in which blockholders own a large fraction of shares, are significantly less likely to be diversified. If agency problems lead managers to maintain value-reducing diversification strategies, what is it that leads some of these same firms to refocus? The agency cost hypothesis predicts that managers will reduce diversification only if pressured to do so by internal or external mechanisms that reduce agency problems. Consistent with this argument, the authors find that decreases in diversification appear to be precipitated by market disciplinary forces such as block purchases, acquisition attempts, and management turnover.     

Efficiency in agricultural production: the case of peasant farmers in eastern Paraguay

This paper contributes to the productivity literature in developing country agriculture by quantifying the level of efficiency for a sample of peasant farmers from Eastern Paraguay. A stochastic efficiency decomposition methodology is used to derive technical, allocative and economic efficiency measures separately for cotton and cassava. An average economic efficiency of 40.1% for cotton and of 52.3% for cassava is found, which suggests considerable room for productivity gains for the farms in the sample through better use of available resources given the state of technology. Gains in output through productivity growth have become increasingly important to Paraguay as the opportunities to bring additional virgin lands into cultivation have significantly diminished in recent years. No clear strategy to improve farm productivity could be gleaned from an examination of the relationship between efficiency and various socioeconomic variables. One possible explanation for this finding is the existence of a stage of development threshold below which there is no consistent relationship between socioeconomic variables and productivity. If this is the case, then our results suggest that this sample of Paraguayan peasants are yet to reach such a threshold. Hence, improvements in educational and extension services, for example, would be needed to go beyond this threshold. Once this is accomplished, additional productivity gains would be obtained by further investments in human capital and related factors.     

Day-of-the-Week Effects in the Long-Run Performance of Initial Public Offerings

This study examines the influence of day-of-the-week patterns in security returns on long-run IPO underperformance. Comparisons are made between the IPOs in Ritter's [20] database, and a constructed set of matching firms based on SIC code and size, using NYSE, AMEX, and NASDAQ securities. It is found that virtually all of the IPO underperformance occurs on Mondays and Tuesdays and that the degree of underperformance significantly differs from other days. Thus, a common explanation may exist for the general day-of-the-week pattern in security returns and IPO long-run underperformance.     

From weed to wealth? Prospects for medic pastures in the Mediterranean farming system of north-west Syria

Medic (Medicago spp.) pastures are widely grown in rotation with dryland cereal crops in Mediterranean climate zones of Australia. Attempts since the 1960's to introduce this system to Mediterranean west Asia and north Africa (the native region of medic) have not lead to significant adoption; farmers in the region recognize medic, but as a weed and natural pasture plant. This first detailed economic evaluation of the rotational medic system was conducted using a whole-farm linear programming model based on the agricultural system of north-west Syria. The model represents in detail impacts of rotation on yields, labor requirements of alternative farm activities, availability of family and hired labor, subsistence income requirements, livestock feed sources and uses at different times and a choice of sheep stocking rates. Biological data for the analysis are based on a large six-year cropping and grazing experiment near Aleppo on terra-rossa soil with rainfall mainly in winter and averaging about 330 mm annually. The trial compared a dryland medic-wheat system and traditional two-year rotations of wheat with: fallow, watermelon, lentil and vetch. Results indicate that, given current prices and yields from the trial, medic is less profitable than traditional rotations. The model was used to investigate situations in which medic would be economically preferred. Selection of a medic rotation by the model was found to be particularly sensitive to the area of the farm and the price of labor. On small farms, labor availability per hectare is high, favouring the production of labor intensive crops such as lentil and watermelon. On larger farms, labor costs of these enterprises are substantial, increasing the relative profitability of medic, especially if labor prices increase. Interestingly, the relative desirability of medic is more sensitive to its impact on subsequent wheat crops than to the level of pasture production. We also found that modest increases in the prices of sheep products (especially milk) have a major impact on the economic performance of medic. These insights will allow improved focusing and targeting of future research and extension activities.     

Believing in employment discrimination: The case of Forrest Mims,Scientific American,and title VII protection

This article reviews the law regarding Title VII employment discrimination protection from religious discrimination. The issues surrounding the principal legal protection in this regard are explored in the context of a recent controversial case in which an author, Forrest Mims, was not hired as a regular contributor forScientific American magazine, ostensibly because of his belief in the theory of creation over the theory of evolution. The definition of what constitutes a protected religious belief or practice is seen to have expanded over time. However, a belief in creationism is not necessarily seen as being tantamount to a religious belief under present legal interpretation of Title VII. The implications of this finding for future needed Title VII revision are discussed.     

Are the elderly really machiavellian? A reinterpretation of an unexpected finding

In an article published recently in theJournal of Business Ethics, Vitellet al. (1991) found that elderly respondents scored surprisingly high on a measure of Machiavellianism. This paper offers an alternative explanation for this unexpected result — it may be an artifact of the survey format employed — and recommends additional research to help clarify the issues raised by Vitell and his colleagues.Peter E. Mudrack is an Assistant Professor in the Department of Management and Organization Sciences at Wayne State University's School of Business Administration. His publications have appeared inHuman Relations, Journal of Business Ethics, andJournal of Organizational Behavior.     

Educating business schools about safety & health is no accident

This paper summarizes the consequences of safety and health inattentiveness, and reviews four primary dangers in the workplace. In addition, perspectives of employee health and safety are presented from industry and academia which provide the basis for a strong recommendation to include safety and health issues in business school curricula. Wayne H. Stewart's areas of research and teaching interest include Social Responsibility in Management, Entrepreneurship, and International Business. Wayne is currently on the editorial board of the International Journal of Case Studies, and has published in the Journal of Management Learning, as well as participating in several academic conferences. Donna E. Ledgerwood is currently the Secretary for the Southern Management Association. Donna was President of the Southwest Academy of Management in 1993 and served as the Academy of Management's Director of Exhibits/Publisher Relations and Director of Advertising from 1983–1991. Having written one of the first articles on sexual harassment in 1980, Donna serves on the Editorial Review Board for the Journal of Business Strategies and has published in the Labor Law Journal, the Monthly Labor Review, and the Personnel Administrator. Ruth C. May's areas of expertise are International Business, Business Policy and Strategy and International Human Resource Management. Specializing in the transfer of Western management practices to the former Soviet Union, Ruth is currently involved in the development of training programs and privatization processes in central Russia. She has published in the Academy of Management Executive, Multinational Business Review, and Socialist Labor (Russia).