Mechanism design with side payments: Individual rationality and iterative dominance

We investigate the collective decision with incomplete information and side payments. We show that a direct mechanism associated with the social choice function that satisfies budget balancing, incentive compatibility, and interim individual rationality exists for generic prior distributions. We consider the possibility that a risk-averse principal extracts full surplus in agency problems with adverse selection. With regard to generic prior distributions, we show that there exists a modified direct mechanism associated with the virtual social choice function, which satisfies budget balancing and interim individual rationality, such that truth telling is the unique three times iteratively undominated message rule profile.     

The governance mechanism of Russian firms: its self-enforcing nature and limitations

The legal form of business enterprises in contemporary Russia is diversified to almost the same extent as those in major advanced countries. Joint-stock companies are now the most common form of incorporation among leading industrial enterprises. The law on joint-stock companies in Russia provides for the governance mechanism of joint-stock companies, in order to implement the concept of a ‘self-enforcing’ organisation in which the legal code of business management should be observed voluntarily by managers and large stockholders. This fundamental idea is embodied in many aspects of the current system, including the mechanism of management and supervision characterised as ‘diarchial leadership’, the balance of power between stockholders and corporate officers, and the internal audit system. However, the self-enforcing nature of the Russian enterprise has been undermined by a number of factors, including the overwhelming expansion of closed joint-stock companies, the predominance of insider ownership, the short history of internal auditing and the lack of legal enforcement power. As a result, breaches of company law are rampant in Russia today. This raises serious problems for the Russian corporate system, along with the legal peculiarity of privatised firms and people's enterprises, which complicates the system of joint-stock companies and deprives it of transparency.     

Interlinkage and Generous Tit‐for‐Tat Strategy

We investigate an infinitely‐repeated prisoners' dilemma with imperfect monitoring and consider the possibility that the interlinkage of the players' distinct activities enhances implicit collusion. We show a necessary and sufficient condition for the existence of a generous tit‐for‐tat Nash equilibrium. Such an equilibrium, if it exists, is unique. This equilibrium achieves approximate efficiency when monitoring is almost perfect, where the discount factors are fixed.     

The State Budget Compilation Process in Russia: Institutional Framework and Practice

This article clarifies the institutional framework and practice of the state budget compilation process in Russia, taking the 2001 federal budget as an example. The budget was the first one compiled under the new national financial system, including the Budget Code of the Russian Federation, which came into force in January 2000. The Budget Code is greatly superior to the preceding one, in the socialist era, which regulated Russia's financial activities during the initial phase of the transition period. Under the new legal system the 2001 budget was drafted by the Ministry of Finance, approved by the government, submitted to the Federal Assembly, discussed at the State Duma and finally approved by the Federation Council. A detailed analysis of this process shows that a certain order is emerging in the budget compilation process due to the comparatively amicable relationship between the government and the Federal Assembly and because of the establishment of the new legal system, including the Budget Code. The new financial system, however, has many problems, indicating that Russia will not be able to accomplish institutional changes in this field all at once.     

Dissemination of Accruals Information,Role of Semi‐Annual Reporting,and Analysts' Earnings Forecasts: Evidence from Japan

Our study investigates the effects of dissemination of accounting accruals information on stock prices using Japanese annual reports as our sample. We conduct month‐by‐month detailed analyses of price adjustment behavior with a particular focus on revisions of analysts' earnings forecasts and changes in trading volume around the period of upcoming semi‐annual reports. We find that analysts' forecasts are often revised around this time, and analysts use this as auxiliary information. In addition, an accompanying re‐adjustment of abnormal returns and an increase in trading volume are observed. Our findings demonstrate that informational uncertainty initially triggered by the announcement of annual reports decreases as semi‐annual reports are disclosed and analysts change their earnings forecasts, and confirms the importance of semi‐annual reporting.     

Examining Rival Models of Leisure Coping Mechanisms

The present study examined the role of leisure in coping with stress and promoting good health. Using police and emergency response service workers (n = 132), this study tested a number of theoretically grounded leisure coping models to discover mechanisms by which leisure coping influences the relationship between stressors and adaptational outcomes (i.e., immediate adaptational outcomes such as coping effectiveness and stress reduction, and physical and mental health). Ensel and Lin's (1991) life stress paradigm was adopted to conceptualize these rival models (eight in total), and structural equation modeling was used to compare goodness of fit among the models to identify the best model. The findings suggest that stressors and leisure coping appear to independently influence adaptational outcomes. Leisure coping facilitated positive immediate adaptational outcomes that subsequently had a positive impact on health, irrespective of the level of stress experienced. The potential contribution of leisure to coping with stress and health is highlighted. Results suggest that the development of enduring beliefs about the role of leisure as ways of coping (i.e., leisure coping beliefs) seems essential for the actual and effective use of leisure as a means to manage stress (i.e., leisure coping strategies). Theoretical and practical implications of the findings are discussed.     

Detail-free mechanism design in twice iterative dominance: Large economies

This paper investigates unique implementation in large economies with incomplete information and interdependent values; we degenerate the common knowledge assumptions and assume that a central planner is unaware of the specifications of an environment. With a minor restriction on the class of environments, we demonstrate that there exists a detail-free mechanism that virtually implements competitive allocations with complete information in twice iterative dominance, irrespective of how the environment is specified.     

ENTERPRISE REFORM AND CORPORATE GOVERNANCE IN RUSSIA: A QUANTITATIVE SURVEY

Abstract.  The objective of this paper is to verify the range and depth of the study on corporate governance in Russia through a comprehensive survey of 202 research works. With regard to the internal structure of Russian corporations, a great deal of research has been conducted in a relatively short time since the collapse of the Soviet Union by many highly motivated researchers, who have provided insightful perspectives. These achievements, however, place too much emphasis on the empirical analysis of the interrelation between ownership structure and corporate restructuring, leaving some critical themes open for further discussion. As the twenty-first century begins, a well-balanced research base should be established in this field in order to identify the reality of Russian corporations from a multifaceted perspective.     

The impact of designated market makers on security prices

This paper is divided into two distinct parts. Part I, Empirical Evidence, tests a previously formulated variance, thinness relationship for security returns. First quarter 1972 daily returns variance is regressed on market value of shares, share price, trading activity, sales variance, and institutional holdings for 178 firms selected by stratified random sampling from AMEX and NYSE (specialist exchanges), and from Tokyo and Rio de Janeiro (non-specialist exchanges). The principal finding is that returns variance and market value are inversely related on non-specialist exchanges, but not on specialist exchanges; this difference is attributed to specialists' impact. Part II, Policy Proposals, discusses the manner in which designated market makers may be effectively incorporated into a continuous auction exchange. Issues discussed include: desirability of price stabilization, transfers implicit in the existing U.S. specialist system, consolidation and public availability of the limit order book, number of designated market makers for a security, competitive bidding, and compensation for performing the price stabilization function. Stabilization is modeled as an external economy, and specific policy proposals for internalizing it are advanced.