Why Are the Levels of Control (So) Different in German and U.K. Companies? Evidence from Initial Public Offerings

We analyze why the control of listed German and U.K. companiesis so different. As shareholders in Germany are less protectedand control is less expensive, German investors prefer controllingstakes. We also focus on economic factors such as profitability,risk, and growth to predict the probability of occurrence ofdifferent states of control six years after the flotation. LargeU.K. companies become widely held, whereas in large German firmsnew shareholders control significantly larger stakes. Wealthconstraints become binding for U.K. shareholders, whereas Germanshareholders can avoid this by using pyramids. We find substantialdifferences between a takeover by a concentrated shareholderand one by a widely held company. For the United Kingdom, theprobability of the former increases when the company is risky,small, and poorly performing. Conversely, the latter is morelikely when the target is large, fast growing, and profitable.Poor performance and high risk require control and monitoringby a concentrated shareholder. Conversely, high growth and profitabilityattract widely held companies. Founders are less inclined todilute their stake to retain private benefits of control. WhenGerman firms are profitable and risky, control is likely togo to a concentrated shareholder, but growth and low profitabilityincrease the probability of a control acquisition by a widelyheld firm.     

Institution building and growth in transition economies

Drawing on the recent literature on economic institutions and the origins of economic development, we offer a political economy explanation of why institution building has varied so much across transition economies. We identify dependence on natural resources and the historical experience of these countries during socialism as major determinants of institution building during transition. Using natural resource reliance and the years under socialism to extract the exogenous component of institution building, we also show the importance of institutions in explaining the variation in economic development and growth across transition economies during the first decade of transition.     

Banking crises,financial dependence,and growth

This paper contributes to the literature that analyzes the mechanisms linking financial shocks and real activity. In particular, we investigate the growth impact of banking crises on industries with different levels of dependence on external finance. If banks are the key institutions allowing credit constraints to be relaxed, then a sudden loss of these intermediaries in a system in which such intermediaries are important should have a disproportionately contractionary impact on the sectors that flourished due to their reliance on banks. Using data from 38 developed and developing countries that experienced financial crises during the last quarter century, we find that those sectors that are highly dependent on external finance tend to experience a substantially greater contraction of value added during a banking crisis in countries with deeper financial systems than in countries with shallower financial systems. Our results do not suggest, however, that on net the externally dependent firms fare worse in deep financial systems.     

Tracking Poverty Over Time in the Absence of Comparable Consumption Data

Following the endorsement by the international community ofthe Millennium Development Goals, there has been an increasingdemand for practical methods for steadily tracking poverty.An economically intuitive and inexpensive methodology is exploredfor doing so in the absence of regular, comparable data on householdconsumption. The minimum data requirements for this methodologyare the availability of a household budget survey and a seriesof surveys with a comparable set of asset data also containedin the budget survey. This method is illustrated using a seriesof Demographic and Health Surveys for Kenya.     

Does a Terroir Product Tell the Same Story to Tourists,Day‐trippers and Local Consumers? The Moderating Role of Variety‐seeking Tendency and Perceived Authenticity

The issue of segmentation of the culinary tourism market is central for local economic actors because many products and activities address several marketing targets, including tourists and residents. This research shows that the assessment of the attributes of a terroir cheese is not altered by the consumer's tourist status. In contrast, taking into account the underlying motivations behind culinary tourism, an individual variable (the variety‐seeking tendency) and a variable related to the product (its perceived authenticity) appear as relevant segmentation criteria for such a culinary tourism product. Copyright © 2015 John Wiley & Sons, Ltd.     

Addendum to L. Lauwers and L. Van Liedekerke, “Ultraproducts and aggregation” [J. Math. Econ. 24 (3) (1995) 217–237]

This addendum fills a minor gap in the key lemma of a paper by Lauwers and Van Liedekerke [Lauwers, L., Van Liedekerke, L., 1995. J. Math. Econ. 24 (3), 217–237].     

What determines the financing decision in corporate takeovers: Cost of capital,agency problems,or the means of payment?

How is a takeover bid financed and what is its impact on the expected value creation of the takeover? An analysis of the sources of transaction financing has been largely ignored in the takeover literature. Using a unique dataset, we show that external sources of financing (debt and equity) are frequently employed in takeovers involving cash payments. Acquisitions with the same means of payment but different sources of transaction funding are in fact quite distinct. Acquisitions financed with internally generated funds significantly underperform those financed with debt. The takeover financing decision is influenced by the bidder's pecking order preferences, its growth potential, and its corporate governance environment, all of which are related to the cost of external capital. The choice of equity versus internal cash or debt financing also depends on the bidder's strategic preferences with respect to the means of payment.