The value impact of name changes evidence from Chinese firms during the technology boom

For a sample of US stocks in the period 1998–1999, Cooper, Dimitrov, and Rau (2001) report dramatic value increases in the 10 days around the announcement of dotcom name changes. We find much smaller value changes for a sample of Chinese listed firms with changes to internet-related dotcom names for the 1998 to 2002 period. This result is surprising given the high proportion of retail trading in China and the prohibition to short sell Chinese stocks. Also in contrast to Cooper, Dimitrov, and Rau (2001), we find that most of the value increase for our sample firms is realized gradually prior to the announcement. Further investigation reveals that our sample firms experience more frequent CEO-turnover, significant increase in return-on-assets, and involve more restructure activities around the name change event. These results suggest that the value increases for firms with name changes are the consequence of substantial and successful operational changes, and that the name change is simply part of that process, instead of the cosmetic effects of name change or investor mania suggested by previous studies.     

Rural versus urban preferences for renewable energy developments

Development of renewable energy resources, such as wind farms and hydro-electric schemes, are being promoted as a new method of expanding and diversifying employment in rural areas. However, such energy projects are associated with a range of environmental impacts which might be detrimental to other economic activities, such as those based on nature tourism. The authors use a Choice Experiment to quantify peoples' preferences over environmental and employment impacts that may result from the deployment of renewable energy projects in rural areas of Scotland, focussing in particular on any differences between the preferences of urban and rural dwellers, and on heterogeneity within these groups. Rural and urban households are shown to have different welfare gains which are dependent on the type of renewable energy technology and on the scale of project under consideration.     

Confidence in formal institutions and reliance on informal institutions in Bosnia and Herzegovina

This article uses survey data to investigate the relationship between citizens’ confidence in formal institutions and reliance on informal institutions in Bosnia and Herzegovina (BiH). We find an endogenous substituting relationship and that the different institutional structures currently existing in the two entities in BiH are significantly linked to respondents’ confidence in formal and reliance on informal institutions. In addition, perceptions of higher indirect costs of institutions and a lack of their improvement are associated with a lower confidence in formal and a greater reliance on informal institutions; the minority ethnic groups in each region are less confident in formal and rely more on informal institutions compared to the majority group; and more reliance on informal institutions is found amongst males and respondents from urban areas.     

Private equity portfolio company performance during the global recession

We assess the recent economic and financial performance of U.K. private equity (PE) backed buyouts. Our empirical evidence, which is based on thousands of transactions, reveals that PE-backed buyouts achieved superior economic and financial performance in the period before and during the recent global recession, relative to comparable firms that did not experience such transactions. Our regression results imply positive differentials of 5–15% in productivity and approximately 3–5% in profitability for buyout firms, relative to non-buyout firms. Another key finding is that revenue and employment growth for PE- backed firms were positive during the sample period.     

A Next Step in Debt Enforcement: the Merger of Debt Help and Debt Collection

Since the 1990s, each Member State of the European Union designed a policy that infused the liberal American fresh start policy into its own social institutions and legal culture. Especially in countries with a civil law tradition, the legal position of the consumer has improved. The paradigm of lifelong liability of debts has been replaced by a form of limited liability. Discharge of debts has established itself as a firm legal principle in all European jurisdictions. In most European countries, the new approach consists of a combination of legal and extrajudicial instruments. Under the umbrella of the courts, social workers, trustees, and administrators perform a broad range of activities in monitoring and helping debtors. The so-called new-chance approach has dramatically changed the playing field amongst debtors and creditors. The new legal equilibrium worked rather well in most European countries in the 1990s and 2000s. However, the systems are obviously far from perfect as almost all European governments are still fine-tuning their laws. Recently, two innovations have appeared on the European stage: Some Nordic countries have opted for a centralized state-controlled enforcement system, while in the UK, commercial debt management plans were developed, mainly by commercial suppliers. In 2005, the US Bankruptcy Code was changed in favour of the creditors. The 2008 credit crunch and its aftermath present a window of opportunity for the next step in the modernization of debt enforcement policy. I will suggest a merger of the fields of debt relief and debt collection, with a pivotal role for independent trustees.     

The influence of policy on the roles of agriculture in South Africa

This article provides a framework for the analysis of the relationship between different macroeconomic, sector and commodity policies and the multiplier effects of agriculture. It starts with a listing of the macroeconomic, sector and commodity policies that have been included in the analysis. These should be considered in conjunction with the likely roles of agriculture along each of the dimensions of the social, poverty and cultural roles of agriculture. These policies and roles should be conceptualised as the vertical and horizontal axes respectively of a ‘policy role’ matrix. The ‘cells’ of this matrix – the policy role interactions – are discussed with respect to the immediate macroeconomic, agricultural, economic, institutional and social impact of the policy change on the agricultural sector at farm, regional, national and multinational levels, and thereafter on the role of agriculture in terms of each of the dimensions identified above.     

SOME DESIGN GUIDELINES FOR EQUITY-BASED PAY

Almost everyone agrees that equity-based incentive compensation can play an important role in increasing shareholder value, but there is considerable disagreement as to what that role should be and how equity pay should be packaged. What's more, there has been a backlash against equity pay that has compensation committees, investors, and corporate watchdogs on full alert. The authors of this article provide some basic guidelines for equity pay that could help to restore confidence in this useful element of compensation–guidelines that encompass the type of equity instrument, the level of equity-based pay, the extent to which equity pay is performance based, and the structure of the equity package in terms of vesting, exercise, and expiry. They start by acknowledging that the role of equity pay is limited by the extent to which shareholder value can be affected by the manager in question. They recommend building steadily to a constant level of stock price exposure and then gradually reducing this level after retirement. For most companies, equity-based pay should be significant only for a handful of employees; performance based cash bonuses provide better "line-of-sight," especially for operating managers who are somewhat removed from corporate-wide decisions. And disclosure–both internal and external–is perhaps the most important aspect of equity-based pay plans.