Individualism and collectivism revisited: a study of black and minority ethnic women

This article seeks to add discussion of the intersection of gender and ethnicity to the debates on individualism and collectivism. In doing so, it challenges the prevailing view, in these debates, of the rise of individualism and the decline in collectivism. Through a study of black and minority ethnic women trade unionists, it shows how a differentiated workforce, rather than leading to individualism at work, may contribute to union renewal and inspire more creative forms of collectivism.     

Does technology licensing matter for privatization?

In mixed oligopolies, technology licensing from a cost‐efficient firm to a cost‐inefficient firm has been widely observed. This paper examines the relationship between privatization and licensing (by public or private firms) with the consideration of either a domestic or a foreign private firm. We find that (a) in the case of a domestic private firm, public licensing facilitates privatization, but private licensing hinders privatization; (b) in the case of a foreign private firm, both public and private licensing facilitate privatization. Our results yield important policy implications on privatization.     

Forced Versus Voluntary Dividend Reduction: An Agency Cost Explanation

We examine whether the agency cost arising from shareholder‐bondholder conflict is an important determinant of the timing of dividend reduction decisions. Firms forced to reduce dividends owing to bond covenant violations experience lower earnings, more frequent losses, and greater earnings declines around the dividend reduction year than do firms that voluntarily reduce dividends. Relative to voluntary‐reduction firms, forced‐reduction firms have higher debt‐to‐equity ratios and managerial holdings. These findings coupled with the increased dividend payout ratios and lower announcement period returns suggest that financially distressed firms that anticipate poor performance have greater incentives to delay reducing dividends to avoid a wealth transfer to bondholders.     

Bilateral Merger a Note on Salant-Switzer-Reynolds Model

The SSR (1983, QJE) paper shows that in an oligopoly industry of kfirms (k > 2) with linear demand and identical (constant) average cost of production, a bilateral merger is never profitable when all firms choose their quantities simultaneously. In this paper we re-examine the issue when some firms have first-mover advantage. We find that in a leader-follower structure a bilateral merger is always profitable when a leader and a follower merge together and the merged firm behaves like a leader. But, a bilateral merger between leaders or between followers may not be privately profitable.

     

Geography,Informal Information Flows and Mutual Fund Portfolios

This paper explores how informal information channels impact mutual fund performance. We measure the strengths of two location‐based information channels: 1) information transfers among fund managers (fund‐fund links) and 2) transfers between managers and the companies in which they invest (fund‐company links). We find that each channel increases investment performance in the absence of the other, but decreases it when acting in combination. Stock selection associated with the presence of one channel, but the absence of the other, earns positive future returns. Our results indicate that the economic benefits of informal information channels depend critically on the nature of their interactions.     

Tariffs, licensing and market structure

This paper challenges the conventional wisdom that exclusive owners of an advanced technology are always better off when producing as a monopolist than when competing against another firm. Competition against a less-efficient firm weakens the power that a host country can exert on the incumbent in the form of its tariff policy. We show that this gives a motive for a monopolist to license its technology to another foreign firm. A host country gains more from increased competition if it can induce the foreign incumbent to transfer technology to the host country firm. We show that the host country can do so by tariff commitment. We also discuss the implications of bargaining under licensing and Bertrand competition in the product market. Hence, this paper qualifies and extends the recent work of Kabiraj and Marjit [Protecting consumers through protection: The role of tariff-induced technology transfer. European Economic Review 47, 113-124].     

Agency problems in tracking stock and minority carve-out decisions: Explaining the discrepancy in short- and long-term performances

Several studies have evaluated short- and long-term performances of parent firms who resort to restructuring via tracking stock or minority carve-out. Results show that short-term positive performance of restructuring parents turns negative in the long haul. Although researchers have attempted to resolve this inconsistency, a satisfactory explanation is yet to emerge. In this paper, we offer the self-serving behavior of restructuring parents’ managers as a potential explanation for the observed discrepancy in the short- and long-term performances. We argue that managers of parent firms create new units to receive additional compensation packages. We present evidence that the long-term negative performance can be attributed, at least partially, to self-awarded raise. Since managers of tracking stock parents enjoy a greater degree of managerial discretion and controls, we hypothesize that they would pay themselves a bigger compensation package than their carve-out counterparts and their long-term performance would be inferior to that of the latter group. Our results largely support these hypotheses.

International Outsourcing and R&D: Long‐Run Implications for Consumers*

We show that international outsourcing and R&D by the outsourced firm may be either substitutes or complements. Outsourcing increases the R&D investment in small markets and in highly competitive product markets, whereas it decreases the R&D investment in large markets. If the outsourced firm can be technologically very efficient under exporting, outsourcing can make the consumers worse off by reducing the R&D investment. If there is skill differential in the production process and outsourcing occurs only in the unskilled activities, R&D‐reducing outsourcing occurs in a relatively low‐skilled industry. If outsourcing of the unskilled jobs reduces the effective cost of the skilled workers by increasing the productivities of the skilled workers, outsourcing provides further disincentive for R&D compared to the situation where outsourcing of the unskilled jobs does not affect the effective cost of the skilled workers.     

Capital Structure Deviation and Speed of Adjustment

As a firm deviates from its target leverage from above (below), the bankruptcy costs (foregone tax savings) rise at an increasing rate while the tax savings (reduced bankruptcy costs) rise at a decreasing rate, generating a stronger incentive for rebalancing capital structure. This phenomenon renders the speed of adjustment (SOA) an increasing function of the deviation. Employing a bootstrapping‐based estimation strategy that averts well‐known estimation biases, we find U.S. firms exhibit a positive SOA sensitivity to leverage deviation. Also, the SOA sensitivity is greater for overlevered than underlevered firms.     

Optimal job design in the presence of implicit contracts

We characterize the optimal job design in a multitasking environment when the firms use implicit contracts (i.e., bonus payments). Two natural forms of job design are compared: (i) individual assignment, where each agent is assigned to a particular job and (ii) team assignment, where a group of agents share responsibility for a job and are jointly accountable for its outcome. Team assignment mitigates the multitasking problem but may weaken the implicit contracts. The optimal job design follows a cutoff rule where only the firms with high reputation concerns opt for team assignment. However, the cutoff rule need not hold if the firm can combine implicit incentives with explicit pay‐per‐performance contracts.