Reforming Food Subsidy Schemes: Estimating the Gains from Self-targeting in India

The paper uses the theoretical framework of the theory of tax reform to analyze whether a “small” change in an existing food subsidy program can be both welfare‐improving and revenue‐neutral. It shows how existing econometric methods can be adapted to estimate demand parameters even when household‐level data exhibit little price variation because the government controls food prices. The methodology is used to estimate welfare changes from shifting a rupee of subsidy on existing commodities to coarse cereals in the Indian public distribution system.     

Evaluating Efficiency of Personnel in Nepalese Commercial Banks

The failure of large and reputable banks is creating a potential threat to depositors’ hard-earned money deposited in commercial banks (CBs). Therefore, evaluation of the risk-adjusted efficiency of CBs is crucial. This study evaluates the relative efficiency of CBs personnel with an unbalanced panel dataset of 21 Nepalese CBs based on their remunerations, financial performances, and risky behaviors using data envelopment analysis, the Malmquist productivity index, and simple regression analysis. In the first step analysis, various financial ratios regarding the firm performance were considered. In the second step analysis, efficiency scores estimated in the first step analysis were adjusted by risk variables. The study shows that relatively large banks were exploiting personnel expenses, but smaller-sized banks, recently established banks, and banks with fewer branches gained more efficiency from their size. Personnel efficiency had a positive influence on the market price of stock, but it also increased the volatility of stock prices. Negative growth of both productivity indices (i.e., with and without risk adjustment) suggests poor agency services delivered by personnel and decreasing healthy conduct of Nepalese CBs.     

Industry clustering of initial public offerings

Extant empirical evidence has documented both a temporal variation in the number of initial public offerings (IPOs) and an industry clustering effect in these offerings. This article attempts to provide insights into this phenomenon by: (i) identifying industry conditions that influence IPO clustering, (ii) analyzing differences in characteristics of clustered versus non‐clustered IPOs, and (iii) studying the impact of IPO clustering on long‐run operating performance. We find that IPO clustering is more likely to occur in high‐growth fragmented industries that are characterized by strong investment opportunities, favorable investor sentiment, and which require high levels of investments in R&D. Further, we document a negative relation between post‐IPO operating performance and whether the IPO firm goes public in its industry cluster period. We conclude that the relatively poor post‐IPO operating performance of firms that go public in industry cluster periods likely reflects industry overinvestment arising from too many firms within that industry chasing the same investment opportunities. Copyright © 2005 John Wiley & Sons, Ltd.     

Information or Opinion? Media Bias as Product Differentiation

Two aspects of media bias are important empirically. First, bias is persistent: it does not seem to disappear even when the media is under scrutiny. Second, bias is conflicting: different people often perceive bias in the same media outlet to be of opposite signs. We build a model in which both empirical characteristics of bias are observed in equilibrium. The key assumptions are that the information contained in the facts about a news event may not always be fully verifiable, and consumers have heterogeneous prior views ("ideologies") about the news event. Based on these ingredients of the model, we build a location model with entry to characterize firms' reports in equilibrium, and the nature of bias. When a news item comprises only fully verifiable facts, firms report these as such, so that there is no bias and the market looks like any market for information . When a news item comprises information that is mostly nonverifiable, however, then consumers may care both about opinion and editorials, and a firm's report will contain both these aspects—in which case the market resembles any differentiated product market . Thus, the appearance of bias is a result of equilibrium product differentiation when some facts are nonverifiable. We use the model to address several questions, including the impact of competition on bias, the incentives to report unpopular news, and the impact of owner ideology on bias. In general, competition does not lead to a reduction in bias unless this is accompanied by an increase in verifiability or a smaller dispersion of prior beliefs.     

Hiring functions and a new index for measuring mismatch: Some empirical results for european countries

Conclusion This paper investigates the relation between mismatch and sectoral hiring functions. Traditionally, the indices used to measure structural mismatch were constructed by assuming that the hiring functions are identical across sectors. However, both theoretically and empirically, there is no reason to believe that the hiring behavior of the firms or the search methods of the workers are identical across sectors. Evidence for this is provided in the Appendix of this paper where it is shown that theUV curves for the different regions in Great Britain and different sectors in Switzerland are not identical. Brunello [1990] also shows that the hiring functions do not have to be identical. This paper also demonstrates that it may not be possible to eliminate structural unemployment totally when the hiring functions across sectors are non-identical. In other words, total hiring may be maximized even if theV/U ratios are not equalized across sectors. This conclusion is important as it highlights that the indices used in empirical work to measure structural mismatch may be seriously flawed.This paper develops an index for measuring mismatch which is rooted in the theory of hiring functions and utilizes the approach of measuring angle between vectors by the use of cos() functions. The FH index presented in this paper is based on a simple arithmetic mean of regional or sectoral cos() functions. It has been estimated for several European countries, and the empirical results highlight some interesting conclusions concerning regional mismatch in these countries.     

Group lending and individual lending with strategic default

Papers that compare group lending and individual lending in the presence of strategic default suggest that unless group members can impose costly social sanctions on one another, or unless the bank uses cross-reporting mechanisms group lending may do worse than individual lending. In this paper, we show that if, (1) the amount that a successful borrower owes for his defaulting partner is optimally determined, and (2) the penalty is allowed to vary across group members, then even in the absence of any social sanctions or cross-reporting, (1) expected borrower welfare is strictly higher with group lending when both group lending and individual lending are feasible and (2) group lending is feasible for a greater range of opportunity cost of capital. These results are robust to collusion between borrowers.     

Factors influencing the choice between founder versus non-founder CEOs for IPO firms

Despite the innate advantage founder CEOs have by virtue of their founding vision, organizational influence, positive image, and ownership stakes to lead their firms at their initial public offering (IPO), extant empirical evidence indicates that between a third to half of IPO firms go public with non-founder CEOs at the helm. Relatively little however, is known regarding factors that influence the choice of founder versus non-founder CEO for firms issuing IPOs. This study examines the impact of factors such as founder characteristics, size of founding team, governance structure, ownership structure, top management team independence, venture capitalist influence, and the demand for equity financing on the probability of founder CEO at IPO.     

The Impact of Strategic Investment Choices on Post-Issue Operating Performance and Survival of US IPO Firms

Abstract:  We examine the impact of strategic investment choices at the time of the IPO on: (i) the post-issue operating performance and (ii) the likelihood of failure and time-to-failure of newly public US firms. Our post-issue operating performance analysis uses various performance metrics, benchmarks, and expectation models. Overall, our evidence indicates that the extent of diversification and industry-adjusted capital expenditures intensity are generally positively related to changes in operating performance. We do not, however, document a consistent relation between industry-adjusted R&D expenditures and changes in operating performance. The results from our survival analysis suggest that pre-issue managerial commitment to R&D spending and developing diversified product lines enhance the ability of IPO issuing firms to remain viable for longer periods of time. Our study highlights the impact of various managerial investment decisions on the subsequent performance of newly public firms.