Economic growth under political accountability

We examine the impact of political and criminal accountability on economic growth. Governments seek to maximize their own consumption by extracting rents that are costly to growth. When citizens are able to depose politicians through elections, governments are tightly controlled. The rents politicians are able to extract increase in the length of their term. The effect of the threshold of criminal responsibility on the ability of voters to control politicians is non-monotonic. When tenure in power does not depend on economic performance, rent extraction is limited only by the effectiveness of oversight mechanisms but does not depend on time horizons of the rulers. Accumulation constraint binds only rulers who are neither politically nor criminally accountable.     

Effects of family ownership and management on small business equity financing

Equity financing is important in financing growth but its special features in small business have not been well addressed in the finance or entrepreneurship literature. Since many small firms have family involvement and research shows that family firms have both advantages and disadvantages in managing agency costs, how family involvement and agency issues interact to affect equity financing in small business is an important topic of research. This study examines the effects of family ownership and management on two dimensions of small business equity financing, the use of equity financing and the use of public equity financing within the agency theory of financing. The results show that family involvement and agency issues interactively and separately influence equity financing in small business.     

A Study of the Validity of the Moral Ethos Questionnaire and its Transferability to a Chinese Context

This paper begins by comparing and contrasting the Moral Climate Questionnaire (MCQ) and the Moral Ethos Questionnaire (MEQ), and identifies differences in their theoretical orientations. It argues that they seek to measure different things and should not be seen as competing instruments. The MEQ is based on Kohlbergian assumptions, regards the six individual stages of moral development as having equivalents within organisational moral atmosphere, and measures the relative strength of these organisational stages or forces. In validating the MEQ, one problem is its ranks-based questionnaire format, making standard assessments of reliability and validity difficult. The researchers investigated the MEQ's cross-cultural transferability and comprehensibility, by assessing how accurately three groups of 60 undergraduate business students, two Hong Kong Chinese and one Australian, assigned MEQ items to their designated stages. The Australian group met the comprehensibility criterion of 50% stage assignments (hits), but the Chinese did not, with Chinese students using an English version of the MEQ achieving fewer accurate hits than those using an expertly translated Chinese version. The results indicated some lack of cross-cultural transferability and some language-related interpretation differences. Students tended to assign stages 2, 3 and 4 items with greater accuracy than stages 1, 5 and 6, and the paper gives explanations for the lower comprehensibility of the latter. The paper concludes with comments on teaching Kohlbergian concepts to Chinese students and using the MEQ to research Chinese organisations.     

Social conflict and growth

Despite the predictions of the neoclassical theory of economic growth, we observe that poor countries have invested at lower rates and have not grown faster than rich countries. To explain these empirical regularities we provide a game-theoretic model of conflict between social groups over the distribution of income. Among all possible equilibria, we concentrate on those that are on the constrained Pareto frontier. We study how the level of wealth and the degree of inequality affects growth. We show how lower wealth can lead to lower growth and even to stagnation when the incentives to domestic accumulation are weakened by redistributive considerations.     

A NOTE ON INVESTMENT DECISION RULES BASED ON UTILITY FUNCTIONS

Many investment decision models are formulated on the basis of certain assumptions regarding investor's tastes combined with the assumed objective of expected utility maximization. The rules are often expressed in the form of a finite number of moments of the returns distributions, depending on the specific utility function restrictions imposed. For example, mean/variance decisions have been derived using the assumption of a quadratic preference function. Borch (1969) and many others have demonstrated the ambiguity of mean/variance decision rules based on this specific utility functional form. In this note, Borch's findings are extended t o all investment decision rules based on the assumption of any finite order utility function for a general class of risk averters.     

Employment Status Persistence in the Japanese Labour Market

The growth of non‐standard employment has become a cause for concern for policy‐makers trying to boost output and keep unemployment low while also maintaining job security. This paper estimates a dynamic unobserved effects model using the Keio Household Panel Survey, an individual‐level panel data set, to investigate the effects on future employment opportunities of employment in Japan's non‐standard employment and regular employment sectors. I find strong evidence of persistence within the labour market, suggesting that past employment experience has a significant impact on future labour market outcomes.