Corporate Governance,Tax Avoidance,and Financial Constraints

We examine how corporate governance affects the relationship between corporate tax avoidance and financial constraints. Conditional on having poor governance, tax avoidance is associated with greater financial constraints and a greater likelihood of financial distress. In firms with strong governance, however, we find that tax avoidance does not have a negative impact on financial constraints. Our results suggest that tax avoidance is a less useful source of financing for constrained firms when they are plagued with potential agency problems and opaque information environments. Stronger governance mechanisms can help firms mitigate the negative consequences of tax avoidance.     

The impact of regulatory review time on incremental and radical innovation: evidence from the high-risk medical device market

Journal of Regulatory Economics - We theoretically and empirically study the effect of variation in regulatory review time on firms’ choices between radical and incremental innovations. We...     

On the decision to go public with dual class stock

Why do firms deviate from a one share-one vote regime when going public? This question raises considerations that are at the core of many corporate governance issues. We consider three arguments for this choice. Examining data on IPOs from 1980 through 2008, we do not find that firms go public with dual class stock so managers have more incentive to invest in hard to monitor projects nor to gain more when selling control of the firm. Rather, managers appear to take their firms public with dual class stock in order to retain control of their firms while reducing their lack of diversification costs.     

Why do large shareholders adopt a short‐term versus a long‐term investment horizon in different firms?

I ask why the same large shareholders have different investment horizons. Using data for 1998–2013, I examine four fundamental firm policies for their potential influence on blockholders’ investments with different time horizons. The panel ordinary least squares, difference‐in‐difference (using the Sarbanes‐Oxley Act), logistic, and dynamic generalized method of moments regression analyses reveal that blockholders adopt a short‐term horizon in smaller firms with a less independent board, high leverage, and high dividends while the same blockholders keep their investments longer in firms with a more independent board and low dividends. Under various economic conditions, different firm characteristics gain importance in blockholders’ decision on short‐term versus long‐term investments.     

Avatars as information: Perception of consumers based on their avatars in virtual worlds

The presence of consumers and companies in the virtual worlds has increased in recent years. It is predicted that 80% of active Internet consumers and Fortune 500 companies will have an avatar or presence in a virtual community, including social networks, by the end of 2011 (eMarketer, 2007 ). The increase in the number of consumers with avatars emphasizes the need for a better understanding of who these consumers behind the avatars really are in order to convert these individuals to online and real‐world customers. The objective of this paper is to investigate how avatars reflect the personality of their creators (targets) in virtual worlds. Using the Brunswik Lens Model as the theoretical framework, an investigation of real consumers in the virtual world Second Life reveals that perceivers who view targets' avatar use particular thin‐slices of observations such as avatar cues (e.g., attractiveness, gender, hairstyle) to form accurate personality impressions about targets. The findings support the premise that real‐life companies that intend to expand to virtual worlds can use member avatars as a proxy for member personality and lifestyles. As a future research direction, avatars and other consumer‐generated media could be used as the basis for targeting and segmentation of online consumers. © 2010 Wiley Periodicals, Inc.     

A consumer-surplus standard in foreign acquisitions,foreign direct investment,and welfare

Review of World Economics - This study scrutinizes the ramifications of the strategic use of a consumer welfare argument in regulating foreign acquisitions and foreign market entry (i) on a...     

Public Procurement Auctions and Competition in Turkey

This paper empirically investigates the effect of the competitive environment (number of participants) on the cost of procurement. We use a unique dataset provided by the Public Procurement Authority (PPA) of Turkey that covers all of the government procurement auctions for the years 2004–2006. First, after controlling for possible endogeneity, we show that the number of bidders significantly and negatively affects the procurement price. Thus, the existence of a more competitive environment significantly decreases procurement costs in Turkey. Second, when auctions are open to foreign participation, the auction price tends to be lower. Finally, prices in services and goods sectors are more sensitive to changes in the number of bidders than is true for the construction sector. The results of this paper have several policy implications for e-procurement and efficient procurement design.     

Anonymous and neutral social choice: a unified framework for existence results,maximal domains and tie-breaking

Review of Economic Design - We present a group-theoretical method to analyze and compare necessary and sufficient conditions on the size of the social choice problem for the existence of anonymous,...