The quality of accounting information in politically connected firms

We document that the quality of earnings reported by politically connected firms is significantly poorer than that of similar non-connected companies. Our results are not due to firms with ex-ante poor earnings quality establishing connections more often. Instead, our results suggest that, because of a lesser need to respond to market pressures to increase the quality of information, connected companies can afford disclosing lower quality accounting information. In particular, lower quality reported earnings is associated with a higher cost of debt only for the non-politically connected firms in the sample.     

Relationship Banking and the Pricing of Financial Services

We investigate pricing effects of the joint production of loans and security underwritings. We control for firm and borrower characteristics, including differences in sequencing, which are important for pricing. Contrary to previous studies, when banks combine lending and underwriting within the same customer relationship they charge premiums for both loans and underwriting services. Abstracting from effects of joint production within relationships, depository banks engaged in underwriting price lending and underwriting more cheaply than stand alone investment banks. One advantage borrowers enjoy from bundling products within a banking relationship is a form of liquidity risk insurance, which is manifested in a reduced demand for lines of credit. We also find evidence of a “road show” effect; firms enjoy loan pricing discounts on loans that are negotiated at times close to the debt underwritings, whether or not the same bank provides both services. Relationship effects are only visible when lending and underwriting both occur, and are stronger for equity-loan relationships than for debt-loan relationships. Electronic supplementary material  The online version of this article (doi:) contains supplementary material, which is available to authorized users.

Its Bark is Worse Than its Bite: The Wage and Employment Effects of the Minimum Wage in the US

This study examines the effect of changes in the US minimum wage on wages and employment in 32 industries selected for their presumed sensitivity to the minimum wage. Applying time series techniques commonly used in macroeconomics and finance to changes in the minimum wage occurring from 1967 and 1991, we initially test for a wage response; only where one is found do we test for an employment response. Twenty-five per cent of the industry/minimum-wage-increase pairs show evidence of an appropriate wage response. Eight of these 54 show a statistically significant negative employment response, while six show significant, positive employment responses. Positive effects may be due to either a high variance distribution centred on zero or markets with 'lemons' problems concerning worker quality. Limiting analysis to industries in which the minimum wage binds provides no evidence of a consistent negative relationship between the historical minimum wage and employment.     

Mobility effects of b2c and c2c e-commerce in the Netherlands: a quantitative assessment

For more than a decade researchers have been interested in the implications of e-commerce for personal travel and freight transport. So far it is mostly the mobility effects of business-to-consumer (b2c) e-commerce that have been studied. However, consumer-to-consumer (c2c) e-commerce is becoming popular and may have important implications for mobility as well. Moreover, most studies conducted thus far have looked at the consequences of b2c e-commerce for either personal or freight travel, but not for both.This paper takes a more comprehensive approach. Using a nationwide sample of 3000 Dutch e-shoppers we calculated the potential impacts of both types of e-commerce on personal and freight travel. The results indicated that personal travel in the Netherlands has only marginally decreased as a result of e-shopping, while freight transport has slightly increased. The outcomes showed a net mobility effect, as the reduction in personal travel was not fully compensated by the increase in freight transport. However, this mobility reduction was fully attributed to b2c e-commerce, as c2c e-commerce led to an increase in both personal travel and freight transport.     

Subsidisation of Upland Conservation in West Java: The Citanduy II Project 1

The Citanduy II Project's model farm program on steep slopes in West Java was started in 1981 with the dual goals of reducing erosion and increasing farmer incomes. Limited success in reaching both goats has been achieved. Subsidies used to implement the program, however, could have been allocated more efficiently.     

Corporate Equity Ownership, Strategic Alliances, and Product Market Relationships

This paper examines long-term block ownership by corporations and performance changes in firms with corporate block owners. We also examine potential reasons for corporate ownership including benefits in product market relationships, alleviation of financing constraints, and board monitoring by corporate owners. We find the largest significant increases in targets' stock prices, investment, and operating profitability when ownership is combined with alliances, joint ventures, and other product market relationships between purchasing and target firms, especially in industries with high research and development. Our findings are consistent with the conclusion that block ownership by corporations has significant benefits in product market relationships.     

Autonomy strategies of government owned business corporations in Canada

State-owned enterprises, referred to as “government owned business corporations” in this paper, are a common phenomenon in Canada, are increasing in number, and are contributing substantially to the economy. The environment for these corporations is examined to establish the principal components and to identify two dominating trends in public policy, privatization and commercialization. The paper suggests that these trends, plus management's desire for flexibility, are resulting in the formulation of autonomy strategies designed to increase management's decision making capability relating to operating and strategic management with less government interference. A final section integrates the environment and autonomy strategies discussions to develop a typology for classifying the behaviour of government owned business corporations. The paper concludes that managers of government owned business corporations in Canada are formulating and implementing autonomy strategies because of environmental factors, public policies, and management's desire for independence.