Volatility of capital flows and financial liberalization: Do specific flows respond differently?

This paper examines the volatility of capital flows following the liberalization of financial markets. Utilizing a panel data set of overlapping data, the paper focuses on the response of foreign direct investment, portfolio flows, and other debt flows to financial liberalization. The financial liberalization variable comes from the chronology and index developed by Kaminsky and Schmukler [Kaminsky, G.L. and Schmukler, S.L., 2003, Short-run pain, long-run gain: The effects of financial liberalization, IMF Working Paper WP/03/34.]. Different types of capital flows are found to respond differently to financial liberalization. Surprisingly, portfolio flows appear to show little response to capital liberalization while foreign direct investment flows show significant increases in volatility, particularly for the emerging markets considered.     

Evidence on the Trade-Off between Risk and Return for IPO and SEO Firms

Do the low long‐run average returns of equity issuers reflect underperformance due to mispricing or the risk characteristics of the issuing firms? We shed new light on this question by examining how institutional lenders price loans of equity issuing firms. Accounting for standard risk factors, we find that equity issuing firms' expected debt return is equivalent to the expected debt return of nonissuing firms, implying that institutional lenders perceive equity issuers to be as risky as similar nonissuing firms. In general, institutional lenders perceive small and high book‐to‐market borrowers as systematically riskier than larger borrowers with low book‐to‐market ratios, consistent with the asset pricing approach in Fama and French (1993) . Finally, we find that firms' expected debt returns decline after equity offerings, consistent with recent theoretical arguments suggesting that firm risk should decline following an equity offering. Overall, our analysis provides novel evidence consistent with risk‐based explanations for the observed equity returns following IPOs and SEOs.     

Global and regional inequality in the distribution of income: Estimation with limited and incomplete data

The paper examines the nature and extent of global and regional inequality using the most recent country level data on inequality drawn from World Bank studies, and real per capita income from the Penn World Tables, for the period 1980–1990. The methodology employed in the paper is based on a mixture of parametric and non-parametric approaches to inequality measurement. It is designed to handle the limited and incomplete nature of income distribution data from different countries. Empirical results show a very high degree of global inequality, but with some evidence of catch-up and convergence between regions.     

Earnings Manipulation in Failing Firms

Prior literature and anecdotal evidence, most recently provided by allegations relative to Enron, Global Crossing, and WorldCom, suggest that failing firms (defined here as prebankruptcy firms) may be motivated to engage in fraudulent financial reporting to conceal their distress. I examine two research questions: (1) Are failing firms' prebankruptcy financial statements more likely to exhibit signs of material income increasing earnings manipulation than those of nonfailing firms? (2) Do auditors detect the overstatements in firms that they perceive to be failing? I predict and find that as (ex post) bankrupt firms that do not (ex ante) appear to be distressed approach bankruptcy, their financial statements reflect significantly greater material income‐increasing accrual magnitudes in nongoing‐concern years than do control firms. The accrual behavior of these firms resembles that of bankrupt firms that the Securities and Exchange Commission (SEC) has sanctioned for fraud. Like sanctioned firms, the nonstressed bankrupt firms display significantly greater (material) increases in receivables; inventory; property, plant, and equipment; sales; net working capital, current, and discretionary accruals in prebankruptcy nongoing‐concern years than do control firms. They also display significantly more negative changes in cash flows from operations and net cash and a greater disparity between accrual‐based net income and operating cash flows than do control firms, consistent with Lee, Ingram, and Howard 1999. Finally, I predict and find that these firms' going‐concern years reflect evidence consistent with auditor‐prompted reversal of previous overstatements. These results are based on parametric and nonparametric tests for various subsample combinations drawn from a sample of 293 bankrupt firms representing approximately 2,500 observations.     

Language and the Circuits of Power in a Merging Multinational Corporation

abstract    We argue in this paper that corporate language policies have significant power implications that are easily overlooked. By drawing on previous work on power in organizations ( Clegg, 1989 ), we examine the complex power implications of language policy decisions by looking at three levels of analysis: episodic social interaction, identity/subjectivity construction, and reconstruction of structures of domination. In our empirical analysis, we focus on the power implications of the choice of Swedish as the corporate language in the case of the recent banking sector merger between the Finnish Merita and the Swedish Nordbanken. Our findings show how language skills become empowering or disempowering resources in organizational communication, how these skills are associated with professional competence, and how this leads to the creation of new social networks. The case also illustrates how language skills are an essential element in the construction of international confrontation, lead to a construction of superiority and inferiority, and also reproduce post-colonial identities in the merging bank. Finally, we also point out how such policies ultimately lead to the reification of post-colonial and neo-colonial structures of domination in multinational corporations.     

A descriptive study of behavioral responses of sexual harassment targets: Implications for control theory

The problem of sexual harassment in the workplace can be viewed within the framework of personal control. In particular, sexual harassment can be viewed as an infringement upon employees' rights to control the conditions under which they work. Targets of harassment must tolerate sexual harassment to avoid negative consequences such as termination, demotion, distasteful remarks or jokes, and so forth. Previous research (Wortman & Brehm, 1975; Greenberger & Strasser, 1986) into personal control has drawn upon two theories—reactance theory and learned helplessness theory—to explain behavioral responses to infringement upon personal control. The purpose of this study is to investigate the efficacy of personal control theories in explaining responses of targets who file discrimination suits.     

Suburban Encroachment on the Old North 40: The Search for Effective Measures to Preserve Agricultural Land

A bstract . Since 1956, more than 40 states have passed some form of legislation to preserve agricultural land. These statutes or constitutional amendments invoke a variety of economic and/or legal strategies to obtain their objectives, but the most common strategy is that of the differential tax. None of the various strategies is entirely effective, however, although land resource allocation problems have prompted some economists to reexamine the merits of land value taxation. A survey of pertinent literature on land value taxation is examined in an effort to determine whether a system based on single tax principles might offer a simpler, more equitable, and therefore preferable solution to the problem of land resource allocation according to criteria believed to foster environmental conservation or social goals.     

Business,Aging, and Socioemotional Selectivity: A Qualitative Study of Gray Entrepreneurship

This three‐stage qualitative paper explores the motivations and experiences of gray entrepreneurship through age‐related lenses outlined in behavioral psychology literature. In contrast to economic approaches that presuppose financial drivers, findings reveal that intrinsic drivers such as achievement, fulfillment, and relationships had primacy among the participants in this research. Entrepreneurship enabled the older people in this study to construct their social environments in a way that maximizes the potential for positive affect, and minimizes the potential for negative affect, both in and out of work.     

Working with monsters: counting the costs of workplace psychopaths and other toxic employees

We explore the role of ‘Workplace Monsters’ in the global burden of disease, including the $US1.15 trillion annual cost of depressive and anxiety disorders. We propose the productivity drain created by these individuals is a wicked problem, integrating several disciplines to position workplace monsters as significant corporate governance issues for organisations. Our discussion covers Monster prevalence, impacts on fellow workers and estimates of the costs incurred to business. We classify Monsters as ‘appreciating liabilities’ and call for future research to develop means of accounting for their inherent organisational costs in an effort to prompt action to address their destructive impacts.