Biology,Complexion, and Socioeconomic Status: Accounting for Nineteenth Century Body Mass Index by Race

Nineteenth‐century US whites were taller than their mulatto and darker complexioned African‐American counterparts, a pattern known as the ‘Mulatto Advantage’. If this pattern was due to social preferences, fairer complexioned whites would have had greater body mass index (BMIs) values. This study shows that late nineteenth‐ and early twentieth‐century US BMIs differed by race, and darker complexions were associated with greater BMI values. Mulattos had greater BMI returns associated with socioeconomic characteristics, indicating that while blacks had greater BMIs than fairer complexioned whites and mulattos, part of the difference was offset by socioeconomic characteristics that favoured fairer complexions.     

Corporate Governance, Internal Decision Making, and the Invisible Hand

Proponents of the dominant contemporary model of corporate governance maintain that the shareholder is the primary constituent of the firm. The responsibility for managerial decision makers in this governance system is to maximize shareholder wealth. Neoclassical economists ethically justify this objective with their interpretation of Adam Smith's notion of the Invisible Hand. Using a famous quotation from The Wealth of Nations, they interpret the Invisible Hand as Smith's (An Inquiry into the Nature and Causes of the Wealth of Nations, Methuen &; Co., London) assertion that market participants, in pursuing their own self-interests without regard to the interests of others, will collectively provide the optimal economic benefit to society. We argue that the traditional interpretation of Smith is too narrow and potentially harmful to society. In order to fully understand Smith's notion of the influence of the Invisible Hand on human behavior, one must also consider The Theory of Moral Sentiments. In that work, Smith (The Theory of Moral Sentiments, A. Millar, London) portrays the pursuit of self-interest as only one of several potential motivations for human action. He also acknowledged the existence of a “sympathy principle,” which refers to the ability and propensity of human beings to consider the interests of others. Heilbroner (The Essential Adam Smith, W.W. Norton, New York, p. 59) suggests that Smith's sympathy principle allows one to “determine the appropriate degree of self-interest, the proper display of benevolence, the desirable strictness of justice.” In fact, Smith indicates that (1) a society whose members pursue self-interest without a sense of justice will eventually collapse; (2) a society whose members pursue self-interest checked by their sense of justice alone will survive; (3) a society whose members pursue self-interest, justice, and the interests of others will flourish. Since a more complete reading of Smith indicates that human beings, in considering their own interests, also reflexively consider the interests of others when making decisions, then the traditional corporate governance model appears to be lacking. A broader, multiple stakeholder approach to corporate governance that considers the interests of other constituencies may be more consistent with Smith's views. In particular, Smith's sympathy principle provides a theoretical foundation for a shift away from the narrow, yet dominant, shareholder-based corporate governance model and toward multiple stakeholder models of corporate governance [e.g., Business and Society: A Strategic Approach to Corporate Citizenship, Houghton Mifflin, Boston, MA] and internal decision-making [e.g., Sloan Management Review 38, (1997) 25–37].     

Organizational Ethics in Developing Countries: A Comparative Analysis

Relationships with one’s employees, co-workers, or superiors create ethical dilemmas. Employees’ judgments and ethical perceptions have been extensively studied in Western cultures, but not in developing countries. The purpose of this investigation is to examine employees’ self-reported work-related ethics and compare them to their perceptions of co-workers’ and top managements’ along various morally challenging situations in three developing countries’ organizations. Saudi Arabia, Kuwait, and Oman, known as the Gulf countries, were selected as the research setting – and provided the sampling frame – for this study. The results suggest that respondents perceived all ethically challenging situations as unethical and had significant differences among themselves regarding the ethical perceptions of self, as compared to perceptions of peers’, and top managements’. Discussion of the results and implications are provided.     

Higher Education and Economic Mobility: Who Punches Above Their Weight?

Atlantic Economic Journal -     

Evidence of Manager Intervention to Avoid Working Capital Deficits

We study managers’ interventions in financial reporting by examining working capital deficits, measured as current ratios less than 1.0. Current ratios represent important balance sheet liquidity indicators to lenders and creditors, and have an identifiable and naturally occurring reference point at 1.0, analogous to the profit/loss income statement reference point. We find that distributions of reported current ratios of both U.S. and non‐U.S. firms exhibit a discontinuity at 1.0. For U.S. firms, we find that the discontinuity increases with exogenous increases in the cost of credit in the economy, and that determinants of the likelihood to achieve a given current ratio are diagnostic precisely at the 1.0 discontinuity location but not at other nearby locations in the current ratio distribution. U.S. firms that avoid working capital deficits report lower proportions of inventory and higher proportions of accounts receivable in current assets and, when credit is tight, higher proportions of cash, consistent with managers increasing sales volume so as to capitalize profit margins and thereby increase current assets. For non‐U.S. firms, the discontinuity is more pronounced for observations from common law countries, a proxy for jurisdictions where financial reports are more intended to provide decision‐useful information. The evidence suggests that managers intervene to achieve a balance sheet reporting objective that stems from stakeholder use of reference points.     

Capital Structure Decisions in the Insurance Industry: Stocks versus Mutuals

Mutual insurers generally face higher costs of raising new capital than stock insurers. Other things being equal, the higher costs of raising capital should cause mutual insurers to have higher ex ante target capital to liability ratios than stock insurers. Mutual insurers' capital ratios also should be more sensitive to income than capital ratios for stock insurers and therefore adjust more slowly toward their long-run targets. We provide evidence concerning these issues using aggregate time series data for stock and mutual insurers during 1984–1999 and a large panel data set during 1991–1998. Our regressions provide strong evidence that annual changes in capital to liability ratios are more sensitive to income for mutual insurers than for stock insurers. We also provide evidence that mutual insurers' capital ratios are on average higher than those for stock insurers after controlling for several factors that could influence capital ratios.     

The Creation and Spread of Technology and Total Factor Productivity in China's Agriculture

The overall goal of this study is to create a framework for assessing the trends of China's national and international investment in agricultural research and to measure its impact on total factor productivity. The main methodological contribution is to provide more convincing measures of crop–specific technologies from China's national research program and of those imported from the international agricultural research system. Our results find that from 1980 to 1995, China's total factor productivity for rice, wheat, and maize grew rapidly and new technology accounts for most of the productivity growth.     

Transgenic varieties and productivity of smallholder cotton farmers in China

Genetically modified cotton varieties have greater production efficiency for smallholders in farming communities in China. We also find that the adoption of Bacillus thuringiensis (Bt) cotton varieties leads to a significant decrease in the use of pesticides. Hence, we demonstrate that Bt cotton appears to be an agricultural technology that improves both production efficiency and the environment. In terms of policies, our findings suggest that the government should investigate whether or not they should make additional investments to spread Bt to other cotton regions and to other crops.