Determinants of the Method of Payment in Asset Sell‐Off Transactions

Using a sample of asset sell‐off transactions from January 1990 to April 2010, we find that the method of payment used in asset sell‐off transactions is associated with several characteristics cited in the acquisitions research that reflect cash constraints of the bidder. Specifically, bidders facing more stringent cash constraints are more likely to use equity when purchasing assets, while sellers subjected to cash constraints prefer cash when selling assets. Second, we find that the variation in method of payment among asset sell‐off transactions also is partially explained by variables representing asymmetric information. Third, we apply our model to an expanded sample that includes non‐U.S. sellers of assets and find that an equity payment is more likely when sellers are based in countries that have relatively high country risk (more government restrictions), weak shareholder rights, and a weak legal system. Thus, it appears that bidders prefer that sellers share in the risk of the transaction under these conditions.     

Overconfidence and optimism: The effect of national culture on capital structure

This study assesses whether variations in capital structure across countries can be explained by cultural traits. We analyze capital structure choices of firms in 42 countries and provide evidence that these decisions are affected by the degree of individualism of the country where the firm is located. We assert that managers in countries with high level of individualism exhibit strong optimism and overconfidence which cause an upward bias in perception of supportable debt ratios. Our results are robust to controlling for other firm- and country specific determinants of capital structure choices and to using alternative model specifications and estimation techniques.     

GOVERNMENT SIZE AND GROWTH: A REJOINDER

In our 2011 survey of the literature in the Journal of Economic Surveys on the effect of government size on economic growth in wealthy countries we find a relatively consistent pattern: An increase in government size by 10 percentage points is associated with a 0.5–1 percentage point lower annual growth rate. This conclusion is questioned by Colombier. In this rejoinder we present a rebuttal of Colombier's argument based on a detailed scrutiny of his own statistical evidence and regression results. Furthermore, we note that several new papers that have appeared since our original paper was published give support to our main conclusion.     

When do MNCs fail to learn from prior failure experience?

Do multinational corporations (MNCs) learn from their prior failures in international joint ventures (IJVs)? When does decision makers’ cognitive inability hinder MNCs from learning through their prior failure experiences? In the context of IJV survival in subsequent IJV entries, this study compares predictions made from two distinct theoretical perspectives, both of which belong to the behavioural school in strategy literature. According to the performance feedback perspective, MNCs may effectively learn from their prior failure experiences gained in familiar decision‐making contexts. On the other hand, according to the cognitive bias perspective, MNCs may not be able to effectively learn from their prior failure experiences if they inaccurately interpret the causes of their prior failures. The results provide partial support for the notion that MNC decision makers may not be able to effectively learn from their prior failures because of their cognitive biases. Copyright © 2015 ASAC. Published by John Wiley & Sons, Ltd.     

Building a better literature review: Looking at the nomological network of the country‐of‐origin effect

Due to a rising pace of knowledge production, reviewing extant knowledge on mature topics has become increasingly challenging. Researchers often need to account for hundreds of references with little guidance on how to proceed. Taking the phenomenon of the country‐of‐origin effect (COE) as an example, this paper proposes a solution to tackle this challenge. By adopting the principles of integrative literature reviews and using online databases, bibliography management software, and literature‐mapping techniques, I organize 355 papers about the COE. As a result, the nomological network of the COE is drawn while establishing links between the phenomenon, its antecedents, and its outcomes. This methodological article contributes to building better literature reviews. Copyright © 2015 ASAC. Published by John Wiley & Sons, Ltd.     

Kernel-type estimators for the distortion risk premiums of heavy-tailed distributions

A new kernel-type estimator for the distortion risk premiums of heavy-tailed losses is introduced. Using a least-squares approach, a bias-reduced version of this estimator is proposed. Under suitable assumptions, the asymptotic normality of the given estimators is established. A small simulation study, to illustrate the performance of our method, is carried out.     

Asymptotic comparison at optimal levels of reduced‐bias extreme value index estimators

In this article we are interested in the asymptotic comparison, at optimal levels, of a set of semi‐parametric reduced‐bias extreme value (EV) index estimators, valid for a wide class of heavy‐tailed models, underlying the available data. Again, as in the classical case, there is not any estimator that can always dominate the alternatives, but interesting clear‐cut patterns are found. Consequently, and in practice, a suitable choice of a set of EV index estimators will jointly enable us to better estimate the EV index γ, the primary parameter of extreme events.     

Sample bias in contingent valuation: A comparison of the correction methods

Abstract

This article compares various methods for correcting contingent valuation aggregate benefits when the sample is known to be biased. A sample is defined as the population, and response rates are simulated on the basis of a measure of salience. The simulated response rates suffer from nonresponse bias and selection bias. Coefficient and benefit estimates that result from weighting and self‐selection correction approaches are compared with the true coefficient and benefit estimates. Our results indicate that at both low and high response rates the standard approach leads to bias, and either correction approach will reduce the bias in coefficient and benefit estimates.     

Saving up or settling down: Home ownership over the life cycle

In a Bewley model with endogenous price volatility, home ownership and mobility across locations and jobs, we assess the contribution of financial constraints, housing illiquidities and house price risk to home ownership over the life cycle. The model can explain the rise in home ownership and fall in mobility over the life cycle. While some households rent due to borrowing constraints in the mortgage market, factors that affect propensities to save and move, such as risky house values and transactions costs, are equally important determinants of the ownership rate.