Optimal investment with fixed financing costs

Models with a premium on external finance produce counterfactual predictions about liquidity management. We address this shortcoming by introducing a fixed cost of increasing external finance into an otherwise standard investment/financing problem. This additional financial friction is well-motivated by case studies and our analysis shows that it generates more realistic predictions about liquidity management: firms hold external finance and idle cash simultaneously, and may invest an additional dollar of cash flow in liquidity rather than repaying external funds or investing in productive capital. In addition to better fitting the stylized facts about the time-series and cross-sectional pattern of liquidity holding, these results may help shed light on the fragility of estimates of investment–cash flow sensitivities.     

Intertemporal Equity and Hartwick's Rule in an Exhaustible Resource Model*

In a standard exhaustible resource model, it is known that if, along a competitive path, investment in the augmentable capital good equals the rents on the exhaustible resource (known as Hartwick's rule), then the path is equitable in the sense that the consumption level is constant over time. In this paper, we show the converse of this result: if a competitive path is equitable, then it must satisfy Hartwick's rule.     

On Sraffa's Standard commodity: is its price invariant with respect to changes in income distribution?

In his 1960 book, Sraffa suggested using a composite commodity,which he called the ‘Standard commodity’, to solveRicardo's search for an invariable measure of value, i.e., astandard capable of isolating the price movements of any othercommodity induced by changes in income distribution. The absencein Sraffa's book of an explicit proof of the invariance propertyof this standard gave rise to many misunderstandings about itsmeaning and its role as an invariable measure of value. In orderto clear up these questions, Bellino (On Sraffa's Standard commodity,Cambridge Journal of Economics, vol. 28, 121–32, 2004)has proposed a ‘proper’ definition of an ‘invariablemeasure of value’, showing that Sraffa's Standard commoditydoes fulfil the requirements of this definition. He claims thatthe fulfilment of this property (but not the constancy of its‘nominal’ price) qualifies the Standard commodityas an invariable measure of value. In this paper, a proof ofthe invariance of the price of the Standard commodity with respectto changes in income distribution is given, and the equivalenceof this property with Bellino's definition of invariance isshown.     

AN EMPIRICAL EXAMINATION OF RELATIONSHIP MAGNITUDE

Based upon a review of the extant literature, it is proposed that the structure of an interorganizational relationship is composed of relationship type and the under‐researched construct of relationship magnitude. Specifically, it is hypothesized that relationship magnitude, a second order construct composed of trust, commitment, and dependence, affects relationship type, which affects the perception of value of the relationship. The results of a survey analyzed through structural equation modeling support these hypotheses.     

Capital structure and the control of managerial incentives

We present a theory of capital structure based on the power of shareholders, bondholders and managers to control the incentive conflicts in large corporations. The manager–owner conflict produces a trade-off between inefficiency in the low state and rents in the high state, and the shareholder–bondholder conflict produces under-investment as in Myers [Journal of Financial Economics 19 (1997) 147]. Since managers and bondholders both prefer more efficient actions in the low state, the two conflicts are interdependent. With risk-less levels of debt, there are no shareholder–bondholder agency costs, but managerial control over the incentive-setting process produces excessive rents. With risky debt, shareholders focus more on returns in the high state so that shareholder–bondholder agency costs increase but managerial rents decrease. Efficient levels of debt holder protection facilitate a reduction in manager–owner agency costs that outweighs shareholder–bondholder agency costs, and are decreasing in firm performance. The results are consistent with the separate empirical results relating control to both compensation and leverage, and suggest how future studies can be integrated.     

Organizational rejuvenation for knowledge exploitation: Exploring corporate entrepreneurship in an MNE

The purpose of this paper is to study how organizational rejuvenation is used to increase and support knowledge exploitation in multinational enterprises. Using case-study data to explore the theoretical arguments, interesting findings emerge. The main finding is that entrepreneurial activities in IT industry enable organizational rejuvenation with repercussions beyond the focal function. Other findings relate to how corporate entrepreneurship activities provide possibilities for continuous knowledge exploitation within the MNE and how entrepreneurial groups inside MNEs form the foundation from which the organizational rejuvenation originates. Finally, the form of organizational rejuvenation studied embraced both structural and behavioral changes. The authors acknowledge an equal share in the development of this article.     

基于“行为经济学理论”的旅游者行为分析

传统的旅游者行为分析方法,主要是进行定性的分析,将各个因素进行框架分析,而对旅游者行为的影响因素分析深度不够。借助行为经济学的理论和分析方法,从旅游者的心理活动角度入手,注重旅游者的心理变量分析,应用前景理论和心理账户分析旅游者行为,充分考虑了情境因素和体验因素,使得关于旅游者的行为分析更加细化和接近现实生活。     

A change in market responses to the environmental management ranking in Japan

This article investigates stock price reactions to the release of the environmental management ranking issued by Nihon Keizai Shimbun (Nikkei newspaper) from 1998 to 2005, by using a standard event study methodology. An examination of stock price movements of the top 100 manufacturing companies reveals that stock prices during the sample period did not respond significantly to the release of the ranking within a 3-day event window. However, market responses became significantly positive after 2003, while they were significantly negative in 1999 and 2000. The stock prices of upgraded companies in particular reacted negatively before 2000, but positively after 2002. These results indicate that market reactions were changed between 2001 and 2002, when the Japanese government showed its strong commitment to environmental policies by establishing the Ministry of the Environment and signing the Kyoto Protocol, following a number of legislations.     

A generalization of Condorcet’s Jury Theorem to weighted voting games with many small voters

We extend Condorcet’s Jury Theorem (Essai sur l’application de l’analyse à la probabilité des décisions rendues à la pluralité des voix. De l’imprimerie royale, 1785) to weighted voting games with voters of two kinds: a fixed (possibly empty) set of ‘major’ voters with fixed weights, and an ever-increasing number of ‘minor’ voters, whose total weight is also fixed, but where each individual’s weight becomes negligible. As our main result, we obtain the limiting probability that the jury will arrive at the correct decision as a function of the competence of the few major players. As in Condorcet’s result the quota q = 1/2 is found to play a prominent role. I wish to thank Maurice Koster, Moshé Machover, Guillermo Owen and two anonymous referees for helpful comments.