The Role of Ethical Standards in the Relationship Between Religious Social Norms and M&A Announcement Returns

Journal of Business Ethics - Prior studies suggest that firms headquartered in areas with strong religious social norms have higher ethical standards. In this study, we examine whether the ethical...     

What Drives Fraud in a Credence Goods Market? – Evidence from a Field Study

This paper investigates the impact of competition on an expert firm's incentive to defraud its customers in a credence goods market. Controlling for the competence of car repair shops, their financial situation, and reputational concerns, we use and complement the data set from a nationwide field study conducted by the German Automobile Association that regularly checks the reliability of garages in Germany. We find that more intense competition lowers a firm's incentive to defraud its customers.     

Trade policy substitution: theory and evidence

Review of World Economics - With the help of a political economy model, we show that the extent of ‘trade policy substitution’—namely, substitution of tariffs with non-tariff...     

Tobacco retail licences and state formation in early modern England and Wales

This article addresses one under‐studied aspect of Charles I's finances during his Personal Rule: the licensing of tobacco retailers. While it was ultimately a failed project, the tobacco retail licence project was fiscally successful before the transformative events of the 1640s triggered its demise. The project enabled tobacco retail licensees to establish commercial outlets for the marketing of tobacco throughout England and Wales, and cooperation with pre‐existing officeholders contributed to the apprehension of unlicensed retailers. Ultimately, the geographic breadth of tobacco licences translated into much‐needed royal revenue which, when added to other projects and patents, contributed to the king's financial survival. The evidence presented here suggests that we may want to rethink some of our assumptions for how the process of state formation worked and that earlier seventeenth‐century ‘prototypes’ of taxation were more fiscally successful than previously recognized.     

Prediction based on entrepreneurship-prone personality profiles: sometimes worse than the toss of a coin

Small Business Economics - The human personality predicts a wide range of activities and occupational choices—from musical sophistication to entrepreneurial careers. However, which method...     

An Empirical Analysis of Short-run and Long-run Irish Export Functions: Does exchange rate volatility matter?

We analyse the long-run and short-run relationship between merchandise export volume and its determinants, foreign income, relative prices and exchange rate volatility, using the techniques of cointegration and error correction. The model was estimated for Irish exports and sectoral exports SITC 0-4 and SITC 5-8 to the EU using quarterly data for the period 1978-1998. The sectoral classification corresponds to the exports of mainly indigenous Irish firms and multinationals, respectively. We find that the exchange rate volatility has no effect on the volume of trade in the short-run but a significant positive effect in the long run. This is true in the aggregate and for our sectoral classifications. We can tentatively conclude that the decline in intra-EU exchange rate volatility associated with the single currency will lead to a long-run fall in Irish exports to the EU.     

An exceptional development pattern

This paper investigates India's exceptional development pattern, specifically the major importance of information technology services (ITS), and compares it with China's development pattern. Both countries want to develop capabilities for carrying out the innovation of technologies that compete at the state-of-the-art in the world market. The paper posits that technological/economic success in the contemporary world market requires the ability to innovate complex technologies and complex technology-related services. The share of trade represented by complex technologies is compared with the “high-tech” share. The trading patterns of the two countries are compared using United Nations data. Two case studies of Indian ITS companies are then compared with two case studies of Chinese manufacturing companies. Historical and cultural differences appear to explain some of the differences in the development patterns of the companies located in the two countries.     

Are the Best Small Companies the Best Investments?

Previous research finds that large companies previously judged to be excellent growth companies have subsequently been poor investments. We examine small companies selected by Business Week on the basis of multiple criteria used in annual articles featuring highly rated growth companies. We study the investment performance over the three years before eleven annual Business Week publications and the three years after publication. We find positive excess returns in the pre‐publication period, but negative excess returns in the post‐publication period. This reversal in investment performance appears to be due to a mean‐reversion tendency in operating performance, in which the earnings and the past rates of return on capital of such companies subsequently decrease significantly.     

Financial Structure and Corporate Behavior in Japan and the US: insulation versus integration with speculative pressures

This paper examines the impact of speculative financial markets on corporate behavior under the Japanese and US financial systems. While both countries experienced speculative financial booms during the 1980s, real sector corporate decision making was relatively insulated from such activity in Japan by its bifurcated capital markets: high-turnover trading of much equity coexists with another segment in which large blocks of firms equity and debt are held long term, by capital suppliers who are strategic business allies. In the American system, in contrast, fluid and impersonal stock trading leaves firms vulnerable to the impact of short term price movements. This avenue for speculative financial market pressures has militated toward reduced time horizons and financial ratio-based decision criteria in the US corporate sector. The main implication is that mechanisms must be found for insulating American corporate decision making from speculative pressures. Rather than attempting to mimic the undemocratic role played by banks and other buysiness insiders in Japan, US policy makers should achieve a similar insulating effect by vesting more power in corporate constituences other than shareholders—especially employees. An approach built around ‘democratic stakeholder governance’ is proposed.