Price and Probability: Decomposing the Takeover Effects of Anti-Takeover Provisions

We study the effects of anti-takeover provisions (ATPs) on the takeover probability, the takeover premium, and target selection. Voting to remove an ATP increases both the takeover probability and the takeover premium, that is, there is no evidence of a trade-off between premiums and takeover probabilities. We provide causal estimates based on shareholder proposals to remove ATPs and address the endogenous selection of targets through bounding techniques. The positive premium effect in less protected firms is driven by better bidder-target matching and merger synergies.     

The Vote Is Cast: The Effect of Corporate Governance on Shareholder Value

This paper investigates whether improvements in the firm's internal corporate governance create value for shareholders. We analyze the market reaction to governance proposals that pass or fail by a small margin of votes in annual meetings. This provides a clean causal estimate that deals with the endogeneity of internal governance rules. We find that passing a proposal leads to significant positive abnormal returns. Adopting one governance proposal increases shareholder value by 2.8%. The market reaction is larger in firms with more antitakeover provisions, higher institutional ownership, and stronger investor activism for proposals sponsored by institutions. In addition, we find that acquisitions and capital expenditures decline and long‐term performance improves.     

Using Charm to Adjust for Cross-Hauling: The Case of the Province of Hubei,China

Data for the Chinese province of Hubei are used to assess the performance of Kronenberg's Cross-Hauling Adjusted Regionalization Method (CHARM), a method that takes explicit account of cross-hauling when constructing regional input–output tables. A key determinant of cross-hauling is held to be the heterogeneity of commodities, which is estimated using national data. However, contrary to the authors’ findings for Finland, CHARM does not generate reliable estimates of Hubei's sectoral exports, imports and volume of trade, although it is more successful in estimating sectoral supply multipliers. The poor simulations of regional trade are attributed to the fact that Hubei is a relatively small region, where there is a large divergence between regional and national technology and pattern of final demand. The simulation errors are decomposed into components reflecting differences between regional and national technology, final demand and heterogeneity. The third component is found to be the least important of the three sources of error.     

Evaluating the FLQ and AFLQ formulae for estimating regional input coefficients: empirical evidence for the province of Córdoba,Argentina

This paper uses survey-based data of the Argentinian province of Córdoba to conduct an empirical test of the performance of the Flegg's location quotient (FLQ) and augmented FLQ (AFLQ) formulae for estimating regional input coefficients. A comparison is made with conventional methods based on location quotients. The possibility of using prior information about the extent of self-sufficiency of particular sectors is explored. The empirical work employs a range of statistical criteria with contrasting properties, and examines performance in terms of each method's ability to estimate regional input coefficients, output multipliers and imports. Particular attention is paid to the problem of choosing a value for the unknown parameter δ in the FLQ and AFLQ formulae. These formulae are found to give the best overall results of the non-survey methods considered in the paper. However, the AFLQ typically produces slightly more accurate results than the FLQ, in line with the findings of previous studies.     

Congestion in the Chinese automobile and textile industries revisited

This paper re-examines a problem of congested inputs in the Chinese automobile and textile industries, which was identified by Cooper et al. [Cooper WW, Deng H, Gu B, Li S, Thrall RM. Using DEA to improve the management of congestion in Chinese industries (1981-1997). Socio-Economic Planning Sciences 2001;35:227-242]. Since these authors employed a single approach in measuring congestion, it is worth exploring whether alternative procedures would yield very different outcomes. Indeed, the measurement of congestion is an area where there has been much theoretical debate but relatively little empirical work. After examining the theoretical properties of the two main approaches currently available, those of Färe et al. [Färe R, Grosskopf S, Lovell CAK. The measurement of efficiency of production. Boston: Kluwer-Nijhoff; 1985] and Cooper et al., we use the data set assembled by Cooper et al. for the period 1981-1997 to compare and contrast the measurements of congestion generated by these alternative approaches. We find that the results are strikingly different, especially in terms of the amount of congestion identified. Finally, we discuss the new approach to measuring congestion proposed by Tone and Sahoo [Tone K, Sahoo BK. Degree of scale economies and congestion: a unified DEA approach. European Journal of Operational Research 2004;158:755-772].     

On the determinants of infant mortality in underdeveloped countries

The author attempts to identify the determinants of infant mortality in developing countries and, in particular, to overcome some of the deficiencies of a previous study by G. B. Rodgers. The roles of income and inequality as determinants of infant mortality are first examined. Next, consideration is given to the effects of education and medical care. A selection of regression results is then presented. The results provide some evidence as to why infant mortality rates, which fell rapidly in the two decades following World War II, stabilized in the late 1960s and 1970s. They also suggest that developing countries that place low priority on improving women's education and on attaining a more egalitarian distribution of incomes are unlikely to achieve a rapid reduction in their infant mortality rates.     

The demographic effects of income redistribution and accelerated economic growth revisited

The statistical basis of Winegarden's conclusions, i.e., that an egalitarian redistribution of incomes in a typical low-income country would cause a substantial increase in fertility, was examined in detail in that it casts doubt about the validity of all previous econometric studies based on international cross-sectional data. Winegarden's model is reproduced as are his findings. The reexamination of Winegarden's (1984) findings revealed 3 areas which suggest that his conclusions may require modification. In regard to family planning, Winegarden's results indicated that the introduction of a state-supported family planning program would cause a large decline in natality after about a decade. A much weaker relationship emerged when the fertility equation was recomputed using a more appropriate economic method. Further, the results were highly sensitive to changes in the threshold year used to classify countries with regard to family planning programs. It is argued that a qualitative index devised by Mauldin and Berelson (1978) provides a more reliable way to measure the effects of such programs than the binary variable Winegarden used. The use of this index fundamentally altered the findings regarding economic growth and income distribution. According to Winegarden's calculations, faster economic growth would have a pronatal impact in the more economically advanced nations yet help to reduce fertility for those countries in the early stages of development. In contrast, it was found that variations in the rate of economic growth had no discernible impact on natality. Winegarden's results suggested that an egalitarian redistribution of incomes would cause substantial increase in fertility in a typical low-income country, but it was found here that these distributional effects would be fairly modest over a wide range of incomes. Consequently, it appears that any concern about the demographic effects of greater equality in less-developed countries is not well-founded. The potential for reducing natality in the richer nations by means of income redistribution may be overstated by Winegarden's results.     

Communities,institutions and natural resources: An assessment of case‐studies from KwaZulu Natal

This article describes three community‐based organisations (CBOs) that were established to protect natural resources in parts of KwaZulu Natal. The object is to determine why some CBOs are more successful than others. The case‐studies (Dukuduku Forest, Shongweni Resources Reserve and Thukela Biosphere Reserve) are analysed and compared using criteria suggested by the theory of institutional economics. It is concluded that the rural poor are unlikely to comply with rules restricting their access to natural resources unless the benefits are obvious. Creating appropriate management institutions is a necessary first step, but it may also be necessary to subsidise their enforcement costs and development programmes.