Pressure and Politics in Financial Accounting Regulation: The Case of the Financial Conglomerates in the Netherlands

This article examines the political process of promulgating two controversial laws which pertain to the reporting of Dutch financial conglomerates. Central to the study is the exploration of the lobbying efforts observed during the process, and the interaction between the government, the supervisors of banks and insurance companies, the industry and its associations, and the users and auditors of annual reports of financial conglomerates. Previous studies in accounting-rule development have often ignored influences that do not fall within the formal regulatory procedures. By adopting an inductive research approach, this study explores in some detail the behaviour of participants, including their use of informal lobbying methods. Pluralist theory is used to explain the nature of the political process and the behaviour of interested parties. The findings indicate that the Dutch political process in accounting matters is indeed pluralistic. Although auditors and producers of accounts seem to have greater possibilities to participate, the users of corporate reports are able to voice their opinion effectively. Overall, the users' preferences were acknowledged in the final rules governing the reporting by financial conglomerates.     

Joint liability among bank borrowers

Summary. A common feature of financial intermediaries is that the welfare of one borrower is adversely affected by the poor performance of other borrowers. That is, there exists a degree of joint liability among the borrowers of a financial intermediary. This paper provides an explanation for this observation. It demonstrates that in Krasa and Villamil's [14] formalization of a financial intermediary as a delegated monitor, intermediation with joint liability between borrowers Pareto dominates intermediation without joint liability.Received: 4 September 2002, Revised: 21 March 2003, JEL Classification Numbers: D8, E5, G2, G3.I am particularly indebted to Douglas Diamond and Robert Townsend for their advice on this paper. I thank an anonymous referee for helpful comments.     

DO MARKETS PENALIZE AGENCY CONFLICTS BETWEEN CONTROLLING AND MINORITY SHAREHOLDERS? EVIDENCE FROM CHILE

Using a sample of Chilean listed firms with widespread presence of economic conglomerates that use pyramid structures to control affiliated companies, we find that firms where controlling shareholders have higher coincidence between cash and control rights are persistently more valued by the market. We carefully check that our results are not driven by omitted variable biases and control for reverse causation using a feature of Chilean Corporations Law that provides an exogenous instrument for ownership concentration.     

Excess value and restructurings by diversified firms

We examine whether restructuring decisions by diversified firms are related to their excess values. We find that changes in diversification level, measured as changes in the number of segments or number of industries, are positively and significantly associated with excess values. Further, at lower levels of excess values, firms are significantly more likely to increase focus than maintain their existing levels of diversification and, at higher levels of excess values, they are significantly more likely to diversify further than maintain or reduce their current levels of diversification. These findings indicate that excess value variations are meaningful and predict restructuring decisions.     

Financial market frictions and diversification

We find new facts that relate the evolution of firm scope to the changing frictions in external capital markets over the last three decades. We find that large, diversified publicly traded firms increase their scope during times of high external capital market frictions, such as in the recent Great Recession. Moreover, during these times firms diversify their investment needs and cash flow across industries. We also find similar phenomena outside diversified public firms. Examining the mergers and acquisitions activity of stand-alone and diversified private firms, we uncover similar patterns. In aggregate data, we find that the composition of mergers shifts from focused to diversifying and back with changes in external market conditions. Our evidence is broadly consistent with the notion that firms diversify their scope in response to tightening in external capital markets.     

德国金融集团的监管

德国于2002年实行统一监管,金融监管局依照《欧盟金融集团监管指令》,对金融集团统一监管。德国金融集团监管的制度安排对中国金融控股公司的监管具有一定的启示意义。     

The Political Economy of Multinational Conglomerates in Nigeria

Abstract

The paper analyzes the operations of the multinational conglomerates so as to determine the impact of their operations on the Nigerian economy, and especially on the manufacturing sector. It also investigated the possible problems hindering their operations. In an attempt to accomplish these objectives, we employed both survey and investigative research methods using regression modeling and estimation. The analysis of the secondary evidence indicates that, generally, the investment activities of conglomerates are found to positively and significantly relate to the output performance of the manufacturing sector of the Nigerian economy. The primary data analysis confirms this finding. On the other hand, they are seen to exploit natural resources and the workforce to the detriment of the country, and by repatriating all available funds and profits to overseas economies, the economy is starved of needed funds. However, their positive contributions to the Nigerian economy were seen to outweigh their negative contributions. This is particularly true of the manufacturing sector. Two perennial problems confronting the conglomerates in their investment activities relate to environmental hostilities and communal disturbances/social upheavals. Other problems relate to political risks, instability and impasse, and unstable economic climate.     

The determinants and evaluation of merger success

Many decry the preponderance of merger failures and conclude that mergers and acquisitions (M&A) are failed strategies. However, analysis of the causes of failure has often been shallow and the measures of success weak. The research reported here focuses on what makes a merger successful and what is the appropriate manner of evaluating merger success. Extensive field research of the merger of J.P. Morgan and Chase Manhattan Bank in 2000 is used to illustrate the drivers of merger success and how to improve and value the contributions of mergers.     

Testing Forbearance Experimentally: Duopolistic Competition of Conglomerate Firms

Like Feinberg and Sherman (1985) and Phillips and Mason (1992), we test experimentally whether conglomerate firms, i.e. firms competing on multiple, structurally unrelated markets, effectively limit competition through forbearance. Unlike these authors, our more general analysis assumes differentiated rather than homogeneous products and distinguishes strategic substitutes as well as complements to test their forbearance hypothesis. We vary the duration of the interaction to disentangle effects of forbearance and repetition. Surprisingly, rather than limiting competition, conglomerate firms foster it. In line with our expectations, we find more cooperation with strategic complements than with strategic substitutes and also more cooperation with long term than with short term interaction.     

论银行风险与信贷环境的关系以及对我国银行业的启示

通过对经济周期、金融危机和银行行为三者之间的关系进行考察发现:银行的风险水平以不对称的方式反映了信贷市场环境的变化。一般而言,当信贷市场环境出现恶化时,资本充足率和功能分散化程度较高的银行表现出较低的敏感度。这一结论对于我国银行业的改革有着重要启示。