We examine the relation between audit committee compensation and the demand for monitoring of the financial reporting process. We find that total compensation and cash retainers paid to audit ...committees are positively correlated with audit fees and the impact of the Sarbanes-Oxley Act, our proxies for the demand for monitoring. Our results are robust to the inclusion of audit committee quality, measured as the committee chair financial expertise. Our results suggest a recent willingness by firms to deviate from the historically prevalent one-size-fits-all approach to director pay in response to increased demands on audit committees and differential director expertise.
Many researchers have addressed concerns of omitted variable bias in hedonic price models through the use of spatial fixed effects. We argue that this approach does not consider the biases introduced ...by effects that overlap the zone of capitalization for nonmarket goods. We show this bias can dominate the usual omitted variable bias using data on developer-provided open space. We control for multiscale capitalization and omitted variables simultaneously by extending the Hausman-Taylor estimator where the panel component of the estimator is defined over repeated transactions within neighborhoods rather than the traditional definition following a unique cross-sectional unit through time.
Trade, regulations, and income Freund, Caroline; Bolaky, Bineswaree
Journal of development economics,
10/2008, Letnik:
87, Številka:
2
Journal Article
Recenzirano
We examine the relationship between openness and per-capita income using cross-country data from 126 countries. We find that trade leads to a higher standard of living in flexible economies, but not ...in rigid economies. Business regulation, especially on firm entry, is more important than financial development, higher education, or rule of law as a complementary policy to trade liberalization. Specifically, after controlling for the standard determinants of per-capita income, our results imply that a 1% increase in trade is associated with more than a one-half percent rise in per-capita income in economies that facilitate firm entry, but has no positive income effects in more rigid economies. The findings are consistent with Schumpeterian “creative destruction”, which highlights the importance of new business entry in economic performance, and with previous firm-level studies showing that the beneficial effects of trade liberalization come largely from an intra-sectoral reallocation of resources.
This study examines the impact of Thailand’s Bt30 universal health care scheme on household saving behavior using Thai Household Socio-Economic Survey data from 2000, 2001, and 2004. Using two ...difference-in-differences approaches, I find that saving behavior changed after the scheme’s introduction. First, the propensity to save decreases by approximately 14%–17%, which constitutes 24%–30% of the propensity to save out of permanent income in 2004. Second, the propensity to save out of permanent income decreases immediately after the scheme’s introduction. Hence, even poor households significantly reduce their living standards to prepare for unpredictable health risks.
This study examines the influence of Mexico’s efforts to improve corporate governance on firm performance and transparency. We utilize compliance data from the
Code of ‘Best’ Corporate Practices, ...disclosed annually by public firms in Mexico, as a measure of corporate governance strength. We document a significant increase in compliance over 2000–2004 indicating Mexican companies view non-compliance as costly. However, we find no association between the governance index and firm performance, nor is there a relation with transparency. Instead, we find firms with greater compliance resort to the more costly mechanism of making dividend payments (higher propensity to pay and greater yield) to reduce agency conflicts. We conclude these associations are the direct result of the institutional features of the Mexican business environment, which is characterized by concentrated ownership of insiders, interlocked boards of directors, a lack of insider trading enforcement, and generally poor protection of minority investors. Our results show that monitoring mechanisms alone are not enough to fundamentally change economic behavior.
The importance of noncognitive skills in determining long-term human capital and labor market outcomes is widely acknowledged, but relatively little is known about how educational investments by ...parents may respond to children’s noncognitive characteristics. This paper evaluates the parental response to noncognitive variation across siblings in rural Gansu Province, China, employing a household fixed effects specification; the noncognitive measures of interest are defined as the inverse of both externalizing challenges (behavioral problems and aggression) and internalizing challenges (anxiety and withdrawal). The results suggest that there is significant heterogeneity with respect to maternal education. More-educated mothers appear to compensate for differences between their children, investing more in a child who exhibits greater noncognitive deficits, while less-educated mothers reinforce these differences. Most important, we present evidence that these compensatory investments are associated with the narrowing of noncognitive deficits over time for children of more-educated mothers, while there is no comparable pattern in households with less-educated mothers.
Teacher quality is a key element of student academic success, but few specific teacher characteristics influence classroom outcomes. This research examines whether teacher licensure test scores and ...other teacher attributes affect elementary student achievement. The results are based on longitudinal student-level data from Los Angeles. California requires three types of teacher licensure tests as part of the teacher certification process; a general knowledge test, a subject area test (single subject for secondary teachers and multiple subject for elementary teachers), and a reading pedagogy test for elementary school teachers. The student achievement analysis uses a value-added approach that adjusts for both student and teacher fixed effects. The results show large differences in teacher quality across the school district, but measured teacher characteristics explain little of the difference. Teacher licensure test scores are unrelated to teacher success in the classroom. Similarly, student achievement is unaffected by whether classroom teachers have advanced degrees. Student achievement increases with teacher experience, but the linkage is weak and largely reflects poor outcomes for teachers during their first year or two in the classroom.
Recognizing that initial public offerings (IPOs) represent the debut of private firms on the public stage, this study investigates how pre-IPO customer and competitor orientations (CCOs) affect IPO ...outcomes. Building on information economics, we propose that CCOs influence investors' sentiments toward an IPO and that both IPO-specific variables (which influence the credibility of CCO information) and facets of the organizational institutional and task environments (which influence the appropriateness of CCO information) moderate this influence. We test the framework using data collected from computer-aided text analysis, expert coders, and secondary sources for 543 IPOs across 43 industries between 2000 and 2004. A Bayesian shrinkage model, which accounts for industry-specific effects and uses latent instrumental variables to address CCO endogeneity, shows that CCOs positively influence IPO outcomes. Furthermore, (1) underwriter reputation and venture funding positively moderate the effects of CCOs; (2) technological and market turbulence positively and institutional complexity negatively moderate the effect of customer orientation; and (3) technological turbulence, competitive intensity, and institutional complexity positively moderate the effect of competitor orientation. Also, accounting for endogeneity using latent instrumental variables substantially improves the predictive validity of the model, relative to alternative model specifications.
The increasing syntheses and interactions between various technologies increase the usefulness of cross impact analysis (CIA) as a method for forecasting and analyzing them. Conventional CIA depends ...on an expert's qualitative judgment or intuition and thus it is difficult to evaluate quantitatively the impact of one technology on another. In this study, we employ patent analysis in CIA to examine such impacts between technologies based on multiple patent classifications. Patent information is used for facilitating quantitative and systematic approach in CIA. The distinctive feature and main contribution of the proposed approach is the overcoming of the limitations of conventional CIA, by employing conditional probabilities based on the patent information. The classification of patents, particularly the multiple classifications, is used to evaluate the relationships between technologies. As an illustration, a patent-based CIA with information and communication technologies (ICTs) was conducted. Firstly, the patent-based cross impact among ICTs was calculated. Secondly, the technology pairs were classified based on the cross impact score between ICTs. Thirdly, a cross impact network was constructed to identify the complex relation among ICTs. Finally, the changes in cross impact scores between technologies over time were analyzed. The results of this research are expected to help practitioners to forecast future trends and to develop better R&D strategies.
Presidential elections provide both an important context in which to study advertising and a setting that mitigates the challenges of dynamics and endogeneity. We use the 2000 and 2004 general ...elections to analyze the effect of market-level advertising on county-level vote shares. The results indicate significant positive effects of advertising exposures. Both instrumental variables and fixed effects alter the ad coefficient. Advertising elasticities are smaller than are typical for branded goods yet significant enough to shift election outcomes. For example, if advertising were set to zero and all other factors held constant, three states' electoral votes would have changed parties in 2000. Given the narrow margin of victory in 2000, this shift would have resulted in a different president.
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