Who controls East Asian corporations ?

The authors identify the ultimate ownership structure for 2,980 corporations in nine East Asian countries. They find that: A) More than half of those firms are controlled be a single shareholder. B) Smaller firms and older firms are more likely to be family-controlled. C) Patterns of controlling ownership stakes differ across countries. The concentration of control generally diminishes with higher economic and institutional development. D) In many countries control is enhanced though pyramid structures and deviations from one-share-one-vote rules. As a result, voting rights exceed cash-flow rights. E) Management is rarely separated from ownership control, and management in two thirds of the firms that are not widely held is related to management of the controlling shareholder. F) In some countries, wealth is very concentrated and links between government andbusiness are extensive, so the legal system has probably been influenced by the prevailing ownership structure.Small and Medium Size Enterprises,Microfinance,Small Scale Enterprise,International Terrorism&Counterterrorism,Economic Theory&Research,Microfinance,Private Participation in Infrastructure,Small Scale Enterprise,Rural Land Policies for Poverty Reduction,Economic Theory&Research

Forecasting volatility in commodity markets

Commodity prices have historically been among the most volatile of international prices. Measured volatility (the standard deviation of price changes) has not been below 15 percent and at times has been more than 50 percent. Often the volatility of commodity prices has exceeded that of exchange rates and interest rates. The large price variations are caused by disturbances in demand and supply. Stockholding leads to some price smoothing, but when stocks are low, prices can jump sharply. As a result, commodity price series are not stationary and in some periods they jump abruptly to high levels or fall precipitously to low levels relative to their long-run average. Thus it is difficult to determine long-term price trends and the underlying distribution of prices. The volatility of commodity prices makes price forecasting difficult. Indeed, realized prices often deviate greatly from forecasted prices, which has led to the practice of giving forecasts probability ranges. But assigning probability ranges requires forecasting future price volatility, which, given uncertainties about true price distribution, is difficult. One potentially useful source of information for forecasting volatility is the volatility forecasts imbedded in the prices of options written on commodities traded in exchanges. Options give the holder the right to buy (call) or sell (put) a certain commodity at a certain date at a fixed (exercise) price. Options prices depend on several variables, one of which is the expected volatility up to the maturity date. Given a specific theoretical model, the market prices of options can be used to derive the market's expectations about price volatility and the price distribution. The authors systematically analyze different methods'abilities to forecast commodity price volatility (for several commodities). They collected the daily prices of commodity options and other variables for seven commodities (cocoa, corn, cotton, gold, silver, sugar, and wheat). They extracted the volatility forecasts implicit in options prices using several techniques. They compared several volatility forecasting methods, divided into three categories: (1) forecasts using only expectations derived form options prices; (2) forecasts using only time-series modeling; (3) forecasts that combine market expectations and time-series modeling (a new method devised for this purpose). They find that the volatility forecasts produced by method 3 outperform the first two as well as the naive forecast based on historical volatility. This result holds both in and out of sample for almost all commodities considered.Markets and Market Access,Access to Markets,Economic Theory&Research,Economic Forecasting,Science Education

Expropriation of minority shareholders : evidence from East Asia

As many East Asian countries plunged into economic decline, the structure of concentrated ownership and associated corporate governance, along with weak corporate performance, have been blamed for the crisis. There is little empirical evidence, however, of the nature of ownership structures in East Asia and their relationship to corporate performance in the typical East Asian environment (where inefficient judicial systems, and weak property and shareholder rights are common). The authors examine evidence of the expropriation of minority shareholders for 2,658 corporations in nine East Asian countries in 1996. They distinguish control from cash-flow rights. They also distinguish between various types of ultimate owners, including family, state, widely held corporations, and widely held financial institutions. Higher cash-flow rights are associated with higher market values, consistent with Jensen and Meckling (1976). In contrast, deviations of control from cash-flow rights - through the use of dual-class shares, pyramiding, and cross-holdings - are associated with lower market values. This is especially true for corporations under family control and, in Japan, under the control of widely held financial institutions. They conclude that the risk of expropriation is the major principal-agent problem for large corporations, as suggested by La Porta and colleagues (1999). The degree to which certain ownership structures are associated with expropriation depends on country-specific circumstances. These may include the quality of banking systems, the legal and judicial protection of individual shareholders, and the degree of financial disclosures required.Small Scale Enterprise,Fiscal&Monetary Policy,Labor Policies,Economic Theory&Research,International Terrorism&Counterterrorism,Private Participation in Infrastructure,Microfinance,Economic Theory&Research,Fiscal&Monetary Policy,Small Scale Enterprise

Diversification and efficiency of investment by East Asian corporations

The East Asian financial crisis has been attributed in part to the corporate diversification associated with the misallocation of capital investment toward less profitable and more risky business segments. Much anecdotal evidence to support this view has surfaced since the crisis but there was little discussion of it before the crisis. Quite the contrary: The rapid expansion of East Asian firms by entering new business segments was viewed as contributing to the East Asian miracle. The authors examine the efficiency of investment by diversified corporations in nine East Asian countries, using unique panel data from more than 10,000 corporations for the pre-crisis period, 1991-96. They: 1) Document the degree of diversification in the corporate sector in Hong Kong, Indonesia, Japan, the Republic of Korea, Malaysia, the Philippines, Singapore, Taiwan (China), and Thailand, countries that have achieved enviable rates of economic growth over the past three decades. 2) Distinguished between vertical and complementary diversification and study the differences across nine countries. 3) Investigate whether diversification in East Asian has hurt economic efficiency. Their study tests the learning-by-doing and misallocation-of-capital hypotheses related to the types and degrees of diversification in East Asian countries. Firms in Indonesia, Korea, Taiwan, and Thailand appear to have suffered significant negative effects of vertical integration on short-term performance; the same countries gained significant short-term benefits from complementary expansion. The results suggests that the misallocation-of-capital hypothesis is appropriate for Korea and Malaysia; the learning-by-doing hypothesis for Indonesia, Taiwan, and Thailand. Firms in more developed countries succeed in vertically integrating and improve both short-term profitability and market valuation. Firms in more developed countries are ultimately more likely to benefit from such diversification (learn faster, to improve theirperformance). And diversification by firms in less developed countries is subject to more misallocation of capital.Microfinance,Fiscal&Monetary Policy,Economic Theory&Research,Small and Medium Size Enterprises,Small Scale Enterprise,Economic Theory&Research,Microfinance,Private Participation in Infrastructure,Small Scale Enterprise,Achieving Shared Growth

The use of integrative passive samplers as a source of contaminant mixtures in ecotoxicological laboratory experiments

The INRAM project aims to introduce a new application of passive sampling devices in ecological toxicity testing. Conventional (laboratory) ecotoxicity studies are mostly performed by exposing test organisms to various (high) concentrations of a single test compound. This clearly does not reflect in situ conditions: i.e. exposure to mixtures of low levels of various micro-pollutants. In order to expose organisms to environmentally realistic contaminant mixtures, this study explored a novel use of integrative passive samplers. Firstly, the dynamics of the contaminant release from the samplers was studied in the presence of organic material, i.e. algal cells. This study showed that the samplers released the compounds into the test medium as expected. Constant concentrations were achieved in the test medium, but the target concentrations (based on the amount of compound spiked on the samplers) were not reached. Additional experiments will be carried out in order to improve the dynamics of contaminant release. Secondly, samplers were used to collect micro-pollutants from three Belgian coastal harbours and were used ‘inversely’ as a contaminant mixture source in laboratory toxicity assays with Crassostrea gigas larvae. Significant differences in normal development of the oyster larvae were observed between the three harbours. Within each harbour a pollution gradient was apparent. These results show that the targeted application of passive samplers is feasible. As these passive samplers also allow to determine the aqueous concentrations of otherwise (nearly) undetectable trace compounds, they could be a powerful new tool in environmental toxicology

(4-Nitro­phenolato)(subphthalo­cyaninato)boron(III)1

The main feature of the structure of the title compound, C30H16BN7O3 or NO2PhO-BsubPc, are pairs of mol­ecules linked through π-inter­actions between the concave faces of the BsubPc fragments at a distance of 3.5430 (11) Å across an inversion centre. However, the angle between the planes of the five- and six-menbered rings involved in this inter­action is 1.44 (10)°, causing the inter­acting BsubPcs units to be slightly askew rather than parallel as is typical for π-stacking inter­actions