Ownership, Economic Entrenchment and Allocation of Capital

In an efficient economy, capital should be quickly (re)allocated from declining firms and sectors to more profitable investment opportunities. This process is affected by the concentration of corporate control, which in turn is affected by market institutions. We employ a panel of 12,000 firms across 44 countries to estimate the functional efficiency of capital markets. We adapt a measure for the efficiency of capital allocation using the accelerator principle. Our empirical results show weak property rights and highly concentrated ownership reduce the functional efficiency of capital markets. Findings support the economic entrenchment hypothesis but not the legal origins hypothesis.Allocation of capital; accelerator principle; ownership; functional efficiency; economic entrenchment

A Methodological Note on Measuring the Functional Efficiency of Capital Markets

We apply the accelerator principle to measure the functional efficiency of capital markets. We estimate the elasticity of capital with respect to output using a panel of firms across 44 countries, and compare the results with existing approaches. Furthermore, we correlate our measure with corporate governance institutions.Allocation of capital; accelerator principle; functional efficiency:

Cluster Failure Revisited: Impact of First Level Design and Data Quality on Cluster False Positive Rates

Methodological research rarely generates a broad interest, yet our work on the validity of cluster inference methods for functional magnetic resonance imaging (fMRI) created intense discussion on both the minutia of our approach and its implications for the discipline. In the present work, we take on various critiques of our work and further explore the limitations of our original work. We address issues about the particular event-related designs we used, considering multiple event types and randomisation of events between subjects. We consider the lack of validity found with one-sample permutation (sign flipping) tests, investigating a number of approaches to improve the false positive control of this widely used procedure. We found that the combination of a two-sided test and cleaning the data using ICA FIX resulted in nominal false positive rates for all datasets, meaning that data cleaning is not only important for resting state fMRI, but also for task fMRI. Finally, we discuss the implications of our work on the fMRI literature as a whole, estimating that at least 10% of the fMRI studies have used the most problematic cluster inference method (P = 0.01 cluster defining threshold), and how individual studies can be interpreted in light of our findings. These additional results underscore our original conclusions, on the importance of data sharing and thorough evaluation of statistical methods on realistic null data

Reply to Chen et al.: Parametric methods for cluster inference perform worse for two-sided t-tests

One-sided t-tests are commonly used in the neuroimaging field, but two-sided tests should be the default unless a researcher has a strong reason for using a one-sided test. Here we extend our previous work on cluster false positive rates, which used one-sided tests, to two-sided tests. Briefly, we found that parametric methods perform worse for two-sided t-tests, and that non-parametric methods perform equally well for one-sided and two-sided tests

The Cost of Insecure Property Rights: R2 Revisited

In the conventional CAPM model only a single risk factor is considered. However, using a world market portfolio to estimate systematic risk in national portfolios little of the required rate of return is explained in developing as compared to developed countries. Adding a factor representing institutional risk the predictive power increases substantially. By stressing importance of property and investor rights in this fashion, we add to the research on international differences in R2 initiated by Morck et al. (2000). Our findings are consistent with the hypothesis that stock price synchronicy depends on the institutional quality.Asset pricing; International financial markets; Property rights; Financial economics

Family Ownership and Returns on Investment – Founders, Heirs, and External Managers

This paper investigates how family ownership, control, and management affect firms’ investment performance. We use the identity of Chief Executive Officer (CEO) and Chairman of the Board (COB) to establish under what management the firm is: founder, descendant, or external management. The results show that founder management has no effect on investment performance in family firms, whereas descendant management has a negative impact on returns on investment. Having an externally hired manager significantly improves investment performance. The results also indicate that the separation of voting right from cash flow right has a negative impact on investment performance in both family and non-family firms, but the negative effect is larger in family firms.Ownership; Control; Management; Family Firms; Returns on Investments

A catch-free stock assessment model with application to goliath grouper (Epinephelus itajara) off southern Florida

Many modern stock assessment methods provide the machinery for determining the status of a stock in relation to certain reference points and for estimating how quickly a stock can be rebuilt. However, these methods typically require catch data, which are not always available. We introduce a model-based framework for estimating reference points, stock status, and recovery times in situations where catch data and other measures of absolute abundance are unavailable. The specif ic estimator developed is essentially an age-structured production model recast in terms relative to pre-exploitation levels. A Bayesian estimation scheme is adopted to allow the incorporation of pertinent auxiliary information such as might be obtained from meta-analyses of similar stocks or anecdotal observations. The approach is applied to the population of goliath grouper (Epinephelus itajara) off southern Florida, for which there are three indices of relative abundance but no reliable catch data. The results confirm anecdotal accounts of a marked decline in abundance during the 1980s followed by a substantial increase after the harvest of goliath grouper was banned in 1990. The ban appears to have reduced fishing pressure to between 10% and 50% of the levels observed during the 1980s. Nevertheless, the predicted fishing mortality rate under the ban appears to remain substantial, perhaps owing to illegal harvest and depth-related release mortality. As a result, the base model predicts that there is less than a 40% chance that the spawning biomass will recover to a level that would produce a 50% spawning potential ratio

Promarket Reforms and Allocation of Capital in India

The government of India initiated pro-market reforms in the 1990s, after almost five decades of socialist planning. These and subsequent policy reforms are credited as the drivers of India’s radical economic transformation. Prior to reforms, private investment was strictly regulated and restricted to certain areas and sectors. There have since been numerous changes in sectors important for investment, which should lead to changes in outcomes of firm-level strategic decision making and investment behavior. By most estimates, India will continue to grow. The purpose of this paper is to investigate changes in investment behavior from the introduction of reforms to current conditions. Reforms changed several institutional frameworks for firm operations, allowing firms to pursue more competitive strategies. Given the importance of ownership in determining firm efficiency and access to capital, we examine the effect of ownership on the performance of Indian firms for the period 1991-2006. We also examine industry differences in capital allocation. We compute a measure of investment efficiency derived from the accelerator principle: Elasticity of capital with respect to output. We examine the effect of various ownership structures on investment behavior and the efficiently of capital allocation across different sectors of the economy. We find that the allocation of capital has been slow to respond to reforms, indicating similar pace of firm responses.allocation of capital; India; institutional reforms; ownership

His name was Jonas: a biography of Jonas Swensson

Abstract: The life of Jonas Swensson (1828-1873) presents a reversal of the common notion that sons of famous fathers often live in the shadow of their fathers’ fame. For Jonas Swensson was overshadowed by the fame of his illustrious son, Carl Aaron. Both the fame of his son and his own early death, at age forty-five, have tended to obscure the noteworthy accomplishments of Jonas Swensson. Yet Swensson played a significant role in the shaping of the Augustana Lutheran Church in the last half of the 19th century. His contributions to parish and higher education, mission, congregational life, and the theology of Augustana were considerable. It is to this end in part that this book has been written: to identify the significant contribution Swensson made to the formation of the unique character of the Church which he served as pastor, secretary, member of the catechetical committee and as president for the last three years of his life. As such, the book is also an important record of the early Augustana years. It is hoped that a measure of justice may be done to Jonas Swensson’s memory by the publication of this book. Table of Contents: Acknowledgements / Introduction / Early Life and Education (Jonas’ Ancestry, Childhood and Youth / Theological Education / Studies at Bredaryd / Studies at Jönköping / Studies at Växjö / Studies at Uppsala / Notes) / His Ministry in Sweden (His First Pastorate / The Man Who Left Sweden / Notes) / First Parish in the United States (“Culture Shock” / The Community and Swensson’s Ministry to its People / The Formation of a Constitution to Establish Order / Swensson’s Pastoral Contributions in the Hessel Valley/Jamestown Area / Notes) / Jonas Swensson’s Ministry in Andover, Illinois (A Comparison Between Hessel Valley/Jamestown and Andover / Swensson As Parish Pastor in Andover / Hard Work, Hardships, Heartbreaks / Parish Controversies of the Sixties / The Central Thrust of Swensson’s Parish Ministry in Andover / Notes) / Jonas Swensson, Churchman at Large Prior to 1870 (Notes) / Jonas Swensson as President (Main Decisions of 1870 / Other Issues President Swensson Confronted / Notes) / The Summation of a Life (The Contributions of Jonas Swensson / The Last Months of Swensson’s Life and His Death / Notes) / Appendix I / Appendix II / Appendix III / Appendix IV / Bibliography / Indexhttps://digitalcommons.augustana.edu/ahsbooks/1007/thumbnail.jp

Standardized Visual Counts of Goliath Grouper off South Florida and Their Possible Use as Indices of Abundance

Two visual surveys are examined for evidence that the number of goliath grouper has increased in the waters off South Florida since a harvest moratorium was imposed in 1990. Both surveys are standardized to account for the unbalanced design of the sampling procedure. The first survey is effectively a census of the number of goliath grouper at five artificial reef sites in the Gulf of Mexico about 90 miles north of Key West, Florida. It is standardized by use of the canonical log-linear model. The second survey includes the observations of many different SCUBA divers at 32 sites scattered along the Atlantic coast of Florida from the Dry Tortugas to Jupiter. The canonical log-linear model is not appropriate for standardizing this data set because observations of 2-10 fish are recorded only as two or more. To accommodate this feature, we developed a standardization procedure based on a censored Poisson distribution. The most important factors in standardizing the two surveys were the year and location. Seasonal effects were also statistically significant but had little effect on the results because most of the dives in any given year were conducted during the warm season. Both the standardized series indicate a substantial increase in abundance since the 1990 moratorium