Financial constraints, innovation performance, and sectoral disaggregation

How do the effects of financial constraints on innovation performance vary by sector and firm characteristics? This paper uses innovation survey data from eleven European countries to examine the heterogeneity of these effects. So far, there has been a lack of cross-country micro-level studies exploring the effects of financial constraints on innovation performance in Western Europe and only little research about the variability of such effects between the broad sectors of production and services. Our results suggest that the impact of direct measures of financial barriers differs in production and services sectors, and also by the firm’s export orientation. In particular, financial constraints appear to have more pronounced negative effects in the production sector than in the services sector. Among different types of firms, the response to financial constraints seems to be stronger for non-exporters

Electoral motives and the subnational allocation of foreign aid in sub-Saharan Africa

This paper examines how electoral motives shape the subnational allocation of foreign aid commitments by employing a newly constructed geocoded dataset for 14 sub-Saharan African countries over the period 2000-2012. Our results provide strong evidence of a core voter strategy: African leaders diverting Chinese aid towards regions with a high concentration of political supporters. However, no evidence of such preferential treatment is found for World Bank aid, suggesting that aid from traditional donors is less vulnerable to political manipulation. Our results also reveal that checks and balances in recipient countries are an important mediating factor of aid misallocation: while copartisan regions receive larger amounts of Chinese aid in environments with weak checks and balances, these effects disappear when stronger checks and balances are in place. This paper also offers case study evidence from Ghana. Exploiting the 2009 regime change in Ghana and using a difference-in-differences framework, we provide further support of copartisan targeting and confirm that Chinese aid is more manipulable than World Bank aid in this respect

Government ideology and international migration

We provide the first empirical evidence that differences in government ideology play an important role in the choice of cross-border migration destinations. In absence of first-hand experience, immigrants rely on information about the political landscape of the origin and host countries to form expectations about the context of reception in the host society. We use data on bilateral migration and government ideology for 36 OECD countries between 1990 and 2016. Our analysis shows that bilateral migration flows are higher when the government at the destination is more left-wing than the government at the origin, especially when we consider proximate countries

Bank Value and Geographic Diversification: Regional vs Global

This paper analyzes the impact of geographic diversification on bank value by employing a data set comprising the largest banks across the world, originating from both developed and emerging countries. The findings suggest that the value impact of international diversification depends on the financial development level of a bank’s home country: higher levels of diversification are associated with changes in valuations only for banks originating from emerging countries. In addition, the locus of internationalization matters for the direction of effects: while markets respond positively to the intra-regional expansion activities of emerging country banks, they seem to believe that these banks cannot benefit from diversifying into far away markets

Did terrorism affect voting in the Brexit referendum?

We contribute to the recent research on Brexit and public opinion formation by contending that the determinants of the referendum results should be evaluated against the background of wider public security concerns. Terrorism has long been regarded as a top concern by the British public, more than in any other European country. Terrorist attacks on UK soil raised voters’ awareness of security issues and their saliency in the context of an EU referendum. We find that locations affected by terrorist violence in their proximity exhibit an increase in the share of pro-Remain votes, particularly for more sensational attacks. Using individual-level data, we show that in the aftermath of terrorist attacks, citizens are more likely to reconsider the security risks involved in leaving the EU

Foreign vs Domestic Acquisitions on Financial Risk Reduction

This paper examines the role of foreign versus domestic ownership in improving the financial health of acquired firms. In particular, it explores the impact of foreign and domestic acquisitions on financial risk reduction of acquired firms in Italy and Spain over the period 2002-2010. To estimate causal relationships, we control for selection bias by applying propensity score matching techniques. Our results indicate that foreign acquisition leads to a significant and steady reduction in financial risk. In contrast, the relationship between domestic acquisition and financial risk appears to be smaller and statistically less robust

Are the effects of terrorism short-lived?

Terrorism elicits strong public reactions immediately after the attack, with important implications for democratic institutions and individual well-being. Are these effects short-lived? We answer this question using a natural experiment design and combining data on terrorist attacks in the United Kingdom with a Continuous Monitoring Survey. We find that heightened risk perceptions and emotional reactions in the wake of deadly attacks do not dissipate in the very short run but are sustained over time and up to 120 days after the attacks. Whereas large-scale attacks cause a long-lasting shift in risk assessments and emotions, the corresponding effect of smaller-scale terrorism incidents appears to subside within one month. Overall, the impact of terrorism does not fade away easily

Interlocking directorships and patenting coordination

The aim of this paper is to investigate the role interlocking directorships play in the patenting activities of UK companies and provide further insights into the channels through which this relationship emerges. Our empirical analysis produces three main results: first, interlocking leads to a higher number of successful patent applications; second, interlocked firms are more likely to cite each other's patents, especially around the moment of interlocking; and, third, interlocked companies tend to increase the technological similarity of their patent portfolio in the immediate period following their first interlock. To rationalise these results, we develop a theoretical model that identifies interlocking directorships as a practice that prevents property right conflicts that often arise between firms that are technologically close to each other

Fiscal redistribution around elections when democracy is not "the only game in town"

This paper seeks to examine the implications of policy intervention around elections on income inequality and fiscal redistribution. We first develop a simplified theoretical framework that allows us to examine election-cycle fiscal redistribution programs in the presence of a revolutionary threat from some groups of agents, i.e., when democracy is not “the only game in town”. According to our theoretical analysis, when democracy is not “the only game in town”, incumbents implement redistributive policies not only as a means of improving their reelection prospects, but also in order to signal that “democracy works”, thereby preventing a reversion to an autocratic status quo ante at a time of the current regime’s extreme vulnerability. Subsequently, focusing on 65 developed and developing countries over the 1975–2010 period, we report robust empirical evidence of pre-electoral budgetary manipulation in new democracies. Consistent with our theory, this finding is driven by political instability that induces incumbents to redistribute income—through tax and spending policies—in a relatively broader coalition of voters with the aim of consolidating the vulnerable newly established democratic regime