Economic geography : real or hype?

Economic geography has become a mantra for many economists, geographers, and regional scientists. Previous studies have tested the importance of economic geography for production activities and found a significant association between them. Most of these studies, however, have not taken into account that economic geography influences location decisions at the firm level. The authors show a potential bias that can arise when firm location choices are not considered in estimating the contribution of economic geography to industry performance. Their analysis using microdata of Indian manufacturingfirms shows there is an upward bias in the contribution of economic geography to productivity when firm location choices are not considered in the analysis.Economic Theory&Research,Banks&Banking Reform,Environmental Economics&Policies,Water and Industry,Labor Policies,Economic Theory&Research,Environmental Economics&Policies,Banks&Banking Reform,Water and Industry,National Urban Development Policies&Strategies

Occupation Analysis for the Greater Cleveland Area

Occupation is an important aspect of regional economy; it has been forgotten, however, in most studies of regional economies. We developed a set of benchmark occupation clusters that share similar knowledge and skills and examined the Cleveland metropolitan area based on the derived occupation clusters

How Different is Japanese Corporate Finance? An Investigation of the Information Content of New Security Issues

This paper studies the shareholder wealth effects associated with 875 new security issues in Japan from January 1, 1985 to May 31, 1991. The sample includes public equity, private equity, rights offerings, straight debt, warrant debt and convertible debt issues. Contrary to the U.S., the announcement of convertible debt issues is accompanied by a significant positive abnormal return of 1.05%. The announcement of equity issues has a positive abnormal return of 0.45%, significant at the 0.10 level, but this positive abnormal return can be attributed to one year in our sample and is offset by a negative issue date abnormal return of -1.01%. The abnormal returns are negatively related to firm size, so that for equity issues (but not for convertible debt issues), large Japanese firms have significant negative announcement abnormal returns. Our evidence is consistent with the view that Japanese managers decide to issue shares based on different considerations than American managers.

Evaluation of the effect of contact between risers and guide frames on offshore spar platform motions

A computer program is developed for the dynamic analysis of a spar platform coupled with mooring lines and risers in waves, winds, and currents. The new multi-contact analysis program is developed for the nonlinear multi-contact coupling between vertical risers and guide frames inside of the spar moon-pool. The program extends capability of the current coupled dynamic analysis program, WINPOST, by adding the capability of analyzing riser effects caused by the contact forces and moments from buoyancy-cans inside the spar moon-pool on the global spar motions. The gap between the buoyancy can and riser guide frames are modeled using three different types of nonlinear gap springs. The new riser model also considers the Coulomb damping between the buoyancy-cans and riser guide frames, and it also calculates the impact force on risers for use in fatigue analysis. The spar platform generally uses vertical risers with dry trees. However, as the water depth increases, the size of the buoyancy-can increases, and it makes installation more difficult. The pneumatic riser support system does not use buoyancy-cans and is an alternative solution to the buoyancy-can approach. The dynamic characteristics of pneumatic riser support system are studied by using the newly developed numerical analysis program. The damped Mathieu instability diagram for the damped Mathieu's equation is developed. Due to spar heave and pitch coupling, Mathieu's instability may become excited in long period waves. In the numerical analysis program, pitch and roll hydrostatic stiffness are recalculated for heave motion in every time step to check Mathieu's instability for the spar platform. Simplified vortex-induced vibration effects on the spar platform are considered in newly developed numerical analysis program, and the results are systematically compared with those of the original program WINPOST. The results in this paper show that the buoyancy-can effect significantly reduces the spar pitch motion, and the Coulomb damping effect also significantly reduces the spar heave motion. The buoyancy-can effect also plays an important role in Mathieu instability. The results also show that a pneumatic riser support system increases the spar heave motion and payload

Business Groups and Tunneling: Evidence from Private Securities Offerings by Korean Chaebols

Using a comprehensive sample of equity-linked private securities offerings by Korean firms from 1989 to 2000, we examine whether such offerings can be used as a mechanism for wealth transfer between issuers and acquirers. For deals involving issuers and acquirers in the same business group (chaebol), the announcement returns for chaebol-affiliated issuers with good past performance are lower than those for other types of issuers if the price discount is larger. In contrast, this deal leads to more value creation for chaebol-affiliated acquirers than other types of acquirers. Furthermore, well-performing chaebol-affiliated acquirers experience a larger wealth loss than other types of acquirers if they buy securities from poorly performing issuers in the same chaebol. We also find that chaebol firms with good past performance tend to sell private securities at a low price to their member firms. This evidence is consistent with tunneling within business groups.

Economic structure, productivity, and infrastructure quality in southern Mexico

There are large and sustained differences in the economic performance of sub-national regions in most countries. The authors examine the economic structure and productivity in Southern Mexico and compare it with the rest of the country. The authors use firm level data from Mexican manufacturing to test the relative importance of firm level characteristics (such as human capital and technology adoption) compared with external characteristics (such as infrastructure quality and regulatory environment) in explaining productivity differentials. The authors find that the economic structure of Southern Mexico is considerably different from the rest of the country, with the economic landscape dominated by micro enterprises and a relative specialization in low productivity activities. This, coupled with low skill levels and fewer skill upgrading opportunities, reduces the performance of Southern firms. Productivity differentials between Southern firms and others, however, only exist for micro enterprises. The econometric analysis shows that while employee training and technology adoption enhance productivity, access to markets by improving transport infrastructure that link urban areas also have important productivity effects.Labor Policies,Economic Theory&Research,Municipal Financial Management,Environmental Economics&Policies,Banks&Banking Reform,Environmental Economics&Policies,Economic Theory&Research,Banks&Banking Reform,Municipal Financial Management,Microfinance

How University Endowments Respond to Financial Market Shocks: Evidence and Implications

Endowment payouts have become an increasingly important component of universities’ revenues in recent decades. We test two leading theories of endowment payouts: (1) universities smooth endowment payouts, or (2) universities use endowments as self-insurance against financial shocks. In contrast to both theories, endowments actively reduce payouts relative to their stated payout policies following negative, but not positive, shocks. This asymmetric behavior is consistent with “endowment hoarding,” especially among endowments with values close to the benchmark value at the start of the university president’s tenure. We also document the effect of negative endowment shocks on university operations, including personnel cuts.

The Japanese market for corporate control and managerial incentives

We examine bidder returns in Japanese mergers from 1976 to 1990. Using a comprehensive sample of 104 Japanese acquiring firms, we find that shareholders of Japanese bidders experience a significant positive abnormal return of 1.41%. Bidder returns are higher when firms acquire targets in the same industry, when their managers performed well before the merger, and when their managers acquire relatively large targets. We also find that bidder returns increase with the bidder's leverage and the bidder's ties to financial institutions through borrowings. Our evidence is consistent with the view that managerial incentives affect a firm's investment decisions and therefore firm value, and that these incentives are affected by the internal governance mechanisms that control managerial discretion