Predatory Governance

This paper argues that imperfect corporate control is a determinant of market structure. We integrate a widely accepted version of the separation of ownership and control -- Jensen's (1986) 'empire-building' hypothesis -- into a dynamic oligopoly model. Our main observation is that, due to product market competition, shareholders face an endogenous opportunity cost of governance. We derive shareholders' optimal governance choices and show analytically that governance has a first-order effect on firms' dynamic incentives and leads to increasing dominance and predation. Through numerical simulations we demonstrate that imperfect corporate control has a sizable adverse impact on market structure and consumer welfare. It results in low turnover, high concentration, persistently monopolized markets, and low industry-wide investment. As a consequence, consumer welfare is significantly - up to thirty percent - lower than in otherwise identical industries with full corporate control. These results suggest a role for public policy toward corporate governance as an effective pro-competitive tool.Managerial Preferences, Optimal Governance, Dynamic Oligopoly, Markov Perfect Equilibrium

Evaluation of Biochemical and Quality Attributes to Monitor the Application of Heat and Cold Treatments in Tomato Fruit (Lycopersicon Esculentum Mill.)

The study was accomplished to optimize the application of stress treatment to prevent chilling injury (CI) in tomatoes. Four treatments were evaluated: control, heat shock applied for 24 (HS24) and 48 h (HS48), and cold shock applied for 24 h (CS24). The fruits were stored at 2 and 14C, and evaluated immediately after treatment and after 21 and 28 days of storage. An additional evaluation after 7 days of exposure at 20C following storage withdrawal was included to induce ripening and exteriorize the development of CI symptoms. Different biochemical and quality attributes were evaluated (color, titratable acidity, firmness, ethylene, CI index and heat shock protein [HSP] accumulation). Heat treatments were successful in preventing the decay of fruits under CI‐inducing conditions. The significantly better performance of HS48 in comparison to the other treatments gives evidence that the effectiveness relies on the adequate intensity of application; therefore, this intensity should be strictly controlled by a proper monitoring method. In this regard, small HSP accumulation was found suitable to reflect properly the physiological condition of fruits and therefore to potentially optimize and determine the adequate intensity of treatment application.Instituto de Tecnología de AlimentosFil: Polenta, Gustavo Alberto. Instituto Nacional de Tecnología Agropecuaria (INTA). Instituto Tecnología de Alimentos; ArgentinaFil: Budde, Claudio Olaf. Instituto Nacional de Tecnología Agropecuaria (INTA). Estación Experimental Agropecuaria San Pedro; ArgentinaFil: Sivakumar, Dharini. Tshwane University of Technology. Department of Crop Science. Postharvest Technology Group; SudáfricaFil: Nanni, Mariana. Instituto Nacional de Tecnología Agropecuaria (INTA). Instituto Tecnología de Alimentos; ArgentinaFil: Guidi, Silvina Mabel. Instituto Nacional de Tecnología Agropecuaria (INTA). Instituto Tecnología de Alimentos; Argentin

Stock Market Returns, Corporate Governance and Capital Market Equilibrium

This paper analyzes why corporate governance matters for stock returns if the stock market prices the underlying managerial agency problem correctly. Our theory assumes that strict corporate governance prevents managers from diverting cash flows, but reduces incentives for managerial effort. In capital market equilibrium, this trade-off has implications for the firm's earnings, stock returns, and managerial ownership, because governance impacts the firm's risk-return structure. In particular, the strictness of corporate governance is negatively related to earnings and positively to β. Various empirical tests with U.S. data using the governance index of Gompers, Ishii, and Metrick (2003) yield results consistent with these predictions

Rising Intangible Capital, Shrinking Debt Capacity, and the US Corporate Savings Glut

peer reviewedThis paper explores the connection between rising intangible capital and the secular upward trend in US corporate cash holdings. We calibrate a dynamic model with two productive assets, tangible and intangible capital, in which only tangible capital can serve as collateral. We highlight the following points: 1) a shift toward intangible capital shrinks firms' debt capacity and leads them to hold more cash; 2) the effect accounts for 3/4 of the observed trend in average cash ratios; 3) it also accounts for the upward trend of cash ratios in the cross-section of small and large firms and in the aggregate

Rising Intangible Capital, Shrinking Debt Capacity, and the U.S. Corporate Savings Glut

peer reviewedThis paper explores the connection between rising intangible capital and the secular upward trend in U.S. corporate cash holdings. We calibrate a dynamic model with two productive assets—tangible and intangible capital—in which only tangible capital can serve as collateral. We highlight the following points: (i) a shift toward intangible capital shrinks firms' debt capacity and leads them to hold more cash, (ii) the effect accounts for three-quarters of the observed trend in average cash ratios, and (iii) it also accounts for the upward trend of cash ratios in the cross-section of small and large firms and in the aggregate

Bank lending in the knowledge economy

We study the composition of bank loan portfolios during the transition of the real sec-tor to a knowledge economy where firms increasingly use intangible capital. Exploiting heterogeneity in bank exposure to the compositional shift from tangible to intangible capital, we show that exposed banks curtail commercial lending and reallocate lending to other assets, such as mortgages. We estimate that the substantial growth in intangible capital since the mid-1980s explains around 30% of the secular decline in the share of commercial lending in banks' loan portfolios. We provide suggestive evidence that this reallocation increased the riskiness of banks' mortgage lending

Executive Compensation: An Overview of Research on Corporate Practices and Proposed Reforms

Two landmark episodes of the last decade, the 2001 dot-com crisis and the 2008 bursting of the housing bubble, have drawn attention to the size and structure of executive pay plans and their possible role in propagating or worsening the crises. In this policy-oriented piece, the authors discuss the key issues in the debate on executive pay and express their support for a number of reform proposals that have been advanced in academic and policy circles. Copyright Copyright (c) 2010 Morgan Stanley.

Bioelimination of sulfur from high-sulfur coal by selected strains of microorganisms

In this study, low-rank lignite coal sample collected from Lenger coal deposit (Turkestan province) in Kazakhstan was subjected to desulfurization by using three bacterial strains isolated from soil with silt and coal itself. The molecular identification of the 16S rRNA gene revealed that the isolated bacteria were Atlantibacter sp., Pseudomonas sp., Bacillus sp. denoted as S1, S2, and T1, respectively. Pseudomonas sp. showed the best result in removing organic sulfur (93%) and total sulfur (52%), while Bacillus sp. was effective in removing pyritic sulfur (19%) compared to other strains. However, Atlantibacter sp. had no significant influence on sulfur content after treatment, thereby reducing its chances to be used in decreasing sulfur content in lignite in future investigations. Additionally, this research would be valuable to develop an innovative biotechnological method for producing an environmentally friendly briquetted smokeless fuel from lignite