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

Troubled savings and loan institutions: voluntary restructuring under insolvency

Regulatory agencies are unwilling or unable to close thrift institutions immediately upon insolvency. Instead, they have progressively reduced the thrift capital requirement, refrained from enforcing that requirement, and allowed thrifts to hold more nonmortgage loans in the hope that the industry would recover. According to this study, only 13 percent of the largest 300 firms eventually recovered between the end of 1979 and the end of 1989. When the thrift crisis surfaced in the early 1980s, the firms that ultimately recovered operated in a fashion similar to those that eventually failed. But in the mid-1980s, recovered thrifts pursued a risk-minimizing strategy, while nonrecovered thrifts pursued a risky, high-growth strategy. We find no evidence that managers of unsuccessful firms consumed more perquisites than their successful counterparts.Savings and loan associations

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

Isospin-projected nuclear level densities by the shell model Monte Carlo method

We have developed an efficient isospin projection method in the shell model Monte Carlo approach for isospin-conserving Hamiltonians. For isoscalar observables this projection method has the advantage of being exact sample by sample. The isospin projection method allows us to take into account the proper isospin dependence of the nuclear interaction, thus avoiding a sign problem that such an interaction introduces in unprojected calculations. We apply our method in the calculation of the isospin dependence of level densities in the complete $pf+g_{9/2}$ shell. We find that isospin-dependent corrections to the total level density are particularly important for $N \sim Z$ nuclei.Comment: 5 pages including 4 figure

Evidence for Lattice Effects at the Charge-Ordering Transition in (TMTTF)2_2X

High-resolution thermal expansion measurements have been performed for exploring the mysterious "structureless transition" in (TMTTF)$_{2}$X (X = PF$_{6}$ and AsF$_{6}$), where charge ordering at $T_{CO}$ coincides with the onset of ferroelectric order. Particularly distinct lattice effects are found at $T_{CO}$ in the uniaxial expansivity along the interstack $\textbf{\textit{c*}}$-direction. We propose a scheme involving a charge modulation along the TMTTF stacks and its coupling to displacements of the counteranions X$^{-}$. These anion shifts, which lift the inversion symmetry enabling ferroelectric order to develop, determine the 3D charge pattern without ambiguity. Evidence is found for another anomaly for both materials at $T_{int}$ $\simeq$ 0.6 $\cdot$ $T_{CO}$ indicative of a phase transition related to the charge ordering

Spectra of magnetic perturbations triggered by pellets in JET plasmas

Aiming at investigating edge localised mode (ELM) pacing for future application on ITER, experiments have been conducted on JET injecting pellets in different plasma configurations, including high confinement regimes with type-I and type-III ELMs, low confinement regimes and Ohmically heated plasmas. The magnetic perturbations spectra and the toroidal mode number, n, of triggered events are compared with those of spontaneous ELMs using a wavelet analysis to provide good time resolution of short-lived coherent modes. It is found that—in all these configurations—triggered events have a coherent mode structure, indicating that pellets can trigger an MHD event basically in every background plasma. Two components have been found in the magnetic perturbations induced by pellets, with distinct frequencies and toroidal mode numbers. In high confinement regimes triggered events have similarities with spontaneous ELMs: both are seen to start from low toroidal mode numbers, then the maximum measured n increases up to about 10 within 0.3 ms before the ELM burst

Universal behavior of giant electroresistance in epitaxial La0.67Ca0.33MnO3 thin films

We report a giant resistance drop induced by dc electrical currents in La0.67Ca0.33MnO3 epitaxial thin films. Resistance of the patterned thin films decreases exponentially with increasing current and a maximum drop shows at the temperature of resistance peak Tp. Variation of resistance with current densities can be scaled below and above Tp, respectively. This work can be useful for the future applications of electroresistance.Comment: 13 pages, 4 figure