Ownership concentration, market monitoring and performance: Evidence from the UK, the Czech Republic and Poland

Using data for publicly traded companies from the UK and two transition countries, the Czech Republic and Poland, we analyze the relationship between ownership concentratio and performance while also accounting for the effect of hostile takeover threats on this relationship. Some argue that ownership concentration will improve performance by making the owners more willing or able to monitor managers. Others argue that in the presence of efficient markets, market monitoring (via the threat of hostile takeovers) will discipline the managers. Our results show that concentration is insignificant in explaining performance both in the transition countries, where market monitoring is supposedly weak, and in the UK, where market monitoring is supposedly strong.Ownership concentration, markets for corporate control

Host Country’s Governance and the Size of Foreign Investors

This paper tests whether smaller foreign investors are more sensitive to the quality of host country’s governance than larger investors. This may be the case as smaller foreign firms have less bargaining power, undertake more innovative activities and/or are more sensitive to uncertainty and risk. The results lend support to the hypothesis.foreign direct investment, governance, property rights

Context, law and reinvestment decisions: Why the transitional periphery differs from other post-state socialist economies

A range of studies has found that corruption has a significant impact upon FDI decisions, however to date there has been scant investigation into longer term investments made by firms and their relative proclivity to reinvest. Further, there is particularly little work on reinvestment choices made on the transitional periphery of post-state socialist countries and how these might differ from the more stable transitional economies of central and Eastern Europe. Utilising 2005 World Bank Enterprise Survey data, this study explores the relationship between corruption and MNEs’ strategic decision to reinvest profits. From an institutionalist starting point, we find variation in the impact of different dimensions of corruption upon reinvestment; pervasive corruption impacts negatively upon reinvestment, but its effects are more pronounced in the transitional periphery. Perceived robust legal institutions have a positive correlation with reinvestment, but again, the positive effects are less pronounced on the transitional peripheral state socialist states. We ascribe this disparity to greater institutional fluidity, and explore why this context has particularly adverse effects. Finally, we find that firm level attributes of larger size and greater age play an important role in positive reinvestment decisions, appearing to mitigate the worst consequences of this fluidity

Banking Crisis and Bank Supervisory Accountability

© 2019 Elsevier Inc. The accountability of bank supervisors to the executive and the legislative branches of the government varies across countries and over time. Using cross-country panel data, we explore whether a banking crisis can affect these accountability arrangements. According to our results, supervisory accountability to the executive branch only becomes more likely following a banking crisis. Our contribution is to the nascent but important literature on the governance of bank supervisors

Democracy levels and the income-military expenditure relationship

I explore whether the level of democracy has an impact on the income sensitivity of military expenditures. Such an impact can exist if military support is a substitute for popular support in nondemocracies but not in democracies. For a panel of developing and less developed countries, I find that the sensitivity of military expenditures to income changes decreases with the level of democracy.

Host country's governance and the size of foreign investors

We find that smaller foreign investors are more sensitive to the quality of host country's governance than larger investors. This may be the case as smaller foreign firms have less bargaining power and are more sensitive to uncertainty and risk.

Ownership Concentration, Market Monitoring and Performance: Evidence from the UK, the Czech Republic and Poland

Using data for publicly traded companies from the UK and two transition countries, the Czech Republic and Poland, we analyze the relationship between ownership concentration and performance while also accounting for the effect of hostile takeover threats on this relationship. Some argue that ownership concentration will improve performance by making the owners more willing or able to monitor managers. Others argue that in the presence of efficient markets, market monitoring (via the threat of hostile takeovers) will discipline the managers. Our results show that concentration is insignificant in explaining performance both in the transition countries, where market monitoring is supposedly weak, and in the UK, where market monitoring is supposedly strong.Ownership Concentration, Markets for Corporate Control

Shareholder protection, ownership concentration and FDI

Host country's weaker legal shareholder protection may make it costlier for parent shareholders to monitor the foreign subsidiary and hold managers accountable in case of misconduct. This prospect may motivate the managers to invest in such foreign environments. However, the agency costs associated with such investments can increase as well. The latter would tend to discourage such FDI. We test this ex ante uncertain relationship using a sample of publicly quoted UK parents that established new, majority owned joint venture subsidiaries in Continental Europe. We find that host country's weak legal shareholder protection discourages FDI. This negative relationship, however, is less important for firms with higher ownership concentration, implying that parent's ownership concentration may be a substitute for host country's weak legal shareholder protection.Shareholder protection Ownership concentration FDI

A computational model of politicians–bureaucracy relationship in a competitively authoritarian environment

We develop a model that captures the basic characteristics of competitively authoritarian regimes. An incumbent (government) faces a challenge from a rival (opposition). There is also an agent (bureaucracy) who can shirk and can interfere in this contest. Shirking is costly to the incumbent. The contestants offer the agent contingent pay-offs that determine the agent's optimal strategy. This, in turn, determines each contestant's winning probability. We calculate this probability for every possible strategy combination of the contestants. The result is a two-player (incumbent–rival)zero sum game. We compute Nash Equilibria for several interesting scenarios and find that equilibria can exist where the incumbent deliberately encourages bureaucratic shirking (corruption) in exchange for loyalty. More generally, the incumbent's incentive to encourage shirking can depend on public dissatisfaction with shirking, the bureaucracy's electoral influence, the opposition's strength and the asymmetry in the contestants' ability to impose punishments on the bureaucrats.simulation; political competition; elections; competitive authoritarianism; semi-democracy; bureaucratic corruption; politicians; bureaucracy; computational modelling; authoritarian regimes; two-player games; zero sum games; Nash Equilibria; loyalty; public dissatisfaction; electoral influence; opposition strength; punishment; incumbent; political rivals; politics.

Basel II will trickle down to community bankers, consumers

The new banking accord could make survival for some regional and community banks more difficult. On the other hand, consumers could see lower mortgage rates.Basel capital accord ; Banking law ; Bank supervision