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on Accounting |
| By: | Ambec, S. |
| Abstract: | This paper examines an entrepreneur-investor relationship in a stylized model where (i) investment needs are unknown ex ante and arise sequentially (ii) a major decision must be reached at a maturity strage, (iii) this decision depends on entrepreneur's private information, observable by the investor at some cost. The two partners agree on a corporate governance system which includes a split of futre cash-flows and an allocation of control on the above decision contingently on investment. It turns out that control is assigned to the entrepreneur for low investment levels and then switches to the investor when investment exceeds a threshold. ...French Abstract : Cet article analyse une relation entrepreneur-investisseur dans une modèle stylisée dans lequel (i) les besoins financiers, inconnus ex ante, se présentent de manière séquentielle, (ii) une décision majeure doit être prise à la maturité du projet, (iii) cette décision dépend d'une information privée détenue par l'entrepreneur mais observable par l'investisseur à un certain coût. Les deux partenaires s'entendent sur un système de gouvernance incluant un partage des cash-flow futurs et une allocation du contrôle sur la décision contingentement à l'investissement. L'article montre que le contrôle doit être confié à l'entrepreneur pour des niveaux d'investissement faible, mais qu'il doit être transféré à l'investisseur lorsque l'investissement dépasse un certain seuil. |
| Keywords: | CONTINGENT CONTROL; CORPORATE GOVERNANCE; VENTURE CAPITAL; BIOTECHNOLOGY |
| JEL: | G24 G32 L22 |
| Date: | 2004 |
| URL: | http://d.repec.org/n?u=RePEc:rea:gaelwp:200406&r=acc |
| By: | Antonio LORENZON; Peter J. VAN BAALEN; Luciano PILOTTI |
| Abstract: | The term CRM, Customer Relationship Management, is one of the mos t applied concept both in Marketing and IT literature and applica tions. CRM is most of the time used as a replacement of a mislead ing narrow term: Relationship Management (RM). Operations, Custom er Service, Sales, human resources, credit controls are essential ingredients in the customer satisfaction blender. We can conclud e that the definition of CRM is also its objective: the developme nt and maintenance of mutually beneficial long-term relationships with strategically significant customers. All this focus on cust omers and their needs comes from a shift from a mass marketing ap proach, through market segmentation, to an individualised marketi ng. This one-to-one marketing strategy is connected also with a m ore and more delocalised access to the markets from the logistics and distribution partners that implicates much more real-time ex pectations of the customers. So the market started to move from a product oriented structure to a customer oriented one but, unfor tunately not all the companies haven’t adapted their organization to the new requests of the new “customer centric era”. |
| Keywords: | Knowledge management, Customer Relationship Management, Marketing, User innovation; Open source software; Community; Projects’ performance |
| URL: | http://d.repec.org/n?u=RePEc:mil:wpdepa:2005-04&r=acc |
| By: | Dario Focarelli and Alberto Franco Pozzolo. |
| Abstract: | This paper presents some new evidence on the conflict of interest that may arise when banks underwrite corporate securities and sell them to their customers. Two alternative views are confronted; a) that commercial banks possess private information on the financial condition of their clients and so perform better screening (the certification hypothesis); and b) that commercial banks might convert loans to firms in financial difficulties into bonds marketed to unsuspecting clients (the ‘naïve investor’ hypothesis). The empirical analysis compares the default rates between 2000 and 2002 of a sample of more than 5,000 securities issued from 1991 to 1999. Our results show that, on average, securities underwritten by investment houses and by commercial banks had the same probability of default. However, investment-grade issues underwritten by commercial banks had a lower probability of default than those underwritten by investment houses, while the reverse was true for noninvestment- grade issues. Based on this latter result, it is not possible to refute the ‘naïve investor’ hypothesis, as instead in Kroszner and Rajan (1994). |
| Keywords: | Conflicts of interest, Glass-Steagall Act, Securities underwriting, Default performance. |
| JEL: | G21 G24 N22 |
| Date: | 2005–01–13 |
| URL: | http://d.repec.org/n?u=RePEc:mol:ecsdps:esdp05023&r=acc |
| By: | Randall K. Morck; Lloyd Steier |
| Abstract: | This paper presents a synopsis of recent NBER studies of the history of corporate governance in Canada, China, France, Germany, Japan, India, Italy, the Netherlands, Sweden, the United Kingdom, and the United States. Together, the studies underscore the importance of path dependence, often as far back into preindustrial period; legal system origin, though in a more nuanced form than mere statutory shareholder rights; and wealthy families. They also clarify the roles of ideologies, business groups, trust, institutional transplants, and politics in institutional evolution and financial development. Other themes are the universality of business insiders%u2019 investments in, entrenchment, and a possible behavioral basis for this. |
| JEL: | G3 N2 |
| Date: | 2005–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:11062&r=acc |
| By: | Michelle Hanlon; Terry Shevlin |
| Abstract: | This paper discusses the issues surrounding the proposals to conform financial accounting income and taxable income. The two incomes diverged in the late 1990s with financial accounting income becoming increasingly greater than taxable income through the year 2000. While the cause of this divergence is not known for certain, many suspect that it is the result of earnings management for financial accounting and/or the tax sheltering of corporate income. Our paper outlines the potential costs and benefits of one of the proposed "fixes" to the divergence: the conforming of the two incomes into one measure. We review relevant research that sheds light on the issues surrounding conformity both in the U.S. as well as evidence from other countries that have more closely aligned book and taxable incomes. The extant empirical literature reveals that it is unlikely that conforming the incomes will reduce the amount of tax sheltering by corporations and that having only one measure of income will result in a loss of information to the capital markets. |
| JEL: | K34 M41 E62 G12 |
| Date: | 2005–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:11067&r=acc |
| By: | Simeon Djankov; Caralee McLiesh; Andrei Shleifer |
| Abstract: | We investigate cross-country determinants of private credit, using new data on legal creditor rights and private and public credit registries in 129 countries. We find that both creditor protection through the legal system and information sharing institutions are associated with higher ratios of private credit to GDP, but that the former is relatively more important in the richer countries. An analysis of legal reforms also shows that improvements in creditor rights and in information sharing precede faster credit growth. We also find that creditor rights are extremely stable over time, contrary to the convergence hypothesis. Finally, we find that legal origins are an important determinant of both creditor rights and information sharing institutions. |
| JEL: | G3 G32 K22 |
| Date: | 2005–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:11078&r=acc |
| By: | Bart Lambrecht; Stewart C. Myers |
| Abstract: | We present a real-options model of takeovers and disinvestment in declining industries. As product demand declines, a first-best closure level is reached, where overall value is maximized by shutting down the .rm and releasing its capital to investors. Absent takeovers, managers of unlevered firms always abandon the firm%u2019s business too late. We model the managers%u2019 payout policy absent takeovers and consider the effects of golden parachutes and leverage on managers%u2019 shut-down decisions. We analyze the effects of takeovers of under-leveraged firms. Takeovers by raiders enforce first-best closure. Hostile takeovers by other firms occur either at the first-best closure point or too early. We also consider management buyouts and mergers of equals and show that in both cases closure happens inefficiently late. |
| JEL: | G34 C72 G13 |
| Date: | 2005–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:11082&r=acc |
| By: | Mihir A. Desai (Harvard University and NBER); Alexander Dyck (University of Toronto); Luigi Zingales (University of Chicago, NBER, and CEPR) |
| Abstract: | This paper analyzes the interaction between corporate taxes and corporate governance. We show that the characteristics of a taxation system affect the extraction of private benefits by company insiders. A higher tax rate increases the amount of income insiders divert and thus worsens governance outcomes. In contrast, stronger tax enforcement reduces diversion and, in so doing, can raise the stock market value of a company in spite of the increase in the tax burden. We also show that the corporate governance system affects the level of tax revenues and the sensitivity of tax revenues to tax changes. When the corporate governance system is ineffective (i.e., when it is easy to divert income), an increase in the tax rate can reduce tax revenues. We test this prediction in a panel of countries. Consistent with the model, we find that corporate tax rate increases have smaller (in fact, negative) effects on revenues when corporate governance is weaker. Finally, this approach provides a novel justification for the existence of a separate corporate tax based on profits. |
| Keywords: | Corporate Tax, Corporate governance |
| Date: | 2003–03 |
| URL: | http://d.repec.org/n?u=RePEc:ttp:itpwps:0501&r=acc |
| By: | Irena Grosfeld; Iraj Hashi |
| Abstract: | Focusing on two different mass privatization schemes in two transition economies, Poland and the Czech Republic, we show that the ownership structure in the two countries has rapidly evolved since the initial distribution of property rights Ownership concentration has significantly increased and we can observe an important reallocation of ownership claims between different groups of shareholders. This evidence goes against the main argument of the critics of mass privatization concerned with the dispersed ownership structure these programs were supposed to generate. The fact that the degree of ownership concentration is similar in Poland and in the Czech Republic suggests that private benefits of control are large in both countries. However, when we consider the determinants of ownership concentration we find an interesting difference: in the Czech Republic the increase in ownership concentration is less likely in poorly performing firms while in Poland the quality of past performance does not affect investors' willingness to increase their holdings. This contrasting effect may be interpreted in the light of the theory stressing the importance of the quality of the legal system for investors' behaviour: Poland is usually praised for high standards of its regulation while the Czech Republic, especially in the early and mid-1990s, has been blamed for its weaknesses. So, although direct comparison of ownership concentration in the two countries does not provide confirmation of the main prediction of "law matters" theory, we find indirect evidence in its favour. |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:pse:psecon:2005-01&r=acc |