nep-cfn New Economics Papers
on Corporate Finance
Issue of 2009‒03‒07
three papers chosen by
Zelia Serrasqueiro
University of the Beira Interior

  1. Cycles, Contagion and Crises By Nikolaj Schmidt; Ashley Taylor; Charles Goodhart; Amil Dasgupta
  2. Managerial Compensation, Corporate Governance, and Business Performance in Japan: Evidence Using New Micro Data By Hideaki Sakawa; Naoki Watanabel
  3. Innovation and Institutional Ownership By Aghion, Philippe; Van Reenen, John; Zingales, Luigi

  1. By: Nikolaj Schmidt; Ashley Taylor; Charles Goodhart; Amil Dasgupta
    Abstract: On 28-29 June 2007, the Financial Markets Group organised a conference covering topics under all three themes of its title, 'Cycles, Contagion and Crises', from the perspective of both developed and emerging economies.
    Date: 2008–11
  2. By: Hideaki Sakawa; Naoki Watanabel
    Abstract: This paper examines the relations between the disciplinary role of Japanese relationship-oriented corporate governance mechanisms, such as keiretsu memberships and bank-appointed directors, and pay-performance sensitivity in Japan. Previous studies show that pay-performance sensitivity is positive and almost the same as in a market-oriented system like that of the USA. However, under the Japanese relationship-oriented system, pay-performance sensitivity may be controlled by financial keiretsu ties and bank-appointed directors. We find that the disciplinary mechanism of keiretsu memberships and bank-appointed monitors did not function well in Japan in the 1990s.
    Keywords: Corporate Governance, Firm Performance, Japan, Keiretsu Memberships, Managerial Compensation
    JEL: G30 G32 J33 L22
    Date: 2009–02
  3. By: Aghion, Philippe; Van Reenen, John; Zingales, Luigi
    Abstract: We find that institutional ownership in publicly traded companies is associated with more innovation (measured by cite-weighted patents). To explore the mechanism through which this link arises, we build a model that nests the lazy-manager hypothesis with career-concerns, where institutional owners increase managerial incentives to innovate by reducing the career risk of risky projects. The data supports the career concerns model. First, whereas the lazy manager hypothesis predicts a substitution effect between institutional ownership and product market competition (and managerial entrenchment generally), the career-concern model allows for complementarity. Empirically, we reject substitution effects. Second, CEOs are less likely to be fired in the face of profit downturns when institutional ownership is higher. Finally, using instrumental variables, policy changes and disaggregating by type of owner we find that the effect of institutions on innovation does not appear to be due to endogenous selection.
    Keywords: career concerns; Innovation; Institutional Ownership; productivity; R&D
    JEL: G20 G32 O31 O32 O33
    Date: 2009–03

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