New Economics Papers
on Business, Economic and Financial History
Issue of 2007‒09‒09
23 papers chosen by

  2. The End of (Economic) History By Jean-Paul Fitoussi
  3. Artists and the Market: From Leonardo and Titian to Andy Warhol and Damien Hirst By David Galenson
  4. The Microstructure of the Bond Market in the 20th Century By BIAIS, Bruno; GREEN, Richard
  5. Reevaluating the Modernization Hypothesis By Acemoglu, Daron; Johnson, Simon; Robinson, James A; Yared, Pierre
  6. The "Evropeiskii Sojus" By Tausch, Arno
  7. Bonds and Brands: Lessons from the 1820s By Flandreau, Marc; Flores Zendejas, Juan Huitzilihuitl
  8. World War II, Missing Men, and Out-of-wedlock Childbearing By Michael Kvasnicka; Dirk Bethmann
  9. Culture as Learning: The Evolution of Female Labor Force Participation over a Century By Raquel Fernandez
  10. Do countries default in “bad times”? By Michael Tomz; Mark L. J. Wright
  11. Spatial Growth and Industry Age By Desmet, Klaus; Rossi-Hansberg, Esteban
  12. No place like home? Location choice and firm survival after forced relocation in the German machine tool industry By Guido Buenstorf; Christina Guenther
  13. Singapore economy:An overview By Menon, Sudha Venu
  14. The Long-Term Effects of Africa's Slave Trades By Nathan Nunn
  15. Fisheries Economics and 20 years with Marine Resource Economics: A Citation Analysis By Eggert, Håkan
  16. Silvio Gesell, socialiste proudhonien et réformateur monétaire By Jérôme Blanc
  17. Optimum currency area theory: A selective review By Horvath , Julius
  18. Pasiones e intereses: las causas de la guerra civil de 1876-1877 en el Estado Soberano de Santander By Edna Carolina Sastoque Ramírez; Mario García Molina
  19. Optimal heating of large block of flats By Gustafsson, Stig-Inge; Rönnqvist, Mikael
  20. El crecimiento económico internacional en la segunda mitad del siglo XX ¿que factores lo determinaron? By Carlos E. Posada; Eliana Carolina Rubiano
  21. Location of value added activities in hi-tech industries. The case of pharma-biotech firms in Italy. By Luciano Fratocchi; Alberto Onetti; Alessia Pisoni; Marco Talaia
  22. The Macroeconomic Effects of Oil Shocks: Why are the 2000s So Different from the 1970s? By Olivier J. Blanchard; Jordi Gali
  23. Varieties of Capitalism, Varieties of Markets: Mergers and Acquisitions in Japan, Germany, France, the UK and USA By Gregory JACKSON; MIYAJIMA Hideaki

  1. By: Batiz-Lazo, Bernardo
    Abstract: This article explores the manipulation of published financial reports in order to counter perceived unfavourable impact, on an entity, of newly introduced regulations. The article departs from the traditional analysis of asset depreciation in manufacturing or mining and the link between market efficiency and stock market performance. This by looking at the depreciation of fixed assets in a mutual financial organisation. The change in the depreciation of free-hold buildings was a reaction to limited possibilities for asset management, was taken in the context of substantial growth in mortgage assets and was not followed by any notification in the financial statements. Issues in favour and against qualifying are then analysed in the context of the mid-term performance of the building society as well as the performance of net reserve ratios at other major building societies. CHANGEMENT DE LA METHODE D'AMORTISSEMENT DES BÂTIMENTS : LE CAS DE LA SOCIÉTÉ DE CONSTRUCTION ANGLAISE CIRCA (1959) AVEC SES INCIDENCES EN TERMES FINANCIERS ET EN MATIERE DE GOUVERNANCE Résumé Cet article présente un cas de manipulation des rapports financiers visant à éviter une baisse du résultat comptable perçue comme défavorable. En dépit du lien posé habituellement entre l'information comptable retraitée et l'efficience du marché, l'organisation a changé le taux de d'amortissement de ses actifs sans toutefois en faire état dans ses comptes financiers. Ce changement de méthode d'amortissement des bâtiments intervenait dans un contexte limitant les possibilités de gestion des actifs, et de croissance significative des prêts sous hypothèques. Les problématiques de la certification des comptes sont examinées, de même que l'évolution à moyen terme de la performance de cette société de construction comparativement à ses concurrentes.
    Keywords: Keywords: Depreciation; asset management; building societies; United Kingdom; corporate governance. Mots clés: Amortissement; gestion de actifs; sociétés de construction; Grande-Bretagne; gouvernance d'entreprise.
    JEL: N24 M42
    Date: 2006–08
  2. By: Jean-Paul Fitoussi (Observatoire Français des Conjonctures Économiques)
    Date: 2007
  3. By: David Galenson
    Abstract: In an era in which there is open discussion of many previously forbidden subjects, including race, sex, religion, and drugs, why is it that the nexus between money and art remains perhaps the last taboo subject for many in the art world? The answer can be found five centuries in the past. As the prices artists charged their patrons increased during the Italian Renaissance, their new social status was accompanied by the convention that they should not publicly appear to be concerned with money. This Renaissance ideal persisted into the modern era, even though the growth of a competitive market for fine art in the late 19th century made prices a subject of public discussion for critics and other observers of the art world. Pablo Picasso might privately use shrewd business tactics to amass a great fortune, but he and other successful artists were careful not to make public statements about the market for their work. It was not until the 1960s that a prominent painter decisively broke with the Renaissance tradition: Andy Warhol not only painted images of paper money, but also freely expressed his interest in financial success. Two leading contemporary artists, Jeff Koons and Damien Hirst, have followed Warhol's model of the artist as avowed materialist, specifically citing the high prices of their work as evidence of their importance. In a survival of the Renaissance convention, however, even today many critics and art scholars continue to regard the relationship between art and money as a taboo topic, and to maintain - incorrectly - that prices and artistic importance are unrelated.
    JEL: J01
    Date: 2007–09
  4. By: BIAIS, Bruno; GREEN, Richard
    Date: 2007–08–29
  5. By: Acemoglu, Daron; Johnson, Simon; Robinson, James A; Yared, Pierre
    Abstract: This paper revisits and critically re-evaluates the widely-accepted modernization hypothesis which claims that per capita income causes the creation and the consolidation of democracy. We argue that existing studies find support for this hypothesis because they fail to control for the presence of omitted variables. There are many underlying historical factors that affect both the level of income per capita and the likelihood of democracy in a country, and failing to control for these factors may introduce a spurious relationship between income and democracy. We show that controlling for these historical factors by including fixed country effects removes the correlation between income and democracy, as well as the correlation between income and the likelihood of transitions to and from democratic regimes. We argue that this evidence is consistent with another well-established approach in political science, which emphasizes how events during critical historical junctures can lead to divergent political-economic development paths, some leading to prosperity and democracy, others to relative poverty and non-democracy. We present evidence in favor of this interpretation by documenting that the fixed effects we estimate in the post-war sample are strongly associated with historical variables that have previously been used to explain diverging development paths within the former colonial world.
    Keywords: democracy; economic growth; institutions; political development
    JEL: O10 P16
    Date: 2007–08
  6. By: Tausch, Arno
    Abstract: The author presents a world systems perspective for the ongoing debate about the European failure to meet the Lisbon criteria of catching up with the US by 2010. While the dismal performance of Europe is documented in this paper, the world sys-tem perspective is relatively novel in the debate and argues that Europe in the long run becomes similar to the typical Latin American countries during the “internation-alization of the internal markets” that began in Latin America in the 1960s and 1970. There is also a historical dimension to the Lisbon process. World systems theories maintain that the present ongoing era of globalization already has its parallel in the 19th Century. The UN CEPAL/ECLAC data referred to in this study neatly demon-strate that these epochs of globalization in the 19th Century and after 1973 shifted incomes relatively away from Western Europe, Eastern Europe and Japan and in fa-vor of the United States and the “dominions”, while the era of regulation after 1945 (Arrighi, 1995) clearly re-allocated relative incomes to the West Europeans, to the East Europeans and the Japanese. Latin America also gained during the era of im-port substitution from around 1930 to around 1973. It is to be expected that Western and Eastern Europe, Latin America, and also Japan that all owed their relative ascent in global society after 1945 to their import substitution strategies, will be the main losers during the ongoing globalized decades. In terms of 6 hard combined UNDP indicators of human survival and absolute pov-erty, the US outperforms several EU-15 countries, like the United Kingdom, Spain and Portugal. Not “American conditions” are “threatening” Europe: both continents face the same challenges, to which America – in a capitalistic sense – much more productively stood up to in the 1990s. The lack of industrial policy in the tradition of Commis-sioner Jacques Delors is an important variable here. The EU-25 is characterized, ac-cording to this argument, by a very high MNC penetration (UNCTAD indicator of foreign direct investment per total GDP) and other indicators of dependency, whose net effect on development is polarizing. Human capital policy (public education expenditures per GDP) is also playing an important role in explaining international growth differentials. The relevance of the “Delors” factors for the explanation of economic efficiency, gender justice, em-ployment, social cohesion and sustainable development is shown in multiple regres-sion analyses with 130 countries. It is shown that Europe indeed corresponds to such an analysis; even worse, it is also to be expected that the “Latin Americanization” of European society will go on, if Europe does not return to the Delors agenda.
    Keywords: Cross-Section Models; Income Distribution; International Economic Order; Inequality; Economic Integration: General; National Government Expenditures and Related Policies: General; Globalization; Welfare and Poverty: General; Labor and Demographic Economics: General; Economic Development: General; Economy wide Country Studies: General; Retirement; Retirement Policies; Private Pensions; Economics of the Elderly
    JEL: J14 F15 C21 J00 F02 D31 J26 H50
    Date: 2007
  7. By: Flandreau, Marc; Flores Zendejas, Juan Huitzilihuitl
    Abstract: How does sovereign debt emerge and become sustainable? This paper provides a new answer to this unsolved puzzle. Focusing on the early 19th century, we argue that intermediaries' market power served to overcome information asymmetries and sustained the development of sovereign debt. Relying on insights from corporate finance, we argue that capitalists turned to intermediaries' reputations to guide their investment strategies. The outcome was a two-tier global bond market, which was sustained by hierarchical relations among intermediaries. This novel theoretical perspective is backed by new archival evidence and empirical data that have never been gathered so far.
    Keywords: contagion; intermediaries; IPO
    JEL: G15 G23 N23 N26
    Date: 2007–08
  8. By: Michael Kvasnicka; Dirk Bethmann
    Abstract: Based on county-level census data for the German state of Bavaria in 1939 and 1946, we use World War II as a natural experiment to study the effects of sex ratio changes on out-of-wedlock fertility. Our findings show that war-induced shortfalls of men to women significantly increased the nonmarital fertility ratio at mid century, a result that proves robust to the use of alternative sex ratio definitions, post-war measures of fertility, and estimation samples. The magnitude of this increase furthermore appears to depend on the future marriage market prospects that women at the time could expect to face in the not-too-distant future. We find the positive effect on the nonmarital fertility ratio of a decline in the sex ratio to be strongly attenuated by the magnitude of county- level shares of prisoners of war. Unlike military casualties and soldiers missing in action, prisoners of war had a sizeable positive probability of returning home from the war. Both current marriage market conditions, therefore, and foreseeable improvements in the future marriage market prospects of women appear to have influenced fertility behavior in the immediate aftermath of World War II.
    Keywords: World War II, Sex Ratios, Out-Of-Wedlock Births.
    JEL: J12 J13 N34
    Date: 2007–09
  9. By: Raquel Fernandez
    Abstract: Married women's labor force participation has increased dramatically over the last century. Why this has occurred has been the subject of much debate. This paper investigates the role of culture as learning in this change. To do so, it develops a dynamic model of culture in which individuals hold heterogeneous beliefs regarding the relative long-run payoffs for women who work in the market versus the home. These beliefs evolve rationally via an intergenerational learning process. Women are assumed to learn about the long-term payoffs of working by observing (noisy) private and public signals. They then make a work decision. This process generically generates an S-shaped figure for female labor force participation, which is what is found in the data. The S shape results from the dynamics of learning. I calibrate the model to several key statistics and show that it does a good job in replicating the quantitative evolution of female LFP in the US over the last 120 years. The model highlights a new dynamic role for changes in wages via their effect on intergenerational learning. The calibration shows that this role was quantitatively important in several decades.
    JEL: E2 J21 Z1
    Date: 2007–09
  10. By: Michael Tomz; Mark L. J. Wright
    Abstract: This paper uses a new dataset to study the relationship between economic output and sovereign default for the period 1820-2004. We find a negative but surprisingly weak relationship between output and default. Throughout history, countries have indeed defaulted during bad times (when output was relatively low), but they have also maintained debt service in the face of severe adverse shocks, and they have defaulted when domestic economic conditions were favorable. We show that this constitutes a puzzle for standard theories, which predict a much tighter negative relationship as default provides partial insurance against declines in output.
    Keywords: Default (Finance) ; Debt
    Date: 2007
  11. By: Desmet, Klaus; Rossi-Hansberg, Esteban
    Abstract: U.S. county data for the last 20 or 30 years show that manufacturing employment has been deconcentrating. In contrast, the service sector exhibits concentration in counties with intermediate levels of employment. This paper presents a theory where local sectoral growth is driven by technological diffusion across space. The age of an industry -- measured as the time elapsed since the last major general purpose technology innovation in the sector -- determines the pattern of scale dependence in growth rates. Young industries exhibit non-monotone relationships between employment levels and growth rates, while old industries experience negative scale dependence in growth rates. The model then predicts that the relationship between county employment growth rates and county employment levels in manufacturing at the turn of the 20th century should be similar to the same relationship in services in the last 20 years. We provide evidence consistent with this prediction.
    Keywords: industry age; scale dependence; spatial growth; US counties
    JEL: R1
    Date: 2007–08
  12. By: Guido Buenstorf (Max Planck Institute of Economics, Evolutionary Economics Group); Christina Guenther (Max Planck Institute of Economics, Evolutionary Economics Group)
    Abstract: We study location choices and firm performance in the German machine tool industry, focusing on the forced migration of East German firms after World War II. Our analysis of location choices supports earlier findings that industry agglomerations attract further entrants. Relocating firms outperformed entrants that possessed no prior industry experience; apparently were able to build on their prewar capabilities. We find no evidence suggesting that firm performance benefited from agglomeration effects.
    Keywords: Capabilities, agglomeration economies, location choice, firm survival, machine tool industry
    JEL: L20 R12 R30
    Date: 2007–08–31
  13. By: Menon, Sudha Venu
    Abstract: ABSTRACT Singapore plays a leading role in changing the destiny of post colonial countries in Asian region, by heralding the unique success path of economic growth, industrial competitiveness coupled with political stability and transparency. Even though the country was constrained by geographical limitations and a vast natural resource base, the city- state was able to lay the foundations of economic prosperity and diversity through effective utilization of its entrepot status. When other Asian countries faced a chequered history of economic under development, political instability and social unrest, Singapore attempted a brave step towards liberalization, international trade and capitalistic growth strategy which ultimately made the country a ‘brand’ among other countries. Now Singapore serves as a regional headquarters for more than 3000 multinational companies and has world class financial and service sectors and above all highly efficient physical infrastructure. The country consistently ranks high among 'most attractive countries for international business' and has achieved a per capita GDP level comparable to levels of developed western nations. Against this context, this article attempts to provide a brief overview of Singapore, its economic history, macro economic trends and social and demographic profile. The main objective of the article is to present the growth and development of a small city state into the most vibrant and thriving economic destination across the world
    Keywords: Singapore; economy; Southeast Asia
    JEL: O1
    Date: 2007–05–30
  14. By: Nathan Nunn
    Abstract: Can part of Africa's current underdevelopment be explained by its slave trades? To explore this question, I use data from shipping records and historical documents reporting slave ethnicities to construct estimates of the number of slaves exported from each country during Africa's slave trades. I find a robust negative relationship between the number of slaves exported from a country and current economic performance. To better understand if the relationship is causal, I examine the historical evidence on selection into the slave trades, and use instrumental variables. Together the evidence suggests that the slave trades have had an adverse effect on economic development.
    JEL: F1 F15 N0 O1
    Date: 2007–09
  15. By: Eggert, Håkan (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: This paper reviews the impact of articles published in the Marine Resource Economics and within the field of fisheries economics in general over the period 1954-2004. Specific attention is given to the years 1984-2004, which is the period that Marine Resource Economics have been published. The degree of influence is assessed using citation analysis. I present the most cited papers in Marine Resource, the top ten all time cited fisheries economics papers and the most cited papers during each decade over the last 30 years. By analysing the trend of recently published papers, I can assess which ones are projected to be most influential.<p>
    Keywords: Fisheries economics; Marine resource economics; ISI
    JEL: Q22
    Date: 2006–04–01
  16. By: Jérôme Blanc (LEFI - Laboratoire d'économie de la firme et des institutions - [Université Lumière - Lyon II])
    Abstract: Œuvre postérieure à Proudhon mais reliée à lui, la proposition d’une économie franche et plus spécifiquement d’une monnaie franche par Silvio Gesell, auteur allemand venu sur le tard à l’économie, socialiste proudhonien, décrit par beaucoup comme une sorte de prophète, a jusqu’ici, mais en partie seulement, échappé au destin peu enviable de la plupart des propositions de réforme monétaire qualifiées d'utopiques. Après avoir survolé la vie et l’œuvre de Silvio Gesell, on s’intéressera aux relations que sa pensée entretient avec celle de Proudhon avant de se centrer sur sa proposition de réforme monétaire — ce qui signifie qu’on laissera de côté son analyse spécifique de la terre et ses conclusions relatives à la rente foncière.
    Keywords: Histoire de la pensée économique;socialisme;Proudhon;Gesell;idées monétaires
    Date: 2007–08–28
  17. By: Horvath , Julius (BOFIT)
    Abstract: The first part of this paper is a review of significant papers in the vast literature on optimum currency area (OCA) theory. The author focuses on the main classical contributions, then considers modern treatment of OCA theory. The second part considers empirical literature on the types of geographical areas that might constitute optimum currency areas, particularly with respect to asymmetry and symmetry of shocks.
    JEL: E42 F33
    Date: 2007–09–06
  18. By: Edna Carolina Sastoque Ramírez; Mario García Molina
    Abstract: Este trabajo busca ampliar el análisis de las posibles causas de la llamada guerra civil de 1876 1877 o guerra de las escuelas, en el Estado Soberano de Santander. Se realiza una aproximación a la malla urbana de la región entre 1853 y 1875 y, a partir de ella, las condiciones que contribuyeron a la formación de conflictos y los relevos jerárquicos propiciados por éstos. Por otro lado, para comprender las causas de la guerra se identifican los actores que intervinieron en ella. Se concluye que el grupo que inició la guerra fue el mismo que perdió jerarquía en la malla urbana, como un intento de recobrar la influencia perdida.
    Date: 2007–08–28
  19. By: Gustafsson, Stig-Inge (Linköping Institute of Technology, Linköping University); Rönnqvist, Mikael (Dept. of Finance and Management Science, Norwegian School of Economics and Business Administration)
    Abstract: Large number of block of flats are today often connected to municipal district heating grids. Such systems became very popular in Sweden some fifty years ago. The reason for this was that cheap low-quality oil was abundant on the energy market but normal building owners could not use it in their own low-cost oil-fired boilers. They had to use better and more expensive oil for their heating purposes. In a district heating plant low-quality cheap oil could be burnt in a sophisticated, but expensive, boiler. Such a plant was also large enough to afford investments in other equipment, e.g. for sulphur reduction. Further, the municipalities saw their chance to get rid of many other sources of heat, such as coal and wood, which polluted the air for many inhabitants. It was better with one high and large chimney than thousands of small. During many years heavy oil was the dominant fuel in our district heating plants. Unfortunately, the use of oil made the trade balance of Sweden problematic and the country vulnerable to fluctuations on the energy market. The oil-crises during the 1970-ties made the situation even worse. Sweden had to get rid of the dependence of oil and district heating based on other fuels, or even electricity, where available alternatives. Environmental hazards, high prices and the obligation to reduce greenhouse gas emissions have led to modernisation of the plants and nowadays, a number of energy sources are in use, many of them with very competitive prices. Waste, garbage, worn out rubber tyres, demolished wooden buildings are used as fuels today. There are however drawbacks. Boilers and equipment for waste incineration are expensive devices and it is many times not possible to cover the total heat demand by use of garbage etc., as the only sources. The amount of waste might also be too small. Sometimes coal and oil must be used during peak conditions but taxes and emission allowances make such fuels expensive and the utilities try to do their best in order to avoid such fossil heat sources. If it was possible to reduce the demand when peak conditions emerge, fossil fuels could be avoided. Up to now, normal Swedish district heating tariffs were not thought to encourage such a behaviour, but as this study shows, the cheapest solution for a proprietor is many times to abandon district heating during the winter and use alternative solutions. The utilities of course want to sell district heat also during the winter but if the building owners want to reduce their costs as much as possible the district heating tariff tells them to use heat from the utility only during summer.
    Keywords: Optimisation; Modelling
    JEL: C61
    Date: 2007–07–06
  20. By: Carlos E. Posada; Eliana Carolina Rubiano
    Abstract: En este ensayo presentamos un modelo de crecimiento económico y los resultados de su estimación econométrica. Entre sus variables incluimos las demográficas y de capital físico y humano. El ejercicio empírico se basó en un “panel dinámico” que cubrió un período de aproximadamente cuatro decenios (1960-2000) y tres muestras de países con el fin de apreciar la robustez de los resultados. La primera, con 59 países, y, las otras dos, diferenciando entre países pobres y ricos. Los resultados de la muestra total parecen dominados por los de la sub-muestra de países pobres, a saber: solo la tasa de inversión en capital físico fue significativa en la determinación de la tasa de crecimiento económico. En el caso de los países ricos, además de la inversión en capital físico, también se mostraron significativas la inversión en capital humano (con un efecto rezagado de 10 años) y la constante, sugiriendo, esto último, que fue importante en estos países un cambio técnico exógeno como uno de sus motores de crecimiento.
    Date: 2007–06–26
  21. By: Luciano Fratocchi (Department of Mechanical Thermal and Managerial Engineering - University of L’Aquila - Italy); Alberto Onetti (Department of Economics, University of Insubria, Italy); Alessia Pisoni (Department of Economics, University of Insubria, Italy); Marco Talaia (Department of Economics, University of Insubria, Italy)
    Abstract: This paper aims at analysing the main features of the activities carried out by the Italian biotech industry. This topic is so wide and various that particularly we decided to focus on the value added activities of the so-called “pharma-biotech”, i.e. pharmaceutical firms that have diversified in the biotech business or pharmaceutical spin-offs. First of all we try to identify the main activities carried out by the studied companies. Particularly, we focus on R&D carried out on biotech, trying to measure its extent both in terms of employees involved and of percentage of total investments. Moreover, we provide a picture of the range of R&D activities performed and the contribution arising from the cooperation with actors in and out of the industry. It is worth pointing out the exploratory scope of this paper that at the present is not yet able to provide through managerial guidelines for decision makers. With this respect, the sample is composed of companies operating in Italy in specific business within the biotech industry. More specifically, in order to reach earlier presented goals, attention was paid on the so called red biotech segment, that is biotech companies which develop drugs and diagnostics. This segment - which is predominant at worldwide level - was further divided accordingly to the adopted business model: born-biotech companies (more focused on R&D activities) and pharma-biotech companies (generally operating also manufacturing and sales activities). The research interest was finally focused on the latter segment, which was divided among pharma-oriented and biotech-oriented companies. The paper is structured in four main sections. In the first one, the most relevant features of biotech firms are discussed on the base of a literature review. In the second paragraph, adopted methodology is presented and sample main characteristics are discussed. In the third section, the main results regarding the localization of R&D activities study carried out on the biotech activities in Italy are presented. The conclusions complete the paper.
    Keywords: Biotech, Localization, R&D, MNCs, Value added activities
    Date: 2007–09
  22. By: Olivier J. Blanchard; Jordi Gali
    Abstract: We characterize the macroeconomic performance of a set of industrialized economies in the aftermath of the oil price shocks of the 1970s and of the last decade, focusing on the differences across episodes. We examine four different hypotheses for the mild effects on inflation and economic activity of the recent increase in the price of oil: (a) good luck (i.e. lack of concurrent adverse shocks), (b) smaller share of oil in production, (c) more flexible labor markets, and (d) improvements in monetary policy. We conclude that all four have played an important role.
    JEL: E20 E32 E52
    Date: 2007–09
  23. By: Gregory JACKSON; MIYAJIMA Hideaki
    Abstract: This paper compares the characteristics of M&A in 1991-2005 across five countries: Japan, France, Germany, the UK and USA. We ask what factors explain the growth of M&A markets across these countries, and what similarities and differences exist in the ways the M&A market operates. We find that the growth of M&A reflects a rather similar combination of sectoral, international, and financial factors. However, despite some convergence toward increasing levels, we find important differences in the characteristics of M&A transactions that reflect institutional differences found within different national 'varieties of capitalism'. We find systematic differences between what Hall and Soskice (2001) call liberal market economies (UK and USA) and coordinated market economies (Japan, France, and Germany) across a wide range of in deal characteristics: takeover bids, the size of stakes purchased, the prior stakes held, the use of private negotiation, degree of hostility, and takeover premium. In line with theories of the social embeddedness of markets (Granovetter 1985), we find that in countries with 'coordinated' market economies, M&A reflects greater 'coordination' of transactions through on going business relations. As such, the market for corporate control does not necessary entail a convergence of national business systems, but a pattern of change influenced by strong continuities.
    Date: 2007–09

General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.