New Economics Papers
on Law and Economics
Issue of 2013‒04‒27
four papers chosen by
Jeong-Joon Lee, Towson University

  1. Economics of bankruptcy exemption: Signaling value of collateral, cost of credit and access to credit By Pasqualina Arca; Gianfranco Atzeni; Luca Deidda
  2. Immigration Status and Victimization: Evidence from the British Crime Survey By Georgios Papadopoulos
  3. Institutional Complementarities and Property Rights-Technology Equilibria under Knowledge Intensive Technology By Erkan Gurpinar
  4. Financial accounting and reporting in Germany: A case study on German accounting tradition and experiences with the IFRS adoption By Fülbier, Rolf Uwe; Klein, Malte

  1. By: Pasqualina Arca; Gianfranco Atzeni; Luca Deidda
    Abstract: We analyze the effect of a bankruptcy law according to which some of the borrower’s assets are exempt from liquidation in the event of default in the context of a competitive credit market characterized either by moral hazard (MH) or by adverse selection (AS). In particular, we study how the level of such exemption affects the role of collateral depending on the dominant source of asymmetric information. Under MH, conditional on the level of exemption, the cost of credit is higher for borrowers who are requested to post collateral. Moreover, conditional on posting collateral, the cost of credit does not change with the level of asset exemption. Differently, in the case of AS, the decision to post collateral results in a lower cost of credit, whenever the equilibrium is separating. Finally, under AS, a higher level of exemption is generally associated with a lower level of credit rationing. Similarly, credit rationing either stays unchanged or goes down with exemption in the case of MH. We exploit cross State variability in the level of asset exemption from liquidation – according to personal bankruptcy US State laws prior to 2005 federal reform – in order to identify the signaling role played by collateral in a sample of american small business taken from the SBFF data.
    Keywords: Bankruptcy; Collateral; Exemption levels; Moral hazard; Signal; Screening
    JEL: K35 G32 G33 D82
    Date: 2013
  2. By: Georgios Papadopoulos (University of East Anglia)
    Abstract: This study, using data from the British Crime Survey (BCS), examines the microrelationship between immigration and victimization. We first find that, although immigrants are more likely to suffer property crimes than natives, this is well explained by the fact that immigrants exhibit demographic characteristics associated with higher victimization. Contrary to the above, immigrants are of lower risk of violent victimization. As violence is an expressive type of crime, where interactions between victim-offender pairs prior to the incident matter more than instrumental crime, the lower risk of violence can be attributed to different lifestyle choices associated with lower victimization risks. However, a closer investigation, decomposing violence in domestic, by acquaintances and by strangers crime, shows that this difference is driven by the lower crime immigrants suffer by acquaintances and by family members, which is not consistent with the `different-lifestyles' hypothesis. Nevertheless, we show that the aforementioned (unexpected) difference cannot be attributed to higher under-reporting by immigrants. We further show, that if immigrants did not face racially motivated crime, they would also face a significantly lower risk of victimization by strangers. Finally, we examine whether the lower victimization by acquaintances could be because more recent immigrants have fewer acquaintances. However, we argue that if this kind of `network' effect exists, it is actually quite weak. Therefore, all evidence suggests that indeed, immigrants face a lower risk of violent victimization because of lifestyles associated with a lower exposure to crime. Finally, using count data models we examine whether immigrants are disproportionately victims of repeat crimes. However, the results show that patterns of repeat victimization are generally the same between immigrants and natives.
    Date: 2013–04
  3. By: Erkan Gurpinar
    Abstract: The unprecedented development of intellectual property rights (both in scale and scope) has been one of the most important factors in the transformation of the world economy over the last three decades. We argue that, at least in part, economic importance of knowledge has brought an overreaching enclosure movement on it. IPRs regime protecting the knowledge base of firms deprives knowledge workers of owning the intellectual assets developed in the production process. This development, in turn, (a) has damaging consequences on the knowledge workers’ skills; thereby (b) the rise of a virtuous cycle between nonexclusive property rights and workers’ skills is prevented.
    Keywords: Intellectual property rights, knowledge intensive technology, institutional complementarities
    JEL: K11 L23 O34
    Date: 2013–04
  4. By: Fülbier, Rolf Uwe; Klein, Malte
    Abstract: Financial accounting is rooted in national thoughts, traditions and institutional settings. As a consequence, accounting has developed heterogeneously over time and fulfilled contracting purposes in divergent national environments. Against this background, we argue that the ongoing process of accounting internationalization and imposed harmonization carries with it the danger of deforming country-specific balancing factors in the accounting systems, especially when the national environment for economic and contractual activities is not harmonized at all. In contrast to more evolutionary integration and adjustment processes of the past where spillover effects have always existed, the rapidity of the current process and coercive nature increases country-specific frictions. To support our argument and to substantiate the interplay of accounting as a contractual device and country-specific characteristics, we provide an in-depth case study of one country, Germany. We illustrate how the traditional German commercial law accounting system has evolved over time to meet specific contractual needs. We demonstrate how the current process of globalization and accounting internationalization has been attended by increasing frictions and challenges, especially on the contractual and regulatory level. We finally investigate the consequences on the German standard setting system, which also includes the changing role of German accounting research. -- Als standardisierte Kommunikation zwischen Unternehmensbeteiligten wurzelt Rechnungslegung stets auch in nationalen Traditionen, Konzepten und institutionellen Rahmenbedingungen. Insofern verwundert es nicht, dass sich Rechnungslegung weltweit heterogen entwickelt hat und unter unterschiedlichen nationalen Bedingungen unterschiedlichen Zwecken folgt. Dabei birgt die seit Jahren zu beobachtende Internationalisierung und oktroyierte Harmonisierung der Rechnungslegung die Gefahr, landesspezifische (Ausgleichs-)Faktoren in der Rechnungslegung zu nivellieren, obwohl sonstige Rahmenbedingungen unternehmerischer Aktivität keineswegs harmonisiert sind. Im Gegensatz zu den eher evolutorischen Integrations- und Anpassungsprozessen der Vergangenheit, in denen Einflüsse anderer Systeme durchaus erkennbar waren, dürften die Schnelligkeit und der regulatorische Zwangscharakter des gegenwärtigen Prozesses landesspezifische Friktionen erzeugen. Um diese Argumentation zu untermauern und um das komplexe Zusammenspiel von Rechnungslegung als Vertragskoordinationsinstrument mit landesspezifischen Rahmenbedingungen zu verdeutlichen, wird eine detaillierte Fallstudie präsentiert, die auf ein einziges Land, Deutschland, zielt. Darin wird aufgezeigt wie sich handelsrechtliche, deutsche Bilanzierungstradition vor dem Hintergrund spezifischer Koordinationsbedürfnisse historisch entwickelt hat. Untersucht werden zudem die Friktionen und Herausforderungen auf unternehmensvertraglicher wie auch regulatorischer Ebene, die durch den gegenwärtigen Internationalisierungsprozess in der Rechnungslegung ausgelöst werden. Die Untersuchung schließt die dahingehenden Konsequenzen für das System der deutschen Rechnungslegungsregulierung und für die Rechnungslegungsforschung mit ein.
    Keywords: German Accounting,Accounting Research,HGB,Code Law,Legal System,Socioeconomic-Environment,Institutional Settings,SME,Book-Tax-Conformity,Debt Financing,Accounting History
    JEL: K22 M41 N00 N24 N44
    Date: 2013

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