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on Regulation |
| By: | Chaudhuri, A.R.; Benchekroun, H. (Tilburg University, Center for Economic Research) |
| Abstract: | In a two-country model where firms behave a la Cournot, we show that marginal and non-marginal trade liberalization have different effects on the social desirability of horizontal mergers. Marginal tariff reductions increase (decrease) the desirability of merger at sufficiently low (high) tariff levels. In the neighborhood of free trade, for sufficiently low cost savings from merger, trade liberalization increases the desirability of merger whilst decreasing the profitability, implying that mergers should be actively encouraged by competition authorities. Furthermore, we identify ranges of tariff levels for which, if trade liberalization increases (decreases) the desirability of merger, it necessarily increases (decreases) its profitability. |
| JEL: | L41 F13 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:kubcen:200819&r=reg |
| By: | Martynova, M.; Renneboog, L.D.R. (Tilburg University, Center for Economic Research) |
| Abstract: | In cross-border acquisitions, the differences between the bidder and target corporate governance have an important impact on the takeover returns. Our country-level corporate governance indices capture the changes in the quality of the national corporate governance regulations over the past 15 years. When the bidder is from a country with a strong shareholder orientation (relative to the target), part of the total synergy value of the takeover may result from the improvement in the governance of the target assets. In full takeovers, the corporate governance regulation of the bidder is imposed on the target (the positive spillover by law hypothesis). In partial takeovers, the improvement in the target corporate governance may occur on voluntary basis (the spillover by control hypothesis). Our empirical analysis corroborates both spillover effects. In contrast, when the bidder is from a country with poorer shareholder protection, the negative spillover by law hypothesis states that the anticipated takeover gains will be lower as the poorer corporate governance regime of the bidder will be imposed on the target. The alternative bootstrapping hypothesis argues that poor-governance bidders voluntarily bootstrap to the better-governance regime of the target. We do find support for this bootstrapping effect. |
| Keywords: | takeovers;mergers and acquisitions;cross-border;takeover synergies;corporate governance regulation;contractual convergence;shareholder protection;creditor protection;minority shareholder protection;takeover regulation |
| JEL: | G30 G34 G38 G18 G14 G15 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:kubcen:200818&r=reg |
| By: | Césaire A. Meh; Yaz Terajima |
| Abstract: | In this paper we develop a quantitative model of entrepreneurial activity (risk-taking) and consumer bankruptcy choices and use the model to study the effects of bankruptcy regulations on entrepreneurial activity, bankruptcy rate and welfare. We show that eliminating bankruptcy exemptions leads to a modest increase in the fraction of entrepreneurs, a large decrease in the overall bankruptcy rate and a significant welfare gain. In contrast, eliminating the whole consumer bankruptcy system leads to a large fall in the fraction of entrepreneurs and a substantial welfare loss. These two findings suggest that the consumer bankruptcy system is desirable but it must be well-designed with regard to bankruptcy asset exemptions. In particular, excessive bankruptcy exemptions can be counter-productive. Finally, we argue that entrepreneurial activity is important when studying different bankruptcy rules or regulations. |
| Keywords: | Economic models; Financial stability; Financial system regulation and policies |
| JEL: | D31 E21 J23 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:bca:bocawp:08-5&r=reg |
| By: | Audrey Hu (Universiteit van Amsterdam); Liang Zhou (Universiteit van Amsterdam) |
| Abstract: | A government officials' propensity to corruption, or corruptibility, can be affected by his intertemporal preference over job benefits. Through a dynamic model of rent-seeking behavior, this paper examines how endogenously determined corruptibility changes with monitoring intensity, salary growth, and discount factor for expected future income. The paper illustrates credible circumstances in which the less an official values his job the more he seeks rents. This negative relation suggests a simple quasi-auction mechanism for selecting less corruptible public servants. While straightforward to implement, the quasi-auction also tends to circumvent the corrupt influence that is often associated with standard auction of jobs. |
| Keywords: | rent seeking; corruption; selection of officials; quasi-auction; sale of jobs |
| JEL: | D73 H11 D44 |
| Date: | 2007–12–11 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:20070096&r=reg |
| By: | Argentino Pessoa (Faculdade de Economia da Universidade do Porto, Portugal) |
| Abstract: | The developing world needs far more financing for infrastructure than can be provided by domestic public finances alone and through ODA (Official Development Aid). Around middle 1980s a new strategy based on the use of public-private agreements, relying on ODA to enhance the quality of projects, reduce risks and raise profitability was gradually implemented for the provision of infrastructures and public utilities. This paper evaluates the more typical forms of private sector involvement and its actual importance (by type of public utility and by region), and shows that the new strategy has failed in improving the provision of infrastructures in the developing world. |
| Keywords: | infrastructures, ODA, outsourcing, public-private partnership, public utilities, regulation |
| JEL: | H4 H54 I18 I28 L33 |
| Date: | 2008–02 |
| URL: | http://d.repec.org/n?u=RePEc:por:fepwps:266&r=reg |
| By: | Andvig, Jens Christopher |
| Abstract: | The paper discusses the impact of corruption on the probability of violent conflict events and traces the shifts in the composition of corrupt transactions during and in the aftermath of violent conflicts in an informal way. So far there has been little interaction between empirical corruption research and the empirical research into civil wars. When the two strands of research are brought together and their results are combined, some patterns become apparent that would have been difficult to detect if the results within each field were analysed in isolation. |
| Keywords: | Corruption, civil war, governance indicators |
| JEL: | B49 O17 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifwedp:6987&r=reg |
| By: | Hiroko Okudaira (Graduate School of Economics, Osaka University) |
| Abstract: | The goal of this paper is to detect the degree to which court decisions control the stringency of employment protection and investigate how such judicial discretion affects labor market performance. However, Identification difficulty arises because court decisions are volatile against economic and social conditions. This paper overcomes the endogeneity problem by exploiting the triennial judge transfer system in Japan, or the exogenous allocation of judges to prefectures. Specifically, I estimated the judge-specific effects from litigation records and instrumented them to the judgment indicator in the original model. A key finding in this paper is that prefecture employment rate is reduced by approximately 1.5% if a prefecture receives more pro-worker judgments than pro-employer ones in a given year. Interestingly, the result is robust to the instrumental variable estimates only if the sample includes observations of the Tokyo and Osaka Prefectures. Thus, judges assigned to these prefectures have played leading roles in exogenously establishing the doctrine of abusive adjustment dismissals, whereas the rest of the variation in judgments4 is reversely explained by local labor market performance. |
| Keywords: | Employment Protection, Wrongful-Discharge Law, Weak Instrumental Variables |
| JEL: | J65 K31 K41 |
| Date: | 2008–02 |
| URL: | http://d.repec.org/n?u=RePEc:osk:wpaper:0808&r=reg |