Essays on the Determinants of International Portfolio Investments

Investors significantly overweight domestic assets in their portfolios. This behavior which is commonly called “home bias” contradicts the prescriptions of portfolio theory. This thesis explores potential reasons for the “home bias” by examining the characteristics of the investing and the target countries and features of the interaction between them. A common theme of the four essays is a focus on the importance of information about foreign markets in explaining the share of these markets in investors’ portfolios. The results indicate that the size of the equity ownership in another country strongly relates to the distance to the financial capital of that country, and to trade in goods with and direct investments (FDI) to that country. The first essay empirically investigates the relationship between trade in real goods and portfolio investments. Overall, the evidence indicates a substantial role for trade in reducing the information cost relating to portfolio investments. The second essay examines the implications of the launch of the European Monetary Union (EMU) on international portfolio investments. The evidence on the allocation of Finnish international portfolio investments is more consistent with an information-based than a diversification motive explanation. The third essay employs new data for a large number of countries and further explores the role of trade on international portfolio investments. The results indicate that trade provides important information especially on firms in countries in which the corporate governance structure and the information environment of firms generate less reliable information. The fourth essay examines the relationship between direct investments (FDI) and portfolio investments. In contrast to the predications of portfolio theory, it provides evidence that FDI is a complement rather than a substitute for portfolio investments.

The Impact of the EMU on International Portfolio Investments

This paper analyses the impact of the launch of the European Monetary Union (EMU) on the allocation of international portfolio investments. The initiation of the EMU provides an opportunity for comparison of competing theoretical explanations for investment behavior. Models stressing the diversification motive would predict that the increased dependence between countries participating in the EMU should reduce the attractiveness of portfolio holdings in other EMU countries. Models based on asymmetric information would instead emphasize the increased intensity in the flow of information resulting from an increase in cross border transactions between the EMU countries. The consequent decline in information asymmetry should increase, rather than reduce portfolio holdings in other EMU countries. Our results based on the allocation of Finnish foreign portfolio investment support the information-based explanation against predictions based on the diversification motive.

International Portfolio Investments and The Informational Value of Trade

A large volume of literature suggests that information asymmetry resulting from the spatial separation between investors and investments have a significant impact on the composition of investors’ domestic and international portfolios. I show that institutional factors affecting trading in tangible goods help explain a substantial portion of investors’ spatial bias. More importantly, I demonstrate that an information flow medium with breadth and richness directly linked to the bilateral commitment of resources between countries, that I measure by their trading intensity in tangible goods, is consistent with the prevailing country allocation in investors’ international portfolios.

The Impact of FDI on International Portfolio Investments

Some empirical research has argued that part of the reason for the observed "home bias" is that investors are able to indirectly achieve internationally diversified portfolios via domestically listed multinational firms. Another branch of this research attributes the "home bias" and country allocations to more deeply rooted informational causes. Using a four-year annual panel of Finnish international portfolios and Foreign Direct Investments in twenty-five countries, I provide evidence consistent with an information asymmetry explanation

Increasing forestry investments by means of public policy programs.

XVIII IUFRO World Congress, Ljubljana 1986.

Murtuva säätyvalta, kestävä eliitti : Senaattori Lennart Gripenbergin sukupiiri ja sääty-yhteiskunnan muodonmuutos

This study examines the transformation of the society of estates in the Finnish Grand Duchy through the case study of Senator Lennart Gripenberg and his family circle. While national borders and state structures changed, the connections between old ruling elite families remained intact as invisible family networks, ownership relations, economic collaboration and power of military families. These were the cornerstones of trust, which helped to strengthen positions gained in society. Also, these connections often had a central if unperceivable impact on social development and modernization. Broadly speaking, the intergenerational social reproduction made it possible for this network of connections to remain in power and, as an imperceptible factor, also influenced short-term developments in the long run. Decisions which in the short term appeared unproductive, would in the long run produce cumulative immaterial and material capital across generations as long-term investments. Social mobility, then, is a process which clearly takes several generations to become manifest. The study explores long-term strategies of reproducing and transferring the capital accumulated in multinational elite networks. Also, what was the relationship of these strategies to social change? For the representatives of the military estate the nobility and for those men of the highest estates who had benefited from military training, this very education of a technical-military nature was the key to steering, controlling and dealing with the challenges following the industrial breakthrough. The disintegration of the society of estates and the rising educational standards also increased the influence of those professionals previously excluded, which served to intensify competition for positions of power. The family connections highlighted in this study overlapped in many ways, working side by side and in tandem to manage the economic and political life in Finland, Russia and Sweden. The analysis of these ties has opened up a new angle to economic co-operation, for example, as seen in the position of such family networks not only in Finnish, but also Swedish and Russian corporations and in the long historical background of the collaboration. This also highlights in a new way the role of women in transferring the cumulative social capital and as silent business partners. The marriage strategies evident in business life clearly had an impact on the economic life. The collaborative networks which transcended generations, national boundaries and structures also uncover, as far as the elites are concerned, serious problems in comparative studies conducted from purely national premises. As the same influential families and persons in effect held several leading positions in society, the line would blur between public and invisible uses of power. The power networks thus aimed to build monopolies to secure their key positions at the helm. This study therefore examines the roles of Lennart Gripenberg senator, business executive, superintendent of the Department of Industry, factory inspector, and founding member of industrial interest groups as part of the reproduction strategies of the elite. The family and other networks of the powerful leaders of society, distinguished by social, economic and cultural capital, provided a solid backdrop for the so-called old elites in their quest for strategies to reproducing power in a changing world. Crucially, it was easier for the elites to gain expertise to steer the modernization process and thereby secure for the next generation a leading position in society, something that they traditionally, too, had had the greatest interest in.

Kuluttaminen ja ylhäisaatelin elämäntapa 1700-luvun Ruotsissa

Consumption and the lifestyle of the high nobility in eighteenth-century Sweden This monograph is an analysis of the lifestyle, consumption and private finances of the Swedish high nobility during the eighteenth century (ca 1730 1795). It describes the lifestyle of one noble house, the House of Fersen. The Fersen family represents the leading political, economic and cultural elite in eighteenth-century Sweden. The analysis concentrates on Count Carl von Fersen (1716 1786) and his brother Count Axel von Fersen (1719 1794), their spouses and children. Carl von Fersen was a courtier whilst Axel von Fersen was an officer and one of the leaders of the Francophile Hat party. His son, Axel von Fersen the younger, was in his time an officer and a favourite of Gustavus III, King of Sweden, as well as a favourite and trusted confidant of Marie-Antoinette, Queen of France. The research is based upon the Fersen family s private archives, the Counts personal account books, probate inventories, letters and diaries. The study discusses the Fersens landed property and investments in ironworks and manufacturing, the indebtedness of the high nobility, high offices in civil administration, the militia and at court, as well as marriages as the foundations of noble wealth and power. It analyses the Count von Fersens revenue and expenditure, their career options and personal expenses, their involvement in the building and decorating of palaces, and the servants in service of the Fersen family as well as the ideal nobleman and his consumption. Central themes are inheritance, children s education, marriages and ladies preparing their trousseaux, the nobility ordering luxury goods from France, the consumption of Counts and Countesses before and after marrying and having children, the pleasures of a noble life as well as the criticism of luxury and sumptuousness. The study contributes to the large body of research on consumption and nobility in the eighteenth century by connecting the lifestyle, consumption and private finances of the Swedish high nobility to their European context. Key words: nobility, Fersen, lifestyle, consumption, private finances, Sweden, eighteenth century

Land leasing, land degradation and agricultural productivity in Finland

This study analysed whether the land tenure insecurity problem has led to a decline in long-term land improvements (liming and phosphorus fertilization) under the Common Agricultural Policy (CAP) and Nordic production conditions in European Union (EU) countries such as Finland. The results suggests that under traditional cash lease contracts, which are encouraged by the existing land leasing regulations and agricultural subsidy programs, the land tenure insecurity problem on leased land reduces land improvements that have a long pay-back period. In particular, soil pH was found to be significantly lower on land cultivated under a lease contract compared to land owned by the farmers themselves. The results also indicate that land improvements could not be reversed by land markets, because land owners would otherwise have carried out land improvements even if not farming by themselves. To reveal the causality between land tenure and land improvements, the dynamic optimisation problem was solved by a stochastic dynamic programming routine with known parameters for one-period returns and transition equations. The model parameters represented Finnish soil quality and production conditions. The decision rules were solved for alternative likelihood scenarios over the continuation of the fixed-term lease contract. The results suggest that as the probability of non-renewal of the lease contract increases, farmers quickly reduce investments in irreversible land improvements and, thereafter, yields gradually decline. The simulations highlighted the observed trends of a decline in land improvements on land parcels that are cultivated under lease contracts. Land tenure has resulted in the neglect of land improvement in Finland. This study aimed to analyze whether these challenges could be resolved by a tax policy that encourages land sales. Using Finnish data, real estate tax and a temporal relaxation on the taxation of capital gains showed some potential for the restructuring of land ownership. Potential sellers who could not be revealed by traditional logit models were identified with the latent class approach. Those landowners with an intention to sell even without a policy change were sensitive to temporal relaxation in the taxation of capital gains. In the long term, productivity and especially productivity growth are necessary conditions for the survival of farms and the food industry in Finland. Technical progress was found to drive the increase in productivity. The scale had only a moderate effect and for the whole study period (1976–2006) the effect was close to zero. Total factor productivity (TFP) increased, depending on the model, by 0.6–1.7% per year. The results demonstrated that the increase in productivity was hindered by the policy changes introduced in 1995. It is also evidenced that the increase in land leasing is connected to these policy changes. Land institutions and land tenure questions are essential in agricultural and rural policies on all levels, from local to international. Land ownership and land titles are commonly tied to fundamental political, economic and social questions. A fair resolution calls for innovative and new solutions both on national and international levels. However, this seems to be a problem when considering the application of EU regulations to member states inheriting divergent landownership structures and farming cultures. The contribution of this study is in describing the consequences of fitting EU agricultural policy to Finnish agricultural land tenure conditions and heritage.

Poverty and the Environment : Investment Poverty and the Role of Assets in Generating Welfare for Farmer Households in the Province of Herrera, Panama

Köyhiä maanviljelijöitä on usein syytetty kehitysmaiden ympäristöongelmista. On väitetty, että eloonjäämistaistelu pakottaa heidät käyttämään maata ja muita luonnonvaroja lyhytnäköisesti. Harva asiaa koskeva tutkimus on kuitenkaan tukenut tätä väitettä; perheiden köyhyyden astetta ja heidän aiheuttamaansa ympäristövaikutusta ei ole kyetty kytkemään toisiinsa. Selkeyttääkseen köyhyys-ympäristö –keskustelua, Thomas Reardon ja Steven Vosti kehittivät investointiköyhyyden käsitteen. Se tunnistaa sen kenties suuren joukon maanviljelijäperheitä, jotka eivät ole köyhiä perinteisten köyhyysmittareiden mukaan, mutta joiden hyvinvointi ei ole riittävästi köyhyysrajojen yläpuolella salliakseen perheen investoida kestävämpään maankäyttöön. Reardon ja Vosti korostivat myös omaisuuden vaikutusta perheiden hyvinvointiin, ja uskoivat sen vaikuttavan tuotanto- ja investointipäätöksiin. Tässä tutkimuksessa pyritään vastaamaan kahteen kysymykseen: Miten investointiköyhyyttä voidaan ymmärtää ja mitata? Ja, mikä on viljelijäperheiden omaisuuden hyvinvointia lisäävä vaikutus? Tätä tutkimusta varten haastateltiin 402 maanviljelijäperhettä Väli-Amerikassa, Panaman tasavallan Herreran läänissä. Näiden perheiden hyvinvointia mitattiin heidän kulutuksensa mukaan, ja paikalliset köyhyysrajat laskettiin paikallisen ruoan hinnan mukaan. Herrerassa ihminen tarvitsee keskimäärin 494 dollaria vuodessa saadakseen riittävän ravinnon, tai 876 dollaria vuodessa voidakseen ravinnon lisäksi kattaa muitakin välttämättömiä menoja. Ruoka- eli äärimmäisen köyhyyden rajan alle jäi 15,4% tutkituista perheistä, ja 33,6% oli jokseenkin köyhiä, eli saavutti kyllä riittävän ravitsemuksen, muttei kyennyt kustantamaan muita perustarpeitaan. Molempien köyhyysrajojen yläpuolelle ylsi siis 51% tutkituista perheistä. Näiden köyhyysryhmien välillä on merkittäviä eroavaisuuksia ei vain perheiden varallisuuden, tulojen ja investointistrategioiden välillä, mutta myös perheiden rakenteessa, elinympäristössä ja mahdollisuuksissa saada palveluja. Investointiköyhyyden mittaaminen osoittautui haastavaksi. Herrerassa viljelijät eivät tee investointeja puhtaasti ympäristönsuojeluun, eikä maankäytön kestävyyttä muutenkaan pystytty yhdistämään perheiden hyvinvoinnin tasoon. Siksi investointiköyhyyttä etsittiin sellaisena hyvinvoinnin tasona, jonka alapuolella elävien perheiden parissa tuottavat maanparannusinvestoinnit eivät enää ole suorassa suhteessa hyvinvointiin. Tällaisia investointeja ovat mm. istutetut aidat, lannoitus ja paranneltujen laiduntyyppien viljely. Havaittiin, että jos perheen hyvinvointi putoaa alle 1000 dollarin/henkilö/vuosi, tällaiset tuottavat maanparannusinvestoinnit muuttuvat erittäin harvinaisiksi. Investointiköyhyyden raja on siis noin kaksi kertaa riittävän ravitsemuksen hinta, ja sen ylitti 42,3% tutkituista perheistä. Heille on tyypillistä, että molemmat puolisot käyvät työssä, ovat korkeasti koulutettuja ja yhteisössään aktiivisia, maatila tuottaa paremmin, tilalla kasvatetaan vaativampia kasveja, ja että he ovat kerryttäneet enemmän omaisuutta kuin investointi-köyhyyden rajan alla elävät perheet. Tässä tutkimuksessa kyseenalaistettiin yleinen oletus, että omaisuudesta olisi poikkeuksetta hyötyä viljelijäperheelle. Niinpä omaisuuden vaikutusta perheiden hyvinvointiin tutkittiin selvittämällä, mitä reittejä pitkin perheiden omistama maa, karja, koulutus ja työikäiset perheenjäsenet voisivat lisätä perheen hyvinvointia. Näiden hyvinvointi-mekanismien ajateltiin myös riippuvan monista väliin tulevista tekijöistä. Esimerkiksi koulutus voisi lisätä hyvinvointia, jos sen avulla saataisiin paremmin palkattuja töitä tai perustettaisiin yritys; mutta näihin mekanismeihin saattaa vaikuttaa vaikkapa etäisyys kaupungeista tai se, omistaako perhe ajoneuvon. Köyhimpien perheiden parissa nimenomaan koulutus olikin ainoa tutkittu omaisuuden muoto, joka edisti perheen hyvinvointia, kun taas maasta, karjasta tai työvoimasta ei ollut apua köyhyydestä nousemiseen. Varakkaampien perheiden parissa sen sijaan korkeampaa hyvinvointia tuottivat koulutuksen lisäksi myös maa ja työvoima, joskin monesta väliin tulevasta muuttujasta, kuten tuotantopanoksista riippuen. Ei siis ole automaatiota, jolla omaisuus parantaisi perheiden hyvinvointia. Vaikka rikkailla onkin yleensä enemmän karjaa kuin köyhemmillä, ei tässä aineistossa löydetty yhtään mekanismia, jota kautta karjan määrä tuottaisi korkeampaa hyvinvointia viljelijäperheille. Omaisuuden keräämisen ja hyödyntämisen strategiat myös muuttuvat hyvinvoinnin kasvaessa ja niihin vaikuttavat monet ulkoiset tekijät. Ympäristön ja köyhyyden suhde on siis edelleen epäselvä. Köyhyyden voittaminen vaatii pitkällä tähtäimellä sitä, että viljelijäperheet nousisivat investointiköyhyyden rajan yläpuolelle. Näin heillä olisi varaa alkaa kartuttaa omaisuutta ja investoida kestävämpään maankäyttöön. Tällä hetkellä kuitenkin isolle osalle herreralaisia perheitä tuo raja on kaukana tavoittamattomissa. Miten päästä yli tuhannen dollarin kulutukseen perheenjäsentä kohden, mikäli elintaso ei yllä edes riittävään ravitsemukseen? Ja sittenkin, vaikka hyvinvointi kohenisi, ei ympäristön kannalta parannuksia ole välttämättä odotettavissa, mikäli karjalaumat kasvavat ja eroosioalttiit laitumet leviävät.

Components of productivity growth in Finnish agriculture

The objective was to measure productivity growth and its components in Finnish agriculture, especially in dairy farming. The objective was also to compare different methods and models - both parametric (stochastic frontier analysis) and non-parametric (data envelopment analysis) - in estimating the components of productivity growth and the sensitivity of results with respect to different approaches. The parametric approach was also applied in the investigation of various aspects of heterogeneity. A common feature of the first three of five articles is that they concentrate empirically on technical change, technical efficiency change and the scale effect, mainly on the basis of the decompositions of Malmquist productivity index. The last two articles explore an intermediate route between the Fisher and Malmquist productivity indices and develop a detailed but meaningful decomposition for the Fisher index, including also empirical applications. Distance functions play a central role in the decomposition of Malmquist and Fisher productivity indices. Three panel data sets from 1990s have been applied in the study. The common feature of all data used is that they cover the periods before and after Finnish EU accession. Another common feature is that the analysis mainly concentrates on dairy farms or their roughage production systems. Productivity growth on Finnish dairy farms was relatively slow in the 1990s: approximately one percent per year, independent of the method used. Despite considerable annual variation, productivity growth seems to have accelerated towards the end of the period. There was a slowdown in the mid-1990s at the time of EU accession. No clear immediate effects of EU accession with respect to technical efficiency could be observed. Technical change has been the main contributor to productivity growth on dairy farms. However, average technical efficiency often showed a declining trend, meaning that the deviations from the best practice frontier are increasing over time. This suggests different paths of adjustment at the farm level. However, different methods to some extent provide different results, especially for the sub-components of productivity growth. In most analyses on dairy farms the scale effect on productivity growth was minor. A positive scale effect would be important for improving the competitiveness of Finnish agriculture through increasing farm size. This small effect may also be related to the structure of agriculture and to the allocation of investments to specific groups of farms during the research period. The result may also indicate that the utilization of scale economies faces special constraints in Finnish conditions. However, the analysis of a sample of all types of farms suggested a more considerable scale effect than the analysis on dairy farms.

Keittiömaailman matkassa 20 vuotta : Tutkimus erään keittiökalustevalmistajan johtavan markkina-aseman rakentamisesta ja säilyttämisestä

A View into the World of Kitchen: Development and retention of a leading position in the market of kitchen interiors - a case study of 20 years. This study focuses on the development of a kitchen interiors company, presently called Novart Inc., into the leading company of the industry from 1980´s to the present. The objective of the study is to describe the effects of strategic choices, the decisions of the management and the owner´s direction and control to the build up and the retaining of the leading position in the market. From theory point of view, strategic choices refer to com-pany purchases as corporate-level strategies, and business and marketing strategies. The empirical research was carried out in two phases and it is based on various company documents and records, and on the intensive interviews of seven key executives in the company. An abductive research design was utilized. The company gained the leading position in the kitchen market in Finland by company purchases, and the company has been able to retain the position. Firstly the goal was to expand to retail market and, secondly, the company has maintained the balance of supply and demand by closing the purchased production units when needed. The simultaneous use of these two strategic goals is a kind of a new observation, and the strategy may be suitable only for market leaders. During the latter part of the research period the strategy of com-pany purchases has been abandoned and the leading position in the market has been main-tained by developing systematically business and marketing capability. In the business and marketing strategies the distribution channels and the brands have been emphasized. During the research period the company has almost totally abandoned the long distribution channels and started to use its own channels built and named after the main brands. These are A la Carte, Parma and Petra. At the moment, in the beginning of the 21st century, a new distribution channel, the concept of the Kitchen World, is being built in addition to the channels mentioned above. The management´s decision making and the implementation the decisions have been well-considered. The executives emphasized the valuing of the importance of the decisions dif-ferently except the two decisions named the most important ones, i.e., the decisions to start own production of the raw material and to concentrate the business only to one company. The executive staff has also succeeded in managing crisis and threats of bankruptcy, and the company has been managed profitable. During all the four terms of ownership: Puolimatka Corporation, the Hankkija/Novera Corporation, the ownership period of the "bank", and the Nobia Corporate the ownership direction and control has been somewhat different. All the owners have paid attention to economic issues. The direction of cash flows and investments was at its strongest during the Hankkija/Novera term. For the last owner Nobia the production and marketing of the kitchen interiors has been the core business, which thus has strengthened the business and marketing capabilities of the target company of this research. A common denominator during all the four terms of ownership has been owners' trust gained by the professional skills of the management of the target company. This has lead to greater independence of the management of the company and less owners´ direction. Keywords: leading position, marketing strategy, management decisions, acquisition, corporate governance

Alueellinen imago ja identiteetti liikkeessä

Regions are considered to be in competition for investments, industries, inhabitants and skilled labour nationally as well as internationally. In the context of tightening competition, more and more attention has been paid to regional attractors. A positive image is an important attractor in regional competition. In Finland, many towns and regions have either implemented or are planning to implement various image-enhancing campaigns or other measures aimed at improving their image. The role of identity is very important in developing a regional image. Good regional image should be based on a strong regional identity and awareness. Related to this is the perception of one's own region as separate from others and the familiarity of the region. If a region has no place in the awareness of its residents or if the inhabitants do not identify with it, its very existence as a social construct can be questioned. This means that building the regional image, which in this context is seen as social constructivism, is extremely difficult if the degree of regional awareness and identification is low. On the other hand, regional identity is being built also by developing the regional image. In a way, regional discourses have become more marketing-oriented in that instead of trying to create a regional esprit de corps there is now more image-oriented speech aimed at striving to improve the attractivity to outsiders of the region. Even though the goal is to bring the region to the attention of non-residents, a measure of construction of regional identity for the local population is automatically effected at the same time. Regional image and identity are consequences of linguistic producing and understanding of a region. It means that both image and identity are seen as language-created social constructions. The regional image is created through various discourses, but also the construction of a regional identity as regional consciousness and identification is largely a linguistic process. Essential in this context is perceiving the region as a discursive project characterized by its representation as texts, images and symbols. The linguistic production of a region is not a neutral description of "reality", but a representation based on interpretations, experiences and different motivations. Production and perceiving vary in time, so regional image and identity are on the move. This research is driven by the ongoing change of the regional system. The municipal and service structure reform is in progress and the number of municipalities seems to be on the decrease. At the same time, European Union s regional policy and regionalism on the whole are changing the status of sub-regions. At municipal level the crucial question is how the municipal structure reform will affect regional identity. This study points out that strong sense of municipal identity is a source of opposition to changes in municipal structure, but on the other hand the deinstitutionalization of the old municipality in municipal merger does not in itself mean the weakening of municipal identity.

Integration of natural hazards, risk and climate change into spatial planning practices

Most countries of Europe, as well as many countries in other parts of the world, are experiencing an increased impact of natural hazards. It is often speculated, but not yet proven, that climate change might influence the frequency and magnitude of certain hydro-meteorological natural hazards. What has certainly been observed is a sharp increase in financial losses caused by natural hazards worldwide. Eventhough Europe appears to be a space that is not affected by natural hazards to such catastrophic extents as other parts of the world are, the damages experienced here are certainly increasing too. Natural hazards, climate change and, in particular, risks have therefore recently been put high on the political agenda of the EU. In the search for appropriate instruments for mitigating impacts of natural hazards and climate change, as well as risks, the integration of these factors into spatial planning practices is constantly receiving higher attention. The focus of most approaches lies on single hazards and climate change mitigation strategies. The current paradigm shift of climate change mitigation to adaptation is used as a basis to draw conclusions and recommendations on what concepts could be further incorporated into spatial planning practices. Especially multi-hazard approaches are discussed as an important approach that should be developed further. One focal point is the definition and applicability of the terms natural hazard, vulnerability and risk in spatial planning practices. Especially vulnerability and risk concepts are so many-fold and complicated that their application in spatial planning has to be analysed most carefully. The PhD thesis is based on six published articles that describe the results of European research projects, which have elaborated strategies and tools for integrated communication and assessment practices on natural hazards and climate change impacts. The papers describe approaches on local, regional and European level, both from theoretical and practical perspectives. Based on these, passed, current and future potential spatial planning applications are reviewed and discussed. In conclusion it is recommended to shift from single hazard assessments to multi-hazard approaches, integrating potential climate change impacts. Vulnerability concepts should play a stronger role than present, and adaptation to natural hazards and climate change should be more emphasized in relation to mitigation. It is outlined that the integration of risk concepts in planning is rather complicated and would need very careful assessment to ensure applicability. Future spatial planning practices should also consider to be more interdisciplinary, i.e. to integrate as many stakeholders and experts as possible to ensure the sustainability of investments.

Essays on corporate governance, stakeholders, and restructuring

This dissertation consists of an introductory section and three theoretical essays analyzing the interaction of corporate governance and restructuring. The essays adopt an incomplete contracts approach and analyze the role of different institutional designs to facilitate the alignment of the objectives of shareholders and management (or employees) over the magnitude of corporate restructuring. The first essay analyzes how a firm's choice of production technology affects the employees' human capital investment. In the essay, the owners of the firm can choose between a specific and a general technology that both require a costly human capital investment by the employees. The specific technology is initially superior in using the human capital of employees but, in contrast to the general technology, it is not compatible with future innovations. As a result, anticipated changes in the specific technology diminish the ex ante incentives of the employees to invest in human capital unless the shareholders grant the employees specific governance mechanisms (a right of veto, severance pay) so as to protect their investments. The results of the first essay indicate that the level of protection that the shareholders are willing to offer falls short of the socially desirable one. Furthermore, when restructuring opportunities become more abundant, it becomes more attractive both socially and from the viewpoint of the shareholders to initially adopt the general technology. The second essay analyzes how the allocation of authority within the firm interacts with the owners' choice of business strategy when the ability of the owners to monitor the project proposals of the management is biased in favor of the status quo strategy. The essay shows that a bias in the monitoring ability will affect not only the allocation of authority within the firm but also the choice of business strategy. Especially, when delegation has positive managerial incentive effects, delegation turns out to be more attractive under the new business strategy because the improved managerial incentives are a way for the owners to compensate their own reduced information gathering ability. This effect, however, simultaneously makes the owners hesitant to switch the strategy since it would involve a more frequent loss of control over the project choice. Consequently, the owners' lack of knowledge of the new business strategy may lead to a suboptimal choice of strategy. The third essay analyzes the implications of CEO succession process for the ideal board structure. In this essay, the presence of the departing CEO on the board facilitates the ability of the board to find a matching successor and to counsel him. However, the ex-CEO's presence may simultaneously also weaken the ability of the board to restructure since the predecessor may use the opportunity to distort the successor's project choice. The results of the essay suggest that the extent of restructuring gains, the firm's ability to hire good outside directors and the importance of board's advisory role affect at which point and for how long the shareholders may want to nominate the predecessor to the board.

Funktionaalinen Transitioteoria : Hallinto, Instituutiot ja Oikeusjärjestys Venäjällä

Functional transition theory: administration, legal order and institutions in Russia This dissertation examines some of the salient characteristics of Russia that are deemed to have impeded the growth of its economy and investments in particular. These characteristics are the volatility of the administrative and legal systems, corruption, and the perceived irrationality and difference in the operating environment in comparison with European conditions. The dissertation is one of the first studies on Russia that approaches the subject from the perspective of comprehensive social scientific theories. The study is based on the structural functionalistic theory, which is widely used in the social sciences. Adopting a sufficiently ambitious theoretical examination will provide a systematic and logical explanation of the characteristics of Russian institutions and ways of operations, such as corruption, that are commonly perceived as inexplicable. The approach adopted in the dissertation sheds light on the history of Russia's development and provides a comparative view of other societies in transition. Furthermore, it suggests recommendations as to how the structures of Russian society could be comprehensively strengthened.