The political economy of cross-border relations : the TNI and East Timor

Within a framework of formally increasingly cordial bilateral relations, the Indonesian military, the TNI, was engaging in and allowing extensive cross-border trade and smuggling while pursuing a policy of limited cross-border destabilization of East Timor. This seemingly contradictory policy, run from the TNI's 'strategic command centre' in Atambua, West Timor, met the TNI's continuing need to fund its own activities (and those of its proxies) through both legal and illegal means, to provide leverage for the coming talks about the formal demarcation of the border, and to provide a foothold to longer-term irredentist claims to the former occupied province and now independent state.

Not so welcoming? United States cross-border insolvency assistance

Examines the recognition of and assistance for foreign insolvency proceedings offered by the US courts under the US Code Title 11 Ch.15 (Bankruptcy Code), with particular reference to the approach to determining a centre of main interests, leading to refusal of recognition of Cayman Islands proceedings, in Re Basis Yield Alpha Fund (Master) and Re Bear Stearns High-Grade Structured Credit Strategies Master Fund Ltd (In Provisional Liquidation). Suggests that the approach under Ch.15 is more restrictive than the previous approach in the US, noting examples from case law under the previous provisions.

An online cross border contract for ecommerce transactions

The thesis identifies the deficiencies in the international legal framework that has been constructed in order to facilitate and provide certainty with online cross-border transactions. The thesis finds that it is possible to construct an anonymous online contract that permits certainty in enforcing online cross-border transactions, and provides such a contract.

The role of leverage in cross-border mergers and acquisitions

We examine the relationship between leverage and cross-border mergers and acquisitions. Using a sample of 85,560 cross-border mergers and acquisitions in 57 countries over the period 1990 to 2010, we find that firms with higher leverage are less likely to acquire foreign targets, whereas firms with lower leverage tend to be targets acquired by foreign firms. These effects are more pronounced in Asian countries than North America. Acquisition premium, the likelihood of all-cash offer and the percentage of cash in the acquisition offer decrease with leverage in cross-border mergers and acquisitions. Foreign targets gain positive abnormal returns in the both short run and long run, while acquirers earn positive abnormal returns in the short-run, but negative returns in the long run. We also find that firms adjust their capital structure after the acquisition by issuing more equity if they were overleveraged, or issuing more debt if they were underleveraged before the acquisition. Our results provide international evidence on how leverage affects managerial decision to acquire foreign targets, payment method and acquisition premium in cross-border mergers and acquisitions. This study shows that the interdependent relationship between investment decision and financing decision exists worldwide.

Cross-border travellers and parallel trade: implications for Asian economies

This paper explores the impact of parallel trade in an export market by cross-border travellers on welfare of the home country in a model with heterogeneous consumers' perceptions. We show that such parallel trade when it is organised trading always hurts the home-country welfare. However, when parallel trade is unorganised trading, it might benefit the home-country welfare provided that the size of the export market is relatively small. Along these lines, we suggest optimal policy responses in the home country to parallel trade by cross-border travellers. The results of the paper yield insightful policy implications for Asian economies.

How do cross-border mergers and acquisitions affect firms’ management and stakeholders? Part 2

The effect of mergers and acquisitions (M&A) on different stakeholders is dependent on a number of factors. These factors can include but are not limited to: the type of M&A; each firm's reasons for the M&A; the offer amount; the product market of both the acquirer and target firms; the political environment; the economic environment; and the current situation of each firm. Employees play a significant role in businesses in which employee satisfaction affects the quality and quantity of business output. Firms interested in embarking on cross-border mergers have new employees to manage and must determine an appropriate wage to match the level of productivity of target employees. Wages may need to be altered as a result of employee relocation; employee compensation can be a complex matter, as the cost of living in each area varies greatly.

Cross-border insolvency law and multinational enterprise groups: judicial Innovation as an international solution

The Article argues that courts confronting the effects of multinational enterprise insolvency must undertake a pragmatic incursion into the separate entity doctrine. This argument is premised on gaps in the current Model Law which confers significant discretion on the courts. Our research shows that courts have fashioned innovative solutions to fill the gaps and thatgreater recognition of the legitimacy of these judicial incursions into the separate entity doctrine would facilitate the reduction of transaction costs in the case of multinational group insolvencies. We identify criteriawhereby a court would be able to determine that the inherentseparateness of the corporate structure should be disregarded andthe group regarded as one.

A Transaction cost analysis of cross-border insolvency.

The thesis identified transaction cost efficiencies in the application of appropriate governance mechanisms in cross-border insolvency law.

Global profit split: An evolutionary approach to international income allocation

International taxation is concerned mainly with the equitable allocation of cross-border income between countries in which income-earning activities take place. Such allocation has traditionally been governed by the arm’s-length principle, which has been interpreted as requiring a comparable transactional pricing approach. This approach assumes that each member of a multinational enterprise (MNE) group is a separate entity and that the transactions between related parties can be separated and compared with arm’s-length transactions. It has, however, proved difficult to apply comparable transactional pricing to internationally integrated businesses, especially those involving intangibles and services, and formulary apportionment has been suggested as an alternative. Essentially, formulary apportionment treats the MNE group as a single economic entity. The group’s profit is allocated to members according to a formula that reflects the particular member’s contribution to the production of that profit. A rich academic literature exists which either defends or attacks this alternative approach. The OECD and national governments have rejected formulary apportionment mainly on the ground that it violates the arm’s-length principle. This article proposes a global profit split (GPS) method for allocating international income. The GPS would allocate the global profit of an integrated business to each country in accordance with the economic contributions made by components of the business located in that country. The allocation would be based on a formula that would reflect the economic factors that contribute to profit making. While the GPS draws on elements of the traditional formulary apportionment and profit split methods, it also differs from them. The author discusses in detail the key issues involved in designing the GPS. She also presents and evaluates the main policy and pragmatic justifications for the adoption of this innovative approach. The author argues that the GPS is not only theoretically and practically superior to traditional income allocation methods, but also consistent with the arm’s-length principle. On the basis of historical developments, interpretation of article 9 of the OECD model tax convention, and international tax policy considerations, the author establishes that the GPS is not a radical departure from the arm’s-length principle, but rather a natural development in its evolution. She concludes that the law of evolution ison the side of reform because the GPS would provide for a fair and effective allocation of income derived from globally integrated business activities.

A new era in United States cooperation in international insolvency adminstrations?

Cross-border insolvency laws are increasingly being influenced by the UNCITRAL Model Law on Cross-border Insolvency provisions. The United States has recently enacted domestic legislation based on these provisions by way of Ch 15 of the Bankruptcy Abuse Prevention and Consumer Protection Act 2005, which inserted Ch 15 into USC, Title 11. This article briefly explains the provisions of this United States legislation and draws attention to the important case law commenting and explaining same. It further attempts to alert local practitioners to the changes, benefits and detriments they may encounter when acting pursuant to this legislation.