How does ownership structure invfluence bank risk? Analyzing the role of managerial incentives

This paper analyzes how ownership concentration and managerial incentives influences bank risk for a large sample of US banks over the period 1997-2007. Using 2SLS simultaneous equations models, we show that ownership concentration has a positive total effect on bank risk. This is the result of a positive direct effect, which reflects monitoring and opportunistic behavior, and a negative indirect effect, which works through the design of managerial incentive contracts and reflects shareholder preferences toward risk. Large shareholders reduce bank risk by reducing the sensitivity of CEO wealth to stock volatility (Vega) and by increasing the CEO pay-performance sensitivity (Delta). In addition, we show that the direct and indirect effect of ownership concentration on bank risk depends on the type of the largest shareholder (a family, a bank, a corporation or an institutional investor), as well as, on the total shareholding held by each type as a group. Our results suggest that the positive relation between ownership concentration and risk is not the result of preferences towards more risk. Rather, they point at opportunistic behavior of large shareholders.

Impact of Ownership Structure on the Performance of China’s Feed Mill Sector, April 2005

In the decade of the 1990s, China’s feed sector became increasingly privatized, more feed mills opened, and the scale of operation expanded. Capacity utilization remained low and multi-ministerial supervision was still prevalent, but the feed mill sector showed a positive performance overall, posting a growth rate of 11 percent per year. Profit margin over sales was within allowable rates set by the government of China at 3 to 5 percent. Financial efficiency improved, with a 20 percent quicker turnover of working capital. Average technical efficiency was 0.805, as more efficient feed mills increasingly gained production shares. This study finds evidence that the increasing privatization explains the improved performance of the commercial feed mill sector. The drivers that shaped the feed mill sector in the 1990s have changed with China’s accession to the World Trade Organization. With the new policy regime in place, the study foresees that, assuming an adequate supply of soy meal and an excess capacity in the feed mill sector, it is likely that China will allow corn imports up to the tariff rate quota (TRQ) of 7.2 mmt since the in-quota rate is very low at 1 percent. However, when the TRQ is exceeded, the import duty jumps to a prohibitive out-quota rate of 65 percent. With an import duty for meat of only 10 to 12 percent, China would have a strong incentive to import meat products directly rather than bringing in expensive corn to produce meat domestically. This would be further reinforced if structural transformation in the swine sector would narrow the cost differential between domestic and imported pork.

Regulation of foreign gene in fowlpox virus by a vaccinia virus promoter.

A vaccinia virus promoter was evaluated for regulation of a foreign gene in fowlpox virus by a transient expression assay. Fowlpox virus-infected quail cells, transfected with plasmid DNA containing chloramphenicol acetyltransferase (CAT) gene ligated to a vaccinia virus promoter, expressed CAT activity. No CAT activity was detected either in uninfected cells or fowlpox virus-infected cells. These results indicated that a heterologous vaccinia virus promoter can regulate expression of a foreign gene in fowlpox virus.

Institutions, Public Debt and Foreign Finance

We study the role of domestic financial institutions in sustaining capital flows to the private and public sector of a country whose government can default on its debt. As in recent public debt crises, in our model public defaults weaken banks' balance sheets, disrupting domestic financial markets. This effect leads to a novel complementarity between private capital inflows and public borrowing, where the former sustain the latter by boosting the government's cost of default. Our key message is that, by shaping the direction of private capital flows, financial institutions determine whether financial integration improves or reduces government discipline. We explore the implications of this complementarity for financial liberalization and debt-financed bailouts of banks. We present some evidence consistent with complementarity.

The interaction of ownership structure and customer satisfaction as determinants of brand equity

In this paper we study the interaction between ownership structure and customer satisfaction, and their impact on a firm's brand equity. We find that customer satisfaction has a positive direct effect on brand equity but an indirect negative one, through reductions in ownership concentration. This latter effect emerges when managers are focused mainly on satisfying customers. It gives out a warning signal that highlights the perverse effect of implementing policies focused excessively on satisfying customers at the expense of shareholders, on a firm's brand equity. We demonstrate our theoretical contention, empirically, making use of an incomplete panel data comprising 69 firms from 11 different nations for the period 2002-2005.

Gentamicin Improves the Activities of Daptomycin and Vancomycin against Enterococcus faecalis In Vitro and in an Experimental Foreign-Body Infection Model.

For enterococcal implant-associated infections, the optimal treatment regimen has not been defined. We investigated the activity of daptomycin, vancomycin, and gentamicin (and their combinations) against Enterococcus faecalis in vitro and in a foreign-body infection model. Antimicrobial activity was investigated by time-kill and growth-related heat production studies (microcalorimetry) as well as with a guinea pig model using subcutaneously implanted cages. Infection was established by percutaneous injection of E. faecalis in the cage. Antibiotic treatment for 4 days was started 3 h after infection. Cages were removed 5 days after end of treatment to determine the cure rate. The MIC, the minimal bactericidal concentration (MBC) in the logarithmic phase, and the MBC in the stationary phase were 1.25, 5, and >20 μg/ml for daptomycin, 1, >64, and >64 μg/ml for vancomycin, and 16, 32, and 4 μg/ml for gentamicin, respectively. In vitro, gentamicin at subinhibitory concentrations improved the activity against E. faecalis when combined with daptomycin or vancomycin in the logarithmic and stationary phases. In the animal model, daptomycin cured 25%, vancomycin 17%, and gentamicin 50% of infected cages. In combination with gentamicin, the cure rate for daptomycin increased to 55% and that of vancomycin increased to 33%. In conclusion, daptomycin was more active than vancomycin against adherent E. faecalis, and its activity was further improved by the addition of gentamicin. Despite a short duration of infection (3 h), the cure rates did not exceed 55%, highlighting the difficulty of eradicating E. faecalis from implants already in the early stage of implant-associated infection.

The impact of "early" nineteenth-century globalization on foreign trade in the Southern Cone: A study of British trade statistics

This paper deals with the impact of "early" nineteenth-century globalization (c.1815-1860) on foreign trade in the Southern Cone (SC). Most of the evidence is drawn from bilateral trades between Britain and the SC, at a time when Britain was the main commercial partner of the new republics. The main conclusion drawn is that early globalization had a positive impact on foreign trade in the SC, and this was due to: improvements in the SC's terms of trade during this period; the SC's per capita consumption of textiles (the main manufacture traded on world markets at that time) increased substantially during this period, at a time when clothing was one of the main items of SC household budgets; British merchants brought with them capital, shipping, insurance, and also facilitated the formation of vast global networks, which further promoted the SC's exports to a wider range of outlets.

Oral Correction in Foreign Language Classrooms

This paper analyses the correction of errors and mistakes made by students in the Foreign Language Teaching classroom. Its goal is to point out typical correction behaviors in Cape Verde in Language Teaching classrooms and raise teachers’ consciousness concerning better correction practice.

Globalization and the provision of incentives inside the firm: The effect of foreign competition

This paper studies the effect of changes in foreign competition on the structureof compensation and incentives of U.S. executives. We measure foreign competitionas import penetration and use tariffs and exchange rates as instrumental variables toestimate its causal effect on pay. We find that higher foreign competition leads tomore incentive provision in a variety of ways. First, it increases the sensitivity of payto performance. Second, it increases whithin-firm pay differentials between executivelevels, with CEOs typically experiencing the largest wage increases, partly becausethey receive the steepest incentive contracts. Finally, higher foreign competition is alsoassociated with a higher demand for talent. These results indicate that increased foreigncompetition can explain some of the recent trends in compensation structures.