The Cost of ownership in the governance of interfirm collaborations

This paper investigates the selection of governance forms in interfirm collaborations taking into account the predictions from transaction costs and property rights theories. Transaction costs arguments are often used to justify the introduction of hierarchical controls in collaborations, but the ownership dimension of going from “contracts” to “hierarchies” has been ignored in the past and with it the so called “costs of ownership”. The theoretical results, tested with a sample of collaborations in which participate Spanish firms, indicate that the cost of ownership may offset the benefits of hierarchical controls and therefore limit their diffusion. Evidence is also reported of possible complementarities between reputation effects and forms of ownership that go together with hierarchical controls (i.e. joint ventures), in contrast with the generally assumed substitutability between the two.

Corporate governance in banking: the role of board of directors

We test hypotheses on the dual role of boards of directors for a sample of large international commercial banks. We find an inverted U shaped relation between bank performance and board size that justifies a large board and imposes an efficient limit to the board’s size; a positive relation between the proportion of non-executive directors and performance; and a proactive role in board meetings. Our results show that bank boards’ composition and functioning are related to directors’ incentives to monitor and advise management. All these relations hold after we control for bank business, institutional differences, size, market power in the banking industry, bank ownership and investors’ legal protection.

Public Governance, Health and Foreign Direct Investment in Sub-Saharan Africa

In this paper we diverge from the existing empirical literature on FDI determinants in two ways. First, we decompose the sources of the foreign direct investment (FDI) gap between Sub-Saharan Africa (SSA) and other developing regions. Once market size has been accounted for, we nd that SSA's FDI de cit is mostly explained by insufficient provision of public goods: low human capital accumulation, especially health, in SSA explains 100-140% of the inter-regional FDI gaps. Second, we estimate the indirect effect of infectious diseases on FDI through their direct impact on health. We find that a 1% point rise in HIV prevalence in the adult population is associated with a decrease in net FDI inflows of 3.5%, while a country in which 100% of the population is at risk of contracting deadly malaria receives about 16% less FDI than a similar country located in a malaria-free region.

Engorgement des centres d'urgences: une raison légitime de refuser l'accès aux patients non urgents [Emergency department overcrowding: a legitimate reason to refuse access to urgent care for non-urgent patients?].

Non-urgent cases represent 30-40% of all ED consults; they contribute to overcrowding of emergency departments (ED), which could be reduced if they were denied emergency care. However, no triage instrument has demonstrated a high enough degree of accuracy to safely rule out serious medical conditions: patients suffering from life-threatening emergencies have been inappropriately denied care. Insurance companies have instituted financial penalties to discourage the use of ED as a source of non-urgent care, but this practice mainly restricts access for the underprivileged. More recent data suggest that in fact most patients consult for appropriate urgent reasons, or have no alternate access to urgent care. The safe reduction of overcrowding requires a reform of the healthcare system based on patients' needs rather than access barriers.

Does Public Governance Always Matter? How Experience of Poor Institutional Quality Influences FDI to the South

This paper investigates whether the higher prevalence of South multinational enterprises (MNEs) in risky developing countries may be explained by the experience that they have acquired of poor institutional quality at home. We confirm the intuition provided by our analytical model by empirically showing that the positive impact of good public governance on foreign direct investment (FDI) in a given host country is moderated significantly, and even in some cases eliminated, when MNEs have been faced with poor institutional quality at home.

The Known Unknowns of Governance.

Empirical researchers interested in how governance shapes various aspects of economic development frequently use the Worldwide Governance indicators (WGI). These variables come in the form of an estimate along with a standard error reflecting the uncertainty of this estimate. Existing empirical work simply uses the estimates as an explanatory variable and discards the information provided by the standard errors. In this paper, we argue that the appropriate practice should be to take into account the uncertainty around the WGI estimates through the use of multiple imputation. We investigate the importance of our proposed approach by revisiting in three applications the results of recently published studies. These applications cover the impact of governance on (i) capital flows; (ii) international trade; (iii) income levels around the world. We generally find that the estimated effects of governance are highly sensitive to the use of multiple imputation. We also show that model misspecification is a concern for the results of our reference studies. We conclude that the effects of governance are hard to establish once we take into account uncertainty around both the WGI estimates and the correct model specification.

Private Governance of Financial Markets: the US Regulatory Regime on Hedge Funds

The article investigates the private governance of financial markets by looking at the evolution of the regulatory debate on hedge funds in the US market. It starts from the premise that the privatization of regulation is always the result of a political decision and analyzes how this decision came about and was implemented in the case of hedge funds. The starting point is the failure of two initiatives on hedge funds that US regulators launched between 1999 an 2004, which the analysis explains by elaborating the concept of self-capture. Facing a trade off between the need to tackle publicly demonized issues and the difficulty of monitoring increasingly sophisticated and powerful private markets, regulators purposefully designed initiatives that were not meant to succeed, that is, they “self-captured” their own activity. By formulating initiatives that were inherently flawed, regulators saved their public role and at the same time paved the way for the privatization of hedge fund regulation. This explanation identifies a link between the failure of public initiatives and the success of private ones. It illustrates a specific case of formation of private authority in financial markets that points to a more general practice emerging in the regulation of finance.