Handbook of industrial organization , Handbook of industrial organization , کتابخانه دانشگاه امام صادق(ع)

Handbook of Industrial Organization

In the debate on no-regret potentials, transaction costs are a rather controversial issue On the one hand, the controversy concerns the level of transaction costs related to energy saving measures Existing cost-benefit analyses for energy saving measures are often criticised for being incomplete because, allegedly, they would not fully account for transaction costs Depending on the level of transaction costs, this negligence is more or less severe Some studies, e g Sutherland (1991), hold that transaction costs are so high that they challenge favourable results of quantitative cost-benefit analyses and explain why energy-efficient technologies are not adopted Other studies implicitly assume transactions costs to be zero (e g Lovins, Lovins 1991; Landwehr et al 1996) As pointed out, e g by Golove and Eto (1996, p 24) this aspect of the debate suggests a need to empirically quantify transaction costs and integrate them in the cost-benefit assessment of the measures considered

Transaction cost economics

https://isiarticles.com/bundles/Article/pre/pdf/14698.pdf

The impact of strategic alliances on the market value of telecommunications firms

This thesis examines the different areas of agency theory including managerial discretion, corporate governance compliance, voluntary disclosure policies and regulation. The institutional setting for these studies will be the Alternative Investments Market (AIM) as this market provides a unique regulatory environment and distinctive corporate governance features that makes it suitable for analysis. Specifically, AIM, unlike its FCA-regulated main market counterpart, operates under a self-regulated environment, where application of the FCA rules and combined codes are voluntary. This allows great discretion in a firms operation leading to potential agency problems as mandatory disclosure is limited to price-sensitive information, allowing for the presence of information asymmetry. As well as agency theory, one of the main arcs of this thesis explores the role of Nomads. As principle regulator, these firms are charged with ensuring the compliance of their clients with the AIM rules, as well as ensuring the continued success of AIM itself. 

The first investigation creates a Nomad reputation index to test how the market responds when companies change to more reputable Nomads. To do this, event study methodology is utilised to examine the abnormal returns earned around Nomads switches. The key findings indicate that when managers switch-up to a more reputable Nomad, a proxy for managerial bonding, the market responds favourably, in spite of the costs associated with hiring a more reputable Nomad. Similarly, when managers make the unnecessary decision to switch to a Nomad of equal rank, the market responds negatively. As there is no intuitive advantage to switching to a Nomad of equal rank, it might therefore be seen as a costly and unnecessary move that will not improve the value of the firm. Therefore, the market reacts negatively, indicating the presence of market discipline as investors are punishing managers for making a decision perceived as unnecessary. The final analysis introduces the concept of ‘strict’ Nomads who are perceived to follow the AIM rules more closely than other Nomads. The reporting lag is used as a proxy and finds a positive relation with switches to a strict Nomad over a lenient one. 

The second study examines the determinant of corporate governance compliance with a focus on the effect of regulation. The findings document that regulation has not influenced the level of compliance, but rather there has been a convergence in governance standards over time given the increased awareness and demand for governance attributes. The findings also extend the Nomad reputation analysis with regards to governance and find a significant positive relation indicating Nomads influence governance standards as part of their monitoring role. 

The final study examines how the extent of voluntary disclosure is influenced by the company’s corporate governance attributes and the reputation of the Nomad. This study finds a positive relation between the level of voluntary disclosure, board…

/pdf/corporate-governance-disclosure-and-the-role-of-nomads-5eychogym5.pdf

Corporate governance, disclosure and the role of Nomads : evidence from the Alternative Investments Market

In the recent past, all the industries have undergone a sea change with the advent and adoption of 3rd arm of technology, i.e., information and communication technologies (ICTs). Particularly in the case of banking industry, the personal banking has become dearer to the customers with the advent and usage of ICTs. Banking has moved from ‘banking-in-person’ to ‘net-banking’ to ‘mobile banking’ and over to ‘virtual banking’. In this present scenario, spending of increasing amounts of capital on by several banks is on upward paths. This aspect along with the benefits derived by the banks with the usage of ICTs has made ways to understand the relationship between investments in ICT and select dimensions of productivity of banks. This study attempts to look into the relationship between investment in ICT systems and the over all usage of ICTs and resulting levels of select dimensions of productivity. For this research, the impact of commitment from the Apex management is also studied. The experimental/observat...

ICT and banking – is it a rejuvenating combination? A diagnostic analysis

In the U.S., companies entered into more than 67,000 strategic alliances in the 1996-2003 time period. We investigate the impact of the announcement of alliances by U.S. firms using the Fama-French model. We find firms engaging in technology alliances are likely to be smaller in size and have better price-to-book ratios than firms engaging in marketing alliances. Prior studies find announcement period abnormal stock returns to be positive. Our study, in contrast, finds that technology as well as marketing alliances on average have stock price reaction not significantly different from zero. We find, on average, the market considers the announcement of an alliance by a firm - irrespective of whether it is technology or marketing alliance - as a negative signal about its internal growth options. Despite these similarities for the Technological and Marketing alliances, the determinants of abnormal returns convey a different picture for the two groups during our study period. Cross-sectional findings suggest that the first movers in technology alliances are more likely to experience exploitative hold-up behavior by their partners and that the financial viability of the partners is more important than in marketing alliances. In marketing alliances, the stock market favors those in which the partners are from the same industry, while it shows no such concern in technology alliances. Finally, we find that while alliances do not involve just transfer of wealth from one partner to the other, the bigger partner exhibits better bargaining power against the smaller partner in technology alliances than in marketing alliances.

https://papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID891423_code542089.pdf?abstractid=891423&mirid=2

Technology and Marketing Alliances, 1996-2003

Strategic alliances play a prominent role in firm competitiveness. While the number of strategic alliances formed increases year after year, the research evidence on alliance success is conflicting. This study compares marketing and technology alliances during the technology era, 1996–2003. The sample size for the two groups is 91 and 109, respectively. On the basis of the Fama-French three-factor model, we find that the stock market considers the announcement of marketing and technology alliances to be a zero NPV project (whether alliance partners are considered individually or not). Also, we find that between alliance partners the larger firms exhibit better bargaining in technology alliances than in marketing alliances.

Do technology alliances create more value than marketing alliances

This paper discusses how the stockholder-bondholder conflict can be analyzed using the binomial option pricing model. Although the potential conflicts between stockholders and bondholders are recognized and discussed in most intermediate corporate finance textbooks, these textbooks, generally do not illustrate the valuation of the relevant options involved in those situations; this article fills that void. Further, it takes explicit account of financial distress of the firm - which is usually the cause of the conflict - in analyzing the underinvestment and asset substitution problems.

Stockholder-Bondholder Conflict: Application of Binomial Option Pricing Methodology

We examine whether systematic risk of the financial services industry (banks, finance, insurance, and real-estate sectors) declined after the passage of GLBA. This study differs from prior work in that we examine changes over a long period of time (5 years before and 5 years after the Act) and we use the Carhart (1997) four-factor model for assessing changes in risks. The study finds that banks, insurance, finance, and real-estate segments load on the market, size, and value factors before as well as after GLBA (the real-estate segment loads on the value factor only after GLBA). Except for finance companies, betas decline significantly for all the other segments after the GLBA. In the case of banks even their loadings on the size and value factors decline after the GLBA, while in the case of finance and real-estate companies the loadings on the momentum factor exhibits reduction in risk after the Act. Overall, the GLBA had a risk reducing impact on the financial services industry.

C.R. Narayanaswamy

Papers

Technology and Marketing Alliances, 1996-2003

Do technology alliances create more value than marketing alliances

Stockholder-Bondholder Conflict: Application of Binomial Option Pricing Methodology

The Long-Term Risk Effects of the Gramm-Leach-Bliley Act (GLBA) on the Financial Services Industry