London Business School

About: London Business School is a education organization based out in London, England, United Kingdom. It is known for research contribution in the topics: Portfolio & Equity (finance). The organization has 1138 authors who have published 5118 publications receiving 437980 citations. The organization is also known as: LBS.

Democratization and growth

Abstract: This paper challenges recent empirical findings that democratic institutions have a negligible direct effect on economic growth. We delve into numerous historical sources and democracy indicators to identify the countries and timing of recent democratization episodes. We then employ a before-after event study approach and analyze the impact of democratization on growth in countries that have managed to abandon autocratic rule and consolidate democratic institutions. In contrast to previous studies, we primarily explore the within country effect of a permanent democratization, controlling for time-invariant country-specifi ce ffects. The dynamic panel estimates imply that democratizations, on average, are associated with an almost one percent increase in real per capita growth. The analysis also reveals a noteworthy J-shaped growth pattern: during the transition growth is slow and even negative; after, however, the third post-democratization year growth peaks and stabilizes at higher level. The effect is robust to various model specifications, panel methodologies, alternative democratization dates, and to the potential endogeneity of democratization. From a theoretical standpoint the evidence offers direct support for "development" theories of democracy and growth that highlight the positive impact of representative institutions on economic activity. They also favour the old Aristotelean notion, recently rephrased and updated by Friedrich Hayek (1960), that the merits of democracy will come in the long run.

Hedge-Fund Benchmarks: Information Content and Biases

Abstract: We discuss the information content and potential measurement biases in hedge-fund benchmarks. Hedge-fund indexes built from databases of individual hedge funds inherit the measurement biases in the databases. In addition, broad-based indexes mask the diversity of individual hedge-fund return characteristics. Consequently, these indexes provide incomplete information to investors seeking diversification from traditional asset classes through the use of hedge funds. The approach to constructing hedge-fund benchmarks we propose is based on the simple idea that the most direct way to measure hedge-fund performance is to observe the investment experience of hedge-fund investors themselves—the funds of hedge funds (FOFs). In terms of measurement biases, returns of FOFs can deliver a cleaner estimate of the investment experience of hedge-fund investors than the traditional approach. In terms of risk characteristics, indexes of FOFs are more indicative of the demand-side dynamics driven by hedge-fund investors' p...

Capturing Causal Complexity: Heuristics for Configurational Theorizing

Abstract: Management scholars study phenomena marked by complex interdependencies where multiple explanatory factors combine to bring about an outcome of interest. Yet, theorizing about causal complexity can prove challenging for the correlational theorizing that is predominant in the field of management, given its “net effects thinking” that emphasizes the unique contribution of individual explanatory factors. In contrast, configurational theories and thinking are well-suited to explaining causally complex phenomena. In this article, we seek to advance configurational theorizing by providing a model of the configurational theorizing process which consists of three iterative stages—scoping, linking and naming. In each stage, we develop and offer several heuristics aimed at stimulating configurational theorizing. That is, these theorizing heuristics are intended to help scholars discover configurations of explanatory factors, probe the connections among these factors, and articulate the orchestrating themes that underpin their coherence. We conclude with a discussion of how configurational theorizing advances theory development in the field of management and organizations, and beyond.