Showing papers by "Tilburg University published in 1998"

International expansion through start-up or through acquisition : An organizational learning perspective

Abstract: This study brings a fresh approach—a learning perspective—to the literature examining whether firms expand internationally through start-ups or acquisitions. Hypotheses concern how this strategic c...

The Choice of Stock Ownership Structure: Agency Costs, Monitoring, and the Decision to Go Public

Abstract: From the viewpoint of a company’s controlling shareholder, the optimal ownership structure generally involves some measure of dispersion, to avoid excessive monitoring by other shareholders. The optimal dispersion of share ownership can be achieved by going public, but this choice also entails some costs (the cost of listing and the loss of control over the shareholder register). If the controlling shareholder sells shares privately instead, he avoids the costs of going public but must tolerate large external shareholders who may monitor him too closely. Thus, the owner faces a trade-off between the cost of providing a liquid market and overmonitoring. The incentive to go public is stronger, the larger the amount of external funding required. The listing decision is also affected by the strictness of disclosure rules for public relative to private erms, and the legal limits on bribes aimed at dissuading monitoring by shareholders.

Venture capital financing, moral hazard, and learning

Abstract: We consider the provision of venture capital in a dynamic agency model. The value of the venture project is initially uncertain and more information arrives by developing the project. The allocation of the funds and the learning process are subject to moral hazard. The optimal contract is a time-varying share contract which provides intertemporal risk-sharing between venture capitalist and entrepreneur. The share of the entrepreneur reflects the value of a real option. The option itself is based on the control of the funds. The dynamic agency costs may be high and lead to an inefficient early stopping of the project. A positive liquidation value explains the adoption of strip financing or convertible securities. Finally, relationship financing, including monitoring and the occasional replacement of the management improves the efficiency of the financial contracting.

How Does Foreign Entry Affect the Domestic Banking Market

Abstract: Does the entry of foreign banks make domestic banks more competitive? This study shows that, in developing countries, increasing the number (even more than the share) of foreign banks reduces both profits and overhead expenses of domestic banks. Banking markets are becoming increasingly international through financial liberalization and general economic integration. Using bank-level data for 80 countries for 1988-95, Claessens, Demirguc-Kunt, and Huizinga examine the extent of foreign ownership in national banking markets. They compare net interest margins, overhead, taxes paid, and profitability of foreign and domestic banks. The comparative functions of foreign banks and domestic banks is very different in developing and industrial countries, possibly because of a different customer base, different bank procedures, and different regulatory and tax regimes: ° In developing countries foreign banks tend to have greater profits, higher interest margins, and higher tax payments than do domestic banks. ° In industrial countries it is the domestic banks that have greater profits, higher interest margins, and higher tax payments. It is common to read, in the literature on foreign banking, that the entry of foreign banks can make national banking markets more competitive, thereby forcing domestic banks to operate more efficiently. Claessens, Demirguc-Kunt, and Huizinga show that increasing the foreign share of bank ownership does indeed reduce profitability and overhead expenses in domestically owned banks - so the general effect of foreign bank entry may be positive. Interestingly, the number of foreign entrants matters more than their market share, suggesting that they affect local bank competition more on entry rather than after gaining a substantial market share. These effects hold even when controlling for the fact that foreign banks may be attracted to markets with certain characteristics, such as low banking costs. This paper - a joint product of the East Asia and Pacific Region and the Development Research Group - is part of a larger effort in the Bank to study the effects of increasing global integration of financial services. The authors may be contacted at cclaessens @worldbank.org, ademirguckunt@worldbank.org, or H.P.Huizinga@Kub.NL.

Managerial compensation and firm performance : A general research framework

Abstract: A tremendous amount of research has explored the relationship between managerial pay and firm performance. We argue that this research has generally been limited because it ignores other criteria t...

What Determines the Number of Bank Relationships? Cross-Country Evidence

Abstract: We investigate the determinants of multiple-bank relationships using a new data set comprised of 1129 firms across twenty European countries. We first document large cross-country variation in the average number of bank relationships per firm, exposing a richness in the financial systems of European countries that goes beyond simply being termed "bank-dominated." We find, after controlling for firm and industry-specific characteristics, that the average number of bank relationships per firm is non-monotonically related to the fragility of a country?s banking system and negatively related to the efficiency of its bankruptcy process and enforcement of creditor rights. Moreover, we find that although concentrated banking systems reduce the number of bank relationships, public bond markets have a complementary effect and increase the average number of banks per firm. We extend our analysis to industry-level effects and also study the robustness of our results using a different data set on bank relationships in Norway. Overall, our study provides a rich set of results that should aid in sorting out theories in banking, corporate governance and financial system architecture.

WSDM: a user centered design method for Web sites

Abstract: WSDM is a user-centered method for the design of kiosk Web Sites. By explicitly starting from the requirements of the users or visitors, WSDM solves Web site problems that are primarily caused by that fact that a site has no underlying design at all, or that the design is mostly data-driven.

The Effect of Unemployment Insurance Sanctions on the Transition Rate from Unemployment to Employment

Abstract: This paper finds that unemployment insurance sanctions substantially raise individual transition rates from unemployment to employment. Sanctions are punitive benefits reductions that are supposed to make recipients comply with certain minimum requirements concerning search behavior. We provide a theoretical analysis and we use a unique administrative data set of individuals who started collecting unemployment insurance in the Netherlands in 1992. We deal with various forms of selectivity involved in the imposition of a sanction. We exploit the timing of events as well as the fact that some respondents experience multiple unemployment spells.

Innovation, Creativity and Success

Abstract: This article explores the role of innovation in small and medium sized firms, in relation to the firm's success. After a discussion of the relationship between success, innovation and creativity, some possible backgrounds of creativity and innovation are presented. For one part these are of a personal nature, like the entrepreneur's values, attitudes and level of education. For another part they concern institutional aspects of the firm. After the development of a number of hypotheses these are empirically checked with data from a survey among 200 entrepreneurs in six countries. In the appendices some details of the data and variables may be found.

Punitive Sanctions and the Transition Rate from Welfare to Work

Abstract: In the Netherlands, the average exit rate out of welfare is dramatically low. Most welfare recipients have to comply with guidelines on job search effort that are imposed by the welfare agency. If they do not, then a sanction in the form of a temporary benefit reduction can be imposed. This article investigates the effect of such sanctions on the transition rate from welfare to work using a unique set of rich register data on welfare recipients. We find that the imposition of sanctions substantially increases the individual transition rate from welfare to work. This discussion paper has resulted in a publication in the Journal of Labor Economics , 2004, 22(1), 211-241.

Automatic visual bias of perceived auditory location

Abstract: Studies of reactions to audiovisual spatial conflict (alias “ventriloquism”) are generally presented as informing on the processes of intermodal coordination. However, most of the literature has failed to isolate genuine perceptual effects from voluntary postperceptual adjustments. A new approach, based on psychophysical staircases, is applied to the case of the immediate visual bias of auditory localization. Subjects have to judge the apparent origin of stereophonically controlled sound bursts as left or right of a median reference line. Successive trials belong to one of two staircases, starting respectively at extreme left and right locations, and are moved progressively toward the median on the basis of the subjects’ responses. Response reversals occur for locations farther away from center when a central lamp is flashed in synchrony with the bursts than without flashes (Experiment 1), revealing an attraction of the sounds toward the flashes. The effect cannot originate in voluntary postperceptual decision, since the occurrence of response reversal implies that the subject is uncertain concerning the direction of the target sound. The attraction is contingent on sound-flash synchronization, for early response reversals did no longer occur when the inputs from the two modalities were desynchronized (Experiment 2). Taken together, the results show that the visual bias of auditory localization observed repeatedly in less controlled conditions is due partly at least to an automatic attraction of the apparent location of sound by spatially discordant but temporally correlated visual inputs.

Investigating consumers" tendency to combine multiple shopping purposes and destinations

Abstract: Because of the increasing time pressure they face, many consumers are becoming more concerned about the efficiency of their shopping patterns. Retailers have recognized this trend and have improved shopping convenience by offering greater variety in product categories and making it easier for consumers to combine visits to multiple stores. However, little is known about how consumers improve the efficiency of their shopping trips or how changes in retail supply affect the way in which consumers combine multiple purposes and destinations. Building on previous work in consumer shopping trip modeling and conjoint design theory, the authors introduce a choice-based conjoint approach to studying and modeling this phenomenon. The authors illustrate the approach in a case study that investigates the tendency of Dutch shoppers to combine grocery, drugstore, and clothing purchases across multiple shopping destinations. The authors observe that the tendency of consumers to combine purchases differs from category to category and depends on category availability. In general, consumers combine considerably fewer purchases than could be expected if their shopping trip planning was based purely on travel cost minimization.

Forgetting Exceptions is Harmful in Language Learning

Abstract: We show that in language learning, contrary to received wisdom, keeping exceptional training instances in memory can be beneficial for generalization accuracy. We investigate this phenomenon empirically on a selection of benchmark natural language processing tasks: grapheme-to-phoneme conversion, part-of-speech tagging, prepositional-phrase attachment, and base noun phrase chunking. In a first series of experiments we combine memory-based learning with training set editing techniques, in which instances are edited based on their typicality and class prediction strength. Results show that editing exceptional instances (with low typicality or low class prediction strength) tends to harm generalization accuracy. In a second series of experiments we compare memory-based learning and decision-tree learning methods on the same selection of tasks, and find that decision-tree learning often performs worse than memory-based learning. Moreover, the decrease in performance can be linked to the degree of abstraction from exceptions (i.e., pruning or eagerness). We provide explanations for both results in terms of the properties of the natural language processing tasks and the learning algorithms.

Categorial feature magnetism: The endocentricity and distribution of projections

Abstract: The question addressed here is whether there is a systematic relationship between the internal structure of syntactic phrases and their distribution in the clause. To account for the internal coherence of syntactic phrases, their endocentricity, I develop the notion of 'extended projections' in two ways. First, evidence from two constructions of German and Dutch argues that in addition to lexical heads and functional heads, also semi-lexical heads must be intro- duced. The notion of categorial identity, which states that the syntactic nodes connecting the lexical and functional heads within an extended projection with the phrasal node must all be of the same category type, is shown to hold for semi-lexical heads as well. Second, the notion of 'extended projection' will be modified to accommodate the fact that prepositional elements can often be inserted within an extended projection. This exceptional status of prepositional elements is reminiscent of the fact that prepositional phrases are arguably the most flexible phrases in terms of their distribution. In earlier work, I had suggested that this fact could be expressed in terms of a constraint, the Unlike Feature Constraint, which was formulated in terms of repulsion between the positive values of the categorial features: a (+N/V) head does not tolerate a (+N/V) phrase in its immediate domain. Categorial identity is now interpreted as the mutual attraction of the positive categorial feature values: we have attraction within, but repulsion across phrasal categories. And in both cases, prepositions are the neutral element. This idea leads to a unified principle, the Law of Categorial Feature Magnetism.

Are autoimmune thyroid dysfunction and depression related

Abstract: The objective of this study was to examine the relationship between autoimmune thyroid disease and depression in perimenopausal women. Thyroid function [TSH, free T4, and thyroid peroxidase antibodies (TPO-Ab)] and depression (using the Edinburgh Depression Scale) were assessed cross-sectionally together with other determinants of depression. The subjects were 583 randomly selected perimenopausal women (aged 47-54 yr) from a community cohort of 6846 women. The main outcome measures were the occurrence of thyroid dysfunction (abnormal free T4 and/or TSH or elevated levels of TPO-Ab) and the concomitant presence of depression according to the Edinburgh Depression Scale. Neither biochemical thyroid dysfunction nor menopausal status was related to depression. Apart from several psycho-social determinants (the occurrence of a major life event, a previous episode of depression, or financial problems), an elevated level of TPO-Ab (> or = 100 U/mL) was significantly associated with depression (odds ratio, 3.0, 95% confidence interval, 1.3-6.8). We conclude that women with elevated TPO-Ab levels are especially vulnerable to depression, whereas postmenopausal status does not increase the risk of depression.

Dynamic choice and nonexpected utility

Abstract: This paper explores how some widely studied classes of nonexpected utility models could be used in dynamic choice situations. A new "sequential consistency" condition is introduced for single-stage and multi-stage decision problems. Sequential consistency requires that if a decision maker has committed to a family of models (e.g., the multiple priors family, the rank-dependent family, or the betweenness family) then he use the same family throughout. Conditions are presented under which dynamic consistency, consequentialism, and sequential consistency can be simultaneously preserved for a nonexpected utility maximizer. An important class of applications concerns cases where the exact sequence of decisions and events, and thus the dynamic structure of the decision problem, is relevant to the decision maker. It is shown that for the multiple priors model, dynamic consistency, consequentialism, and sequential consistency can all be preserved. The result removes the argument that nonexpected utility models cannot be consistently used in dynamic choice situations. Rank-dependent and betweenness models can only be used in a restrictive manner, where deviation from expected utility is allowed in at most one stage.