World Bank

About: World Bank is a other organization based out in Washington D.C., District of Columbia, United States. It is known for research contribution in the topics: Population & Poverty. The organization has 7813 authors who have published 21594 publications receiving 1198361 citations. The organization is also known as: World Bank, WB & The World Bank.

Corporate Governance, Investor Protection and Performance in Emerging Markets

Abstract: Recent research studying the link between law and finance has concentrated on country-level investor protection measures and focused on differences in legal systems across countries and legal families. Klapper and Love extend this literature and provide a study of firm-level corporate governance practices across emerging markets and a greater understanding of the environments under which corporate governance matters more. Their empirical tests show that better corporate governance is highly correlated with better operating performance and market valuation. More important, the authors provide evidence showing that firm-level corporate governance provisions matter more in countries with weak legal environments. These results suggest that firms can partially compensate for ineffective laws and enforcement by establishing good corporate governance and providing credible investor protection. The authors' tests also show that firm-level governance and performance is lower in countries with weak legal environments, suggesting that improving the legal system should remain a priority for policymakers. This paper - a product of Finance, Development Research Group - is part of a larger effort in the group to study corporate governance around the world.

Option Volume and Stock Prices: Evidence on Where Informed Traders Trade

Abstract: This paper investigates the informational role of transactions volume in options markets. We develop an asymmetric information model in which informed traders may trade in option or equity markets. We show conditions under which informed traders trade options, and we investigate the implications of this for the linkage between markets. Our model predicts an important informational role for the volume of particular types of option trades. We empirically test our model's hypotheses with intraday option data. Our main empirical result is that negative and positive option volumes contain information about future stock prices. THE INFORMATION CONTENT of trading activity is a subject of widespread interest. If trades are correlated with private information, then the outcome of the transaction process may portend future movements in price. The extension of trading to different venues or to derivative instruments, however, means that this link between transactions and information need not be easily discernible. If there are alternative markets in which informed traders can profit from their information, then where informed traders choose to trade may have important implications not only for security p:rice movements, but for the behavior of related prices as well. This suggests that transactions in derivative markets may be an important predictor of future security price movements. In this paper we investigate the informational role of transactions volume in options markets. For some readers, this focus may seem puzzling; an option is a derivative security so its price should be dictated unilaterally by the behavior of the stock price. This unidirectional linkage is only true, however, in complete markets; if information is impounded into prices by trading, then the ability of informed traders to transact in options markets mearns

Growth is Good for the Poor

Abstract: When average income rises, the average incomes of the poorest fifth of society rise proportionately. This is a consequence of the strong empirical regularity that the share of income accruing to the bottom quintile does not vary systematically with average income. The authors document this empirical regularity in a sample of 92 countries spanning the past four decades and show that it holds across regions, periods, income levels, and growth rates. The authors next ask whether the factors that explain cross-country differences in the growth rates of average incomes have differential effects on the poorest fifth of society. They find that several determinants of growth--such as good rule of law, opennness to international trade, and developed financial markets--have little systematic effect on the share of income that accrues to the bottom quintile. Consequently, these factors benefit the poorest fifth of society as much as everyone else. Thee is some weak evidence that stabilization from high inflation and reductions in the overall size of government not only increase growth but also increase the income share of the poorest fifth in society. Finally, the authors examine several factors commonly thought to disproportionately benefit the poorest in society, but find little evidence of their effects. The absence of robust findings emphasizes that relatively little is known about the broad forces that account for the cross-country and intertemporal variation in the share of income accruing to the poorest fifth of society.