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Book part
Publication date: 3 May 2016

Benjamin A. T. Graham, Noel P. Johnston and Allison F. Kingsley

Political risk is a complex phenomenon. This complexity has incentivized scholars to take a piecemeal approach to understanding it. Nearly all scholarship has targeted a…

Abstract

Political risk is a complex phenomenon. This complexity has incentivized scholars to take a piecemeal approach to understanding it. Nearly all scholarship has targeted a single type of political risk (expropriation) and, within this risk, a single type of firm (MNCs) and a single type of strategic mechanism through which that risk may be mitigated (entry mode). Yet “political risk” is actually a collection of multiple distinct risks that affect the full spectrum of foreign firms, and these firms vary widely in their capabilities for resisting and evading these risks. We offer a unified theoretical model that can simultaneously analyze: the three main types of political risk (war, expropriation, and transfer restrictions); the universe of private foreign investors (direct investors, portfolio equity investors, portfolio debt investors, and commercial banks); heterogeneity in government constraints; and the three most relevant strategic capabilities (information, exit, and resistance). We leverage the variance among foreign investors to identify effective firm strategies to manage political risk. By employing a simultaneous and unified model of political risk, we also find counterintuitive insights on the way governments trade off between risks and how investors use other investors as risk shields.

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Strategy Beyond Markets
Type: Book
ISBN: 978-1-78635-019-0

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Article
Publication date: 28 August 2019

Ning Chai, Rob Stevens, Xiaozhen Fang, Chun Mao and Ding Wang

The purpose of the paper is to investigate compensation and related welfare issues in the case of the expropriation of land for urban redevelopment in China.

Abstract

Purpose

The purpose of the paper is to investigate compensation and related welfare issues in the case of the expropriation of land for urban redevelopment in China.

Design/methodology/approach

A mixed methods quantitative and qualitative approach was selected to undertake the research. This involved a wide ranging qualitative review of the academic and policy literature to explore the relevant arguments and issues, combined with a quantitative regression analysis of survey data collected from research subjects.

Findings

The research identified the complex and changeable phenomena of urban village redevelopment in China, and the variable compensation arrangements used. The research found that monthly family income before land expropriation, monthly family expense before expropriation, the location of the housing expropriation and family unit size are important determinants for the property holders chosen methods of compensation. It also found that an increase in family size leads to a decreasing probability that the expropriated farmers choose the single monetary compensation relative to the alternative option of housing compensation. The degree of satisfaction with compensation, changes in monthly family income and expense are found to be significant determinants for changes in life satisfaction.

Research limitations/implications

The research made the following four recommendations based upon the qualitative and quantitative analysis: that local governments should pay closer governance/ political attention to changes in the welfare of the farmers/ villagers whose property has been expropriated; that central and local government should aim to improve the compensation system for rural land and property expropriation, to make the compensation policy be perceived as fairer and more reasonable by citizens; that a broad National standard of compensation be used within a pragmatic locally focussed regime; that the Chinese Central, Provincial and Local governments can devise improved policy tools and make more effective policy interventions by learning from the experiences (both successes and failures) of other countries approaches to this topic. It also suggested that further research be undertaken investigating the multitude of local level policy experiments, as a way of developing better National compensation standards based upon those compensation standards that appear to be working – and have citizen support – at the local level.

Originality/value

The literature review identified recent developments in Chinese urban studies and originally synthesised both recent and longstanding work on the issue of urban villages in China. The research also suggested changes to the National and Local legal and policy framework for compensation cases in urban redevelopment expropriation scenarios.

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Journal of Property, Planning and Environmental Law, vol. 11 no. 3
Type: Research Article
ISSN: 2514-9407

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Article
Publication date: 20 April 2012

Yuan Zhang, Christopher Gan and Zhaohua Li

The purpose of this paper is to examine the effects of borrowers' quality on the size of market reaction to bank loan announcements in the Chinese financial market, where…

Abstract

Purpose

The purpose of this paper is to examine the effects of borrowers' quality on the size of market reaction to bank loan announcements in the Chinese financial market, where poor quality borrowers are prevalent and the banking system is highly controlled by the Chinese government.

Design/methodology/approach

The paper uses different measures to proxy for borrower quality, including the borrowers' information opaqueness, possibility of expropriation and their financial status. A cross‐sectional regression analysis was conducted to investigate the relationship between the market response to bank loan announcements and the borrowers' quality.

Findings

It is revealed that the negative market response to bank loan announcements is particularly significant for borrowing firms with lower quality, including firms that are opaque, have a higher possibility of expropriation or tunnelling, have ineffective expropriation‐reduction mechanisms, are controlled by the state and are in financial distress, for the sample period 1996 to 2009. Furthermore, to test whether there is any significant difference on the effects of the borrowers' quality on the size of the market response to bank loan announcements following China's announcement of share‐split reform in 2005, this paper splits the sample period into sub samples, 1996 to 2004 and 2004 to 2005. The results on the effects of the borrowers' quality on the size of market response to bank loan announcements for the sub sample period 1996 to 2004 are similar to those for the full sample 1996 to 2009.

Research limitations/implications

The paper's findings imply that the reforms in the Chinese financial market since 2005 do not have any significant effects on the borrowers' quality on the size of the market response to bank loan announcements for the full sample period.

Originality/value

This paper differs from previous studies in regards to the sample period and the measurements of the possibility of expropriation or tunnelling. The paper contributes to the banking and corporate governance literature.

Details

Management Research Review, vol. 35 no. 5
Type: Research Article
ISSN: 2040-8269

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Article
Publication date: 29 March 2013

Belachew Yirsaw Alemu

The aim of this paper is to examine the expropriation, valuation and compensation practice. This paper tries to investigate how the expropriation and compensation laws are…

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Abstract

Purpose

The aim of this paper is to examine the expropriation, valuation and compensation practice. This paper tries to investigate how the expropriation and compensation laws are implemented when privately held land and attached real properties are taken for public purpose development in Bahir Dar city and surrounding. However, further research should be undertaken nation‐wide to explore the problems throughout the country.

Design/methodology/approach

The paper reports the findings of a survey of expropriatees from main practices throughout Bahir Dar city and its surroundings.

Findings

There is a big gap between the actual practice of expropriation, valuation and compensation and the Laws. Lack of application of standardized methods and procedures created situations of unfair valuation and compensation.

Practical implications

The practical implication is that the living status of affected people before and after expropriation could be useful.

Originality/value

The value of the paper for government officials, real property valuers and investors is that transparency, consistency and fair compensation are useful.

Details

Property Management, vol. 31 no. 2
Type: Research Article
ISSN: 0263-7472

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Book part
Publication date: 3 May 2016

Kenneth W. Shotts

This paper explores firms’ strategic options when their investments are subject to the threat of government expropriation. I develop a simple hold-up model of political…

Abstract

This paper explores firms’ strategic options when their investments are subject to the threat of government expropriation. I develop a simple hold-up model of political risk. In the model, a firm decides whether to invest and then the government decides whether to expropriate the firm’s investment or to simply collect normal taxes on its profits. The government is motivated by revenue and a wide range of nonpecuniary factors: its reputation, electoral pressures, patronage opportunities, and pressure from external actors. In the model, the likelihood of expropriation depends on several factors: the firm’s profits, the amount of taxes it pays, the government’s ability to operate the firm’s assets, and the government’s political incentives. Effective management of political risk requires an integrated strategy, consisting not only of public and government relations efforts, but also financial, value chain, and human resources strategies designed to reduce the government’s incentives for expropriation.

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Book part
Publication date: 6 November 2012

Yongli Luo and Dave O. Jackson

Purpose – This study explores the probability of expropriation of minority shareholders by controlling shareholders in the form of CEO compensation under an imperfect…

Abstract

Purpose – This study explores the probability of expropriation of minority shareholders by controlling shareholders in the form of CEO compensation under an imperfect governance institution by using a novel Chinese dataset over 2001–2010.

Design/methodology/approach – We use a direct method to gauge controlling shareholders’ tunneling and expropriation of minority shareholders, and we present a simple model to link corporate governance and the degree of entrenchment by the largest shareholder. We use both Logit and Probit models to predict the likelihood of tunneling and use two-stage least square (2SLS) regression to address the endogeneity issues.

Findings – There are significant deterioration effects between controlling shareholder's tunneling and firm performance. Firms with more tunneling activities typically have larger controlling ownership, greater evidence of state control, less balance of power among large shareholders, and weaker board characteristics.

Research limitations/implications – The positive relationship between controlling shareholders’ tunneling and executive compensation implies that the controlling shareholder might divert personal benefits from the public firms at the expense of minority shareholders.

Originality/value – We focus on the effects of corporate governance restructuring on executive compensation and controlling shareholders’ tunneling in the Chinese context, and we also investigate whether these effects are stronger with the involvement of state ownership. We empirically address the issues between executive compensation and expropriation of minority shareholders.

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Advances in Financial Economics
Type: Book
ISBN: 978-1-78052-788-8

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Article
Publication date: 27 July 2018

Song Qu, Nico Heerink, Ying Xia and Junping Guo

The purpose of this paper is to examine the impact of the compensation amount as well as the mode through which compensations are paid on farmers’ satisfaction with the…

Abstract

Purpose

The purpose of this paper is to examine the impact of the compensation amount as well as the mode through which compensations are paid on farmers’ satisfaction with the compensation received for farmland expropriation in China.

Design/methodology/approach

Using rural household survey data collected among 450 households in three provinces, located in eastern, central and western China, this paper estimates the impacts of compensation payments, compensation modes, household characteristics and other control variables on farmers’ satisfaction applying an ordinal probit model.

Findings

The major findings are: farmers’ satisfaction with the compensation depends not only on the size of the compensation but also on the gap between the compensation and the market value of the expropriated land; and the compensation amount positively affects farmers’ satisfaction when the social security compensation mode is used, but does not significantly affect farmers’ satisfaction when other modes are used.

Originality/value

First, it contributes to the literature on farmland expropriation by providing empirical evidence of the direct impact of the compensation amount and other factors on the degree of farmers’ satisfaction with farmland compensations. Second, potential interactions between compensation amount and compensation mode are taken into account in estimating factors affecting farmers’ satisfaction.

Details

China Agricultural Economic Review, vol. 10 no. 4
Type: Research Article
ISSN: 1756-137X

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Article
Publication date: 28 August 2018

Valerio Antonelli, Raffaele D’Alessio, Roberto Rossi and Warwick Funnell

The purpose of this paper is to identify the significant role of accounting in the expropriation of Jewish real estate after the enforcement of race laws under Benito…

Abstract

Purpose

The purpose of this paper is to identify the significant role of accounting in the expropriation of Jewish real estate after the enforcement of race laws under Benito Mussolini’s Fascist regime in Italy.

Design/methodology/approach

Hannah Arendt’s understanding of government bureaucracy in the twentieth century totalitarian regimes informs the research which draws upon a wide range of primary sources.

Findings

Implementation of the program of expropriation was the responsibility of a government body, EGELI, which was created specifically for this purpose. The language of accounting provided the means to disguise the nature and brutality of the process and allow bureaucrats to be removed from the consequences of their actions. Accounting reports from EGELI to the Ministry of Finance confirmed each year that those who worked in EGELI were devoted to its mission as an agency of the Fascist State.

Research limitations/implications

The findings of this study recognize the need for further research on the role played by servicemen, bureaucrats and accounting as a technology of government in the deportation of Italian Jews to Germany. The study also provides impetus to examine how other countries managed the properties confiscated or expropriated from the Jews in the earlier stages of the Final Solution.

Originality/value

The study is the first to identify the significant role played by accounting and accountants in the persecution of Italian Jews under the Fascism.

Details

Accounting, Auditing & Accountability Journal, vol. 31 no. 8
Type: Research Article
ISSN: 0951-3574

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Article
Publication date: 4 April 2016

Samuel Jebaraj Benjamin, Mazlina Mat Zain and Effiezal Aswadi Abdul Wahab

The purpose of this study is to examine the agency problem of expropriation using dividends in politically connected firms and the relevance of institutional investors in…

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1960

Abstract

Purpose

The purpose of this study is to examine the agency problem of expropriation using dividends in politically connected firms and the relevance of institutional investors in limiting this problem. The growing presence of this group of shareholders offers a unique opportunity to test their importance in the context of dividends payments and expropriation.

Design/methodology/approach

This study uses the Tobit regression to test the association between political connection, institutional investors and dividend payouts. The results are also robust to the three-stage-least squares regressions method.

Findings

The study is based on a random sample of 2,458 Malaysian firms-year observations for the period of 2004-2009. The results reveal that politically connected firms have an inclination to pay lower dividends, while institutional ownership is associated with higher dividend payouts. Furthermore, the findings reveal that higher levels of institutional ownership moderates the negative relationship between politically connected firms and dividends.

Research implications

The findings have an important implication to regulators as it suggests that the institutional investors can influence the dividend payouts in politically connected firms through active monitoring, thus alleviating agency problems. This also provides a positive feedback on the regulators’ governance initiatives that quest to strengthen the roles of institutional investors.

Originality/value

This study is the first to examine the effectiveness of the monitoring role of institutional investors in the context of expropriation by politically connected firms from the perspective of dividend payouts.

Details

Pacific Accounting Review, vol. 28 no. 2
Type: Research Article
ISSN: 0114-0582

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Article
Publication date: 15 May 2009

Vladimir Ponczek and Enlinson Mattos

The purpose of this paper is to decompose the effects of democracy and risk of expropriation on economic volatility.

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1025

Abstract

Purpose

The purpose of this paper is to decompose the effects of democracy and risk of expropriation on economic volatility.

Design/methodology/approach

The authors follow Acemouglu et al. and use settler mortality in former colonies in the seventeenth, eighteenth and nineteenth centuries as an instrument of “risk of expropriation,” in addition to a democracy index to capture institutional effects on economic stability.

Findings

The authors present empirical evidence that the economic performance of more centralized former European colonies is not more volatile than that of democratic ones, once the exogenous variation of expropriation risk across countries is included in the model

Originality/value

The paper investigates the role of a spectrum of different institutions on economic stability. In this sense, the paper contributes to the literature analyzing the effect of property‐rights protection, as measured by a risk‐of‐expropriation index, on the relation between democracy and economic stability.

Details

Journal of Economic Studies, vol. 36 no. 2
Type: Research Article
ISSN: 0144-3585

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