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Corporate bonds have been a major source of medium and long-term financing in Brazil. We analyze how corporate bond covenants have been used to mitigate agency costs…
Corporate bonds have been a major source of medium and long-term financing in Brazil. We analyze how corporate bond covenants have been used to mitigate agency costs between shareholders and bondholders. Our data includes 119 corporate bond indentures issued in Brazil from 1998 to 2001. This paper analyzes whether public investors have demanded stricter terms in corporate bond indentures. When comparing to previous studies of Anderson (1999) and of Filgueira and Leal (2001), we found empirical evidence that: (a) more bond issues with no indexed inflation features, but more floating rate interest features to match market needs; (b) no major changes for contingent maturity features; (c) loose covenants with respect to dividend and financing actions; and (d) tighter covenants regarding change in control and/or ownership and negative pledge. There is empirical evidence that the role of sponsor may partially mitigate risks borne by bondholders.
This book is an attempt to reflect on what we have learned from financial policies and financial crises in Latin America. The 21 chapters in this volume capture the developments in various ways. They cover theoretical contributions, regional empirical studies, and specific inquiries on Argentina, Brazil, Chile, Colombia, Cuba, Ecuador, Mexico, Peru and Venezuela. The breadth of methodologies implemented suggests that researchers are looking at Latin American financial markets through a variety of lenses. The chapters are divided into 7 parts, including, in Part I, an initial overview. Part II examines the foreign exchange markets in Latin America and their interactions with other markets. Part III discusses dollarization issues in the region. Part IV then takes up the issue of banking in Latin America. Equity and bond markets are considered in Parts V and VI, respectively. Lastly, Part VII considers pension systems in Latin America. Taken as a whole, the 21 chapters seize the excitement of studying Latin America and provide lessons that are applicable around the world.
The seminal literature on state formation proposes a model of “co-opt and expand” to explain the rise of centralized nation-states in modern and early modern Europe…
The seminal literature on state formation proposes a model of “co-opt and expand” to explain the rise of centralized nation-states in modern and early modern Europe. Building on this literature’s distinction between direct and indirect rule, other analysts have expanded the scope of this model to explain patterns of state building in the non-Western world, particularly in the construction of centralized authority in postcolonial and postimperial contexts. According to this literature, the failure of central rulers to co-opt local elites has frequently produced weak states lacking capacities of rule in their peripheries. Using archival materials to examine the Albanian state’s relatively successful penetration of the country’s highland communities during its early decades of national independence, this article suggests that state building can proceed along an alternative path called “co-opt and bind,” in which state builders “bind” peasant communal institutions to the institutional idea of the nation-state to legitimize and implement state building goals. The article identifies three mechanisms used by early Albanian state builders to generate legitimacy and institute political order in its remote communities, including disarmament, the institution of new forms of economic dependency, and the invocation of peasant cultural codes of honor.
The purpose of this paper is to examine the relationship of CEO compensation plans and the risk of managerial equity portfolios with the extent of strategic investments in…
The purpose of this paper is to examine the relationship of CEO compensation plans and the risk of managerial equity portfolios with the extent of strategic investments in advertising, capital expenditures and research and development (R&D). The elements of compensation are salary, bonuses, options and restricted stock grants. The authors proxy the design of CEO equity portfolios by the price performance sensitivity of the holdings and the portfolio deltas.
The authors use the components of executive compensation and portfolio risk as the dependent variables, regressing these against measures for the level of strategic investment. The authors test for non-linear relationships between the components of CEO compensation and strategic investments. The sample is a broad cross-section from 1992 to 2016.
The authors find strong support for non-linear relationships of capital expenditures and R&D with CEO bonuses, option grants and restricted stock grants. There are very complex relationships between the components of executive compensation and R&D expenditures, but little evidence of a relationship with advertising expenditures. The authors also find strong complex relationships in the design of CEO equity portfolios with advertising and R&D.
Little earlier research has considered advertising, capital expenditures and R&D in a unified framework. Also, testing for non-linear associations provides much greater insight into the relationship between the components of executive compensation and strategic investment. The findings represent a valuable incremental contribution to the executive compensation literature. The results also have normative policy implications for compensation committees’ design of optimal annual CEO compensation packages to incentivize or discourage particular strategic investment behavior.
The purpose of this paper is to reexamine the corporate focus hypothesis to establish the characteristics of firms that discontinue operations. The authors concentrate on…
The purpose of this paper is to reexamine the corporate focus hypothesis to establish the characteristics of firms that discontinue operations. The authors concentrate on four interrelated elements of the hypothesis, diversification, performance, financial constraint and market-based risk measures. The authors also examine whether firms reporting positive- or negative-valued discontinued operations have different characteristics.
Analyzing discontinued operations provides a broad sample of strategically important exit decisions using a variety of different disposal methods. The authors use logistic regression models to explore whether the elements of the corporate focus hypotheses, and interactions between them, explain decisions to discontinue operations, and also the differences between firms making negative- and positive-valued announcements.
Firms that discontinue operations are more diverse, with weak operating performance, higher financial constraints and perform poorly in financial markets. Interrelationships between these factors strongly affect exit decisions. Companies reporting negative-valued discontinued operations are smaller, make lower capital investments and face greater cash constraints and market risk. Those announcing positive-valued discontinuations are larger and make higher payouts and capital expenditures. Their overall performance is weaker than for control firms, but clearly superior to companies discontinuing negative-valued operations.
Discounted operations represent a wide range of exit decisions. They provide a much larger sample than most previous studies of divestitures. The authors include β, the Sharpe ratio, cash holdings, payouts to shareholders, capital expenditures and also cross-product terms between the elements of the corporate focus hypothesis, all of which have received little attention in prior research. There are significant differences between firms announcing positive and negative-valued discontinued operations.
This qualitative study seeks to explore the grounded realities of live-in care workers in Malta. The growing economic affluence in Malta, coupled by an ageing population…
This qualitative study seeks to explore the grounded realities of live-in care workers in Malta. The growing economic affluence in Malta, coupled by an ageing population and the lowest fertility rate in the European Union, is resulting in a greater demand for live-in care givers, particularly from the Philippines. Reinforced through public policy wherein families who employ a qualified live-in carer are benefiting from government subsidy to ease burden on the state’s residential homes, Malta appears to be moving from a passive to a more active international recruitment of domestic migrant workers. This inquiry provides an evidence-based contribution to the appeal of the European Economic and Social Committee of the EU calling for more research about the rights of live-in care workers in Europe which has long remained almost invisible to EU and Member State policymakers. The majority of the findings reflect some of the concerns that have already been identified in international literature, like higher levels of precariousness, contractual agreements not being honoured, psychological obligations, fraudulent agents and the lack of separation between work and personal life. Other findings have endogenous characteristics that are closely linked to the island state of Malta, namely its safe environment, Catholic culture, bilingual coexistence of Maltese and English and the competitive nature of Filipino community groups that may discourage further social engagement. The chapter concludes with brief policy suggestions to trigger improvements in the wellbeing and dignity of migrant carers.
Recent neuroscience research shows that two large-scale cortical networks are involved in organizational behavior. These two networks are naturally antagonistic – when one…
Recent neuroscience research shows that two large-scale cortical networks are involved in organizational behavior. These two networks are naturally antagonistic – when one is active the other tends to be suppressed. The focus of the chapter is to apply the opposing-domains hypothesis to problems associated with: (1) trying to balance creative thinking and global processing with analytic reasoning and focused attention; (2) avoiding ethical dangers associated with an imbalance in task positive network (TPN) and default mode network (DMN) thinking; and (3) properly motivating and incentivizing employees so as not to lead to an imbalance between the TPN and DMN. We contend that the opposing-domains hypothesis can inform organizational and leadership theory in areas where single-dimensional dual-process models are inadequate.
Current issues of Publishers' Weekly are reporting serious shortages of paper, binders board, cloth, and other essential book manufacturing materials. Let us assure you…
Current issues of Publishers' Weekly are reporting serious shortages of paper, binders board, cloth, and other essential book manufacturing materials. Let us assure you these shortages are very real and quite severe.