Doctor of Philosophy / Department of Agricultural Economics / Michael Langemeier / This study focused on the inclusion of risk in efficiency measures to determine its impact on traditional efficiency scores. Previous research and theory suggests efficiency scores will be lower under risk and for risk averse individuals. Risk aversion may deter use of new production technologies and production levels may not be as high as under other risk preferences. Two data sets were used in the analysis. A panel data set of 256 farms from 1993-2010 was used to address the impact of risk measured as variability in outputs and downside risk on efficiency. A separate data set of 258 farms for 2008 was used with a corresponding risk preference score to determine the impact of risk preference on efficiency. The risk preference scores in the sample ranged from 5 to 86 where a smaller value represents stronger risk aversion. Data envelopment analysis was used to construct a nonparametric efficiency frontier and calculate cost- and revenue-based economic, overall, technical, allocative, and scale efficiency measures. Five inputs: labor, crop input, fuel, livestock input, and capital; and two outputs: crops and livestock were used in the analysis. The results focused on cost- and revenue-based economic efficiency. They showed that risk did affect average efficiency scores and is necessary to include in efficiency analysis. The average cost efficiency without risk was 0.6763. It increased to 0.7200 and 0.7018 respectively when cost efficiency was adjusted to recognize variability in outputs and downside risk. The average portion of cost inefficiency explained by variability in outputs was 28.06 percent. Downside risk explained 22.66 percent of cost inefficiency. The average revenue efficiency without risk was 0.7611 and increased to 0.8372 and 0.7811 when revenue efficiency was adjusted for variability in outputs and downside risk, respectively. Variability in outputs explained 42.53 percent and downside risk explained 30.58 percent of revenue inefficiency. The average cost efficiency for the 258 farms was 0.5691 and increased to 0.6043 with the consideration of risk preference scores. The average revenue efficiency was 0.6735 and increased to 0.6987 with risk preference scores. The efficient farms varied across cost and revenue efficiency, and the risk measures used. This lends support to the use of both input-oriented (cost) and output-oriented (revenue) efficiency measures as well as the use of multiple measures of risk.

Although the economic motivation and efficiency effects of mergers and acquisitions (M & As) in the insurance industry have been discussed, none of the prior studies have addressed the relationship between M & A activity and insurance price change. In addition, little is known about the effect of diversification on the differences in insurance price across lines. The main objective of the dissertation is to provide evidence on these issues. A secondary objective is to investigate the relationship between M & A activity and insurer’s efficiency and financial performance. We also examine various firm characteristics that affect insurance price differences across lines and that influence insurer’s efficiency and performance. We conduct fixed effects model regressions to test our hypotheses using unbalanced panel data over the sample period 1989-2004. The empirical tests indicate that the price of insurance for newly formed insurers decreases following the M & As and diversified insurers charge lower prices than less diversified firms. Our result is consistent with one possible explanation that acquiring insurers reduce overall underwriting risks and more efficiently manage the frictional costs of capital through geographic and/or product line diversification by engaging in the M & As and therefore gain a competitive advantage in pricing. Our analysis also reveals a number of other interesting results. We find that insurance price is positively related to marginal capital allocation and inversely related to firm insolvency put value, suggesting the importance of incorporating insolvency risk and marginal capital costs in pricing lines of insurance business. We also find that the price of insurance is inversely related to cost efficiency, consistent with the efficiency structure hypothesis. However, the market share variable is not significant, implying that market power that can arise from M & A activity may not be a big concern for insurance regulators. In the analysis of efficiency and financial performance, we provide evidence that acquirers’ overall cost and revenue efficiency and financial performances decrease following M & As. We also find that more focused insurers outperform the diversified insurers.

The three essays of this dissertation inform tax policy design. It is a compilation of empirical and experimental research work. The first and the second essays explore the performance of a recent tax policy reform at the sub-national level in India in terms of revenue efficiency as well as economic efficiency. India is among the only three countries in the world to have adopted a sub-national VAT. Therefore, empirically examining its performance not only improves the understanding of this important tax policy reform but also informs tax policy decision-making at the sub-national level in other developing countries. India transitioned to the state-level VAT between the years 2003 and 2008. Among other things, it was expected to achieve revenue growth and decrease tax cascading on commodities by improving economic efficiency of the indirect tax system. In the first essay, I model the impact of the VAT on revenue by adding revenue dependent administrative and compliance costs associated with taxation to an existing model developed by Keen and Lockwood (2010). The theoretical results show that replacing one type of indirect tax with another improves long-run revenue efficiency only if there is a net decrease in the administrative, compliance and distortionary costs of taxation at the margin. I then compile a unique state-level dataset for the years 1990 to 2010 to determine changes in the long-run revenue efficiency from the use of the VAT. This essay contributes to the literature by extending an existing revenue efficiency model and testing it in the unique situation of India’s sub-national VAT. The results reveal a significant improvement in the long-run revenue efficiency of the sales tax instrument used by state governments. The model implies this improvement is driven by a net fall in the marginal taxation costs from the use of the state-level VAT. This finding has important implications on the role of a sub-national VAT in the future as an effective tax instrument in the developing countries. The second essay appeals to the general theory of tax incidence which suggests that a VAT will have less impact on prices than a traditional turnover tax because the VAT does not “get stuck” in the production process as a turnover tax does. The impact should be larger for goods that have more components to the production process as the tax then “touches” more of the final product. In this essay I measure the change in the level of tax cascading with VAT by using multiple waves of the state- and household-level expenditure surveys. Specifically I test the impact of the VAT on the real consumption of households on a variety of consumption goods. I find the biggest significant decrease in the tax cascading burden of the long-term durable goods which essentially involve the maximum production components. This result is found in the 18 more developed states of India which are the focus of the empirical analysis due to data constraints. The third essay is an experimental research which looks at the influence of institutions on the economic burden of an excise tax. The traditional long-run tax incidence theory establishes that the economic incidence of an excise tax is independent of the assignment of the liability to pay tax. However, the theory is silent on the possible effects of the market institutions on tax incidence. Since all markets need an institution to function and every market institution has its own unique price and quantity determination property, it is important to understand its bearings on the incidence of taxes. Existing experimental research has tested economic incidence under many different market institutions but no previous research systematically analyzes and compares the incidence of a unit tax under two important market institutions we deal with in everyday life. One of these institutions is posted offer which dominates the consumer goods markets in developed countries and the other is double auction which is frequently observed in developing countries. I report a significant impact of these market institutions on tax incidence. In particular, I find that consumers bear a much higher burden of a unit tax in the posted offer markets as compared to the double auction markets and their burden further increases when the liability to pay the tax is on the seller.

Maintenir un accroissement soutenu de la valeur pour les actionnaires estaujourd'hui reconnu comme un des principaux objectifs stratégiques pour les institutions financières. Générer une croissance stable de la valeur pour les actionnaires nécessite une concentration intense sur une prestation de services de meilleure qualité aux clients, le recrutement, le maintien d'un effectif motivé, et l'entretien d'excellentes relations avec les différents partenaires de la firme bancaire.Cette thèse présente une évaluation analytique de la création de la valeur actionnariale dans le secteur bancaire. La première partie : Fournit un cadre pour l'analyse théorique de la valeur actionnariale en discutant comment la valeur actionnariale peut être définie, si elle peut être considérée comme un objectif valable et stratégique pour la banque, comment la valeur actionnariale peut être mesuré et comment elle peut être créé. La deuxième partie de la thèse présente des Investigations empiriques afin de mesurer la valeur actionnariale et certains de ses déterminants. La partie finale Analyses l'importance de Ces facteurs dans lacréation de valeur pour les actionnaires.L'échantillon utilisé comprend les dix banques tunisiennes cotées sur la bourse des valeurs mobilières de Tunisie entre 1995 et 2009. Nous utilisons un modèle de panel pour examiner les déterminants de la création de valeur pour les actionnaires (Mesuré par l'EVA et ses composante, c.-à-d. profits économiques et coût de capital) comme une fonction linéaire de variables spécifique aux banques et a l?industrie bancaire et des variables macro-économique. Nous trouvons que Divers facteurs semble être d'importants déterminants significatifs des profits économiques et de la valeur actionnariale créée par les banques. En cohérence avec la littérature antérieure, nous avons des efficiences coût et revenu qui sont liées positivement à la performance des banques: à savoir, les profits économiques ont eu un lien positif avec l'amélioration de l'efficience revenu, tandis que l'EVA est positivement liée a l'amélioration de l'efficience coût. Deuxièmement, nous trouvons une relation positive entre les pertes de crédit et la valeur actionnariale, ce qui explique que des pertes élevées inattendues impliquent un plus grand volume d'affaires et peut-être de moins bonne qualité du portefeuille de prêts. Troisièmement, nous avonsobservé un lien positif entre l'endettement bancaire et les profits économiques, mais non pas avec l'EVA. Cela est dû à la relation positive entre effet de levier financier et le coût du capital. Dans l'ensemble, plus le levier financier est important plus les profits économiques seront aussi importantes, mais cela est compensé par des coûts du capital plus élevés. / Creating sustainable shareholder value is at this time accepted as one of the mostimportant strategic objectives for financial institutions. Generating stable shareholder value growth requires an intense focus on delivering benefits to customers in the most efficient way, hiring and retaining motivated personnel, maintaining excellent relationship with other firm stakeholders.This thesis provides an analytical assessment of shareholder value creation in banking. The first part of the text provides a framework for analysing shareholder value theory by discussing how shareholder value can be defined, if it can be considered a valid strategic objective for banks, how shareholder value can be measured and how it can be created.The second part of the text presents empirical investigations in order to measureshareholder value and some of it drivers. The final part analyses the importance of these drivers in creating shareholder value. In order to have a broad view of the sector, the sample analysed comprises commercial Tunisian banks listed on Tunisian stock exchange between 1995 and 2009. We use a panel model to examine the determinants of bank's shareholder value reaction (measured by EVA and its components) as a linear function of various bank-specific, industry-specific and macroeconomic. We find that various factors are found to be statistically significantdeterminants of economic profits and shareholder value created by banks. Consistently with the previous literature, we find that cost and revenue efficiency are positively related to bank performance: namely, economic profits are found to have a positive link with revenue efficiency improvements, while EVA is positively related to cost efficiency improvements. Secondly, we find a positive relationship between credit losses and shareholder value providing evidence that higher unexpected losses imply larger business volume and perhaps lower loan portfolio quality. Thirdly, we observe a positive link between bank's leverage and economic profits, but not with EVA. This is due to the positive relationship between financial leverage and the cost of capital, overall, greater financial leverage increase economic profits but this is compensate by higher costs of capital.