This dissertation comprises two essays that attempt to determine, empirically, the fiscal response of governments’ to international assistance. The first essay examines whether an increasingly popular recommendation in international aid policy to switch from tied foreign assistance to untied foreign assistance affects investment in critical development expenditure sectors by developing countries. In the past, most international aid has been in the form of tied assistance as donors believed that tying aid will improve its effectiveness. It has been argued, that if tied aid is well designed and effectively managed then its overall effectiveness can be improved. On the contrary, it is also believed that tied aid acts as an impediment to donor cooperation and the building of partnership with developing countries. In addition, it is also argued that it removes the ‘feeling’ of ownership and responsibility of projects from partner countries in aid supported development. Two other more popular arguments used to challenge the effectiveness of foreign aid is that it is compromised when tied to the goods and services of the donor countries because almost 30 percent of its value is eliminated and also because it does not allow recipient countries to act on their priorities for public spending. These problems bring into question whether tied aid is truly the most effective way to help poor countries. A recommendation by the international community is that a switch to untied aid would be necessary. With untied aid, the recipient country is not obligated to buy the goods of the donor country neither is it compelled to pursue the public expenditure priorities of donors. Instead with untied aid they will have greater flexibility over spending decisions and can more easily pursue the priorities of their countries as they see fit. Hence, one could expect that a one dollar increase in untied aid will increase spending in the critical priority sectors by more than a one dollar increase in tied assistance. The question therefore is whether national domestic priorities coincide or not with what the international community has traditionally deemed should be priority. Empirically, we test this prediction using country-by-country data for 57 countries for the period 1973 to 2006. The results suggest that on average untied aid has a greater impact on pro-poor spending than do tied aid. In addition, the results also suggest that fungibility is still an issue even after accounting for the effects of untied aid. However, one could argue that fungibility may not be as bad as it appears since the switch to untied aid improves spending in the sectors that are essential for growth and development. The second essay explores the hypothesis that the expectations of debt forgiveness can discourage developing countries from attaining fiscal independence through an improvement of their tax effort. On the one hand, the international financial community typically advises poor countries to improve revenue mobilization but, on the other hand, the same international community routinely continues to bail-out poor countries that fail to meet their loan repayment obligations. The act of bailing-out these countries creates an expectation on the part of developing country governments that they will receive debt forgiveness time and again in the future. Therefore, the expectation of future bail outs creates a moral hazard that leads to endemic lower tax efforts. The key prediction of our simple theoretical model is that in the presence of debt forgiveness, tax ratios will decline and this decline will be stronger the higher the frequency and intensity of the bailouts. Empirically, we test this prediction using country-level data for 66 countries for the period 1989 to 2006. The results strongly suggest that debt forgiveness plays a significant role in the low tax effort observed in developing countries. Our empirical model allows for the endogeneity of tax effort and debt forgiveness. Interestingly we find that more debt forgiveness is actually provided to countries with lower tax effort. The results are robust to various specifications.

This dissertation comprises two essays that attempt to determine, empirically, the fiscal response of governments’ to international assistance. The first essay examines whether an increasingly popular recommendation in international aid policy to switch from tied foreign assistance to untied foreign assistance affects investment in critical development expenditure sectors by developing countries. In the past, most international aid has been in the form of tied assistance as donors believed that tying aid will improve its effectiveness. It has been argued, that if tied aid is well designed and effectively managed then its overall effectiveness can be improved. On the contrary, it is also believed that tied aid acts as an impediment to donor cooperation and the building of partnership with developing countries. In addition, it is also argued that it removes the ‘feeling’ of ownership and responsibility of projects from partner countries in aid supported development. Two other more popular arguments used to challenge the effectiveness of foreign aid is that it is compromised when tied to the goods and services of the donor countries because almost 30 percent of its value is eliminated and also because it does not allow recipient countries to act on their priorities for public spending. These problems bring into question whether tied aid is truly the most effective way to help poor countries. A recommendation by the international community is that a switch to untied aid would be necessary. With untied aid, the recipient country is not obligated to buy the goods of the donor country neither is it compelled to pursue the public expenditure priorities of donors. Instead with untied aid they will have greater flexibility over spending decisions and can more easily pursue the priorities of their countries as they see fit. Hence, one could expect that a one dollar increase in untied aid will increase spending in the critical priority sectors by more than a one dollar increase in tied assistance. The question therefore is whether national domestic priorities coincide or not with what the international community has traditionally deemed should be priority. Empirically, we test this prediction using country-by-country data for 57 countries for the period 1973 to 2006. The results suggest that on average untied aid has a greater impact on pro-poor spending than do tied aid. In addition, the results also suggest that fungibility is still an issue even after accounting for the effects of untied aid. However, one could argue that fungibility may not be as bad as it appears since the switch to untied aid improves spending in the sectors that are essential for growth and development. The second essay explores the hypothesis that the expectations of debt forgiveness can discourage developing countries from attaining fiscal independence through an improvement of their tax effort. On the one hand, the international financial community typically advises poor countries to improve revenue mobilization but, on the other hand, the same international community routinely continues to bail-out poor countries that fail to meet their loan repayment obligations. The act of bailing-out these countries creates an expectation on the part of developing country governments that they will receive debt forgiveness time and again in the future. Therefore, the expectation of future bail outs creates a moral hazard that leads to endemic lower tax efforts. The key prediction of our simple theoretical model is that in the presence of debt forgiveness, tax ratios will decline and this decline will be stronger the higher the frequency and intensity of the bailouts. Empirically, we test this prediction using country-level data for 66 countries for the period 1989 to 2006. The results strongly suggest that debt forgiveness plays a significant role in the low tax effort observed in developing countries. Our empirical model allows for the endogeneity of tax effort and debt forgiveness. Interestingly we find that more debt forgiveness is actually provided to countries with lower tax effort. The results are robust to various specifications.

Background: Since the late 1990s the economy has become an important part of the football club activities. With increased revenues, a financial framework was needed and in 2002 the "Elitlicens" introduced for this purpose. Elitlicensen is divided into different criteria, the study dealt only with the economic criteria, the requirement that clubs in Allsvenskan should maintain a positive shareholders' equity. Aim: The study aims to study items and key figures in the annual financial reports of the clubs that participated in Allsvenskan every year during the period 2010-2014 to examine whether and how the clubs reached Elitlicensens criterion for positive shareholders´ equity. Furthermore, the aim is to explain the club's actions based on Elitlicensens criterion of positive shareholders´ equity. Method: A case study of the AIK, BK Häcken, Djurgårdens IF's, Helsingborgs IF's, IF Elfsborg, IFK Gothenburg, Kalmar FF and Malmö FF's annual financial reports during the period 2010-2014 where selected items and key figures audited. Through the theoretical framework with Soft budget constraint and the Fund theory the clubs actions tries to explain. Result: All clubs have reported positive shareholders´ equity 2010-2014. This has been maintained through player sales, money from the UEFA Europa Cups and capital contributions from stakeholders. There have been clear hints of soft budget constraint through both soft credit and soft subsidy AIK, Djurgårdens IF, Helsingborgs IF and IFK Gothenburg. A tendency to use of the Fund theory could be seen some years in BK Hacken, IF Elfsborg, IFK Gothenburg and Kalmar FF. Conclusion: The study shows that all audited clubs reached Elitlicensens requirements in positive shareholders´ equity 2010-2014. Selected theories provide no coherent picture of the clubs' actions regarding shareholders´ equity. Further research is needed in this area, which also take into sporting success and club financial strategies.

由於中共國營企業對中共政權在政治象徵著立國的根本；在經濟上具有全民所有制的地位；在社會上則揭示階級剝削消失理想的到來，由此可知國營企業的重要性。中共對其改革的策略也一直在小心斟酌，避免引起政治上的不安，也不能導致人民的不滿。因此，國營企業的改革勢必對中國大陸各方面帶來巨大的影響。令人不解的是，當中國大陸經濟改革中已然包含了許多種類的所有制型態，那麼在城市經濟改革重要的一環—國營企業改革中，為什麼仍然必須維持公有制得所有制形態？而此又有何重要性？此外，由工業總產值來看，全民所有制工業所占的比例，由一九五五年開始，一直超過百分之五十，最高曾達百分之九十之多；但從中共改革之後，比例一路向下滑，直到一九九三年，已經降到約百分之四十三，在此背後，有可能隱藏了何種意義？本論文之目的便在於探討中共的國營企業改革的過程，也嘗試探討國營企業改革對中共政權有何影響。所採取的觀察方式則以產權形式的變革作為分析的判準，隨著國營企業的產權性質的逐步變化，是否會對中共政權造成影響。中共政權的基礎是否不必然與社會主義公有制的經濟形式相配套，並且真如鄧小平所言，中國大陸正走向中國特色的社會主義的過程中。

Abstract R&D investment differs from general investments due to more and greater uncertainties. Once the R&D technique is selected and the investment turns into sunk cost, a path dependence of the R&D investment will occur that locks in the involved parties in the R&D cooperation relationship and the determined cost path. Due to information asymmetry, whether the executer honestly provides information about the project type will be critical to the profit or loss of the R&D investment. If a high cost type project be confesses, the financier can immediately terminate the project to avoid more losses. On the contrary, if the cost type is concealed, the financier will sink more costs into it. Thus, soft budget constraint should be seriously considered in R&D investments. First, we capture the intrinsic uncertainty in R&D investment by introducing both cost and outcome uncertainties of R&D investment. Furthermore, we introduce the financier type and the executor¡¦s expectation of the probability that a high cost project would be refinanced ex post to establish a dynamic game of incomplete information. With this setup, we develop reputation effects from repeated R&D games. The incentive for the financier to avoid executor¡¦s opportunism by establishing reputation makes the commitment to hard budget constraint credible. Second, we attempt to develop a foundation for the concept of the SBC and to extend the analysis of SBCs to the contractual relationship of R&D investment. Information asymmetry is one important cause for contractual incompleteness, and the only one cause makes two legal contract theories unhelpful. Instead of relying on court enforcement, it is possible for the financier to leave contract terms unspecified and rely on a private self-enforcement mechanism. Writing down explicit contract terms can define the self-enforcing range by imposing a private sanction on the executer perceived to be violating the contract understanding. Such a self-enforcing relationship is a useful framework in which to analyze the SBC of R&D investment. In Chapter 5, we describe industrial R&D activities in China and uses statistics to calculate the softness of budget constraint. The main point of the R&D investment model is that the incentive for the financier to establish reputation increases as the probability of success decreases. With this point of view, given the probability of success for R&D projects in high-tech industries being lower than that in conventional industries, refinancing should be relatively more common in conventional industries than in high-tech industries. Statistics of R&D activities in China confirm the above proposition in that the computer-related industry has the hardest budget constraint compared to other industries within the state-controlled sector.

No description available.

Financial intermediaries are recognized to promote the efficiency of resource allocation by mitigating problems of incentives, asymmetric information and contract incompleteness. The role played by financial intermediaries is perceived so crucial that these institutions have received all over the world the greatest attention of regulators. Differences in regulatory regimes as well as in the real economies have produced a large variety in the characteristics of financial sectors and of individual intermediaries. In particular, in different places and times it is possible to observe banking sectors more or less competitive, populated by credit intermediaries of different sizes and with different levels of specialization. This variety of institutions raises interesting questions about the features of a well functioning financial intermediation sector. These questions have inspired an important body of economic literature which, however, is still inconclusive in many aspects. This dissertation includes three studies all intending to contribute in this direction. Chapter 2 Recent empirical works have found evidence consistent with larger banks having lower incentives to collect soft information and, in particular, to lend to small firms which are typically regarded as relatively opaque borrowers. Another market segment affected by relatively high levels of opaqueness is that of long-term loans and the reason is that, as emphasized in the corporate finance literature, short-term maturities are useful for the purpose of screening and monitoring investment projects. It is therefore interesting to assess whether large and small banks differ in their propensity to issue long-term loans, a type of investigation which has not been conducted yet. The reason why small and large banks might be expected to have a different propensity to issue long-term loans has to do with two notions. First, the effectiveness of a short-term maturity as a screening and monitoring device is preserved only if parties anticipate that, when payments are due, the lender will not be willing to extend the maturity, otherwise the initial short-term loan is de facto a long-term one. The problem may rise if the liquidation of insolvent firms produces lower payoffs than their refinancing: under these circumstances, as suggested by theories on renegotiation, liquidation is not implemented no matter what is written on the contract (parties can easily avoid the inefficiency that would result from liquidation, for example by simply granting a new loan). Second, at a more specific level theories on renegotiation suggest that the ability to commit to not extend thematurity decreases with bank size.1 Small banks are therefore predicted to issue shorter-term loans and to make a better selection of projects. The results are consistent with this prediction. Controlling for other characteristics of both the demand- and the supply-side as well as for the type of guarantee supplied, small banks have lower proportions of long-term loans to total loans and lower proportions of non performing loans to total loans. It should be pointed out that this does not imply that small banks are necessarily more efficient since short-term maturities also have costs; in particular, short-term maturities can interfere with the incentives of good types by inducing short-termism (the inflation of shortterm results at the expenses of total profitability). Moreover, beyond the ability to commit other supply-side features are shown to be relevant in the determination of the maturity, at least with specific classes borrowers. In particular, the findings are also consistent with the presence of economies of scale in lending at long maturities to firms in more technical and innovative industries. Since providing the right incentives to high quality entrepreneurs and to firms in innovative sectors is more likely to be a priority in more advanced countries, a policy implication is that these economies need more the presence of large credit institutions and the more so if venture capital and stock market are of limited size. Chapter 3 As already emphasized, theories on renegotiation suggest that the ability of banks to commit to a given course of action is an important factor for efficiency and that such ability depends on observable characteristics, like bank size. An important aspect which has not been analyzed in the theoretical literature is the effect that competition among banks exert on their ability to commit. The theoretical model presented in chapter 3 tries to provide an answer to this question. More specifically, the model studies the effects of competition among banks when these are subject to dynamic commitment problems which may result in excess refinancing of insolvent borrowers (soft budget constraint) as well as in excess termination of profitable ones (ratchet effect and short-termism). The building assumption is that, because of priority schemes and relationship lending, competition is harsher for new lending than for lending to ongoing projects. The main conclusion is that there exists a trade-off between the benefits that competition brings by disciplining low quality borrowers and the costs implied by worsening the incentives of good ones. The model also allows to look at the effects of competition on stability. This is done in two ways by looking at the extent to which competition interferes with the procyclicality of the banking sector and by studying if competition may eliminate or add inefficient equilibria. The main policy implication is that the optimal level of competition of a banking system is positively related to the quality of the underlying economy. If taken together, the results of chapters 2 and 3 also provide a theory about local or regional banks which is not based on any aprioristic assumption about the technology of these type of intermediaries. As long as these institutions can be seen as banks with a relatively high market power and a relatively small size (they are often important players at a local level although of limited size), both chapters 2 and 3 suggest that these intermediaries can more easily commit to a tough stance at the refinancing stage, with positive effects on their ability to screen out bad projects but with negative effects on their ability to incentivize good types and to fund more technical and innovative firms. In other words, these institutions might promote growth at earlier stages of development, although they are not sufficient to address the incentive issues of more advanced economies. Interestingly, this interpretation of the role of local banks is totally distinct from the traditional one which is based on the aprioristic assumption that these banks are good in doing relationship lending. Chapter 4 Conflicts of interest of economic institutions carrying out a variety of functions are considered a widespread phenomenon severely limiting the efficiency that can be achieved. These worries are often taken as justification for regulations imposing transparency requirements or tougher measures like separation of functions. At the same time, contract theory suggests that the effects of opportunistic behavior can be limited by adopting appropriate incentive schemes. The third study, chapter 4, tries to understand from a theoretical point of view to what extent the use of incentive schemes can address the distortions posed by the presence of conflicts of interest. The universal bank is regarded as a (common) agent serving different clients with potentially conflicting interests: for example, it may buy assets on behalf of investors and sell assets on behalf of issuing firms. The clients offer incentive schemes to the bank and they behave non-cooperatively. The bank decides a level of effort and, when firewalls are absent, a level of collusion, modelled as a costly and unproductive redistribution of wealth among the clients (for example, the banks can at no cost sell the securities it is underwriting to the funds it manages and can do so at the price it likes). Firewalls are defined as all legal or economic devices imposing a real separation of functions and therefore preventing the bank from colluding as specified above. The main conclusion is that in the absence of firewalls the equilibrium incentive schemes are steeper. This means that the equilibrium level of effort is higher and may compensate the (ex post) inefficiency of collusion. In other words, not only appropriate incentive schemes can eliminate the distortions posed by conflicts of interest but, at least in principle, their presence may even be necessary for efficiency (this happens if effort is a public good for the two principals so that the allocation without firewalls is characterized by under-provision of effort). At the same time, the allocation without firewalls is shown to be the least efficient in the presence of one naive player who does not recognize the existence of the conflict of interest. As long as transparency requirements can be considered tools to improve market participants’ sophistication, these results suggest why and how this type of regulation can work. Moreover, the model allows to draw conclusions about the desirability of tougher regulation prescribing a more or less neat separation of functions. With sophisticated economic agents, who can address the distortions posed by conflicts of interest by choosing appropriate incentive schemes, separation of functions is unnecessary or even detrimental for efficiency. On the other hand, more or less powerful firewalls are desirable if market participants are not considered sufficiently sophisticated to be able to react to the presence of conflicts of interest and if transparency requirements cannot increase their sophistication. In few words, the optimal regulation of conflicts of interest is softer in situations involving professionals who are more likely to realize and to react by choosing an appropriate incentive scheme or, more generally, for institutions operating in advanced economies where the average level of market participants sophistication is higher.

This thesis deals with the problems of optimal grading, employee performance evaluation by unaccountable managers, and the evolution of inequity-averse preferences. The purpose is to explain certain stylized facts related to these problems, and this is attempted with the help of contract-theoretic models. Chapter 1 of this thesis studies a teacher-student relationship as a principal-agent model with a costless reward structure. The model shows that the stylized fact of a mismatch and low correlation between students' abilities and their grades can be the expected-effort-maximizing outcome of teachers' optimal grading. Chapter 2 presents a three-tier model of a firm's economic organization, which is centered on the observation that managers do not fully internalize the payroll expenses they incur. With the idea that the degree of manager accountability varies inversely with firm size, the model predicts that the compression of ratings, the large-firm wage premium, and the inverse relationship between wage dispersion and firm size can actually be equilibrium outcomes. The last chapter presents an evolutionary argument for the endogeneity of people's preferences with respect to market exposure. It shows that aversion to income inequality observed empirically could have evolved as an optimal response to merchants' price discrimination. / <p>Diss. Stockholm : Handelshögskolan, 2009</p>

Cette thèse contient trois études sur le fonctionnement des banques.<p>Le premier Chapitre analyse empiriquement comment la capacité d’offrir des emprunts à long terme est influencée par la dimension des intermédiaires financiers.<p>Le deuxième Chapitre analyse, avec un model théorique caractérisé par la présence de soft-budget constraint, ratchet effect et short-termism, comment la pression compétitive influence la capacité des banque de financer le firmes ayant des projets de bonne qualité.<p>Le troisième Chapitre examine, avec un model théorique du type moral hazard common agency, le conflits d'intérêts des banques universelles.<p><p>Financial intermediaries are recognized to promote the efficiency of resource allocation by mitigating problems of incentives, asymmetric information and contract incompleteness. The role played by financial intermediaries is considered so crucial that these institutions have received all over the world the greatest attention of regulators.<p>Across and within banking sectors it is possible to observe a wide variety of intermediaries. Banks may differ in their size, market power and degree of specialization. This variety raises interesting questions about the features of a well functioning banking sector. These questions have inspired an important body of economic literature which, however, is still inconclusive in many aspects. This dissertation includes three studies intending to contribute in this direction.<p>Chapter 1 will empirically study the willingness of smaller and larger lenders to grant long-term loans which, as credit to SME's, constitute an opaque segment of the credit market. Chapter 2 analyzes, with a theoretical model, the effects of competition on the efficiency of the banking sector when this is characterized by dynamic commitment issues which brings to excessive refinancing of bad quality investments (so called soft-budget constraint) or excessive termination of good ones (ratchet effect and short-termism). Chapter 3 presents a model to investigate to what extent the distortions posed by conflicts of interest in universal banks can be addressed through the provision of appropriate incentive schemes by the different categories of clients. / Doctorat en Sciences économiques et de gestion / info:eu-repo/semantics/nonPublished

. / Corporate acquisitions are classified as part of “the market for corporate control” in which management teams are facing constant competition from other management teams. If the team that currently controls a company is not maximizing the value of the company’s assets, then an acquisition will likely occur and increase the value of the company by replacing its poor managers with good managers. This dissertation focus on two issues on mergers, the first compares the strategy between mergers and joint ventures. The second investigate how much liquidity should the acquirer preserve and what is the equilibrium price of the acquired firm in considering the merger strategy. Drawing upon the incomplete contract theory, I examine the criterion of the strategic choice between joint ventures (JVs) and mergers when two firms contemplate vertical integration. The model reaches the following conclusions: (1) some ownership provision to the acquired company after the mergers may prove to be more lucrative to the acquirer than 100% takeover; (2) given the same equity share arrangement for JVs and mergers I conclude that these two firms should choose to merge or be merged rather than JVs; (3) I derive the optimal equity share arrangement in both JVs and mergers when ownership provision is considered as a strategic means. In addition, I also compare the welfare and effort of both companies in JVs and mergers under symmetric cost structures, and find that mergers would provide greater social efficiency and welfare than 50-50 JVs when the acquirer’s equity share is between 30% and 65%. Firms are concerned that they may in the future be deprived of the funds that would enable them to take advantage of exciting growth prospects, strengthen existing investments or simply stay alive. I specifically examine a firm’s liquidity need in order to grasp any future opportunity of mergers and acquisitions. However, a firm’s manager (borrower) can shed his interim wrongdoings (misbehavior) under the pretext of further financial need for mergers and acquisitions because he knows that he can easily raise sufficient cash from lenders to cover any adverse shock. My study derives the conditions that when this soft-budget-constraint (SBC) problem will occur. It happens when the interim income is small. Moreover, I analyze how the purchase price of acquisition is affected by this soft-budget-constraint syndrome. If there is SBC problem, the acquisition price will be raised by the investors when the interim income is small. Besides, a firm with severe moral hazard problem will be merely able to offer a smaller purchase price for the acquisition. On the contrast, a firm with a stronger balance sheet will be able to secure a greater credit line and offer a more attractive price for the acquisition. The empirical study of U.S. firms during 1988 to 2006 supports my conclusions.