AIB 2012 Conference Proceedings - Academy of International ...

SUNDAY
Informality, Expropriation, and Corporate Governance
Matthew Grady Smith, Rutgers Business School
Poor investor protection and a large informal economy are both endemic characteristics of less developed
countries. In this study, I explore the links between corporate governance and participation in the informal
economy. In particular, I argue that hidden (or under-reported) sales income can be viewed simultaneously as
expropriation of shareholders and as participation in the informal economy. Building on the prior corporate
governance literature, I hypothesize that the decision to hide sales is related to two dimensions of ownership
structure: ownership concentration and affiliation with a business group. I also hypothesize that firms that
choose to cross-list on foreign exchanges will engage in less expropriation. Using panel data on publicly listed
Indian manufacturing firms, along with survey data, I find evidence that ownership concentration, business
group affiliation and cross-listing are all significantly related to the decision to hide sales. (For more information,
please contact: Matthew Grady Smith, Rutgers Business School, USA: matthewgradysmith@gmail.com)
Firm Size, Institutional Quality and the Impact of Securities Regulation
April Michele Knill, Florida State University
Douglas Cumming, York University
Nela Thomas Richardson, Bloomberg
We argue in this paper that it is appropriate to analyze the impact of regulation at the firm level due to
disparate effects of regulation across firm size and institutional quality. In support of this logic, we find
incongruent effects of regulation across both dimensions using a newly assembled dataset of 41,508 firms
across 46 countries spanning the years 1996-2007. In G10 countries where institutional environments are
relatively strong, we find that public enforcement facilitates small firm security issuance while private
enforcement benefits large firms more than small firms. In Non-G10 countries where institutional environments
are relatively weak and information asymmetries between firms and investors are more pronounced, the
marginal benefit of both public and private enforcement requirements are more pronounced for opaque smaller
firms. Stronger public enforcement gives rise to larger firms raising capital internationally both among G10 and
Non-G10 countries. (For more information, please contact: April Michele Knill, Florida State University, USA:
aknill@cob.fsu.edu)
Evolving Property Rights and Shifting Organizational Forms: Evidence from Joint-Venture Buyouts following
China's WTO Accession
Fariha Kamal, Center for Economic Studies, US Census Bureau
Mary E. Lovely, Syracuse University
China's WTO accession reduced incentives for joint ventures while reducing constraints on wholly owned foreign
subsidiaries and concurrently creating a more liberal investment environment for indigenous investors. Using
newly created enterprise-level panel data on equity joint ventures and changes in registration type following
China's WTO accession, we find evidence consistent with the property rights theory. More highly productive
firms with higher value added and lower domestic sales shares are more likely to become wholly foreign owned,
while less productive firms focused on the Chinese market are more likely to become wholly domestic owned
rather than remain joint ventures. (For more information, please contact: Fariha Kamal, Center for Economic
Studies, US Census Bureau, USA: fariha.kamal@census.gov)
The Disintegration of the German Directors' Network - An Empirical Discussion of the Impact of Domestic and
International Informal Institutions on the Convergence of Corporate Governance Systems
Dominik Boehler, Karlsruhe Institute of Technology
Jana Oehmichen, Georg-August University Göttingen
Marc Steffen Rapp, Philipps-University Marburg
Michael Wolff, Georg-August University Göttingen
AIB 2012 Conference Proceedings
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