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The Market for “Lemons”: Quality Uncertainty and the Market Mechanism
Abstract
This paper relates quality and uncertainty. The existence of goods of many grades poses interesting and important problems for the theory of markets. On the one hand, the interaction of quality differences and uncertainty may explain important institutions of the labor market. On the other hand, this paper presents a struggling attempt to give structure to the statement: “Business in under-developed countries is difficult”; in particular, a structure is given for determining the economic costs of dishonesty. Additional applications of the theory include comments on the structure of money markets, on the notion of “insurability,” on the liquidity of durables, and on brand-name goods.
... Asymmetric information plays a central theoretical role in corporate strategy (e.g., Balakrishnan & Koza, 1993;Vanhaverbeke, Duysters & Noorderhaven, 2002;Villalonga & McGahan, 2005;Higgins & Rodriguez, 2006;Schildt & Laamanen, 2006;Capron & Shen, 2007;Graebner, 2009;Zaheer, Hernandez & Banerjee, 2010;Cuypers, Cuypers & Martin, 2017;Humphrey-Jenner, Sautner & Suchard, 2017). Many corporate transactions are characterized by some level of information asymmetry, and this leads a less informed buyer to face adverse selection, or the risk of overpaying for assets (e.g., Akerlof, 1970;Ravenscraft & Scherer, 1987;Healy & Palepu, 1993;Healy & Palepu, 2001). It is also relatively well understood that the hazards associated with information asymmetry tend to be greater when the value of a transaction is significant to a buyer, and when the transaction is a one-off deal, rather than an ongoing relationship that will have buyers and sellers engage in repeat business over time (Riley, 2001). ...
... This work has applied the theoretical models of information economics originally developed for other markets to the M&A market context, in order to understand the antecedents and consequences of various aspects of M&A transactions. Specifically, M&A studies have relied on seminal research such as Akerlof's (1970) classic model of used car markets, Spence's (1973) model of signaling in labor markets, and Stiglitz's (1973) analysis of insurance markets (e.g., Reuer, 2009). The upshot of research on M&A is that under conditions of information asymmetry, deals may fall through, or alternative entry modes may be used, absent other remedies such as contractual provisions or payment structures to reduce the exposure of buyers to adverse selection risks (e.g., Balakrishnan & Koza, 1993;Kohers & Ang, 2000;Datar, Frankel & Wolfson, 2001;Gilson and Schwartz, 2005;Cain, Denis, & Denis, 2011;Reuer and Ragozzino, 2012;Macias and Moeller 2016;McCann, Reuer, & Lahiri, 2016). ...
... The theory of information economics provides important insights into the structure and functioning of exchanges in various markets. The early work of Akerlof (1970) in particular helped lay the theoretical foundations to understand adverse selection, which is a direct consequence of asymmetric information between buyers and sellers. In a nutshell, Akerlof relied on the market for used cars as the context of his analysis and proposed that in a world in which buyers cannot distinguish good and bad cars, buyers either refrain from buying cars altogetherin which case no cars are sold and markets do not clear -or they end up with cars having a low average quality. ...
... In fact, various market participants have varying levels of information. This information asymmetry leads to market inefficiency (Akerlof 1970). Spence (1973) proposed signaling theory to explain how people strive to mitigate the negative implications of information asymmetry. ...
... Customers' online customer reviews (OCRs) play a significant role in signaling valuable information to potential buyers, helping them avoid what economists call 'adverse selection' (Akerlof, 1970). It is crucial to note that OCRs are diverse and do not follow a uniform pattern. ...
... These studies align with signaling theory, which suggests that brands serve as important indicators of unobservable product characteristics, such as quality. Companies use these signals to reduce information asymmetry with consumers, aiming to enhance the efficiency of the exchange process (Akerlof, 1970). Marketing-mix research (e.g., Boulding & Kirmani, 1993;Cambier & Poncin, 2020;Volckner, 2008) further supports this idea, highlighting that signals from sellers, such as pricing, advertising, brand transparency, and warranties, not only reduce perceived risk but also positively influence buyers' perceptions of brand integrity and behavioral intentions by mitigating information asymmetry. ...
As a result of digitalization, consumers have more agency than in earlier times. Consumers now have the ability to express their consumption experiences through diverse online platforms by means of rating or providing written feedback. The ability to effectively decipher online customer reviews (OCRs) holds significant importance for businesses due to its far-reaching consequences. This research aimed to determine if review valence (RV) (the degree to which reviews are extremely positive or negative) was transmitted to purchase intentions via review helpfulness within the framework of signaling theory and cue-diagnosticity theory. The research also examined the presence of negative bias among customers when evaluating the valence of online customer reviews (OCRs) and its signaling ofreview helpfulness. Further, to determine if such an effect occurs within the boundaries of brand equity, an experimental study was conducted sequentially on two products: mobile phones and laptop computers. The study did not find negative bias among consumers concerning the assessment of RV. Further, the study supports an indirect effect of RV on purchase intention through review helpfulness. In addition, the results demonstrate that the referred effect is fully mediated by review helpfulness. Moreover, the results indicate that such an indirect effect is contingent on the brand's equity. The findings indicate that the RV has a significant effect on purchase intentions, particularly when brand equity is low. The study also discusses its managerial and research implications.
... Findings: Annual sales are sufficiently increased, companies send positive signals, leading to the issuance of more debt than equity (Akerlof, 1970;S. Ross, 1977;S. ...
... A regressão OLS foi empregada para determinar o impacto das oportunidades de crescimento nas decisões da estrutura de capital. Conclusões: As vendas anuais são suficientemente aumentadas, as empresas enviam sinais positivos, levando à emissão de mais dívida do que capital próprio (Akerlof, 1970;S. Ross, 1977;S. ...
... Se utilizó regresión OLS para determinar el impacto de las oportunidades de crecimiento en las decisiones de estructura de capital. Hallazgos: Las ventas anuales se incrementan lo suficiente, las empresas envían señales positivas, lo que conduce a la emisión de más deuda que capital (Akerlof, 1970;S. Ross, 1977;S. ...
Purpose: The purpose of the research is to determine the impact of asymmetric information on capital structure decisions. Theoretical framework: The perspective of the Pecking Order Theory (POT) suggests that managers are more informed about new investments than shareholders, making external financing issuance more prone to asymmetric information. Design/Methodology/Approach: The data was collected from companies in the mining or energy sectors listed on the Indonesia Stock Exchange during the period of 2007 to 2022, resulting in 647 observation units. Growth opportunities were proxied by total sales (Lang et al., 1996), and the debt ratio was used to measure capital structure decisions (Myers & Majluf, 1984). OLS regression was employed to determine the impact of growth opportunities on capital structure decisions. Findings: Annual sales are sufficiently increased, companies send positive signals, leading to the issuance of more debt than equity (Akerlof, 1970; S. Ross, 1977; S. A. Ross, 2005).. Companies follow the financing hierarchy when annual sales are lower than the signaling mechanism. Research, practical & social implications: Facts and empirical evidence have challenged the signaling and pecking order theories, leading to significant debates. The obligation of financial disclosure has resulted in a reduction of asymmetric information, consequently leading to an increase (decrease) in annual sales, which in turn causes a decrease (increase) in the debt ratio. Originality/Value: The value of the study was extended in Indonesia with abundant of natural resource (energy and mining).
... Ekonomik faaliyette bulunan tarafların sözleşme yapılmadan önce veya sözleşme yapıldıktan sonra ticarete konu olan söz konusu mal veya hizmet ile ilgili eşit seviyede bilgiye sahip olmaları simetrik bilgi kavramı ile açıklanırken taraflardan biri diğerine göre daha fazla bilgiye sahipse asimetrik bilgi kavramıyla açıklanmaktadır (Ünsal, 2005: 538). Asimetrik bilginin, ilk olarak George A. Akerlof (1970) tarafından yayımlanan makalede geçen bir kavram olduğu görülmektedir. Piyasalardaki alıcılar ile satıcılar arasındaki malın kalitesine ilişkin bilgi farklılığının piyasaların etkinliğini nasıl bozabileceği, otomobil piyasası 2 örneğinden hareketle ifade edilmiştir (Akerlof, 1970). ...
... Asimetrik bilginin, ilk olarak George A. Akerlof (1970) tarafından yayımlanan makalede geçen bir kavram olduğu görülmektedir. Piyasalardaki alıcılar ile satıcılar arasındaki malın kalitesine ilişkin bilgi farklılığının piyasaların etkinliğini nasıl bozabileceği, otomobil piyasası 2 örneğinden hareketle ifade edilmiştir (Akerlof, 1970). ...
Genişlemekte olan davranışsal finans literatürü, şirket haberlerinin/bildirimlerinin öncesinde-anında-sonrasında gerçekleşen yatırımcı tepkilerini ve dolayısıyla hisse senetlerinin fiyat hareketlerini Etkin Piyasa Hipotezi (EPH)’nin yarı güçlü formunun test edilmesi özelinde dikkatle ele almaktadır. Elde edilen bulguları fiyat anomalisi bağlamında değerlendirerek, ortaya çıkan irrasyonaliteyi yatırımcı önyargıları ve davranışsal finans modelleri ile açıklamaya çalışmaktadır. Bu çalışmanın amacı, kamuyu aydınlatma kapsamında gerçekleştirilen şirket bildirimlerinin/haberlerinin/duyurularının bilgi kullanıcıları ile piyasalar açısından önemini literatürdeki çalışmalardan hareketle ortaya koymak ve elde edilen bulguları davranışsal finans perspektifinde değerlendirmektir. Ulusal ve uluslararası literatürdeki çalışmalar, şirket bildirimlerine ve haberlerine yatırımcıların çoğu zaman rasyonaliten uzak tepkiler verdiğini ve bu durumların piyasaları yarı güçlü formda etkin olmaktan uzaklaştırdığını, söz konusu bulguların önemli bir kısmının fiyat anomalisi bağlamında davranışsal finans modelleri ile açıklanabileceğini göstermektedir.
... 41 Akerlof 1970, p. 493. 42 Akerlof 1970. 43 Akerlof 1970, p. 490. ...
... 499-500. 45 Akerlof 1970, p. 488. 46 Farber 1999 to [be underproduced by markets] because the producer is in no position to recapture the full benefits produced". ...
In this paper, it has been tried (where possible) to draw parallels between Akerlof’s ‘market for ‘lemons’’ theory and the so-called ‘marketplace of ideas’, specifically when it comes to a ‘bad product’ that in its current form appeared only recently on that ‘marketplace of ideas’, online ‘fake news’.
... The development of micro fundaments of modern investment theories originated from questioning that the proposition of symmetric interest rates for different kinds of agents remained coherent with the evidence. Akerlof (1970) suggested that problems related with information flow created a lemon's premium with regards to issuing shares, while Jensen and Meckiling (1976) pointed to the debt default premium that can emerge due to the conflict of interests among the companies' administrators and the owners and/or their stakeholders, called in the literature agency problems. ...
... From the questions proposed by Akerlof (1970) and Jensen and Meckiling (1976), some authors, taking part in new research programs proposed by the neo-Keynesian approach, have shifted their focus to better understanding the financial aspects about the decisions of economic agents. Stiglitz and Weiss (1981) proved that loan agents are unable to make a discrimination of prices between good and bad borrowers, exactly because of information asymmetry problems. ...
In this paper, we analyse several contributions made concerning
investment theory in the last decades. The objective of the paper is to
discuss the difficulties of the testable theory identified by Chirinko (1983),
Fazzari et al. (1988, 2000), Kaplan and Zingales (1997) and Hubbard (1998) to
better understand the results of empirical approach. These few authors we
worked with provided theoretical arguments and empirical evidences that
internal finance variable of the firms may work as an indicator of financial
constraint. In several developed countries, financing constraints has been
identified as important to understand the investment spending. The principal
indicator of financing constraints, that is, cash-flow has been questioned.
However, the evidences offer a support to its relevance. We try to justify such
evidence based on the few authors listed above, which have been quoted by
empirical works. We try to contribute to debate adding aspect of the corporate
finance to offer a logical explanation to econometric difficulties.
... Dois trabalhos são relevantes na argumentação dos autores acima. O primeiro é de Akerlof (1970) que sugeriu que problemas relacionados com a circulação de informações criariam um lemon's premium sobre a emissão de ações. O segundo é de Jensen e Meckiling (1976) que apontava para o debt default premium que pode surgir devido ao conflito de interesses entre os administradores das empresas e os proprietários e/ou os seus financiadores. ...
... A partir dos questionamentos propostos por Akerlof (1970) e Jensen e Meckiling (1976), um conjunto de autores, que mais tarde consolidaram o programa de pesquisa denominado de novo keynesiano, passou a se dedicar ao entendimento dos aspectos financeiros sobre as decisões dos agentes econômicos. 1 Stiglitz e Weiss (1981) mostraram que os agentes emprestadores não conseguem fazer uma discriminação entre bons e maus tomadores através do preço (juros) que organizaria a oferta e demanda por empréstimos. Com a seleção adversa alguns receberiam o capital demandado, outros teriam seus pedidos negados. ...
O objetivo do artigo é analisar a relevância da liquidez nas decisões de investimento a partir de trabalhos que estimaram os determinantes do dispêndio em ativos imobilizados segundo o crescimento do mercado, a lucratividade, liquidez, os empréstimos de longo prazo, de um lado, e as abordagem da estrutura de capital de outro. A hipótese do artigo é que os trabalhos empíricos as decisões de investir –
financiar na abordagem da teoria do investimento não traduziram a complexidade das decisões empresariais relativas à expansão dos ativos. Com esta hipótese procuramos contribuir com a literatura através da explicitação de como a variável liquidez concilia as decisões de investimento e de financiamento.
... O desenvolvimento dos micro-fundamentos das modernas teorias do investimento partiu do questionamento de que a proposição de taxas de juros simétricas para diferentes tipos de agentes mantinha-se coerente com as evidências. Akerlof (1970) sugeriu que problemas relacionados com a circulação de informações criariam um lemon's premium sobre a emissão de ações, enquanto que Jensen e Meckiling (1976) apontaram para o debt default premium que pode emergir devido ao conflito de interesses entre os administradores das empresas e os donos e/ou os seus financiadores, denominado na literatura de agency problems. ...
... A partir dos questionamentos propostos por Akerlof (1970) e Jensen e Meckiling (1976), um conjunto de autores, inseridos nos novos programas de pesquisa propostos pela abordagem novo-keynesiana, passam a se dedicar ao melhor entendimento dos aspectos financeiros sobre as decisões dos agentes econômicos. Stiglitz e Weiss (1981) mostraram que os agentes emprestadores não conseguem fazer uma discriminação de preços entre bons e maus tomadores, justamente devido aos problemas da assimetria das informações. ...
O objetivo do artigo é analisar a teoria do investimento a partir de trabalhos que estimaram os determinantes do dispêndio em ativos imobilizados segundo o crescimento do mercado, a lucratividade, liquidez e os empréstimos de longo prazo e as abordagens da estrutura de capital. A hipótese do trabalho é que a interdependência das decisões de investir —financiar na abordagem da teoria do investimento não traduziu a complexidade das decisões empresariais relativas à expansão dos ativos, por ignorar as abordagens sobre a estrutura de capital. Ao eleger a revisão da interdependência procuramos contribuir com a literatura a partir do significado da ação empresarial que tem o papel de conciliar as decisões de investir e financiar.
... Desse modo, empresas com maior nível de disclosure transmitem uma imagem positiva aos stakeholders, e em decorrência dessa maior transparência, o mercado tende a avaliá-las positivamente (Bushman & Smith, 2001). Diminui-se, assim, o risco de seleção adversa pela falta de informação, pois fornece sinais aos investidores que permitem diferenciar os bons dos maus investimentos (Akerlof, 1970). ...
... Entretanto, podem ocorrer casos em que as empresas evidenciem informações negativas de maneira voluntária; isso acontece quando os gestores percebem que serão mais penalizados pelos investidores se não divulgarem tais informações (Murcia & Santos, 2009), pois com um menor disclosure surge o problema de seleção adversa, na qual, na ausência da informação, os usuários não conseguem diferenciar empresas boas de empresas ruins (Akerlof, 1970). ...
Esta pesquisa teve como objetivo analisar a influência do disclosure dos fatores de risco no value relevance das empresas brasileiras participantes do novo mercado. Para tanto, foram utilizados dados anuais de empresas não financeiras durante o período de 2016-2020, totalizando 506 observações. O disclosure dos fatores de riscos foi mensurado por meio da análise de conteúdo nos formulários de referência, tomando por base um checklist elaborado a partir das exigências da Instrução Normativa CVM nº 552/2014. Buscando analisar o value relevance dessa divulgação para o mercado brasileiro, foi utilizado o modelo adaptado de Ohlson (1995). Os resultados encontrados por meio da análise de regressão por efeitos fixos demonstraram que as divulgações dos fatores de riscos não apresentaram uma relação significativa com o preço das ações. Portanto, não possuem value relevance. Essas evidências demonstram que os investidores podem não estar considerando este tipo de informação quando estão avaliando os ativos. Desse modo, não foi possível validar a hipótese formulada que o disclosure dos fatores de riscos possui value relevance para o novo mercado da B3. Estes resultados, portanto, demonstram que, no contexto analisado, o empenho dos órgãos reguladores por um aumento na evidenciação dos riscos não trouxe ganho informacional para os stakeholders. Estes achados são relevantes, pois indicam para as empresas a necessidade de reflexões sobre a forma como a informação é evidenciada, fornecendo informações mais específicas que permitam os investidores avaliarem a gravidade dos riscos que as empresas estão expostas.
... See Cullen, Long, and Reback (2013) for an empirical analysis. 4 a market breakdown in Akerlof (1970), here, good types, when perceived as such, make competition for scarce grants tougher and thus drive out bad types. But as applications decrease, the pool of grants is proportionally reduced so that top types dig their own grave. ...
... Unraveling start at the bottom of the distribution, where applicants hold out anticipating they stand no chance of winning, thus reducing the budget available for the top applicants. In the end, symmetric information destroys incentives for costly participation in this nonmarket environment, turning on its head Akerlof's (1970) classic insight that asymmetric information reduces incentives for market participation. ...
The paper develops a model of nonmarket allocation of resources such as the awarding of grants to meritorious projects, honors to outstanding students, or journal slots to quality publications. On the supply side, the available budget of grants is awarded to applicants who are evaluated most favorably according to the noisy information available to reviewers. On the demand side, stronger candidates are more likely to obtain grants and thus self-select into applying, given that applications are costly. We establish that if evaluation is perfect, grading on a curve inefficiently discourages even the very best candidates from applying. More generally, when the budget is insufficient to award grants to all applicants, the equilibrium unravels if information is symmetric enough-the paradox of relative evaluation. Leveraging a technique based on the quantile function pioneered by Lehmann, we characterize a broad set of nonmarket allocation rules under which an increase in evaluation noise in a field (or course) raises equilibrium applications in that field, and reduces applications in all other fields. We empirically confirm this comparative statics by exploiting a change in the rule for apportioning the total budget to applications in different fields at the European Research Council, showing that a one standard deviation increase in own evaluation noise leads to a 0.4 standard deviation increase in the number of applications and budget share. Moreover, we derive insights for the design of evaluation institutions, particularly regarding the endogenous choice of noise by fields or courses and the optimal aggregation of fields into panels. JEL: D83, H81, I23.
... Nevertheless, it is important to acknowledge a few THPs that genuinely share relevant information in their advertisements to educate the masses. Otherwise, due to TM conmen whom Arkelof et al describe as 'lemons', who make exaggerated claims, the good 49 THPs could be getting silenced. According to Arkelof 'In a market for a good with different qualities and where quality information is asymmetrical, better 49 products may be driven out by worse ones'. ...
... Otherwise, due to TM conmen whom Arkelof et al describe as 'lemons', who make exaggerated claims, the good 49 THPs could be getting silenced. According to Arkelof 'In a market for a good with different qualities and where quality information is asymmetrical, better 49 products may be driven out by worse ones'. Since TM is a credence good with varying qualities of safety and effectiveness, it particularly gets hard for TM users to vet the genuine THPs or TM. ...
While extant literature highlights several motivations for Traditional Medicine (TM)
usage; few studies have examined how promotions and information asymmetries influence traditional medicine usage behaviors. This study aimed to map out information biases underlying the marketing and promotion of Traditional Medicines in Central Uganda and explored the dimensions of attitudes and usage behaviors of TM users.
... As a result, lower or average-risk clients could be inclined to purchase less life insurance or be driven out of the insurance market completely due to high prices [26]. Perpetual information asymmetry has been argued to result in market failure [27]. However, there is no evidence, to our knowledge, that suggests life insurance industries in jurisdictions which have restricted or banned the use of genetic test results have been compromised [3,28]. ...
... Among our participants, there was considerable variation in: a) awareness and knowledge of the Moratorium; b) perspectives on GD and the moratorium's effectiveness; and c) opinions and views regarding the best approach to regulating GD. While most participants were supportive of the Moratorium as a potential mechanism to reduce GD, some participants raised concerns about the life insurance industry's sustainability, consistent with arguments raised by proponents of permitting GD [27,26,1]. Similarly, some participants perceived the Moratorium to be ultimately redundant. While insurers are prohibited from asking for genetic test results directly, as has been described in the Canadian context, these prohibitions do not extend to broad questions relating to family and medical history [46]. ...
Introduction:
Genetic discrimination (GD) in the context of life insurance is a perennial concern in Australia and internationally. To address such concerns in Australia, an industry self-regulated Moratorium on Genetic Tests in Life Insurance was introduced in 2019 to restrict life insurers from using genetic test results in underwriting for policies under certain limits. Financial advisers (FAs) are sometimes engaged by clients to provide financial advice and assist them to apply for life insurance. They are therefore well-placed to comment on GD and the operation of the Moratorium. Despite this, the financial advising sector in Australia have yet to be studied empirically with regards to GD and the Moratorium. This study aims to capture this perspective by reporting on interviews with the financial advising sector.
Methods:
Ten semi-structured qualitative interviews were conducted with FAs and key informants and analysed using thematic analysis. Discussion/ conclusion(s): Participants' level of awareness and understanding of the Moratorium varied. Participants reported mixed views on the Moratorium's effectiveness and how it operates in practice, and perceived industry compliance. Participants also provided reflections on Australia's current approach to regulating GD, with most participants supporting the concept of industry self-regulation but identifying a need for this to be supplemented with external oversight and meaningful recourse mechanisms for consumers. Our results suggest that there is scope to increase FAs' awareness of GD, and that further research, consultation and policy consideration are required to identify an optimal regulatory response to GD in Australia.
... Existe una creciente literatura que explora el rol de la información asimétrica en la definición de contratos, y el papel del gobierno para corregir las fallas de mercado implicadas por la presencia de selección adversa. La mayoría de los autores ubica el trabajo de Akerlof (1970), "el mercado de los limones", como la obra que inicia la discusión sobre los efectos de selección adversa. En un contexto de información asimétrica, para el caso de los mercados de crédito, el trabajo de Stiglitz y Weiss (1981) establece los lineamientos de modelos en los cuales la selección adversa puede inducir racionamiento de crédito. ...
Este artículo evalúa las implicaciones en el corto plazo de las expectativas cambiarias en mercados de crédito, afectados por problemas de selección adversa, y modela un mercado de crédito donde los contratos de deuda son contingentes en el ingreso de los prestatarios. Los activos riesgosos que estos últimos poseen están denominados en moneda extranjera y su valor en libros, estipulado en los contratos de deuda, se traduce usando las expectativas sobre el tipo de cambio basadas en las premisas del análisis técnico. Este artículo muestra que la información pública, generada por la tendencia adversa del tipo de cambio, mueve al mercado de crédito hacia un equilibrio donde la inversión y el crédito se contraen, y definen el espacio para la intervención del gobierno. En este contexto, el gobierno responde a la información generada por la tendencia del tipo de cambio e incrementa el tamaño de programa, a fin de estabilizar las variaciones en la tasa de interés, lo cual evita que la inversión y la liquidez se reduzcan.
... The theory of signals propounded by Akerlof (1970) and based on the assumption that individuals and organizations have imperfect information about each other's motivations and behaviors and therefore rely on signals to infer the underlying characteristics of the other party suggests that the IFRS adoption can impact the signaling behavior of firms. This is because the increased credibility and reliability of financial statements resulting from IFRS adoption reduces the need for firms to engage in EM practices to signal their financial position to investors (Houqe et al., 2012). ...
This study aims to examine the impact of International Financial Reporting Standards (IFRS) adoption on financial reporting quality in Saudi Arabia, with a specific focus on the mediating role of effective audit committees (ACs) and the specific characteristics of ACs that have a negative correlation with earnings management (EM) practices. The research collected financial data from 92 listed firms spanning the period from 2012 to 2020 encompassing both the years before and after the IFRS adoption in 2017. The study used regression and rigorous mediation analysis based on the Baron and Kenny (1986) approach to investigate the relationship between IFRS adoption, ACs, and EM. The findings indicate that IFRS adoption has a negative and significant impact on EM practices. Additionally, the study found that AC expertise is positively influenced by the IFRS adoption, while the AC size has a positive correlation with EM levels. The study further revealed that AC expertise has a negative correlation with EM levels and fully mediates the relationship between IFRS adoption and EM. The research's findings carry significant practical implications for a range of stakeholders. Regulators and policymakers in Saudi Arabia should consider the positive impact of IFRS adoption on financial reporting transparency and accountability when evaluating their regulatory framework. Firms can strengthen their corporate governance practices by focusing on the recruitment and training of AC members with robust financial and accounting backgrounds. This emphasis on AC quality, rather than size, is crucial to mitigating EM practices and enhancing the effectiveness of IFRS implementation. Lastly, investors and analysts can utilize these findings to assess the reliability of financial statements and identify firms with robust governance structures. Furthermore, the study contributes to the discourse on financial reporting and governance dynamics in emerging markets, offering insights for future research and policy discussions.
... Asymmetric information was introduced by Akerlof (1970). This refers to the state of an institution not displaying information or where information is hidden and players don't access the true information. ...
Microfinance Institutions (MFIs) services and activities in Kenya have helped the country reduce its poverty rate, but the country is still among the poorest in the world. Microfinance institutions in Kenya have also reported capital risk in terms of pricing since they have less flexibility to adjust prices due to their financial structure. The main objective of the study is to establish the influence of capital risk on the financial performance of microfinance institutions in Kenya. The study used a descriptive survey research design with a target population of 12 MFIs listed under the Central Bank of Kenya (CBK). The study used a census approach to sample the entire population. The study used secondary data from published CBK reports over a 7-year period from 2015 to 2021. Descriptive statistics are comprised of skewness, kurtosis, and jarque bera. Inferential statistics used were Pearson correlation and hierarchical regression. A study on financial risk factors and financial performance may be of value to the government in policy formation. The microfinance act policy formulators can use the study to ascertain contagious issues that need to be addressed, especially how to handle capital risk challenges. The study may assist the management of microfinance institutions in establishing the problems facing financial risk factors in their sector. Capital risk had a significant positive effect on the financial performance of the Nairobi Securities Exchange in Kenya (t =0.0346763, p<0.05). This model produced an R square of 0.378, implying that 3.78% of the variation in the risks of microfinance institutions is significantly affected by capital risk. Regarding microfinance size, the incorporation of IV*MV, thus interaction terms, moved R squared from 0.337 to 0.378, hence an increase of 0.041. The P value of 0.024 and an R squared increase of 0.041 shows that microfinance size has a moderatingly significant effect on the relationship between capital risk and the financial performance of microfinance institutions. The study rejected the null hypothesis. The findings guided the following recommendations: It was found that capital risk has a significant impact on financial performance; hence, microfinance firms should improve their assets so as to minimize the risks associated with their capital base.
... For credence attributes, consumers have to rely on information provided by manufacturers, retailers, or other external parties. If there is uncertainty or doubt about the quality of the information, consumers are less willing to pay higher prices, and suppliers lack incentives to oer higherquality products (Akerlof, 1970). ...
The German Minister of Food and Agriculture has initiated a mandatory state label for animal husbandry, revealing the livestock production conditions. This study investigates consumer preferences and their willingness to pay price premiums for pork depending on the di_erent husbandry conditions indicated by this label. We tested the originally planned label, as well as a modi_cation with additional information on the available living space for the animal, a modi_cation with additional interpretive information (i.e., with colours indicating how a product scores on animal husbandry standards), and a combination of both modi_cations. Data were obtained from a representative online discrete choice experiment (N = 2.015) in Germany and analysed using random parameter logit modelling. Our results show that the label proposed by the government is e_ective in increasing the willingness to pay for meat produced with higher standards, except 'organic' level. Furthermore, we show that indicating a ranking of husbandry conditions could further increase the willingness to pay for meat produced with higher husbandry standards.
... However, despite the voluminous coverage of CEO compensation in these literatures, the role of professional board-CEO ties in the setting of new outsider CEO compensation has not been fully explored. Professional board-CEO ties are important because boards are challenged in determining how to appropriately compensate a new outsider CEO where less is known about their characteristics or capabilities (Akerlof, 1970). One means for boards to resolve this issue and gather additional relevant background information on prospective CEOs is for directors to use their professional networks and relationships to refer CEO candidates to board nominating committees (Cziraki & Jenter, 2021;Khurana, 2002). ...
Do directors utilize their relationships with prospective CEOs to determine new CEO compensation in the interests of investors? Or are new outsider CEOs empowered by their relationships with directors to negotiate compensation in their own interests? This study addresses these questions by examining the impact of board/CEO ties in 1,173 outsider CEO successions on a range of short-and long-term, performance-related CEO compensation ratios. Results show that new outsider CEOs in the United States and other common law founded Commonwealth countries can leverage their relationships with directors to restructure compensation in their own interests and against those of investors.
... If we define trust as the likelihood an individual attributes to the possibility of being cheated (as defined in Guiso, Sapienza, & Zingales, 2008), we may better understand the greater dependence of minorities on their families in contrast to a product sold by an insurance salesman. Within a principal-agent theoretical framework, an individual's level of trust may affect financial decisions (Akerlof, 1970), including the decision to purchase life insurance. Exchange systems involve a series of individual actions based on assymetric information. ...
This study uses the 1992–2010 Survey of Consumer Finances to analyze whether the likelihood of life insurance ownership and the face value amount of life insurance changes for minorities as household size changes. We find that the likelihood of life insurance ownership declines for Black and larger Hispanic families as household size increases when controlling for a variety of socioeconomic and demographic variables. There is also a significant decline in the face value amount of term life insurance purchased by Black families as household size rises. We provide possible explanations for these effects and also discuss implications for financial planners.
... (2019), and Singla and Samant (2019). The findings is consistent with signaling theory that a more profitable firms payout more dividend to shareholders of the firm (Akerlof, 1970;Bhattacharya, 1979). Whereas, firm size show a significantly negative impact on dividend policy which is inconsistent with the expected hypothesis. ...
Dividend policy decision is a puzzling phenomenon in finance literature. This study intends to examine the considerable factors of dividend policy among the non-financial listed companies in Pakistan. The research study intends to explore the influence of firm and country level determinants on the dividend in Pakistan. To achieve the objective, this study collected 134 Pakistani non-financial firms' data from 2000 to 2017 using POLS and FE approach. The results found that profitability and corporate tax have influencing and positive effect, while size of the firm and investment opportunities shows significantly adverse influence on dividend policy at firm level factors. Under country level factors, inflation, stock market development, and debt market development have negative impact, however political risk has positive influence on dividend policy. This study is beneficial for the board of directors and management of organizations to establish adequate dividend policy for the organization. It will also be useful for stakeholders of the organization regarding investment decision.
... This theory first proposed by George Akerlof (1970), information asymmetry theory holds that in the event that one party to a potential transaction is more informed than the other, markets can fall apart completely; in the context of financial services, it may be difficult to distinguish good from bad borrowers, Richard, (2015), which may result into adverse selection and moral hazard problems. The party that has more information on a specific item to be transacted is in a position to negotiate optimally for the transaction than the other party (Nenbee et al.,2022). ...
This ex post facto research study examines the effect of loan asset classifications and the impacts of substandard, doubtful, and loss loans on the financial performance of listed deposit money banks in Nigeria. The studied Population included all 14 deposit money banks listed on the Nigerian Stock Exchange (NSE) within the period of 2008 to 2019. The study purposively sampled 10 out of the 14 banks for the purpose of data collection and employed multiple regression analysis of data collated from the annual financial reports of the sampled banks within the studied period. In view of the absence of cross-section effect in the dataset, the pooled independent OLS regression was chosen for analysis and interpretation, revealing that the combined outcome of substandard (SSL) and loss loans (LL) variables are significantly related with the financial performance of listed deposit money banks in Nigeria, while doubtful loans show an insignificant effect on financial performance. The study concludes that bank loans are strong predictor of financial performance in Nigeria, thus it is recommended that banks should eradicate weaknesses such as underwriters’ initial failure to adequately assess borrower risk level prior to issuing loans and to subsequently successfully enforce repayment of the loans.
... Thus, deception is one of the major properties of selfish acts by an economic agent. For example, Akerlof [37] found that car sellers always lie for their own benefit in cases of asymmetric information. A similar argument in mechanism design [38] says that people trust if there are scopes for material outcomes as incentives. ...
... Visto de otra manera, sugiere que el poseedor de mejor información "señala" directamente al mercado para obtener algunos beneficios económicos, como la financiación en los mercados de capitales, por lo tanto, las empresas se muestran al mercado con un auditor que otorgue mayor fiabilidad a sus informaciones. Sumado a esta idea, desde los setenta se advierte los riesgos de las asimetrías de información dan lugar al problema de selección ad-versa, y por lo tanto, cambia las opiniones de los actores que operan en el mercado impidiendo un funcionamiento correcto de los mercados de capitales (Akerlof, 1970). Por lo tanto, para minimi-zar asimetrías, el uso de una firma multinacional en grupos empresariales provocaría una natural concentración del mercado del auditor. ...
The audit market is of international relevance and gives confidence to the markets. The Big Four firms (from now on, B4) have a global scope, prestige, and turnover that are not alien to the interest of concentrating important client portfolios. This study reviews 13 years of B4 participation in the 29 IPSA companies in Chile and includes 348 audit reports consulted. The objective is to understand the level of market concentration, reveal the story of firm and partner rotation, female participation at the signing partner level, and describe the status of the reports. The results show a high concentration of B4s in IPSA, low firm/partner turnover, low female presence, and partners exceeding time for the same entity. This study provides empirical data on this industry in Chile and proposes a discussion on the importance of auditor rotation.
... Both public and private systems suffer from information asymmetry between doctors and patients (Akerlof, 1970). However, private systems may attract risk-taking doctors who prioritize performance metrics, potentially leading to higher mortality rates (Pauly, 1980). ...
This article aims to compare mortality rates in public and private healthcare systems across various countries, drawing upon a wealth of academic literature and empirical studies. It explores the impact of healthcare system type on patient outcomes, particularly mortality rates, and discusses the complexities and challenges inherent in each system. The article concludes with recommendations for future research and policy implications.
... Common to economic knowledge is that asymmetric information, which is analogous in some re spects to market power, results in market inefficiencies including a lack of competitive equilibria. 19,20 In other words, asymmetric information can enable individuals or companies to sell sub-optimal products or ser vices at higher prices. ...
Legislation such as the Affordable Care Act and the American Recovery and Reinvestment Act of 2009 have greatly influenced electronic health information (EHI) and health economics. These laws had four primary effects: (1) induce market entry in health information technology (HIT), (2) diminish (marginal) EHI system functionality, (3) enable market and information asymmetry through incentive structures, and (4) increase market complexity. The more recent Interoperability and Patient Access final rule and the 21 st Century Cures Act final rule aim to improve healthcare interoperability and transparency as well as empower physicians and patients. These federal rules implicitly charge physicians with the responsibility to advocate for and help shape better EHI systems, which are a vital and universal tool for healthcare providers. Healthcare efficiency could be advanced by decreasing orga nizational complexity and increasing EHI interoperability. This overview aims to provide some degree of illumination into EHI and its relevant legislation and economics.
... It is evident from theoretical and empirical literature that financial markets react differently to positive and negative shocks. Moreover, asymmetry does exist in financial markets due to information asymmetry (Hatemi-j, 2012, Akerlof, 1970Spence, 1973). Third, most of the existing studies have neglected the multidimensional nature of FD and have largely used univariate measures of FD. ...
Purpose
This study examines the possibility of asymmetric impact of inflation on the financial development (FD) in the case of Indian economy from 1980 to 2020. Moreover, the finance–growth hypothesis is also tested.
Design/methodology/approach
The authors incorporated the “Nonlinear Autoregressive Distributed Lag” (NARDL) model due to Shin et al. (2014) to investigate the asymmetric impact of inflation on financial development. Asymmetric cumulative dynamic multipliers are also used to track the traverse of any short-run distortion towards the long-run cointegration.
Findings
The results revealed that inflation impacts the financial development negatively whereas the economic growth (EG) and trade openness have a positive effect. However, the effect of inflation on financial development is not symmetric. Moreover, the findings support the demand-led growth hypothesis.
Originality/value
To the best of the authors' knowledge, this is the first study examining the asymmetric effects of inflation on financial development in the Indian context. In addition, instead of using a single proxy to measure financial development, an index for financial development encompassing different aspects of the financial system has been incorporated.
Peer review
The peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-02-2023-0094
... Information asymmetry among individuals within the working-age population may lead to sub-optimal employment outcomes. Information symmetry ameliorates against failure of the labor market [1,2,3]. Social capital is a resource that could support the flow of information in the labor market by linking individuals to available job opportunities and their features and thus bridging information gaps in the labor market. ...
... Second, in 24 Also, an implicit assumption, which is important for our analysis, is that the originator cannot sell the patent for the original product to an outsourcing firm. One reason such a strategy might not be feasible is the existence of private information on the part of the originator concerning the value of related products, and the resulting adverse selection problem, as in Akerlof (1970), which prohibits the possibility of trade. ...
... This paper is founded on the Information Asymmetry Theory. Akerlof (1970), proposed the concept of Information Asymmetry. The principle of asymmetric information suggests that differentiating between favorable and undesirable consumers may be difficult (Richard, 2016) and due to this, borrowers with unethical tendencies or loan nonpayment issues may not be flagged in time. ...
The Kenyan microfinance industry faces many challenges. Studies point to nonperforming loans as one of the main problems facing microfinance institutions in Kenya, which has led to reduced profitability and institutional collapse in some cases. Noncompliance with credit monitoring and loan policy provisions have been cited as some of the factors leading to increased nonperforming loans. The main objective was to determine the effect of credit monitoring on nonperforming loans among microfinance institutions in Nairobi County. Information Asymmetry theory guided the study. The study's main goal was to assess how credit management methods in Nairobi County's microfinance institutions influence the amount of nonperforming loans. The study employed correlation research design where a quantitative approach was adopted. Stratified proportionate random sampling was adopted where data was obtained from 48 microfinance institutions in Nairobi County. The population constituted 192 respondents comprising general managers, credit managers, finance officers, and accountants. The study sampled 128 staff who responded to questionnaires designed on a 5-point Likert scale. Data were subjected to analysis by use of SPSS, where correlation demonstrated possible relationships of variables while regression predicted the effects of changing variables on the defaulted loans. The study found that there was a positive significant effect of credit monitoring practice (β=-0.498, t=-5.099, p< 0.05). The null hypotheses were rejected and alternative hypotheses were accepted that credit monitoring practice had a significant influence on loan nonperformance among microfinance entities in Nairobi County, Kenya. Based on the findings of the study, the researcher recommends that microfinance entities should strengthen credit-monitoring practices to minimize debt writing off and loan nonperformance.
... King, Lenox, and Terlaak (2005) find that suppliers' certification with the ISO 14001 management standard reduces problems with exchange partners that lack essential information or fear opportunism. In cases of highly asymmetric information, client firms may find it more challenging to identify and monitor desirable providers, leading to 'selection problems' (Akerlof, 1970). Host locations characterized by suppliers with high information asymmetry, from the perspective of the potential client investor, would be less likely to receive inward investments (King et al., 2005). ...
We explore the evolution of Africa’s business process outsourcing (BPO) industry. In so doing, we seek to derive policy and managerial implications on how African suppliers can grow and become more attractive to foreign multinational corporations (MNCs). We discuss insights from the literature on (BPO) clusters and how these evolve. Our conceptual arguments are supported by a case study of the evolution of the Kenyan BPO cluster through three broad stages: embryonic, early, and developmental. We argue that this evolution has been hampered by factors including the small and sometimes informal nature of local suppliers, the reluctance of foreign multinationals to make long-term commitments, and the intermittent devotion by the Kenyan government to supporting BPO clusters. Accordingly, we suggest direct and indirect policy initiatives to grow the industry toward a more mature stage, increase knowledge spillovers and formalization levels, and improve working conditions.
... I juni 2023 ble verdien av Erling Braut Haaland anslått til 2,9 milliarder kroner (Folvik, 2023). 40 Uttrykket er hentet fra en berømt artikkel av George Akerlof (1970), der lemons referer til dårlige bruktbiler. Som i et bruktbilmarked vil en klubb kunne ha interesse av å selge de dårlige spillerne. ...
Artikkelen tar for seg for to former for intellektuell eiendomsrett: patentrettigheter i farmasøytisk industri og internasjonale TV-senderettigheter i fotball. I begge tilfeller utvikles globale markeder som også krever global regulering. Inntektene som skapes, blir høye og veldig konsentrert. Samtidig kan selv en mindre omfordeling av rettigheter bidra til kraftig utjevning av inntekter og muligens økt global velferd. Abstract in English:Intellectual Property Rights and Global Distribution – TRIPS, Soccer and Pharmaceutical IndustryThe article explores two forms of intellectual property rights: patents in the pharmaceutical industry and international broadcasting rights in the football industry. In both cases, global markets evolve demanding global forms of regulation. The outcome is extreme concentration of high incomes. Adjustments in the allocation of property rights may contribute to significant leveling of incomes globally and, possibly, improved welfare.
... " 28 See, e.g., Levitt 1970;Santilli 1983;Goldman 1984;Waide 1987;Philips 1994;Lippke 1999;Attas 1999. 29 For critical discussions see, e.g., Wu 2016 andAkerlof andShiller 2015, chap. 3. Putting the Market in Its Place 153 is something I here cannot discuss. ...
Many democratic societies struggle with issues around knowledge: fake news spreads online and offline, and there is distrust of experts, but also fear of technocratic tendencies. Citizen Knowledge discusses how knowledge, understood in a broad sense, should be dealt with in societies that combine a democratic political system with a capitalist economic system. How do citizens learn about politics? How do new scientific insights make their way into politics? What role can markets play in processing decentralized knowledge? The book takes on the perspective of “democratic institutionalism,” which focuses on the institutions that enable an inclusive and stable democratic life. It argues that the fraught relation between democracy and capitalism gets out of balance if too much knowledge is treated according to the logic of markets rather than democracy. Complex societies need different mechanisms for dealing with knowledge, among which markets, democratic deliberation, and expert communities are central. Citizen Knowledge emphasizes the responsibility of bearers of knowledge and the need to support institutions that support active and informed citizenship. It develops the vision of an egalitarian society that considers the use of knowledge in society not a matter of markets, but of shared democratic responsibility, supported by epistemic infrastructures. It contributes to political epistemology, a new subdiscipline of philosophy, with a focus on the interrelation between economic and political processes. It analyzes the current situation, drawing on the history of ideas and on systematic arguments about the nature of knowledge and epistemic justice, developing proposals for reforms.
... Together with the slow flow of genetic material this constitutes one of the major buffers against industry capturing the gains of innovation. This problem coincides with those that inspired Akerlof's (1970) theory concerning the market problems of 'quality and uncertainty', because in the radiata pine structural sawlogs market buyers use basic data with high uncertainty to judge the quality of prospective purchases. ...
Trees in breeding programmes are often selected at 1/4–1/3 of rotation, called ‘early selection’, which is typically between 8 and 10 years in radiata pine. However, differences between populations and genotypes selected for either basic density or wood stiffness are already apparent at age 2. We report the application of very early screening techniques for wood properties in the New Zealand Radiata Pine Breeding Programme deployment populations. Approximately 3000 trees representing three populations with 92 families and 10 clones were grown in a common garden trial, leaning for 21 months to separate compression and opposite wood. The trees were harvested and analysis carried out separately by wood type. The trial showed the existence of large variability in wood properties at early age, in some cases similar to variability near rotation age, and moderate to high degree of genetic control (0.35≤h2≤0.71\documentclass[12pt]{minimal} \usepackage{amsmath} \usepackage{wasysym} \usepackage{amsfonts} \usepackage{amssymb} \usepackage{amsbsy} \usepackage{mathrsfs} \usepackage{upgreek} \setlength{\oddsidemargin}{-69pt} \begin{document}$$0.35 \le h^2 \le 0.71$$\end{document}). The genetic association between traits was strong, particularly between wood stiffness and longitudinal shrinkage (-0.69\documentclass[12pt]{minimal} \usepackage{amsmath} \usepackage{wasysym} \usepackage{amsfonts} \usepackage{amssymb} \usepackage{amsbsy} \usepackage{mathrsfs} \usepackage{upgreek} \setlength{\oddsidemargin}{-69pt} \begin{document}$$-\,0.69$$\end{document}) and between longitudinal and volumetric shrinkage (0.83), suggesting that improving stiffness would also have a strong effect on improving dimensional stability. Basic density was also associated with stiffness and shrinkage, but with lower predictive capacity. These results can be used for roguing deployment populations-which already contain superior growing trees-and quickly upgrade the wood quality of seeds and clones currently available to New Zealand forest growers. We discuss necessary modifications to turn this research work into operation to screen any new material before commercial release.
... Seit einer Studie von Bebchuk und Kahan (2000) 16 , die im Schrifttum vielfach aufgegriffen wurde (Wenger et al., 2001, S. 323;Helmis & Kemper, 2002, S. 524 ff.;Goshen & Wiener, 2003;Subramanian, 2005, S. 35 f.;Winner, 2008, S. 468;Ruthardt, 2014, S. 65), ging es vielmehr um die Frage, welche Wirkung diese Option auf den Börsenkurs hat. In Adaption des nobelpreisgekürten "Lemon"-Ansatzes von (Akerlof, 1970) Indessen geht die Bedeutung der Kaufoption der Hauptaktionärin noch weiter, denn kein Minderheitsaktionär würde bei klarem Verstand freiwillig die unbefristete Stillhalterposition übernehmen (Fleischer, 2002, S. 769), ohne eine Kompensation dafür zu erhalten. Der Wert dieser Option ist offensichtlich davon abhängig, zu welcher Abfindung die Hauptaktionärin den Squeeze Out vollziehen darf. ...
Whether Secs. 327 b, c and f AktG, which are important beyond their direct reference to the squeeze-out under stock corporation law, ensure sufficient protection of the property of excluded minority shareholders is controversial, but has been largely confirmed de facto by the Federal Constitutional Court. The article shows that any undervaluation problems have a retroactive effect on the main shareholder's exceeding the minimum threshold in the share capital, because at this point an uncompensated call option arises. As a consequence, in the case of compensation, the stock market price must be rejected as a valuation method, as must the legal recognition of constructions that further increase the value of the squeeze-out option.
Ob die über ihre unmittelbare Referenz auf den aktienrechtlichen Squeeze Out hinaus wichtigen §§ 327 b, c und f AktG einen hinreichenden Eigentumsschutz ausgeschlossener Minderheitsaktionäre gewährleisten, ist umstritten, aber durch das Bundesverfassungsgericht de facto weitgehend bestätigt. Der Beitrag zeigt, dass allfällige Unterbewertungsprobleme auf das Überschreiten der Mindestschwelle am Grundkapital durch die Hauptaktionärin zurückwirken, weil zu diesem Zeitpunkt eine unkompensierte Kaufoption entsteht. Als Konsequenz ist bei der Abfindung der Börsenkurs als Wertermittlungsverfahren ebenso abzulehnen wie die rechtliche Anerkennung von Konstruktionen, die den Wert der „Squeeze Out-Option“ weiter erhöhen.
Scientific research is based on the division of cognitive labour: every scientist has to trust that other colleagues have checked whether the items that are taken as knowledge, and she cannot check by herself, are reliable enough. I apply ideas from the field known as 'information economics' (the study of economic interactions where some agents are better informed than others) to analyse the scientists' incentives to produce items of knowledge of an 'adequate' quality, under the assumption that a big part of what one observes in her empirical research is not available for the readers of the paper. I also discuss some criticisms to this 'marketization' of science studies.. resumen: La investigación científica se basa en la división del trabajo cognitivo: todo científico ha de con-fiar en que otros colegas hayan comprobado que los ítems que son considerados como conocimiento y que no pueden ser comprobados por él mismo son suficientemente fiables. Aplico aquí ideas del campo conocido como «economía de la información» (el estudio de las interacciones económicas en las que algunos agentes están me-jor informados que otros) para analizar los incentivos de los científicos para producir ítems de conocimiento de una calidad «adecuada», bajo el supuesto de que una gran parte lo que observan en su investigación empírica no está disponible para los lectores de un artículo. También discuto algunas críticas a la «mercantilización» de los estudios sobre la ciencia. PALABrAS CLAve: división del trabajo cognitivo; confianza; elección racional; economía de la informa-ción; asimetría de la información; normas científicas; instituciones científicas; mercantilización. & This article has benefited from Spanish Government research project FFI2017-89639-P, "Mechanisms in the sciences: from the biological to the social".
Portuguese abstract: O objetivo deste artigo é, primordialmente, analisar se, quando transplantada de sistemas jurídicos de common law para o sistema jurídico brasileiro, a prática e as cláusulas de sandbagging em operações de compra e venda de participação societária são ou não limitadas de forma especial por princípios e regras já consolidados em nosso sistema jurídico, como o princípio da boa-fé objetiva. A hipótese a ser testada é a de que tal limitação ocorre, o que resultaria em três principais respostas interpretativas do nosso sistema jurídico, a depender de como a prática de sandbagging está ou não regrada nos contratos de compra e venda de participação societária (“CCVPs”). Com tal intuito, desenvolveu-se metodologia analítico-descritiva a partir da qual tanto a contextualização prática (exemplificação) desenvolvida no tópico 2 quanto a análise das origens da prática de sandbagging nos Estados Unidos e da jurisprudência lá decorrente revelaram elementos posteriormente utilizados para a construção das possibilidades interpretativas desenvolvidas no tópico 4. Ao final, o trabalho apresenta as seguintes possibilidades interpretativas a partir da análise da tensão entre a boa-fé objetiva e a autonomia da vontade, as quais, salvo especificidades dos casos concretos, seriam aplicáveis: (i) nos CCVPs em que as partes decidiram voluntariamente negociar e incluir uma cláusula pro-sandbagging (atrelada a real garantia, e não a mera declaração), a autonomia da vontade parece prevalecer sobre eventual possibilidade de invalidação da cláusula com base no princípio da boa-fé objetiva; (ii) nos CCVPs em que as partes decidiram voluntariamente negociar e incluir uma cláusula anti-sandbagging, a autonomia da vontade parece prevalecer igualmente admitir tal caminho; e (iii) nos CCVPs em que não há cláusula regulando a prática de sandbagging, a boa-fé objetiva parece atuar impedindo a prática, limitando a extensão da autonomia da vontade das partes.
English Abstract: The purpose of this paper is to analyze whether, when transplanted from common law to the Brazilian legal system, the sandbagging practice and clauses in M&A transactions are specifically limited by principles and rules well-stablished in such legal system, such as the principle of good faith. The hypothesis to be tested is that such a limitation does occur, resulting in three main interpretative responses from our legal system, depending on how the practice of sandbagging is regulated in Share Purchase Agreements (“SPAs”). With this in mind, an analytical-descriptive methodology was developed from which both the practical contextualization (exemplification) developed in section 2 and the analysis of the origins of the practice of sandbagging in the United States and the resulting case law revealed elements subsequently used to build the interpretative possibilities developed in section 4. Finally, the paper presents the following interpretative possibilities based on the analysis of the tension between principles of good faith and autonomy of will, which, except for the specificities of concrete cases, would be applicable: (i) in SPAs in which the parties voluntarily decided to negotiate and include a pro-sandbagging clause (linked to a real warranty, and not a mere representation), the autonomy of the will seems to prevail over the possibility of invalidating the clause based on the principle of good faith; (ii) in SPAs in which the parties voluntarily decided to negotiate and include an anti-sandbagging clause, autonomy of will seems to prevail equally to admit such a path; and (iii) in SPAs where there is no clause regulating the practice of sandbagging, the principle of good faith seems to prevent the practice, limiting the extent of the autonomy of will.
Note: Working paper. Downloadable document available in Portuguese.
Jakość informacji we współczesnej gospodarce nabiera coraz większego znaczenia. Jednymi z istotniejszych jej źródeł są systemy rachunkowości dostarczające informacji finansowej, której jakość zależy od wielu czynników. Badania naukowe wskazują na istnienie wielu determinant zarówno po stronie wielkości sprawozdawczych przedsiębiorstw, jak i po stronie cech charakterystycznych czy uwarunkowań makroekonomicznych, kulturowych oraz instytucjonalnych i prawnych. W pracy autor skupił się na wynikach badań wpływu stosowania MSR/MSFF oraz wykazaniu potencjalnych innych czynników, determinujących jakość informacji finansowej prezentowanej przez przedsiębiorstwa.
Termin profesje albo grupy profesjonalne odnosi się do pewnych specyficznych grup zawodowych. Charakterystyczną, ale nie jedyną cechą profesji jest świadczenie przez nie usług o wysokim stopniu asymetrii informacyjnej: przeciętny klient nie potrafi ocenić jakości usługi. Klasycznymi przykładami grup profesjonalnych są lekarze i prawnicy, ale wiele innych grup zawodowych wykazuje przynajmniej niektóre cechy profesji. W opracowaniu podjęto próbę podsumowania i oceny dorobku teorii ekonomii w zakresie analizy działania grup profesjonalnych, w szczególności uzasadnienia i skutków ich autonomii regulacyjnej. Literatura teoretyczna została omówiona w podziale na trzy obszary: grupy profesjonalne a bariery wejścia do gałęzi, organizacja profesjonalna jako gwarant jakości i działanie organizacji profesjonalnych a możliwe interwencje rządu. Przedstawione w artykule badania teoretyczne wskazują, że jakkolwiek istnienie organizacji profesjonalnych ma w pewnym sensie uzasadnienie ekonomiczne, to organizacje takie mają skłonność do tworzenia barier wejścia. Państwo nie powinno całkowicie wycofywać się z regulowania rynków profesjonalnych. W artykule zasugerowano też możliwe kierunki dalszych badań nad profesjami.
The aim of this study is to examine the relationship between financial intermediation and economic growth in Nigeria. The study examined the Central Bank of Nigeria quarterly data from 1981Q1 to 2017Q4 with the E-views software package (version 9.0). The Vector Auto Regression (VAR) methodology was used to analyse the data, while Block Exogeneity Wald test was used to test the hypothesis. The specified models included stationarity tests, reduced form VAR estimate and structural analysis. The Augmented Dickey Fuller Test indicates that the study variables are stationary at first difference or I(1). The VAR roots plot in relation to unit circle indicates that our specified reduced form VAR models are stable. The Lagrange Multiplier (LM) diagnostic tests indicate that our specified VAR models are correctly specified. The results show that financial intermediation measures such as bank deposit, commercial bank loans to rural customers, commercial bank deposits from rural customers and gross national savings jointly have no causal effect on real GDP growth, but individually, only the effect of bank deposit ratio is significant. The study therefore recommends that the Central Bank of Nigeria should persuade deposit money banks to reduce the current interest rate margin by reducing the lending rate and increasing the deposit rates. This would significantly reduce the current high financial exclusion rate as cost of borrowing would decrease while the level of domestic savings would increase. Keywords: Financial Intermediation, Real Gross National Savings, Commercial Bank Deposit from Rural Customers, Commercial Bank Loan to Rural Customers, Bank Deposit and Economic Growth
The monograph defines and analyzes the processes of formation and implementation of innovation and scientific and technical policy in developed countries, the content and meaning of the main criteria for identifying areas of innovative activity and measuring structural changes, key indicators of innovative activity, their compliance with international standards, in particular EU standards. A methodical toolkit for the implementation in Ukraine of the updated OECD methodology for assessing the level of innovative development was developed and, accordingly, an in-depth analysis of the state of innovation in Ukraine was carried out. Particular attention is paid to the problems of harmonizing innovation policy with other types of policy, in particular social and industrial. The possibilities of the post-war recovery of the scientific, technical and innovative spheres of Ukraine in the context of stimulating the processes of economic development and ensuring progressive structural changes in the economy were considered, in this regard, directions for improving approaches to evaluating the effectiveness of innovative activities were proposed and appropriate organizational measures for the implementation of innovations were substantiated.
O texto discute o financiamento no Brasil na primeira metade dos anos 90. Desde que a importância histórica do autofinanciamento é bem conhecida, objetivamos identificar as fontes de financiamento do gasto de investimento entre 1990 a 1994 de urna amostra de 596 firmas. As firmas as quais compõem a amostra são classificadas como grande (155) e medias e pequenas (441) do setor industrial, comercial e de servidos, totalizando 596 firmas. Finalizamos o artigo realizando duas conclusões: urna teórica e outra empírica. A primeira preocupa-se a escolha do modelo mais adequado para ser aplicado a amostra SERASA. A segunda é sobre a evidência sobre os estudos dos determinantes do investimento feitos no Brasil e internacionalmente.
Governing greenwashing in environmental, social, and governance (ESG) disclosure is an important issue, but relevant literature is scant. Based on the data on Chinese A‐share listed firms from 2012 to 2021, we investigate the governance role of corporate digital transformation (DT) in ESG greenwashing and its influencing mechanism. We find that DT significantly inhibits ESG greenwashing. Moreover, DT mitigates ESG greenwashing by enhancing corporate green technology innovation (i.e., innovation channel), reducing information asymmetry (i.e., information channel), and increasing trade credit (i.e., resource channel). From the perspective of investor attention, we find that both retail investors' online opinions and institutional investors' site visits strengthen the inhibitory effect of DT on ESG greenwashing. Furthermore, such an inhibitory effect is more pronounced in large firms, industries with high competition, and regions with strong intellectual property protection. This research provides new insights and policy suggestions for governing corporate ESG greenwashing behavior.
a landmark in the contemporary approach to economics The Observer
For the mixed record of industrial profit, see The Development of Capitalist Enterprise in India
- D H Buchanan
Cotton Mill Industry
- Also
- See H Industry
- Fukuzawa
- H Fukuzawa
For the mixed record of industrial profit, see D
- H Buchanan
Economic Development
- C P Kindleberger
- CP Kindleberger