Globalization

In this chapter, we discuss and extend the findings of our recent research agenda that examines product mix adjustments by Indian firms during the 1990s. During this period, a large fraction of Indians added products to their product mix suggesting that these constraints felt by Mitter twenty years after his article appeared in press had been to some extent eased. This period of firm-level scope expansion coincided with India's large-scale trade liberalization.

We consider three "crisis shocks" related to key features of the 2007-2008 crisis, for emerging and developed economies: (1) the collapse of global trade, (2) the contraction of credit supply, and (3) selling pressure on firms' equity. Using an international cross-section of firms, we find that returns' sensitivities to these shocks imply large and statistically significant influences on residual equity returns during the crisis period (after controlling for normal risk factors that are associated with expected returns).

Political theorists of globalization have argued that foreign inflows to a society can give rise to collective-identity closure — social movements aiming to narrow the in-group, and exclude minorities. In this research we investigate whether exposure to the mixing of a foreign culture with one's heritage culture can evoke need for closure, a motive that engenders ethnocentric social judgments.

The 2007-2009 financial crisis that started in the summer of 2007 had its origins in the US housing policies, the subprime mortgage market in particular, and the end of the real estate bubble in the US. Careful consideration of the causes, consequences and policy responses suggest that various factors contributed to the severity of the 2007-08 crisis, and experts disagree about the weights to attach to each in explaining what is now regarded as the most significant economic contraction since the Great Depression.

Sovereign Wealth Funds (SWFs) are state-owned investment funds with combined asset holdings that are fast approaching four trillion dollars. Recently emerging as a major force in global financial markets, SWFs have other distinctive features besides their state-owned status: they are mainly located in developing countries and are intimately tied to energy and commodities exports, and they carry virtually no liabilities and have little redemption risk, which allows them to take a longer-term investment outlook than most other institutional investors.

While the high savings rate in China has global impact, existing explanations are incomplete. This paper proposes a competitive saving motive as a new explanation: as the country experiences a rising sex ratio imbalance, the increased competition in the marriage market has induced the Chinese, especially parents with a son, to postpone consumption in favor of wealth accumulation. The pressure on savings spills over to other households through higher costs of house purchases. Both cross-regional and household-level evidence supports this hypothesis.

We examine early approaches to the agency problem by asking when captains owned ships in eigheenth and nineteenth century shipping, and how captain-ownership effected voyage success. For each ship we observe the identity of the owners, the identity of the ship captain, the route pursued for each voyage, and various outcome measures for each voyage. We also have information on vessel construction characteristics, the sailing history of each vessel, and the occupations of the owners.

This paper documents that intermediaries play an important role in facilitating international trade. We modify a heterogeneous firm model to allow for an intermediary sector. The model predicts that firms will endogenously select their mode of export-either directly or indirectly through an intermediary-based on productivity. The model also predicts that intermediaries will be relatively more important in markets that are more difficult to penetrate.

Accounting and valuation are so intertwined that valuation is really a matter of accounting; valuation involves accounting for value. Accordingly, a valuation is only as good as the accounting underlying it. How can one ask the question of what the price-earnings should be if the earnings are fuzzy? What is the meaning of price-to-book if book values are suspect? There is a question for both the investor and the accountant to answer: What is good accounting for valuation? Do International Financial Reporting Standards (IFRS) or U.S.