Initial Ownership Research Articles

OP56 – 2339: Respecting “informed consent” in epileptic care

Objective Traditional methods of research and care for patient with epilepsy are increasingly challenged by ethical standards that demand active involvement of affected patients. By focusing on the concept of “informed consent” I will look at four daily life situations in epileptic care from an ethical viewpoint, while trying to give tentative answers to the following four questions. Methods 1. How can confidentiality between doctors and patients be maintained if the patient wants to continue driving while (s)he is not seizure free? 2. How can we gain knowledge about teratogenic effects of AED's on the fetus if pregnant women are not included in clinical studies? 3. In the selection process for epileptic surgery how can the principles of beneficence, nonmaleficence, justice and autonomy be adhered to? 4. How can privacy and data security be maintained in participant led research and large data acquisition? Results 1. Mandatory reporting of drivers with active epilepsy is a breach of confidentiality, and has not shown to result in a reduction of seizure related accidents. 2. A low regulatory threshold for including AED-dependent pregnant mothers in voluntary observational studies should lead to the acquisition of large and interpretable databases. 3. Selection for surgery and postoperative outcome measures should be individualized to preoperative expectations primarily of patients and consecutively of caregivers. 4. Online transmitted patient data must be reencrypted before being pooled and initial ownership should lead to automatic notification of secondary research results. Conclusion Respecting ethical consideration in research and care for patients with epilepsy should not be viewed as a hindrance but rather as an attractive mean to secure a better quality of care even if the underlying disease cannot be cured.

Too Big to Cheat: Efficiency and Investment in Partnerships

Many economic activities are organized as partnerships. These ventures are formed with capital contributions by partnership members who obtain a share of ownership in exchange. The design of the partnership dictates how much of the profits is distributed among the members and how much is reinvested. In this paper, we study the optimal design of partnerships under the assumption that partners privately observe shocks to their liquidity needs. When the ownership share of a partner is large enough, his incentives to misreport vanish. This occurs because a fraction of the increase in his payouts after reporting high liquidity needs is financed by disinvesting in the partnership. When his ownership share is not big enough, the ownership structure of the partnership must vary over time to prevent misreporting. The limiting distribution of shares depends on the initial ownership structure. Under certain conditions, if the partnership starts with approximately equally distributed shares, both partners are too big to cheat and the ownership structure remains unchanged forever. Instead, if the initial ownership structure is such that one of the partners is too big to cheat but the other is not, the share of the initially larger partner ends up either reaching 100% (i.e., sole proprietorship forever) or decreasing to the point at which both partners are too big to cheat (i.e., shares are approximately equally distributed forever).

Ownership Structure and Performance of Closely Held Young Firms

This study documents that manager-shareholder conflict plays an important role at the earliest stage of business formation. Using data on closely held start-up firms, we focus on the owner who has the greatest managerial responsibility in the firm. Controlling for the endogenous relation between the initial equity ownership by the owner-manager and firm performance, we find that increased equity ownership by the owner who actively managers the firm results in better firm performance. In contrast, the owner-manager’s personal contribution of debt and the share of personal wealth invested in the firm are negatively related to firm performance. This evidence is consistent with the idea that start-ups with poor performance prospects are unable to raise funds externally and, instead, rely on internal capital.

Brain Activity in Fairness Consideration during Asset Distribution: Does the Initial Ownership Play a Role?

Previous behavioral studies have shown that initial ownership influences individuals’ fairness consideration and other-regarding behavior. However, it is not entirely clear whether initial ownership influences the brain activity when a recipient evaluates the fairness of asset distribution. In this study, we randomly assigned the bargaining property (monetary reward) to either the allocator or the recipient in the ultimatum game and let participants of the study, acting as recipients, receive either disadvantageous unequal, equal, or advantageous unequal offers from allocators while the event-related potentials (ERPs) were recorded. Behavioral results showed that participants were more likely to reject disadvantageous unequal and equal offers when they initially owned the property as compared to when they did not. The two types of unequal offers evoked more negative going ERPs (the MFN) than the equal offers in an early time window and the differences were not modulated by the initial ownership. In a late time window, however, the P300 responses to division schemes were affected not only by the type of unequal offers but also by whom the property was initially assigned to. These findings suggest that while the MFN may function as a general mechanism that evaluates whether the offer is consistent or inconsistent with the equity rule, the P300 is sensitive to top-down controlled processes, into which factors related to the allocation of attentional resources, including initial ownership and personal interests, come to play.

The role of ownership on control right allocation and compensation contract design

We propose a corporate control model that deals with control right allocation and compensation contract design. By drawing upon a special feature of human nature, that is the sense of gain and loss affiliated with initial ownership as described by the prospect theory in Kahneman and Tversky (1979), we find that it helps mitigate the inefficiency stemming from the agency problem. In particular, there exists a most desirable level of ‘managerial irrationality’ that completely offsets the social efficiency loss inflicted by the moral hazard problem. Moreover, less control right should be allocated to outside investors and more compensation should be granted to the manager as the latter reveals more serious concern about his ownership gain and loss.

The Choice of Ownership Structure: Evidence from Russian Mass Privatization

In a comprehensive data set of 530 Russian manufacturing firms we observe high and gradually decreasing ownership stakes of firm insiders, i.e. managers and workers. We estimate the determinants of the decision to privatize a firm in the mass privatization program (1992-94) and of the resulting initial ownership distribution. For estimating the latter we use a tobit model with sample selection. The paper presents empirical tests for predictions of the model of ownership choice in insider privatization by Aghion and Blanchard (1998). In particular, we find that collusion among workers is important in their decision to sell shares to outsiders and raises their stake. Also, firms in financial distress show a higher incidence of insiders selecting the option of privatization leading to high insider ownership. This can be explained by the desire of insiders to insure against unemployment by acquiring more shares in those companies. No evidence is found of a sequencing in privatization according to the performance of firms before privatization.

The choice of ownership structure: Evidence from Russian mass privatization

We use a large data set of Russian manufacturing firms to describe the ownership structure in the Russian industry at the end of the mass privatization program in 1994 and its subsequent evolution. The data shows a high, but gradually decreasing ownership stakes of firm insiders (managers and workers). We estimate the effect of a wide range of firm characteristics on the decision to privatize, the initial ownership structure after privatization, and on subsequent changes of ownership stakes. We test and find support for several predictions of the model by Aghion and Blanchard (1998). For example, collusion among workers makes them more reluctant to sell shares to outsiders. Firms in financial distress show a higher incidence of insiders selecting the option of privatization leading to high insider ownership. This can be explained by their desire to insure against unemployment in the case of restructuring by outsiders. No evidence is found of a sequencing in privatization according to the performance of firms before privatization. A methodological novelty of this paper is the application of a tobit model with sample selection to the choice of ownership stakes.

Disclosure “Bunching”

ABSTRACTThis paper studies managers' preferences among information acquisition and disclosure policies when their firms are required to engage in “real‐time” or “continuous” financial reporting. The paper predicts that for many, but not all, processes describing the distribution of their firms' cash flows, when subject to such reporting requirements, managers will engage in disclosure “bunching,” that is, they will bunch the discretionary component of the information they acquire and disclose into a single point in time rather than spread the acquisition and disclosure of that information over time. We show that managers' preferred bunching period depends on managers' strategy for trading in their firms' shares, managers' risk aversion, the risk premium the capital market attaches to firms' shares, and the size of managers' initial ownership stakes in their firms. We also study and characterize how the equilibrium prices of firms' shares vary over time and also how managers' optimal trading strategies vary with their most preferred “bunching” strategies. Several extensions confirm the robustness of the optimality of disclosure “bunching.”

Corporate Governance Formation in Poland, Kyrgyzstan, Russia, and Ukraine

This paper presents a cross-country comparative study of corporate governance forma-tion in four transition countries that differ significantly in the reform design, implementation, and outcome. The analysis showed that corporate governance formation in these countries is characterized by both similarities and differences. Similarities originate first of all from the common features of the historical of these countries, the features of centrally planned economy; from the similarities of the principles of the reform programs; and from similarities of certain basic, objective regularities of the post-Communist transition. Such common features include, e.g., highly insiderized initial ownership patterns, high role of man-agers, high ownership concentration, dual trends of ownership structures' evolution towards concentration and outsiderization, and many others. The differences originate, among others, from the specific features of the countries' historical, cultural, and institutional heritage, the soundness of the reform design and implementation, the main characteristics of the enter-prise sector, the quality of the legal base and enforcement mechanisms. Countries that had more favorable background (traditions of private entrepreneurship, capacities of the elites) and during the transition period managed to create good legal for private sector and appropriate institutions are more likely to enjoy formation of more efficient corporate governance mechanisms and patterns.

Initial Title to Employee's Invention: Japanese Experience and International Trends (Teisė Į Tarnybinį Išradimą: Japonijos Patirtis Ir Pasaulinės Tendencijos) (in Lithuanian)

This article analyses the question of initial ownership to patents. Conventionally, intellectual property rights have been considered as limited territorially. Nevertheless, the increase of cross-border exploitation of intellectual property assets reveals shortcomings of the principle of territoriality and lex loci protectionis. This article begins with a closer analysis of the principle of territoriality and the principle of lex loci protectionis and introduces normative criticism based on the theory of new institutional economics. It is argued that new institutional economics might provide insightful considerations to substantiate inefficiency argument which is often invoked as a criticism of territorial understanding of IPRs. On a descriptive level several Japanese landmark court cases (Yonezawa v Hitachi and Nakamura v Nichia). In these cases the employer applied for patents not only in Japan, but also a number of foreign countries. Such foreign applications raised the question which law should be applied to the determination of the initial ownership to the patents. Following the strict territoriality approach, the law of each country where patent application was filed should also determine the initial owner of a patent. Such solution leads to considerable uncertainty especially from the viewpoint of the parties. In order to reduce legal uncertainty in cross-border exploitation of intellectual property assets, the author of this article proposes to allow parties' agreement as to the question of initial title. Even though party autonomy might raise some sovereignty issues, it is nevertheless proposed to allow party autonomy at least in complex cases. It is argued that party autonomy would assure that the same person will hold title to an intellectual property asset. Besides, it is argued that the principle of party autonomy may have important harmonizing effects especially having in mind possible difficulties of having an international agreement on the question of initial title. Besides a closer analysis of Japanese law, this article also dwells upon the relevant provisions in the European Patent Convention, Rome I and Rome II Regulations as well as more recent legislative proposals of comprehensive framework for cross-border exploitation of intellectual property rights (the ALI Principles, Max Planck and so called Transparency Principles presented by Japanese legal scholars).

The Dissemination of Tristram Shandy in Northern Europe: A Preliminary Survey of the Subscription List in Bode’s Translation

There are reasonable grounds for suggesting that J. J. C. Bode’s 1774 translation of Sterne’s Tristram Shandy may be the most influential single edition of that masterpiece in any language, including English. The extensive and comprehensive list of subscribers allows for close examination of the geographic, demographic, and gender divisions of the initial ownership of the book. This paper offers a preliminary survey of the material, demonstrating the level of detail to be found in the list, and suggesting further areas for exploration.

Secondary Privatization in Poland (Part I): Evolution of Ownership Structure and Company Performance in Firms Privatized by Employee Buyouts

This volume contains the output of country research undertaken in Poland by Piotr Kozarzewski and Richard Woodward under the international comparative project Secondary Privatization: the Evolution of Ownership Structures of Privatized Enterprises. The project was supported by the European Union's Phare ACE Programme 1997 (project P97-8201 R) and was coordinated by Barbara Baszczyk from the Center for Social and Economic Research (CASE) in Warsaw, Poland. The support of the ACE Programme made it possible to organize the cooperation of an international group of scholars (from the Czech Republic, France, Poland, Slovenia and the U.K.). The entire project was devoted to the investigation of secondary ownership changes in enterprises privatized in special privatization schemes (i.e., mass privatization schemes and MEBOs) in three Central European countries - the Czech Republic, Poland and Slovenia. Through a combination of different research methods, such as secondary analysis of previous research, analysis of legal and other regulatory instruments, original field research, statistical data base research and econometric analysis of individual enterprise data, the project aimed to investigate the scope, pace and trends in secondary ownership changes, the factors and barriers affecting them and the degree of ownership concentration resulting from them.The authors begin with a general discussion of MEBOs in Poland and go on to analyze ownership changes in a sample of such companies. First, they present the initial ownership structures created at the time of privatization and the evolution of those structures through 1999, and then go on to analyze the factors behind these changes and the relationships between the evolution of ownership structures on the one hand and economic performance and corporate governance on the other.We hope that the results of this research will be of great interest for everyone interested in the little-researched question of what has happened to companies after privatization in transition countries.

The Market Valuation of Share Repurchases in Europe. A Cross Country Analysis

We analyse a uniquely constructed data set of share repurchases in France, Germany and the UK. We find significant differences across the three countries in the popularity of this strategy, in the market reaction and its determinants, and in the likelihood of subsequent share repurchase announcements. We show that in the UK, fundamental factors such as initial announcement, size, past returns, ownership concentration, and changes in regulations during our sample period explain the market reaction to the announcement of intention to repurchase shares. In the remaining countries, the excess returns are not persistent in the post-event period, and the fundamental factors do not consistently explain the market reaction and the probability of subsequent repurchases announcements. Our results suggest that institutional settings affect the value creation of share repurchases.

Cross‐Border Collective Management and Principle of Territoriality: Problems and Possible Solutions in the EU

Cross‐border collective management has recently been a highly discussed topic, in particular from the perspective of competition law. This article focuses on the less discussed issue—the problem of the territoriality principle in cross‐border collective management. Territoriality of substantial copyright laws leads to the need for collecting societies to check the initial ownership, scope of rights, etc. under each national copyright law. In addition, territoriality of the collective management laws (as distinguished from substantial copyright laws) requires the societies to adhere to multiple laws differently regulating establishment, functioning, accountability, etc. of the societies. The article analyses the possible solutions to these problems.

Initial Ownership in Bargaining: Introducing the Giving, Splitting, and Taking Ultimatum Bargaining Game

In three experiments, the authors studied the role of initial ownership of property in bargaining behavior. For this purpose, they created three new variations of the Ultimatum Bargaining Game (UBG): giving, splitting, and taking UBGs. On the basis of insights of loss aversion and the do-no-harm principle, the authors predicted and found that allocations to the recipient were highest in the taking UBG and lowest in the giving UBG. Additional measures to study the underlying mechanism of this effect indicate that the game type effect was mediated by perceptions of entitlement, which allocators did not want to infringe on. Moreover, the effect was not affected by strategic options as provided by deception or power.

Sampling Minority Business Owners and Their Families: The Understudied Entrepreneurial Experience*

We here review and critique prior research on minority entrepreneurship, paying particular attention to the contributions and limitations of deployed sampling techniques and research methodologies. As based on this review, we then introduce the 2003 and 2005 National Minority Business Owner Surveys—a comprehensive and primary data collection effort that used varied methodologies to secure in‐depth information about random national samples of African American, Korean American, and Mexican American populations as well as a comparison sample of nonminority business owners. We present the initial business ownership profiles developed with these recent data, in part, as a benchmark of the U.S. entrepreneurial experience, and compare the profiles with those presented in prior research. These profiles document similarities and differences across the four groups and provide an empirical foundation for understanding the origin of those similarities and differences. No longer can we ignore the in‐depth study of minority businesses and their owning families nor can we simply assume that all businesses are the same, regardless of minority status or ethnicity.

Privatising National Oil Companies: Assessing the Impact on Firm Performance

This study empirically investigates the impact of privatisation on firm performance in the global oil and gas industry, where questions of resource control have regained widespread attention. Using a dataset of 60 public share offerings by 28 National Oil Companies it is shown that privatisation is associated with comprehensive and sustained improvements in performance and efficiency. Over the seven-year period around the initial privatisation offering, return on sales increases by 3.6 percentage points, total output by 40%, capital expenditure by 47%, and employment intensity drops by 35%. Many of our observed performance improvements are already realised in anticipation of the initial privatisation date, accrue over time, and level off after the initial ownership change rather than accelerate. Details of residual government ownership, control transfer, and size and timing of follow-on offerings provide limited incremental explanatory power for firm performance, except for employment intensity. Based on these results partial privatisations in the oil sector might be seen to capture a significant part of the performance improvement associated with private capital markets without the selling government having to cede majority control.

The Intersection between Registered and Unregistered Trade Marks

The principal justification for registration is that trade mark registers act as an important source of public information. More specifically, trade mark registers provide information as to the signs that are protected in a given commercial sphere and as to matters such as initial ownership of trade marks and subsequent assignments thereof. Consequently, in order for a trade mark register to perform its function effectively, it is essential that it reflect as accurately as possible the marks that enjoy legal protection and that those consulting the register are able to rely on the information it conveys. Few countries, however, require registration as a precondition of trade mark protection. Unregistered trade marks are instead protected through a variety of mechanisms: through specific legislative provision; by general unfair competition or consumer protection laws; or through common law actions such as the tort of passing off. Surprisingly, it is rarely, if ever, noted that maintaining protection for unregistered marks has the potential to undermine significantly the effectiveness of the registered trade mark system. Most obviously, protection for unregistered marks means that a trader who consults the register with a view to determining whether it is safe to use a particular sign will not be able to rely on a finding that no confusingly similar sign has been registered it will still be necessary to conduct expensive and time-consuming searches in order to determine which other signs may enjoy legal protection. In addition, registered trade mark systems almost invariably provide a facility for cancelling a registered trade mark on the basis that it conflicts with an earlier unregistered mark. This means that a would-be purchaser, mortgagee or franchisee who consults the register in order to check that a mark has been validly registered cannot know whether the registration is vulnerable to a challenge by the proprietor of an earlier, unregistered mark.

Market versus Non-Market Assignment of Initial Ownership

We study the assignment of initial ownership of a good when agents differ in their ability to pay. Selling the good at the market-clearing price favors the wealthy in the sense that they may acquire the good instead of poor buyers who value it more highly. Non-market assignment schemes, even simple random rationing, may yield a more efficient allocation than the competitive market would - if recipients of the good are allowed to resell. Schemes that favor the poor are even more desirable in that context. The ability to resell the good is critical to the results, but allowing resale also invites speculation, which undermines its effectiveness. If the level of speculation is sufficiently high, restricting resale may be beneficial.

Minority Blocks and Takeover Premia: Comment

In their paper Burkart, Gromb, and Panunzi [2006] (hereinafter BGP) analyze the effect of initial ownership structure on the takeover premia. They consider a company with a single minority blockholder and otherwise dispersed ownership. Though the blockholder is bound to a passive role as a tendering shareholder, their analysis shows that his sole presence can lead to higher bidding prices in a takeover. The analysis is based on the notion, developed by Grossman and Hart [1980] and Bradley [1980], that due to shareholders' free-riding behavior companies with dispersed ownership are an unprofitable target for takeovers. According to this, rational shareholders only tender if the bidding price matches the posttakeover value, leaving no profit to the raider. A remedy is found in the extraction of private benefits, which leaves some profit to the controlling party. BGP assume those private benefits for both the incumbent blockholder and the raider. These private benefits determine at least partly the participants' choices. While the benefit A for the incumbent blockholder is considered exogenous and fixed, the raider's benefit 0 is endogenous. This means the raider, R, can freely decide upon the amount of resources diverted, though at the cost of a welfare loss /( ). The extraction of private benefits is pivotal to the analysis, which is why I will focus on these in this comment. In particular, I consider the raider's benefit extraction technology, i.e., his efficiency in diverting resources, and the role of the incumbent blockholder.