Institutional Complementarities within Corporate Governance Systems: A Comparative Study of Bankruptcy Rules

Recent research work has put forward theconcept of national system of corporate governance to describe the complex architecture of legal rules, economic mechanisms and mentalities which constrain managerial discretion in a different way according to the country considered. The role played by the legal system in this set of mechanisms is particularly important and, as part of the legal system, the bankruptcy law performs a specific function: designed as a governance device for financially distressed firms, it also acts as a monitoring mechanism for healthy ones. The aim of this paper is to investigate the mechanisms of corporate governance in the context of bankruptcy in a comparative perspective. Relying on a broad definition of corporate governance (i.e., one which takes into account the influence of all stakeholders on managerial discretion), we first examine the insolvency codes of five countries (France, Germany, Japan, the United Kingdom and the United States). The stance of the law (creditor-oriented vs. debtor-oriented) is discussed in relation to the legal tradition of each country. We then study the way bankruptcy law in each country articulates with the other governance mechanisms. For that purpose, a typology of those mechanisms is used, based on the type of device each kind of stakeholder is able to activate. Results of both theoretical and empirical studies on bankruptcy are used to understand which of the different devices are used in each country. The comparative approach underlines the impact of institutional differences on organizations through the incentives sent to their stakeholders.     

公司债务与内生破产的实物期权方法分析

本文利用实物期权方法在风险中性概率测试下研究公司的债务与内生破产问题。将公司破产与接管理解为股东和债权人持有的期权,在得到写在公司资产上的各种相机权益的价值后,本文详细讨论风险债务的债权人在公司破产时选择破产清算或破产营运时公司债务水平与破产决策之间的关系,分析了不同杠杆水平的公司破产决策问题,发现公司债务对公司的破产决策具有重要影响。杠杆公司股东策略违约的破产时间与公司价值最大化的时间通常不一致,破产导致公司价值损失;而且由于杠杆融资,公司破产时间与纯股本公司破产时间不一致,破产带来效率损失。本文的分析对我国公司债务与破产政策的研究具有一定借鉴意义。     

Does Immigration Raise Blue and White Collar Wages of Natives? The Case of Italy

This paper analyses both theoretically and empirically the effects of immigration on the wage rate of native workers. There is rare evidence in empirical literature that immigration generates a fall in the wages of manual workers. By hypothesizing an economic system where advanced firms buy an intermediate good from traditional firms, which employ manual workers in both clean and dirty tasks, the latter being more disliked by native workers, we present a theoretical model that justifies these results. We conclude that native skilled wages always increase whereas native unskilled wages can both increase or decrease with immigration. An empirical analysis of the Italian labour market follows, showing that native workers' wages always rise with immigration.     

Der Insolvenzprozess und die Eigenverwaltung in der Insolvenz auf Basis unterschiedlicher Theoriekonzepte

Zusammenfassung  Der Beitrag erkl?rt einerseits die Notwendigkeit eines durch Gesetz geregelten Verfahrens zur Insolvenzabwicklung mittels betriebswirtschaftlicher Grundlagentheorien. Andererseits werden dieselben Grundlagentheorien genutzt, um die unterschiedlichen sich ver?ndernden Machtstrukturen, die oft gegens?tzlichen Interessen von Stakeholdern, die Kosten des Insolvenzprozesses sowie deren Dynamik im Rahmen des vierphasigen Insolvenzprozesses (vor Insolvenzanmeldung, nach Antragstellung, nach Er?ffnung, nach Abschluss des Verfahrens) eines Not leidenden Unternehmens besser veranschaulichen zu k?nnen. Der besondere Schwerpunkt wird hierbei auf das Verfahren in Eigenverwaltung, das hei?t mit eigenem Management, gelegt.

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The bankruptcy process and the self-administration in the bankruptcy proceedings

Summary  This article explains on one hand the necessity of a legally fixed process for the bankruptcy proceedings with basic economic theories. On the other hand, the same theories are used to demonstrate the changing power structures, the often different interests of stakeholders, the costs of the bankruptcy proceedings as well as its dynamics during the four bankruptcy phases (before the filing, after the filing, after opening and after closing) of the bankruptcy process. The focus of this article lies hereby on bankruptcy proceedings in self-administration which means that the management stays on duty.

Dr. Martin K?rner ist promovierter Diplom- und Bankkaufmann und leitet die Abteilung Strategic Advisory bei einem führenden europ?ischen IT- und Telekommunikationsunternehmen. Seine Forschungsgebiete umfassen strategische Fragestellungen, Kapitalmarktthemen, das Outsorcing sowie das Krisen- und Insolvenzmanagement.     

Social Security Wealth and Retirement Decisions in Italy

Abstract. This paper uses administrative data to study the retirement decisions of Italian private‐sector non‐agricultural employees during the period 1977–97. Our analysis tries to assess the importance of the financial incentives built into the social security system. The basic idea is very simple: at any given age, and based on the available information, workers compare the expected present value of two alternatives: retiring today or working one more year, and then choose the best one. A key role in this kind of comparisons is played by social security wealth, whose level and changes reflect the expectations about the profile of future earnings and the institutional features of the social security system. The various incentive measures that we consider differ in the precise weight given to the social security wealth that workers accrue as they continue to work. Our model does not provide a structural representation of the retirement process. A worker's decision is modeled here following a ‘quasi reduced‐form’ approach, with the incentive measures entering as predictors of the worker's choice in addition to standard variables. The estimated models are then used to predict retirement probabilities under alternative policies that change social security wealth and derived incentive measures.     

Microsimulating the Evolution of Italian Pension Benefits: the Role of Retirement Choices and Lowest Pensions Indexing

A few years after the introduction of the Amato and Dini laws, a renewed debate on reforming the Italian pension system and on modifying its structure and technical parameters is taking place. The present work simulates individual reactions to systemic changes, distinguishing among the different typologies of workers the categories of dependent (private and public) and self‐employed ones. This approach allows us to perform a general micro‐analysis of the effects of past reforms on family pension income distribution and average individual pension benefits. Furthermore, it makes it possible to assess the consequences of legislator's choices such as the indexation of the lowest pensions (‘assegni sociali’ and ‘pensioni integrate al minimo’) to wages or to inflation. Finally, a Monte Carlo analysis projects future inequality and poverty trends with a remarkable accuracy and allows to verify the robustness of our results.     

Trade Credit and the Propagation of Corporate Failure: An Empirical Analysis

Using an exhaustive data set on claims held by trade creditors (suppliers) on failed trade debtors (customers), we quantify the importance of trade credit chains for the propagation of corporate bankruptcy. We show that trade creditors experience significant trade credit losses due to trade debtor failures and that creditors' bankruptcy risks increase in the size of incurred losses. By exploring the roles of financial constraints and creditor‐debtor dependences, we infer that the trade credit failure propagation mechanism is driven by both credit losses and demand shrinkage. Finally, we show that the documented propagation mechanism constitutes a significant part of the overall bankruptcy frequency, suggesting that it has measurable implications for the aggregate level.     

The Effect of a Longer Eligibility to a Labour Market Programme for Dismissed Workers

Liste di Mobilità is an Italian programme targeted to dismissed workers. It combines a ‘passive’ and an ‘active’ component. Eligibility duration varies with the worker's age at dismissal. Using a new panel data set, we identify the impact of extending the duration of eligibility on re‐employment probabilities and wages, via Regression Discontinuity Design. We validate the design by a set of overidentification tests. For most subgroups we find no significant impact, with a peculiar pattern for women entitled to monetary benefits. A major negative impact emerges for workers aged 50 or more granted monetary benefits, likely due to the fact that they can use the programme as a bridge to retirement.     

The Cost of Compensating Asbestos Victims Under the Occupational Disease Compensation Act of 1983

The potentially huge financial liability due to asbestos product suits and the resulting filings for reorganization in bankruptcy by Manville, UNR Industries, Inc., and Amatex, has become a major public policy concern. In response to the problem several bills have been introduced in the Congress to provide compensation for asbestos (and other occupational disease) victims. This paper estimates the cost of compensating asbestos victims under the provisions of the "Occupational Disease Compensation Act of 1983," introduced by Congressman George Miller. Utilizing fatality projections from studies by Enterline, Selikoff, and Walker, and assumptions regarding likely claims filing and success rates, duration and degree of disability, and medical expenses, first year costs for this legislation are estimated to range from a low of $131 million to a high of $ billion. Present value cost estimates at a 2% real discount rate range from $3 billion to $56 billion. The paper also estimates the impact of possible modifications to the compensation provisions of the legislation. Reducing medical payments by the amount received from medicare would lower costs by 3-4%. Providing survivors with a 3-year lump sum benefit rather than a 5-year lump sum payment would save 20-25% as would offsetting the 5-year lump sum by expected social security old age and disability benefits. Combining all of these changes would reduce costs by almost 50%.     

Twenty Years after the Hot Autumn: Work and Politics in Italy from Rupture to Change

Abstract. In the first paper the authors make a critical analysis of the interpretations and models generally used for it caso italiano(the Italian Case) and propose explanations that are not one-sided, and that take into account all the elements of continuity which characterised the various phases of these last twenty years. The second paper examines the institutional features of the Italian industrial relations system, and underlines its ‘constant characteristic’. that is. its under-institutionalisation. The author emphasises the negative effects of these institutional shortcomings, and shows concern that the much exalted ‘flexibility’ of the Italian system could be detrimental, rather than positive, as it derives from these shortcomings. The note by Guido Romagnoli. attempts to use some theoretical statements on union behaviour, as the key to interpret the events of the Italian case. The author then indicates some aspects and reasons for the crisis of Italian unions. The fourth paper examines the relationship of the unions with the Italian political system over the last twenty years. This article suggests that it is characterised by considerable continuity in stabilising this political system, both in phases of strength and in times of weakness. This stabilising role has. however, not been reciprocated; in fact, not only has the political system not stabilised the unions and industrial relations, but has become a major obstacle to their strategic reorientation. The last paper in this group of essays on the Autunno Caldo offers what could be termed an ‘institutional’ explanation of union continuity, analysing the various phases of collective mobilisation. political exchange and flexibility, and examines the relationships between the social actors during these phases. The selection of papers published here is in memoriam of our colleague and friend Guido Romagnoli, who suddenly died shortly after the conference. For this reason it includes the outline that he presented at that conference which he could not develop into a full article.     

Planning innovation

This paper deals with the concept of planning for innovation, using marketing as a basis for that planning. The author claims that marketing really controls the whole operation of planning for innovation, even the details of development and design, because customers not only use the resulting product or service; they pay for it and make everything possible.     

Compliance and ethics programs: competitive advantage through the law

This paper aims to address whether deploying compliance and ethics programs will assist US organizations in implementing the internal mechanisms necessary to achieve a competitive advantage from the law. My focus will be on the US legal system, as the corporate compliance and ethics programs examined are based on mitigation provisions contained in the US Federal Sentencing Guidelines. In particular, I propose that organizations can attain a sustainable competitive advantage from the law by considering the following questions: Do compliance and ethics programs assist organizations in achieving a better understanding of the law? Are compliance and ethics programs a cost-effective approach for coping with an organization’s legal issues? Can compliance and ethics programs aid organizations by preventing these legal issues from occurring in the future? Will compliance and ethics programs support organizations in reframing legal issues as business opportunities?     

Digitalization and Promotion: An Empirical Study in a Large Law Firm

In law firms, the number of hours that associates work reportedly plays a preponderant role in promotion decisions. We build on previous research in this area by distinguishing the effect of ‘development hours’ from ‘billable hours’ on promotions and by assessing the extent to which billable hours are still important criteria today, in digitalized environments where efficiency is, presumably, likely to matter more than working long hours. We also examine whether certain types of behaviours, like associates' interactions with technology, may be associated directly or indirectly with a higher likelihood of promotion. We studied these questions in the context of a large corporate law firm in continental Europe, focusing on the promotion of 93 lawyers between 2005 and 2010. We found that both billable and development hours are still significant positive predictors of promotions and that associates' ability to use the case firm's computer‐mediated knowledge management system productively is indirectly rewarded by promotion. This research reasserts the fundamental role of billable hours as one of the primary means for evaluating lawyers' work and suggests that using knowledge management systems gives associates an edge in the race for promotion, particularly in law firms moving along the ‘evolutionary path’ of legal service, from bespoke to commoditized work (Susskind, R. (2010). The End of Lawyers? Rethinking the Nature of Legal Services. Oxford: Oxford University Press).     

Temporary/Permanent Workers' Wage Gap: A Brand‐new Form of Wage Inequality?

By easing restrictions on the use of short‐term contracts, the 30/2003 act represents contemporaneously the more extensive and the more radical policy aimed at introducing flexibility in the Italian labour market. By virtue of a difference‐in‐differences estimator, the paper provides an estimate of the impact of the 30/2003 reform on the wage gap across fixed‐term and long‐term employees. It will be given evidence that the policy has widened the wage differentials and the effect is particularly stronger to skilled workers compared with unskilled workers. These findings would suggest the existence of a possible brand‐new form of wage inequality.     

New Mothers’ Labour Force Participation in Italy: The Role of Job Characteristics

Abstract. In this paper we use newly available individual‐level data from the Longitudinal Survey of Italian Households to investigate the factors associated with female labour force participation after the birth of the first child. We focus on the role of pre‐marital job characteristics and find that new mothers who worked without a contract are less likely to participate, while those who worked in the public sector or in a large private firm have a higher probability of being in the labour force after childbearing. We suggest that these effects could be at least partly attributed to differences in the level of job protection and employment stability enjoyed by workers. This implies that in Italy women with highly protected and stable jobs might find it easier to combine career and family, whereas those who are less sheltered by the legislation might be more likely to be inactive after becoming mothers.     

Italian Urban Plans: Diversified Approaches and Methods for Assessing Their Quality

This article poses the difficult task of providing a brief overview of Italian urban planning, difficult to understand for foreign observers because each Region has different legislation and urban planning tools. The paper describes an original methodology that evaluates the quality of the approach differentiated as (1) ‘of the plan’ (reformist, participative, from the territory); (2) ‘in the plan’ (integrated strategic, sustainable); (3) ‘with the plan’ (conformative, methodological, recompositional, systemic-infrastructural); and (4) ‘beyond the plan’ (beyond governance methodologies). The paper also compares aspects of quality present in plans for large, medium and small Italian cities. The conclusions review factors of excellence that may be used in other international scenarios.     

Occupational stress,rescue workers and English law

Abstract

This paper shows how two strands of English case law, one establishing liability to compensate for shock suffered by those at the scene of disaster, and the other concerned with physical injury suffered by rescuers, were brought together in the 1960s to provide a remedy for a rescuer suffering from what the law describes as ‘nervous shock’. It further traces the development of employers' liability in this context, but finds that the law provides few examples of the contractual duty of employers to protect employees generally against stress that may cause psychological injury. It points out that there is no case law on the liability of employers for stress suffered by rescue workers, whether professional or otherwise. It notes that law reports give little guidance as to the medical evidence judges require to persuade them that nervous shock has been suffered. Finally, it spells out that EC-inspired regulations could now be used to require employers to assess, and take steps to control, stress to which their employees, including rescue workers, are exposed.     

Wage Dispersion and Equilibrium Search Models: Some Evidence from Italy

This paper provides a structural estimation of an equilibrium search model with on‐the‐job search and heterogeneity in firms' productivities using a sample of Italian male workers. Results indicate that arrival rates of offers for workers are higher when unemployed than when employed and firms exploit their monopsony power when setting wages. As a result, workers earn far less than their marginal product. The model is then used to study regional labour market differentials in Italy. Wide variation in frictional transition parameters across areas helps to explain persistent unemployment and wage differentials.     

Modeling the Audit Opinions Issued to Bankrupt Companies: A Two‐stage Empirical Analysis*

Many observers are dissatisfied with the accounting profession's ability to warn the public of upcoming bankruptcy filings. Since regulators and users tend to treat an unmodified audit opinion as a “clean bill of health,” they do not expect the business to fail in the near future. Research has shown that more often than not, auditors end up letting users down when it comes to predicting bankruptcy filings with audit opinions. Although auditors assert they are not responsible for predicting future events, it is very clear that their opinion decision is evaluated, at least in part, based on events that occur after the audit report date. The interesting and logical next step is to find out how companies exit bankruptcy. Do they liquidate or reorganize? Successful reorganization may, in the end, exonerate auditors and preserve their role as an early warning device. The opinion prediction model developed in the paper introduces a new bankruptcy resolution variable that proxies for the auditor's prognosis of the ultimate disposition of the soon‐to‐be‐bankrupt company. Using a sample of bankruptcy filings between 1982 and 1992, we find that auditors do not seem to be able to predict filings or resolution. Our tests of bankruptcy resolution support what auditors have been arguing for years: that they are not clairvoyant with respect to a client's future.     

Narrowing the gap—Equal Pay in Britain 1970–1986

In 1970, Britain introduced the Equal Pay Act aiming at eliminating wage differentials between women and men employed on the ‘same’ or ‘like’ work. Later, the European Communities Commission took infringement proceedings against Britain on the grounds that the equal Pay Act (1970) did not fully implement the European Community directive on the principle of equal pay for work of ‘equal value’. As a result, an amendment was introduced in 1984 to cover also the latter requirement. This paper focuses on the effects of the original Act upon female pay. It concludes that female pay increased significantly during the 1970s because of the Equal Pay Act (1970). The impact of legislation is then attributed to the peculiar way of female wage determination before equal pay was introduced rather than to the sophistication of the Act.