Internal versus External Control: An Analysis of Board Composition and Ownership in UK Takeovers

This paper examines the relationship between board composition, ownership structure and takeovers in the UK in the period 1989–1993. We compare board composition and ownership characteristics for a sample of 166 takeover targets with a matched sample of nontarget firms. We further disaggregate our sample depending on target management's attitude to the bid as well as the eventual outcome of the bid. We find little difference between board composition and ownership structure between all targets and the control group of nontargets. However, when we disaggregate the samples, we find that hostile targets are more likely to have different individuals in the role of chairman and CEO, and exhibit significantly lower levels of managerial ownership compared to both the control group of nontargets and targets of friendly takeovers. We also find that managerial ownership is positively related to takeover success. Overall, our results support the findings of a number of recent studies in the US by highlighting the important role managerial share ownership plays in the takeover process.     

Anthropological Takes on (Im)Mobility

In this introduction, we outline the general conceptual framework that ties the various contributions to this special issue together. We argue for the importance of anthropology to “take on” mobility and discuss the advantages of the ethnographic approach in doing so. What is the analytical purchase of mobility as one of the root metaphors in contemporary anthropological theorizing? What are the (dis)advantages of looking at the current human condition through the lens of mobility? There is a great risk that the fast-growing field of mobility studies neglects different interpretations of what is going on, or that only patterns that fit the mobilities paradigm will be considered, or that only extremes of (hyper)mobility or (im)mobility will be given attention. The ethnographic sensibilities of fieldworkers who learn about mobility while studying other processes and issues, and who can situate movement in the multiple contexts between which people move, can both extend the utility of the mobilities approach, and insist on attention to other dynamics that might not be considered if the focus is first and last on (im)mobility as such. In this special issue, we do not want to discuss human mobility as a brute fact but rather analyze how mobilities, as sociocultural constructs, are experienced and imagined.     

Coordination in Games with Strategic Complementarities: An Experiment on Fixed vs. Random Matching

In this article, we study behavior in a series of two‐player supply chain game experiments. Each player simultaneously chooses a capacity before demand is realized, and sales are given by the minimum of realized demand and chosen capacities. We focus on the differences in behavior under fixed pairs and random rematching. Intuition suggests that long‐run relations should lead to more profitable outcomes. However, our results go against this intuition. While subjects' capacity choices are better aligned (i.e., closer together) under fixed pairs, average profits are more variable. Moreover, learning is slower under fixed pairs—so much so that over the last five periods, average profits are actually higher under random rematching. The underlying cause for this finding appears to be a “first‐impressions” bias, present only under fixed matching, in which the greater the misalignment in initial choices, the lower are average profits.     

Trust games: A meta-analysis

We collect data from 162 replications of the Berg, Dickhaut, and McCabe Investment game (the “trust” game) involving more than 23,000 participants. We conduct a meta-analysis of these games in order to identify the effect of experimental protocols and geographic variation on this popular behavioral measure of trust and trustworthiness. Our findings indicate that the amount sent in the game is significantly affected by whether payment is random, and whether play is with a simulated counterpart. Trustworthiness is significantly affected by the amount by which the experimenter multiplies the amount sent, whether subjects play both roles in the experiment, and whether the subjects are students. We find robust evidence that subjects send less in trust games conducted in Africa than those in North America.     

The Governance Role of Audit Committees: Reviewing a Decade of Evidence

Even though audit committees have traditionally been a key component of corporate governance regulation, the last decade has witnessed a greater emphasis on audit committee regulation and a parallel intensification of academic research on the subject. This review synthesizes recent empirical research seeking to investigate various aspects of audit committees’ governance role. The review is structured around current regulatory expectations of audit committees seeking to document the extent to which specific characteristics of good practice influence various components of audit committee effectiveness. It is found that larger and more independent audit committees as well as those with financial expertise are more likely to seek a higher level of external audit coverage and assurance. There is also evidence that more independent audit committees are associated with the purchase of lower levels of non‐audit services from auditors, thereby seeking to preserve the independence of the external audit process. There seems a consensus that more independent audit committees and those with greater accounting/financial expertise have a positive impact on the quality of financial statements. Evidence on the stock market reaction to audit committee issues suggests that investors both welcome the presence of audit committees and react positively when members are appointed with relevant expertise. It is also found that internal auditors view certain audit committee characteristics, specifically independence, expertise and frequency of meetings, as leading to more effective audit committee performance. In summary, therefore, this review documents a significant amount of evidence offering support to current regulations concerning the desired characteristics of audit committees.     

Victimization Within Mutually Antipathetic Peer Relationships

Children's victimization experiences within relationships characterized by mutual animosity were examined among 210 6th‐ and 7th‐grade boys and girls. Participants reported that a greater proportion of mutual antipathies, relative to other peers, victimized them. Moreover, the receipt of victimization within antipathetic relationships was greater when the partner in the relationship was aggressive, physically strong, non‐victimized and had low levels of internalizing problems. Perceptions of victimization and levels of maladjustment were also found to be more strongly associated with victimization from mutual antipathies than with victimization from other peers. Together, these findings highlight the importance of studying victimization in the context of antipathetic relationships and contribute to an emerging literature on the developmental significance of these relationships.     

A Comparison of the Cost-efficiencies of the Sequential, Group-sequential, and Variable-sample-size-sequential Probability Ratio Tests

Wald and Wolfowitz (1948) have shown that the Sequential Probability Ratio Test (SPRT) for deciding between two simple hypotheses is, under very restrictive conditions, optimal in three attractive senses. First, it can be a Bayes-optimal rule. Second, of all level α tests having the same power, the test with the smallest joint-expected number of observations is the SPRT, where this expectation is taken jointly with respect to both data and prior over the two hypotheses. Third, the level α test needing the fewest conditional-expected number of observat ions is the SPRT, where this expectation is now taken with respect to the data conditional on either hypothesis being true. Principal among the strong restrictions is that sampling can proceed only in a one-at-a-time manner. In this paper, we relax some of the conditions and show that there are sequential procedures that strictly dominate the SPRT in all three senses. We conclude that the third type of optimality occurs rarely and that decision-makers are better served by looking for sequential procedures that possess the first two types of optimality. By relaxing the one-at-a-time sampling restriction, we obtain optimal (in the first two senses) variable-s ample-size- sequential probability ratio tests.     

Private agencies for public purposes: some new perspectives on policy making in health insurance between the wars

The approved societies, who were charged with the administration of health insurance in Britain, have long been blamed for the failure of the scheme to expand its coverage or scope in the interwar period. This paper takes a closer look at the administrative process and argues that societies were more vulnerable to central regulation than is commonly thought and were unable to resist cuts in public subsidies and extensions in liability introduced at their expense. They provided a convenient scapegoat for policies emanating primarily from the economic orthodoxy subscribed to by both government and the Treasury, modified to protect the unemployed during the slump. Health insurance policy was dominated to a large extent by the Government Actuary, who aimed to guarantee the cost effectiveness of the scheme. This paper also shows how administrative definitions and practices affected the classification of claimants to state social insurance at this time. It re-establishes the major weaknesses of the system, arguing that--in the light of recent discussions about reviving a system of national health insurance--we have much to learn from looking again at the experience of the interwar period.     

Estimation of the Intraclass Correlation Coefficient for the Analysis of Covariance Model

For the unbalanced analysis of covariance model with one covariate, a simple formula is given for the intraclass correlation coefficient estimator that results from Henderson's Method 3 estimation of variance components. Example calculations and the corresponding interpretations are given for a study of the correlation of iron content among brothers. The example illustrates the manner in which the estimator depends on the pattern of correlation between the covariate and the variable under investigation.     

Likelihood-based estimation for Gaussian MRFs

Markov random fields (MRFs) express spatial dependence through conditional distributions, although their stochastic behavior is defined by their joint distribution. These joint distributions are typically difficult to obtain in closed form, the problem being a normalizing constant that is a function of unknown parameters. The Gaussian MRF (or conditional autoregressive model) is one case where the normalizing constant is available in closed form; however, when sample sizes are moderate to large (thousands to tens of thousands), and beyond, its computation can be problematic. Because the conditional autoregressive (CAR) model is often used for spatial-data modeling, we develop likelihood-inference methodology for this model in situations where the sample size is too large for its normalizing constant to be computed directly. In particular, we use simulation methodology to obtain maximum likelihood estimators of mean, variance, and spatial-depencence parameters (including their asymptotic variances and covariances) of CAR models.