Sweden has a high degree of separation of ownership from control through pyramids, dual-class shares, and cross-holdings. This increases the potential for private benefits of control. However, Sweden's extralegal institutions—tax compliance and newspaper circulation—are consistent with greater shareholder protection. Using data on Swedish mergers we find limited evidence of shareholder expropriation. Apparently, Sweden's extralegal institutions offset the drawback of weak corporate governance.

This paper investigates the effect of (potential) market size on entry of new drugs and pharmaceutical innovation. Focusing on exogenous changes driven by U. S. demographic trends, we find a large effect of potential market size on the entry of nongeneric drugs and new molecular entities. These effects are generally robust to controlling for a variety of supply-side factors and changes in the technology of pharmaceutical research.

To evaluate early embryo development, 248 good to excellent bovine morulae were cultured in Ham's F-10 medium, supplemented with 10% steer serum, uterine flushings from Days 6, 10 or 15 following estrus (0.01, 0.1, 1.0 and 10% protein; 64 mg protein/ml), and 1.0% uterine flushings and 10% steer serum. Final development scores for embryos in steer serum were significantly higher (range across experiments was: 4.06 to 4.37) than for embryos cultured in uterine flushings alone (-0.23 to 0.52). Treatment means were not different (P >0.05) when 10% steer serum was added to 1.0% uterine flushings. A higher percentage of embryos in 10% steer serum (92%) than in 10% steer serum plus 1.0% uterine flushing from Day 6 (33%), Day 10 (45%) and Day 15 (50%) developed to hatched blastocysts. Embryos cultured in 1.0% Day 6 uterine flushings plus 10% steer serum required more time to attain the early blastocyst and blastocyst stages, while embryos in 1.0% Day 15 uterine flushings and 10% steer serum developed at the same rate as controls to the expanded blastocyst stage, but hatched sooner (72.8 vs 96.5 h). These results suggest substance(s) in uterine secretions can have inhibitory and stimulatory influences on early bovine embryo development.

The existing literature reports insignificant `total' exposure for multinational or exporting firms, where total exposure incorporates both firm-specific and macroeconomic effects. We propose a dual-effect hypothesis to explain this result which seemingly contradicts conventional wisdom. According to our proposed hypothesis, firms are affected by both the domestic economy and foreign markets. These effects are at least partially offsetting for exporters and additive for importers. The resulting predictions of insignificant total exposure for exporters and positive total exposure for importers are borne out in our tests. The literature also reports insignificant `residual' exposure for multinationals or exporting firms, where residual exposure estimates the firm-specific exposure. This result is explained by biases in the residual exposure estimates introduced by the choice of the value-weighted market index as the control portfolio. We propose an equally-weighted portfolio of purely domestic firms as an alternative portfolio to reduce such biases and report significantly negative exposure for exporters and significantly positive exposure for importers, as predicted by theory.

In May 1991 fifteen thousand Ethiopian Jews were brought to Israel in an overnight airlift and sorted in a haphazard and essentially random fashion to absorption centers across the country. This quasi-random assignment produced a natural experiment whereby the initial schooling environment of Ethiopian children can be considered exogenous to their family background and parental decisions. We examine the extent to which the initial elementary school environment affected the high school outcomes of Ethiopian children, using administrative panel data on the educational career of each child in Israel through much of the 1990s. The results show that the early schooling environment has an important effect on high school dropout rates, repetition rates, and the passing rate on matriculation exams necessary to enter college. The results are robust to using alternative measures of the schooling environment and to the inclusion of community fixed effects, which suggests that aspects of the elementary school itself are important for high school success.

We provide a new and more complete analysis of the origins of the Dust Bowl of the 1930s, one of the most severe environmental crises in North America in the twentieth century. Severe drought and wind erosion hit the Great Plains in 1930 and lasted through 1940. There were similar droughts in the 1950s and 1970s, but no comparable level of wind erosion. We explain why. The prevalence of small farms in the 1930s limited private solutions for controlling the downwind externalities associated with wind erosion. Drifting sand from unprotected fields damaged neighboring farms. Small farmers cultivated more of their land and were less likely to invest in erosion control than larger farmers. Soil conservation districts, established by the government after 1937, helped coordinate erosion control. This “unitized” solution for collective action is similar to that used in other natural resource/environmental settings.

I describe a model of earnings and earnings growth and I demonstrate how this model may be used to obtain estimates of the expected rate of return on equity capital. These estimates are compared with estimates of the expected rate of return implied by commonly used heuristics—viz., the PEG ratio and the PE ratio. Proponents of the PEG ratio (which is the price-earnings [PE] ratio divided by the short-term earnings growth rate) argue that this ratio takes account of differences in short-run earnings growth, providing a ranking that is superior to the ranking based on PE ratios. But even though the PEG ratio may provide an improvement over the PE ratio, it is arguably still too simplistic because it implicitly assumes that the short-run growth forecast also captures the long-run future. I provide a means of simultaneously estimating the expected rate of return and the rate of change in abnormal growth in earnings beyond the (short) forecast horizon—thereby refining the PEG ratio ranking. The method may also be used by researchers interested in determining the effects of various factors (such as disclosure quality, cross-listing, etc.) on the cost of equity capital. Although the correlation between the refined estimates and estimates of the expected rate of return implied by the PEG ratio is high, supporting the use of the PEG ratio as a parsimonious way to rank stocks, the estimates of the expected rate of return based on the PEG ratio are biased downward. This correlation is much lower and the downward bias is much larger for estimates of the expected rate of return based on the PE ratio. I provide evidence that stocks for which the downward bias is higher can be identified a priori.

This article provides theoretical and empirical analyses of a firing costs model with adverse selection. Our theory suggests that, as firing costs increase, firms increasingly prefer hiring employed workers, who are less likely to be lemons. Estimates of re‐employment probabilities from the National Longitudinal Survey of Youth support this prediction. Unjust‐dismissal provisions in U.S. states reduce the re‐employment probabilities of unemployed workers relative to employed workers. Consistent with a lemons story, the relative effects of unjust‐dismissal provisions on the unemployed are generally smaller for union workers and those who lost their previous jobs due to the end of a contract.