Hugo J. Faria

Does the Japanese stock market react differently to public security offering announcements than the US stock market

Abstract We examine the equity valuation effects of common stock, straight debt, warrant bond and convertible bond offerings by Japanese firms during the period 1984–1991. We find that Japanese stock market reactions to announcements of common stock, straight debt and warrant bond offerings are quite similar to those of the US market. The only inconsistency is in convertible bond offerings where we find insignificant abnormal returns. Our results provide some evidence that the underlying financial factors in both countries may be similar and strong enough to overcome the effect of environmental and institutional differences.

Evaluating Alternative Measures of Institutional Protection of Private Property and Their Relative Ability to Predict Economic Development

Economic theory and a growing body of empirical literature suggest that private property rights are an important determinant of economic development. In this paper, four commonly used measures of institutional protection of private property rights are assessed, including their relative ability to predict the level of GDP per capita. The risk of expropriation measure from the International Country Risk Guide, the rule of law measure from the World Governance Indicators, and the property rights index from the Economic Freedom of the World exert a similar and robust positive impact on the level of economic development. The executive constraints measure from Polity IV exerts a much smaller impact, and is sensitive to the model specification. The relative strengths and weaknesses of each measure are also addressed. The analysis provides researchers with guidance on selecting an appropriate measure of private property institutions for studies of economic performance.

Does corruption cause encumbered business regulations? An IV approach

In this research we attempt to understand the effects of corruption on business regulations measured by number of procedures, time and costs involved in satisfying governmental requisites. Using Two-Stage-Least Squares (2SLS) methods we lessen the problems associated with endogeneity and uncovered the existence of a robust, positive, statistically significant and quantitatively large direction channel from corruption to encumbered business regulations. These results suggest the need to deter corruption in order to improve business regulations. The quest to reduce corruption worldwide acquires new relevancy given the findings of Djankov et al. (2006) that countries with simple and transparent regulations grow faster.

Do High Levels of Economic and Political Freedom Cause Less Corruption

A growing body of evidence documents numerous and deleterious economic and social consequences of corruption. These findings beg the question: How to reduce corruption? We exploit exogenous sources of variation in latitude, ethno linguistic fractionalization, settler mortality rates, legal origin and initial values of economic and political freedom as instrumental variables for economic freedom and political freedom. We document the existence of a negative, robust, statistically significant and economically consequential impact of economic and political freedom on corruption and both freedoms are complementary. However, “horse race” results suggest that economic freedom trumps political freedom in the effort to deter corruption.