Monika Tarsalewska

External Openness and Economic Growth in Developing Countries

This paper investigates empirically the relationship between two channels of external openness: international trade, foreign direct investment (FDI), and the rate of economic growth implied by the leader–follower model. The predictions of the theory are tested for the group of 97 developing countries in the period of 1974–2006 using static and dynamic panel data estimation methods. The estimation results show that both international trade and FDI positively contribute to growth.

Privatization, Convergence, and Growth: Evidence for Transition Economies

In this paper, the authors study the empirical relationship between privatization, income convergence, and economic growth using the open economy versions of two competing growth models. The predictions of the theory are tested empirically for transition countries using static and dynamic panel data estimation techniques. The results for privatization are robust with respect to the estimation method used and reveal that only small-scale privatization is positively associated with growth. The evidence for external openness is mixed and depends on the estimation method employed and the presence of individual time effects for particular years of the sample. In most specifications, the authors document the presence of the income convergence effect. This implies that privatization and external openness have only temporary effects on the rate of growth in transition countries.

Pre-Going Private Ownership Around the World: Pre-Going Private Ownership Around the World

We examine ownership structure prior to going private transactions in 39 countries around the world from 2002 to 2014. The data indicate strong and consistent evidence that pre-going-private ownership is characterized by higher institutional and corporate ownership. Family ownership lowers the probability of a public to private transaction. Concentrated ownership facilitates public to private transactions. In addition, the data indicate that antidirector (shareholder) rights across countries affect going private transactions in ways consistent with potential wealth expropriation of minority shareholders.

Venture Capital and Material Weaknesses in Internal Control

The Sarbanes-Oxley Act requires management and board of directors to be involved in establishing and maintaining good quality internal control systems and the evaluation and disclosure of any deficiencies or weaknesses that could potentially result in a material error. We find that venture capital backing is negatively associated with disclosures of material weaknesses in internal control. We show that material weakness disclosure is much more likely to be informative for firms backed by VCs: material weakness disclosure is followed by subsequent financial restatements for VC-backed firms, but not other firms. Furthermore, we find that firms backed by more reputable VCs have more effective controls as evaluated by management and auditors.

Pre-Going Private Ownership Around the World

Going private transactions are often highly leveraged, and give rise to potential agency conflicts among existing shareholders. But who exactly are those shareholders, and under what legal conditions are these transaction more likely to occur? We examine ownership structure prior to going private transactions in 33 countries around the world from 2002 to 2014.The data indicate strong and consistent evidence that pre-going private ownership is characterized by higher institutional and corporate ownership. Family ownership lowers the probability of a public to private transaction. Stronger creditor rights increase the probability of going private particularly for whole company and institutional buyouts.

10-K Filing Length and M&A Efficiency

This article explores the relationship between 10-K filing length and M&A efficiency. We posit two effects: 1) an “information” effect, where lengthier 10-K filings contain more information about the target, and thus the acquirer can more accurately assess the benefits of the transaction, and, conversely, 2) a “complexity” effect, where lengthier 10-K filings are overly complex, and thus the acquirer faces greater difficulty in extracting meaningful information about the target. On average, we find that the former dominates the latter. This result is robust to controlling for different measures of textual complexity, and for the length of time the acquirer had access to private information about the target. In subsequent analyses, we find stronger results when less private information about the target is available to the acquirer, and that the relationship between 10-K filing length and M&A efficiency takes the form of an inverted “J-shape,” suggesting a non-linear relationship between 10-K filing length and M&A efficiency.