Corporate Governance in State-Owned and Privately-Owned Enterprises
by Despoina Chouliara
Abstract
In this paper I examine the principal/agency relationship in corporate governance and introduce it in a steady state growth model. More specifically, I will model a profit-maximizing privately-owned enterprise and a series of state-owned enterprises with varying economic goals. I will use the insights of agency theory to revisit the debate about public versus private ownership with the objective of exploring how ownership a↵ects a firm’s performance and whether the sole objective of profit-maximization is optimal for the firm and the aggregate economy. Hence, the scope of this paper is to enhance our understanding of the channels through which corporate governance influences the aggregate economy.
Professor Pietro Peretto, Faculty Advisor
Professor Michelle Connolly, Faculty Advisor
JEL Codes: D2, D21, O40
Regulatory Uncertainty: The Impact of the 2015 Open Internet Order on Broadband Infrastructure Investment
By Dane Bourcy Burkholder and Chin Jie Lim
This paper analyzes the impact of the United States Federal Communication’s (FCC) March 2015 Open Internet Order (OIO) on broadband infrastructure investment outcomes such as changes in speed of services, market entry. We find that higher broadband investment levels deter potential entrants and may weed out competition amongst incumbent ISPs from December 2014 to December 2016. The 2015 OIO appears to have negatively impacted the probability of an ISP entering a census block for the first time by 7.17% during any six-month time periods from June 2015 to December 2016 compared to the time period from June 2010 to December 2014.
Advisor: Dr. Michelle Connolly | JEL Codes: D21, D25, D42, L20, L50, L96
The Market for Apples: A Theory of Identity and Consumption
By Clement Lee
This paper presents an economic model of the effects of identity and social norms on consumption patterns. By incorporating qualitative studies in psychology and sociology, I propose a utility function that features two components – economic (functional) and identity elements. This setup is extended to analyze a market comprising a continuum of consumers, whose identity distribution along a spectrum of binary identities is described by a Beta distribution. I also introduce the notion of salience in the context of identity and consumption decisions. The key result of the model suggests that fundamental economic parameters, such as price elasticity and market demand, can be altered by identity elements. In addition, it predicts that firms in perfectly competitive markets may associate their products with certain types of identities, in order to reduce product substitutability and attain price–setting power.
Advisor: Michelle Connolly, Rachel Kranton | JEL Codes: D11, D21 | Tagged: Consumption, Firm Theory, Heterogeneous Agents, Identity, Social Norm
Book-building versus Auctions: An investigation into which IPO pricing and selling method more effectively promotes the aims of an IPO issuer
by Amrith Krushnakumaar
Abstract
In recent years, book-building has emerged as a method of choice among investment banks in the U.S and around the world for pricing and selling initial public offerings (IPOs). Proponents of the book-building method argue that discriminatory share allocations, the pooling of IPOs and other standard book-building practices price new shares more accurately, thus enabling the issuer to maximize proceeds received from the IPO, and minimize fluctuations in share price immediately after the IPOs. However, in view of the average first-day price increases common among IPOs marketed by the book-building method, and the potential for investment banks to abuse their power when allocating shares, skeptics claim that book-building is inadequate in helping the issuer meet its aims. Amid calls by regulators and critics to reform the existing book-building method, W.R Hambrecht, an investment bank, introduced the auction method of pricing and selling IPOs for the first time in the United States in 1999. This paper aims to determine which method might be more effective in promoting an issuer’s aims by employing a matched methodology to fairly compare more recent book-building and auction IPOs in the U.S.
Professor Edward Tower, Faculty Advisor
Professor Allen H. Huang, Faculty Advisor
JEL Codes: D21, D22, E44, G1,
