The discovery of five neutralities surprised the economics profession and forced the re-thinking of macroeconomic theory. Those neutralities are: the independence of consumption and current income (given wealth); the independence of investment and finance decisions (the Modigliani-Miller theorem); inflation stability only at the natural rate of unemployment; the ineffectiveness of macro stabilization policy with rational expectations; and Ricardian equivalence. However, each of these surprise results occurs because of missing motivation. The neutralities no longer occur if decision makers have natural norms for how they should behave. This lecture suggests a new agenda for macroeconomics with inclusion of those norms.

This study assesses the differential performance effects of learning mechanisms in alliance portfolios. Investigating two distinct types of learning mechanisms (i.e. integrating and institutionalizing mechanisms), the results show that different learning mechanisms have different performance effects at distinct levels of alliance experience.The results are based on a detailed survey among alliance managers and vice-presidents of 192 firms reporting on over 3400 alliances formed over the period 1997–2001.The main lesson from this study is that firms can deliberately develop their alliance capabilities by using integrating mechanisms to transfer prior experiences. Key words • alliance capabilities • alliance experience • alliance portfolio performance • learning mechanisms The road toward a thorough understanding of the learning mechanisms underlying

Abstract: The decline of stoc k markets in the transition economies must make the phenomenon of ownership concentration go hand in hand with a more important due diligence and a search for solutions preserving the channel of external financing. In the absence of concrete formal procedures that pay back the restructuring effort, majority owners decisively affect the allocation of companies ’ wealth in detrimental of small shareholders. When mandatory bid rule is effective, completing takeovers at high prices makes capital markets shrink, affecting on long term the mere capitalist conception of the economic regime of transition economies. Some new forms of enforcement mechanisms have to be proposed in order to mitigate the classical corporate governance conflict between large and minority shareholders. Our approach aims to investigate an option asking for private law enforcement, which could encourage controlling shareholder to disclose the real status of the business being sold: representation and warranties in takeover agreements. In this respect, we propose a screening model, in the case of a cash—financing acquisition. The purpose of this formalization is to determine the features of the acquisition contract in equilibrium, defined by the amount of cash offered for control and by the fraction of liability assumed by the target in two different contexts: (i) when the buyer and the target have the same information; and (ii) when information asymmetry arises between the two parties. The model provides some theoretical predictions concerning the optimal amount of cash, the acquisition premium, and the overpayment of the target. It also contributes to the debate on the type of legal changes relevant for transition economies.

and International Merger and Acquisition Activity This study examines the role that CEO overconfidence plays in an explanation of international mergers and acquisitions during the period 2000-2006. Using a sample of CEOs of Fortune Global 500 firms over our sample period, we document a number of demographic and national patterns in the global distribution of overconfident CEOs. We find that the Hofstede measures of national culture partially explain these geographical patterns in the dispersion of overconfident CEOs. We conclude that CEO overconfidence is an international phenomenon, although it is most extensively observed in younger individuals heading firms headquartered in Christian countries that encourage individualism while deemphasizing a long-term orientation in their national cultures. We also find that overconfidence is related to a number of aspects of merger activity. CEO overconfidence helps to explain the number of offers made by a CEO, the

This study examines whether the “soft ” information present in merger and acquisition announcement press releases contains incrementally valuable news relative to traditional “hard ” data and analyst generated information. We use Diction, a textual-analysis program, to construct measures of optimism and synergy expectations for more that 1,400 mergers and acquisition announcements over the period 1995 to 2007. We find that our measure of synergy expectations is inversely related to acquirer announcement period returns and continues to be negatively related to long-term performance up to two years post merger. We find that managerial optimism is not valued by the market and is especially discounted when analysts hold contrary views regarding the attractiveness of a merger. Overall, we conclude that the soft data contained in M&A announcements provides meaningful information to investors.