Abstract We study the importance of culture, as measured by the strenght of family ties, on economic behavior and attitudes. We define our measure of family ties using individual responses from the World Value Survey regarding the role of the family and the love and respect that children need to have for their parents for over 70 countries. We show that strong family ties imply more reliance on the family as an economic unit which provides goods and services and less on the market and on the government for social insurance. With strong family ties home production is higher, labor force participation of women and youngsters, and geographical mobility, lower. Families are larger (higher fertility and higher family size) with strong family ties, which is consistent with the idea of the family as an important economic unit. We present evidence on cross country regressions. To assess causality we look at the behavior of second generation immigrants in the US and we employ a variable based on the grammatical rule of pronoun drop as an instrument for family ties. Our results overall indicate a significant influence of the strength of family ties on economic outcomes.

This paper uses a large panel of financial flow data from banks to assess how institutions affect international lending. First, employing a time varying composite institutional quality index in a fixed-effects framework, the paper shows that institutional improvements are followed by significant increases in international finance. Second, cross-sectional models also show a strong effect of initial levels of institutional quality on future bank lending. Third, instrumental variable estimates suggest that the historically predetermined component of institutional development is also a significant correlate of international bank inflows. These results thus suggest that institutional underdeveloped can explain a significant part of Lucas (1990) paradox of why doesn’t capital flow from rich to poor countries. The analysis also does a first-step towards understanding which exactly institutional features affect international banking.

Abstract We find strong evidence that three key dimensions of national culture (trust, hierarchy, and individualism) affect merger volume, synergy gains, deal structure, and the division of gains between bidders and targets in cross-border mergers. First, the volume and gains of cross-border mergers are lower when countries are more culturally distant. Second, firms from countries that are more trusting and hierarchical capture a larger share of combined merger gains. Finally, the use of termination fees, tender offers, and the form of payment vary systematically by cultural differences. The results are the first large-scale evidence that cultural differences have substantial impacts on multiple aspects of cross-border mergers. Lost in Translation? The Effect of Cultural Values on Mergers Around the World Abstract We find strong evidence that three key dimensions of national culture (trust, hierarchy, and individualism) affect merger volume, synergy gains, deal structure, and the division of gains between bidders and targets in cross-border mergers. First, the volume and gains of cross-border mergers are lower when countries are more culturally distant. Second, firms from countries that are more trusting and hierarchical capture a larger share of combined merger gains. Finally, the use of termination fees, tender offers, and the form of payment vary systematically by cultural differences. The results are the first large-scale evidence that cultural differences have substantial impacts on multiple aspects of cross-border mergers.

Krister Ahlersten and Tomas Thörnqvist. This material is based upon work supported by the Agence Nationale de la Recherche under a Chaire d’Excellence to Calvet, BFI under a Research Grant to Sodini, the HEC This paper investigates the determinants of financial risk-taking in a panel containing the asset holdings of Swedish twins. We measure the impact on risk-taking of a broad set of demographic, financial, and portfolio characteristics, and use yearly twin pair fixed effects to control for genes and shared background. We report a strong positive relation between risky asset market participation and financial wealth. Among participants, the average financial wealth elasticity of the risky share is significantly positive and estimated at 22%, which suggests that the average individual investor has decreasing relative risk aversion. Furthermore, the financial wealth elasticity of the risky share itself is heterogeneous across investors and varies strongly with characteristics. The elasticity decreases with financial wealth and human capital, and increases with habit, real estate wealth and household size. As a

The empirical literature on economic growth and development has moved from the study of proximate determinants to the analysis of ever deeper, more fundamental factors, rooted in long-term history. A growing body of new empirical work focuses on the measurement and estimation of the effects of historical variables on contemporary income by explicitly taking into account the ancestral composition of current populations. The evidence suggests that economic development is affected by traits that have been transmitted across generations over the very long run. This article surveys this new literature and provides a framework to discuss different channels through which intergenerationally transmitted characteristics may impact economic development, biologically (via genetic or epigenetic transmission) and culturally (via behavioral or symbolic transmission). An important issue is whether historically transmitted traits have affected development through their direct impact on productivity, or have operated indirectly as barriers to the diffusion of productivityenhancing innovations across populations. (JEL J11, O33, O47, Z13) “The further backward you look, the further forward you can see” (attributed to Winston Churchill). 1 1.

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The vast majority of cross-border mergers involve private firms outside of the United States. We analyze a sample of 56,978 cross-border mergers between 1990 and 2007. We find that geography, the quality of accounting disclosure, and bilateral trade increase the likelihood of mergers between two countries. Valuation appears to play a role in motivating mergers: firms in countries whose stock market has increased in value, whose currency has recently appreciated, and that have a relatively high market-to-book value tend to be purchasers, while firms from weaker-performing economies tend to be targets. THE VOLUME OF CROSS-BORDER acquisitions has been growing worldwide, from 23 % of total merger volume in 1998 to 45 % in 2007. Conceptually, cross-border mergers occur for the same reasons as domestic ones: two firms will merge when their combination increases value (or utility) from the perception of the acquiring firm’s managers. However, national borders add an extra element to the calculus of domestic mergers because they are associated with

The World Values Survey (WVS) question on trust has been widely used to study the economic effect of trust. Recent work, however, questions its validity as an accurate measure of trust by showing that it is not correlated with the sender’s behaviour in the Berg et al. trust game. What measure then should we trust to measure trust? In this article, we argue that the sender’s behaviour in a trust game is driven both by beliefs and by preferences. In contrast, WVS-like measures capture mostly the beliefbased component of a trust game. In the last 15 years, economists have increasingly paid attention to the role trust plays in economic activity. From economic growth (Knack and Keefer, 1997) to size of firms (La Porta et al., 1997; Bloom et al., 2009), from financial development (Guiso et al., 2004, 2008) to international trade and investments (Guiso et al., 2009), many economic phenomena have been related to the level of trust. But what is trust? And how do we measure it? ‘When we say we trust someone or that someone is trustworthy – writes Gambetta (2000) – we implicitly mean that the probability that he will perform an action that is beneficial (…) is high enough for us to consider in engaging in some form of

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Using a matched employer-employee data-set, we analyze how workforce diversity in cultural back-ground, education and demographic characteristics affects productivity of firms in Denmark. Implement-ing a structural estimation of the firms ' production function (Ackerberg et al., 2006) we find that labor diversity in education significantly enhances a firm's value added. Conversely, diversity in ethnicity and demographics induces negative effects on firm productivity. Hence, the negative effects, coming from com-munication and integration costs connected to a more culturally and demographically diverse workforce, seem to outweigh the positive effects coming from creativity and knowledge spillovers. JEL Classification: C23, J24, L20.