JOE RAELIN, Northeastern University - College of Business Administration
Email: j.raelin@neu.edu

This paper takes up an important question that has puzzled learning theorists in the critical tradition, namely, are the dialogic practices of emancipatory discourse sufficient to change oppressive conditions in the power structure of modern organization? In other words, can critical dialogic processes change the social order to close the gap between a privileged class of managers and workers, or do we require class struggle and structural reform? By elaborating on such methods as dialogue, public reflection, and action science, the author attempts to make the case that marginalized groups in society might find their voice in projects that are intentionally contextualized and publicly reflective. These methods have found applications in some illustrated critical pedagogies, though not without strain induced from conventional institutions. The paper concludes with an enumeration of some conditions under which emancipatory discourse and liberationist struggle may coincide.

PAUL M. VAALER, University of Minnesota, Twin Cities - Carlson School of Management
Email: vaal0001@umn.edu
BURKHARD N. SCHRAGE, Singapore Management University
Email: bschrage@smu.edu.sg

We question previous research assuming that privatizing firm performance generally benefits from decreasing state ownership and the passage of time, both of which purportedly align principal-agent incentives promoting organizational decision-making that increases shareholder value. When state ownership shifts from majority and controlling to minority and non-controlling the performance impact may be positive in the short-run, particularly where there is instability in the local investment policy environment. Consistent with this proposition, we develop and test hypotheses derived from a minority and non-controlling or "residual" state ownership framework, grounded in credible privatization and institutional theory. We propose that: 1) residual state ownership positively affects shareholder returns after strategic decisions by privatizing firms because it signals state support for managerial initiatives; 2) the passage of time since initial privatization negatively affects shareholder returns after strategic decisions by privatizing firms because initial undertakings in support of the privatizing firm are reversed; and 3) home-country investment policy stability moderates these two effects - greater stability obviates the need for residual state ownership and slows policy reversals over time. We find empirical support for our residual state ownership framework in event study analyses of cumulative abnormal returns ("CARs") associated with 196 major investments announced from 1986-2001 by 15 privatizing telecoms from around the world. CARs are positive at 5-25% state ownership levels but turn negative at higher state ownership levels. CARs turn sharply negative within 1-2 years from initial privatization dates. Increasing policy stability diminishes positive ownership and negative time effects on CARs. Results confirm the potential supporting role that residual state ownership can play in enhancing strategic decision-making and financial performance by privatizing firms, particularly where there is instability in the home-country investment policy environment.

ZHICHUAN FRANK LI, Arizona State University - W.P. Carey School of Business
Email: frankli@asu.edu

Endogeneity problem has always been one, if not the only one, obstacle to understand the true relationship between CEO characteristics and firm performance. Variables are typically endogenous, instrument variables are scarce in many settings, and causality relations are complicated. In this paper, I try to use different econometric methods to mitigate the endogeneity problem. Incomplete and preliminary as it is, this paper is the first to summarize the methodologies to tackle the endogeneity between CEO power and firm performance. I find that CEO power and subsequent firm performance are weakly and negatively correlated, suggesting that in some firms, CEO are overpowered.

DAVID I. MICHAELS, Delaware Court of Chancery, UCLA School of Law
Email: david.i.michaels@gmail.com

In this article I present the first empirical study analyzing whether and to what extent In re WorldCom, Inc. Securities Litigation impacted class action litigation brought under Section 11 of the Securities Act of 1933, one of the securities laws' principal liability provisions. The study tests the hypothesis of an article I previously published in which I argued that WorldCom would encourage plaintiffs to increasingly utilize Section 11 as a means to obtain settlement awards in securities class action cases. WorldCom, I argued, made it virtually impossible for outside directors to successfully assert Section 11's "due diligence" defense-an affirmative defense for parties involved in securities offerings who have completed the requisite investigation of the information disseminated to investors in connection with public offerings of securities-even though historically outside directors were held to a low standard. At the same time, outside directors' liability under Rule 10b-5, the securities laws' most broadly sweeping liability provision, has historically been negligible. Therefore, I concluded that plaintiffs would likely assert more Section 11 class actions relative to Rule 10b-5 actions. I described why this result is sub-optimal and proposed an effective solution. In this article, I test that hypothesis by utilizing empirical methodology, and conclude that there has been a statistically significant rise in post-WorldCom Section 11 class action flings relative to Rule 10b-5 class action filings. This supports the conclusion that the SEC should reexamine the Section 11 standard for outside directors.