BINH BUI, Victoria University of Wellington
Email: binh.bui@vuw.ac.nz

This paper aims to answer one research question: what are the main drivers of mergers and acquisitions (M&A) and disintegration of medium accounting firms during 1960s-1990s? This question is addressed by an investigation into the history of one medium national accounting firm, Kendon Cox and Co. from 1970 to 1988. Two main data sources were utilized in the paper, including: i) oral history transcripts by Baskerville (2002) and ii) New Zealand Society of Accountants' yearbooks published from 1976 to 1994. The findings suggest that international affiliation with its related benefits was the main driver of the various mergers throughout the firm's history. It is found that the KPMG merger in 1985-1986, and subsequently the loss of international affiliation had triggered Kendon Cox & Co. to disintegrate. Besides, it is the lack of financial and cultural integration among local branches and consequently a lack of a national identity that led to the firm's total fragmentation in the late 1980s. The findings of the study contributed to the literature on i) firm lifecycles, ii) firm strategy and iii) the drivers and success factors of M&A.

ARVIND ASHTA, Burgundy School of Business (ESC Dijon), France - CEREN
Email: aashta@escdijon.com
DJAMCHID ASSADI, American University of Paris
Email: dassadi@aup.fr

Microcredit interest costs remain higher than those of commercial banks in spite of significant donor funds, largely owing to transaction costs relative to small loan sizes. With the rise of Web 2.0 and online social interactivity, can these transaction costs be reduced through peer to peer lending? Peer to Peer lending and Web 2.0 have two things in common. The first common denominator is that both of them are rather newcomers in their respective fields and growing fast. The second is that they are both based on mutual and social exchanges between people instead of centrally controlled communications and relationships. The main objective of this paper was to investigate whether they are integrated to support a higher level of social interactions and associations for less (transaction) costs. We find that peer to peer lending consists of diverse websites of microcredit (Kiva, Wokai), social investing (MicroPlace) as well as small loans at market rates (Prosper, Zopa, Lending Club), and even lending between friends and family members (Virgin Money). The paper studies the use of web 2.0 technologies (blogs, interactivity between lenders and buyers, peers' reviews and comments, peers communities and chats) in six such peer-to-peer lending sites. It finds that most of the peer-to-peer lenders are in fact intermediaries between the peers (lender and borrowers) and there is little direct contact between the peers. One website used none of the web 2.0 tools. None of the websites used all the web 2.0 tools. The impact on transaction costs is therefore very little.

CLAIRE TOMKINS, Stanford University - Management Science & Engineering
Email: ctomkins@stanford.edu
THOMAS A. WEBER, Stanford University - Management Science & Engineering
Email: webert@stanford.edu

Temporary resource transfers, as achievable under option contracts, reduce transaction cost associated with the sale of permanent resource rights. As such, they facilitate the realization of gains from trade that would go unrealized under failed permanent transfers. In the California water sector, there has been considerable resistance to permanent water rights transfers. The advent of option trading has led to an increase in urban-agricultural water transfers and has the potential to stimulate the California water market. This paper develops a bilateral option contracting model for water, which includes the possibility of conveyance losses and random delivery. Seller-optimal and socially optimal option contracts are characterized in terms of relevant upfront and strike prices, as well as contract volumes, from an ex-ante and an ex-post point of view. Actual contract prices are compared to model-predicted prices, and the social welfare gains from option contracting in the California water market to date are estimated. The sensitivity of future gains to commodity prices and the cost of electricity, implying the marginal cost of water conveyance, is also discussed.

DOUG GUTHRIE, New York University - Department of Management and Organizational Behavior
Email: doug.guthrie@nyu.edu
ZHIXING XIAO, China Europe International Business School (CEIBS)
Email: xzhixing@ceibs.edu
JUNMIN WANG, affiliation not provided to SSRN
Email: wangjm0609@sina.com

Across the social sciences, agency theory has become one of the basic frameworks through which to analyze the organizational problem of aligning interests between owners (principals) and those who carry out the work of the corporation (agents). Less often analyzed within this framework is the problem of multiple principals with different incentives and agendas. In today's global economy, this is a problem that institutional investors from around the world encounter on a regular basis. We argue that ownership concentration holds the key to dealing with the collective action problems that emerge in these circumstances. To provide empirical insight into these issues, we analyze the impact of ownership concentration in multiple-principal firms that have been listed on the Shanghai and Shenzhen stock exchanges over the last decade. Through these data, we show that the strongest factor shaping performance among this population of firms is ownership concentration: the higher a firm's ownership concentration, the better it performs, both in terms of profitability and in terms of efficiency. Further, as markets in this context have become more competitive over the last decade, overall profitability has declined, but the effect of ownership concentration has increased, suggesting that ownership concentration becomes even more important for achieving corporate goals as markets become more competitive.

SANG HOO BAE, Clark University - Department of Economics
Email: sbae@clarku.edu

The purpose of this paper is to analyze how digitalization affects pricing and private copy protection in contents industries. Digitalization enables content providers and online retailers to implement copy protection at different stages of creation and distribution of contents. We construct a model of vertical relationship where an upstream [a downstream] firm is considered as a content provider [a retailer]. Three different business models are proposed according to the ownership structure of copy protection determined the right to implement by a vertically-integrated entity, an upstream firm, and a downstream firm. In this setup we show that the results are dependent upon the degree of opportunistic behavior responding to increasing rival (piracy) costs under the different copy protection ownership. In addition, to address the change in demand side with digitalization we consider two different types of piracy differentiated by distribution channels (e.g., non-digital versus digital). We show that the effect of piracy on price and private copy protection depend critically on the nature of distribution channels and the dimension of differentiation between originals and pirated contents. In particular, strengthening IPR protection results in a price hike for the both cases, while we have opposite changes in quantities and the level of copy protection depending on different types of piracy.

PEHR-JOHAN NORBÄCK, Research Institute of Industrial Economics (IFN)
Email: PJN@IUI.SE
LARS PERSSON, Research Institute of Industrial Economics (IFN), Centre for Economic Policy Research (CEPR)
Email: LARSP@IUI.SE
JOACIM TÅG, Research Institute of Industrial Economics (IFN), Swedish School of Economics and Business Administration - Department of Economics, Helsinki Center of Economic Research (HECER)
Email: joacim.tag@hanken.fi

In this paper, we study entrepreneurial innovations in an industry characterized by network effects. We show that the presence of network externalities tends to make the entrepreneur prefer sale to entry. Moreover, we also show that the incentive to innovate for entry decreases when network effects become stronger, whereas there is an increase in the incentive for innovation for sale. Moreover, we show that increasing the degree of industry-wide standardization furthers the goal of increasing entry by entrepreneurs. However, this may come at the cost of reducing the research intensity by reducing the bidding competition among incumbents over the innovations of entrepreneurs.