This study provides evidence of the role of both legal and extra-legal institutions in limiting the income management induced by the detachment of control rights from the cash flow rights of ultimate owners. The tests use a unique, comprehensive data set for firm-level control and ownership structures from 9 East Asian and 13 Western European countries. Univariate regressions show that income management that is induced by the wedge between control rights and cash flow rights is significantly limited in countries with high statutory protection of minority rights (proxied by legal tradition, minority rights protection, the efficiency of the judicial system, or disclosure standards) and effective extra-legal institutions (proxied by the effectiveness of competition laws, diffusion of the press, and tax compliance). Furthermore, multiple regression results show that a common law tradition and an efficient judicial system subsume the effects of the other legal institutions, and that a high rate of tax compliance subsumes the effects of the other extra-legal institutions in curbing insider income management. It is surprising that a high rate of tax compliance ultimately has a greater effect than legal tradition and the efficiency of the judicial system. Although this finding is unexpected, given prior evidence on the dominant roles of legal institutions in macroeconomic issues and corporate policies, it is consistent with the recent argument that effective tax enforcement is like a public good in that it can reduce insiders' private control benefits. An implication of this finding is that closer attention to extra-legal institutions has the potential to enhance our understanding of the institutional reforms needed to limit insider private control benefits. Copyright University of Chicago on behalf of the Institute of Professional Accounting, 2004.

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The diffuse coevolution between two moth species (Epicephala lativalvaris and E. mirivalvata) and two plant species (Breynia fruticosa and B. rostrata) is reported based on field observations and indoor experiments conducted in Hainan and Fujian, China. Study results showed that the two Epicephala species jointly pollinated the two Breynia species, which led to a unique obligate pollination mutualism of two−to−two species specificity. A single Epicephala larva exclusively fed on seeds of host plants and developed to maturity by consuming all six seeds of each fruit, whereas a fraction of intact fruits were left to ensure the reproduction of plants within the whole population. Larvae of the two Epicephala species are competitive for resources; the population of E. mirivalvata is much smaller than that of E. lativalvaris, which has resulted from the differences in the female ovipositor structures and oviposition mode. The life history of Epicephala species highly coincides with the phenology of Breynia plants, and different phenology of B. fruticosa resulted in the different life history of the two Epicephala species in Hainan and Fujian. The natural hybridization of two host plants, possibly induced by the alternate pollination of two Epicephala species, is briefly discussed.

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We investigate how common institutional investors (CIIs) in supply chains affect supplier performance. Social network theory suggests that buyer–supplier relationships are influenced by networks of ties in which they are embedded. While prior research has concentrated on networks of trade interactions, we instead examine the influences of networks through common investors. Utilizing a large sample of buyer–supplier relationships, we find that the presence of CIIs improves suppliers' operating and market performance, especially for suppliers with greater dependence on buyers. In addition, supplier performance increases with the common ownership stakes held by CIIs, but decreases with the asymmetric ownership stakes of CIIs across supply chain partners. We find that better financial collaboration between the partners appears to be a mechanism through which CIIs enhance supplier performance. Lastly, we find that the role of CIIs in strengthening supplier performance is distinct from that of direct equity links. Collectively, our findings highlight a novel role of indirect cross‐ownership in fostering supply chain collaboration and coordinating vertical relationships and, in turn, improving supplier performance.