Political instability and economic vulnerability

Bussière, Matthieu; Mulder, Christian

doi:10.1002/1099-1158(200010)5:4<309::aid-ijfe136>3.0.co;2-i

Cited by 60 publications

(23 citation statements)

References 21 publications

(22 reference statements)

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“…Economic, financial, governance, political, and social reforms are being pursued worldwide (Bussiere & Mulder, 2000;Gupta, Baldacci, Clements, & Tiongson, 2005;Swamy & Dharani, 2018). Recent corporate scandals have directed more attention to CG and EP mechanisms (Hasan, Kobeissi, & Song, 2014;Ullah, Ahmad, Akbar, & Kodwani, 2018a), especially on the importance of board of directors in terms of their roles, effectiveness, composition, and diversity (Carter, D'Souza, Simkins, & Simpson, 2010;Carter, Simkins, & Simpson, 2003;Yamori, Harimaya, & Tomimura, 2017).…”

Section: Introductionmentioning

confidence: 99%

Board diversity, corporate governance, corporate performance, and executive pay

2018

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Departing from previous studies, this paper investigates the impact of corporate board diversity on corporate performance and executive pay within the context of Middle East and North African countries. Our sample includes a balanced panel of 600 firm‐year observations, consisting of 100 individual firms drawn from five Middle Eastern countries (Egypt, Jordan, Oman, Saudi Arabia, and United Arab of Emirates) over the 2009–2014 period. The findings are three‐fold. First, board diversity, as measured by director gender and nationality, has a positive effect on corporate financial performance. Second, the relationship between board diversity and corporate performance is stronger in better governed firms than their poorly governed counterparts. Finally, board diversity, as measured by director gender, ethnicity, and nationality, enhances the pay‐for‐performance sensitivity but not the actual executive pay. Our results suggest that decisions about board diversity are not merely influenced by moral values; they arise because of the cost–benefit considerations of what diversity can bring to the firm. The findings are robust to controlling for different alternatives of board diversity measures, corporate governance proxies, corporate outcomes, and types of endogeneities.

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Section: Introductionmentioning

confidence: 99%

Board diversity, corporate governance, corporate performance, and executive pay

2018

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“…In accordance with this finding, Stein and Streb (1998) and Bussière and Mulder (2000) recall several instances in which governments chose not to address real issues before an election so as to keep inflation and the exchange rate under control. However, those authors' observations remain anecdotal.…”

Section: U Umentioning

confidence: 53%

“…For instance, Edwards (1994) found that in Latin American presidential democracies 77 per cent of the devaluations took place within the first 18 months of the government being in office. His finding is corroborated by Klein and Marion (1997), Eichengreen et al (1995) and Bussière and Mulder (2000) who observed that the probability of a devaluation significantly increases in post-election periods. Furthermore, Eichengreen et al (1995) also provide some evidence that revaluations tend to follow government defeat.…”

Section: Imentioning

confidence: 63%

Why are realignments postponed? A model of exchange rate revisions with opportunistic governments

Méon

2004

The Manchester School

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In this paper we investigate the consequences of elections on the willingness of office-motivated governments to defend a pre-announced parity in the presence of output shocks in a fixed exchange rate regime with an escape clause. Knowing that voters rationally interpret realignments as a sign of incompetence, incumbents refrain from realigning before elections. They can do so either when they are competent or when shocks are small enough. Realignments are therefore more likely and output is less volatile on the morrow than on the eve of elections. The welfare impact of elections is ambiguous.

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“…It has been well documented that weak political institutions contribute significantly to the likelihood of currency crises (Edwards 1996;Bernhard and Leblang 1999;Bussiere and Mulder 2000;Frieden, Ghezzi, and Stein 2001;Poirson 2001;Block 2002;Meon and Rizzo 2002;Alesina and Wagner 2003;Calvo and Mishkin 2003;Shimpalee and Breuer 2006). Here we go further to test the hypotheses developed by Willett (2007) that political instability and weak governments more generally are an important part of the explanation for the crisis proneness of adjustable-peg exchange rate regimes.…”

Section: Literature Review and Explanation Of Hypothesesmentioning

confidence: 82%

The Interactions of Strength of Governments and Alternative Exchange Rate Regimes in Avoiding Currency Crises

Chiu¹,

Willett²

2009

International Studies Quarterly

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This paper analyzes the stability of alternative exchange rate regimes in the face of substantial capital mobility. This issue often goes under the label of the unstable middle or the two-corners hypotheses. We argue that both the issues of why the middle is unstable and how far toward the extremes of fixed or flexible exchange rates countries need to go in order to substantially reduce the likelihood of currency crises depends crucially on political economy as well as technical economic considerations. We undertake a large N empirical study that extends the currency crisis literature by using a new classification of exchange rate regimes from the IMF and taking into account the interactive effects between government strength and alternative exchange rate regimes on the probability of currency crises. We find that weak governments increase the likelihood of currency crises under any type of exchange rate regime, and as our theory suggests, this effect is strongest under adjustably pegged exchange regimes.The recent rash of international currency crises has heightened the debate about appropriate exchange rate regimes. Since most of the crisis countries had some form of pegged exchange rates, much greater attention has been paid to the standard economists' critique of adjustable pegs, namely that because of the potential they provide for one-way speculative gambles, adjustable-peg regimes will become highly crisis-prone under conditions of substantial capital mobility. Most economists accept this analysis, but differ over how far away from this middle of the spectrum of exchange rate regimes countries need to move to substantially reduce the likelihood of crises. This question is quite important when considered along with the fact that the theory of optimum currency areas

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Political instability and economic vulnerability

Cited by 60 publications

References 21 publications

Board diversity, corporate governance, corporate performance, and executive pay

Board diversity, corporate governance, corporate performance, and executive pay

Why are realignments postponed? A model of exchange rate revisions with opportunistic governments

The Interactions of Strength of Governments and Alternative Exchange Rate Regimes in Avoiding Currency Crises

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