The Quality of Information Provided by Dual-Class Firms

When Google went public with a dual-class capital structure in which shares owned by the founders confer greater voting rights than shares issued to public investors, its cofounders, Larry Page and Sergey Brin, promised to provide investors with high-quality information about the company. Using the words of Warren Buffett, the chairman and CEO of Berkshire Hathaway, another dual-class firm, they promised shareholders, “We won’t ‘smooth’ quarterly or annual results: If earnings figures are lumpy when they reach headquarters, they will be lumpy when they reach you.” Page, Brin, and Buffett definitely understood the importance of quality information to their investors, especially in dual-class structures. But do dual-class companies really provide investors with credible financial information? Contrary to the assumption of agency theory that dual-class firms are less transparent, we find empirically that these companies do provide credible information to their investors. Our results suggest that the quality of financial reports, as measured by their ability to predict change in future earnings, is higher for dual-class companies than for their single-class counterparts. These findings may be explained by the unique relations created in dual-class firms in which the founders provide investors with higher-quality information in exchange for superior voting rights. The article contributes to the heated debate about the transparency of dual-class companies by providing policy makers with important insights on the quality of information provided by these companies. Our findings suggest that there is no need for stricter regulation with regard to disclosure of financial information by dual-class firms.     

Facing the Challenges of the 21 Century

America's strategy has become increasingly budget-driven in the face of ongoing cuts, culminating in the sequester. As a result, fewer funds are, and will be, available for critical operations, notably exercises and training with foreign forces that are the key both to strengthening alliances and partnerships and to deterring current and potential adversaries. That Washington continues to revise its defense strategy virtually on an annual basis has further undermined its credibility worldwide. Given its long-standing global interests, and uncertainty regarding when and where it might again have to commit forces to defend them, the United States must reinvigorate its efforts to streamline the Defense Department so as to maintain its global posture in the face of budget pressures. Measures to improve defense efficiency include reductions in the civilian and contractor work forces, overhaul of the military medical and retirement systems, and repeal of anachronistic laws that foster waste in defense acquisition.     

Attachment Styles and Aggression in Physically Abused and Neglected Children

Attachment theory provides a valuable conceptual model for understanding the role of the parent–child relationship and its consequences for the child's emerging self-concept and view of the social world. Attachment style is an individual-difference variable that is rooted in the child's early rearing experience and provides the context for later emotional, behavioral, and cognitive transactions with the environment. The aim of this study was to compare physically abused (n = 41), and neglected children (n = 38) with nonabused/nonneglected children (n = 35) aged 6–12 years, in terms of their attachment styles and their levels of aggression. We found that the physically abused children were significantly characterized by the avoidant attachment style and manifested significantly higher levels of aggression, and the neglected children were significantly characterized with the anxious/ambivalent attachment style. The strategies that the physically abused and neglected children adapted for interactions with their parents also marked their relationships outside the family. Thus, physically abused children are at risk of antisocial behavior and sustained suspicion toward the others, and neglected children are at risk of social withdrawal, and social rejection and feelings of incompetence.     

Luck, Genes, and Equality

This essay considers principles of distributive justice for access to reproductive biotechnologies which make it possible to enhance the traits of human offspring. The author provides prima facie reason to think that redistributive principles apply to genetic goods and proceed to evaluate the way in which four distributive patterns--egalitarianism, luck egalitarianism, prioritarianism, and suffcientarianism--would implement a just distribution of genetic goods. He argues that the currency of genetic redistribution consists in natural primary goods like health, vision, and rationality as these goods contribute to the biological component of basic capabilities, like being healthy, seeing properly, and being able to reason. The author develops a mixed sufficiency/priority approach to genetic enhancement, and defends this approach against objections.