A globally consistent framework for reliability-based trade statistics reconciliation in the presence of an entrepôt

This paper develops a mathematical programming model to reconcile trade statistics subject to a set of global consistency conditions in the presence of an entrepôt. Initial data reliability serves a key function for governing the magnitude of adjustment. Through a two-stage optimization procedure, the adjusted trade statistics are achieved as solutions to a system of simultaneous equations that minimize a quadratic penalty function. As an empirical illustration, the model is applied to reconcile the 2004 trade statistics reported by China, Hong Kong and their major trading partners, initialized with detailed estimates of bilateral trade flows, re-export markups, cif/fob ratios and data reliability indexes.     

The effects of budget goals and task interdependence on the level of and variance in performance: a research note

The effects of goal setting and task interdependence on both the level of and variance in performance are examined using a laboratory, resource allocation task. The results show, consistent with existing research, main effects for goal setting and task interdependence on the level of performance, but no goal setting by task interaction effect as hypothesised. The results also show that an increase in task interdependence increases performance variance but that goal setting reduces it with important implications for budget setting.     

Posted rates and mortgage lending activity

In many metropolitan areas (MSAs) newspapers post mortgage terms for lenders in a manner designed to permit an easy comparison of discount points and note rates. Using these advertised rates for 73 lenders in three MSAs we examine 1) how applicants respond to short-run changes in relative rates, and 2) the relationship between the services provided and quality of applications received by lenders and their long-term market positions. We find that applicant flows increase when lenders lower their rates. We also find that persistent cross-lender differences in rates are associated with differences in product quality reflected in processing times, loan sales, and FHA/VA lending; and that high-risk borrowers tend to apply to lenders posting above-average rates.     

‘Obedience’ in the classroom

The second general standard of the AICPA states “In all matters relating to the assignment, an independence in mental attitude is to be maintained by the auditor or auditors.” Despite assertions that the ultimate responsibility of independence rests with the individual auditor, emphasis is typically placed on the AICPA's code of ethics in the auditing classroom. But, does such an approach reflect and accentuate the ultimate moral responsibility of the individual? The purpose of this paper is to discuss the use of Milgram's film “Obedience,” which portrays a psychological experiment on response to authority, as a means of dramatizing the subtle nature of “mental independence” to auditing students.The paper describes the use of this film in auditing instruction and the corresponding response of students. Recommendations for effective administration of the film are offered.     

The Chinese negotiation

Most Westerners preparing for a business trip to China like to arm themselves with a list of etiquette how-tos. "Carry a boatload of business cards," tipsters say. "Bring your own interpreter." "Speak in short sentences." "Wear a conservative suit." Such advice can help get companies in the door and even through the first series of business transactions. But it won't sustain the prolonged, year-in, year-out associations Chinese and Western businesses can now achieve. The authors' work with dozens of companies and thousands of American and Chinese executives over the past 20 years has demonstrated that a superficial adherence to etiquette rules gets executives only so far. They have witnessed communication breakdowns between American and Chinese businesspeople time and time again. The root cause: the American side's failure to understand the much broader context of Chinese culture and values, a problem that too often leaves Western negotiators flummoxed and flailing. American and Chinese approaches often appear incompatible. Americans see Chinese negotiators as inefficient, indirect, and even dishonest, while the Chinese see American negotiators as aggressive, impersonal, and excitable. Such perceptions have deep cultural origins. Yet those who know how to navigate these differences can develop thriving, mutually profitable, and satisfying business relationships. Four cultural threads have bound the Chinese people together for some 5,000 years, and these show through in Chinese business negotiations. They are agrarianism, morality, the Chinese pictographic language, and wariness of strangers. Most Western businesspeople often find those elements mysterious and confusing. But ignore them at any time during the negotiation process, and the deal can easily fall apart.     

Contractual governance and illiberal contracts: some problems of contractualism as an instrument of behaviour management by agencies of government

This paper considers the significance, as a matter both of politicaland of legal analysis, of the considerable and growing use inthe UK of ostensibly contractual or contract-like arrangementsbetween public authorities and members of society whose behaviourit is judged necessary to manage and control. We argue thatthese new arrangements often amount to instruments of illiberalpolicy, both in procedure and implementation. Drawing on a modelof contractual relations found in social work policy, we assessthe manifestation of contract-like features in recent governmentpolicy toward young offenders and workfare participants. Wethen provide a detailed application of the illiberal argumentin respect of the contractual arrangement promoted in the UKGovernment's New Deal programme and Jobseekers' Allowance. Weconclude that illiberal tendencies in these workfare schemesmay have unintended but nonetheless significant brutalisingeffects upon both participants and administrators.     

Analysis of intraday herding behavior among the sector ETFs

A body of literature has emerged suggesting that investors herd, or tend to make investment decisions on the basis of information provided by the trades of other market participants. In this paper, we use intraday data to examine whether traders herd during periods of extreme market movements using sector Exchange Traded Funds (ETFs). Two procedures, one based on identifying extreme up market and down market periods and the other based on incorporating a nonlinear term in a regression specification, are used to identify the possibility of the existence of herding behavior in nine sector ETFs traded on the American Stock Exchange. The results support the conclusion that investors do not herd during periods of extreme market movements using ETFs. Furthermore, we show that the market reaction to news is not symmetric for up markets and down markets.     

Concentrated Control,Analyst Following,and Valuation: Do Analysts Matter Most When Investors Are Protected Least?

This paper uses a sample of more than 2,500 firms from 27 countries to investigate the relation among ownership structure, analyst following, investor protection, and valuation. We find that analysts are less likely to follow firms with potential incentives to withhold or manipulate information, such as when the family/management group is the largest control rights blockholder. Furthermore, this relation is stronger for firms from low-shareholder-protection countries. Using valuation regressions that take into account potential endogeneity between analyst following and firm value, we find a positive valuation effect when analysts cover firms that have both potentially poor internal governance and weak country-level external governance. Overall, our findings suggest that corporate governance plays an important role in analysts' willingness to follow firms and that increased analyst following is associated with higher valuations, particularly for firms likely to face governance problems.