Is a Common Currency Area Feasible for East Asia? A Multivariate Structural Vector Autoregression Approach

In this paper the feasibility of forming a common currency area in East Asia is investigated. A three‐variable structural vector autoregression model is used to identify three types of shocks: global, regional and domestic shocks. The empirical results show that in the post‐crisis period the importance of asymmetric domestic shocks has declined sharply, whereas that of symmetric global and regional shocks has increased. Furthermore, although a ‘prevalent shock’ cannot be uniquely defined, most East Asian economies respond to global and regional shocks in a symmetric way. Although the findings do not provide strong support for forming a common currency area in this region at the current stage, they suggest that most East Asian economies have become relatively symmetric in terms of economic shocks and adjustments, implying that a common currency area might become viable through deepening regional integration.     

Using a modified grey relation method for improving airline service quality

This study applies a modified grey relation method to improve service quality among domestic airlines in Taiwan. First, we replace the referential alternative (sequence) with an aspired alternative, which should better reflect the reality of today’s competitive markets. Second, because the compared alternatives do not usually have the same criteria/aspects, traditional methods are unsuitable to deal with them. Our model fixes this problem, allowing decision-makers to understand the gaps between alternatives and aspired levels in practice. Third, we develop a new ranking index to measure the airlines’ competitiveness in terms of service quality. To validate the effectiveness of our model, we conduct a large sample survey. We also provide managerial improvements needed by each carrier to achieve the aspired level of customer satisfaction.     

Pricing and hedging of quanto range accrual notes under Gaussian HJM with cross‐currency Levy processes

This study analyzes the pricing and hedging problems for quanto range accrual notes (RANs) under the Heath‐Jarrow‐Morton (HJM) framework with Levy processes for instantaneous domestic and foreign forward interest rates. We consider the effects of jump risk on both interest rates and exchange rates in the pricing of the notes. We first derive the pricing formula for quanto double interest rate digital options and quanto contingent payoff options; then we apply the method proposed by Turnbull (Journal of Derivatives, 1995, 3, 92–101) to replicate the quanto RAN by a combination of the quanto double interest rate digital options and the quanto contingent payoff options. Using the pricing formulas derived in this study, we obtain the hedging position for each issue of quanto RANs. In addition, by simulation and assuming the jump risk to follow a compound Poisson process, we further analyze the effects of jump risk and exchange rate risk on the coupons receivable in holding a RAN. © 2009 Wiley Periodicals, Inc. Jrl Fut Mark 29:973–998, 2009     

Influences on expatriate social networks in China

This study applied social network theory to investigate the factors influencing expatriate social networks and the consequences of expatriate social networks in China. Based on analysis of 171 Taiwanese expatriates in China, this study found that core self-evaluations and extraversion are significant for expatriates in developing expressive and instrumental ties with host country nationals. Moreover, job autonomy assists expatriates in developing instrumental ties with host country nationals. The expressive and instrumental ties of expatriates with host country nationals are significant for overseas adaptation. Finally, instrumental ties with host country nationals are significant for expatriate job performance.     

Sources of employment fluctuations in Taiwan's industries and regions

This empirical study explores the sources of employment fluctuations in Taiwan's industries and regions over the period 1978 to 2004. The quarterly growth rates of employment in nine industries and four regions are modelled with a structural vector autoregression (VAR), and the employment shocks are measured by VAR residuals. The covariance matrix of the VAR residuals is decomposed using system estimation method that selects the parameters to make the error model close to the covariance matrix and, in turn, to estimate the relative importance of national as well as industry-specific and region-specific shocks. The empirical results show that industry-specific shocks account for the major fluctuations in industries and regions. On average, about 83.95% of an industry's cyclical variations and 56.28% of the volatility in a region may be attributed to industry-specific shocks. National shocks account for little employment volatility in industries. Only the finance and personal service industries are highly sensitive to national shocks.     

Is income converging in China?

This study adopts a flexible Fourier unit‐root test proposed by Enders and Lee (2012) to revisit the tendency towards convergence in real per capita income among provinces after economic reform in China. When a data‐generating process is non‐linear, a Fourier series not only allows for the possibility of an unknown number of structural breaks with unknown forms but also allows for the use of a low‐frequency component to capture multiple changes. Contrary to what the linear statistics suggest, our results from a flexible unit‐root test indicate that China's eastern and western regions are converging to their own specific steady states.     

China's housing bubble burst?

In this paper, we developed the recursive unit root tests to identify the beginning and end of potential speculative bubbles in the Chinese housing price cycles during 2006–2013 for the 70 major cities of China. The method is best suited for a practical implementation with a time series and delivers a consistent date‐stamping strategy for the origination and termination of multiple bubbles. Simulations demonstrate that the test significantly improves discriminatory power and leads to distinct power gains when multiple bubbles occur. Overall, the results indicate that the speculative housing price bubbles in China are not bursting, and they indicate that the stationarity of the housing price level varies across the different city sizes. Between the cities, approximately one‐fourth of the bubbles have burst up to December 2013, while the first‐tier city bubble may not burst due to the urbanization process.     

Optimizing the Information Outsourcing Practices of Primary Care Medical Organizations Using Entropy and TOPSIS

As clinics strive to select information technology contractors that meet their particular outsourcing needs, the medical sector urgently needs evaluation criteria for outsourcing to information technology contractors to alleviate unnecessary risks and achieve an excellent performance. Therefore, this work presents an entropy combined technique for order preference by similarity to ideal solution (TOPSIS)-based decision-making method for clinics to objectively assess the quality of an information technology supplier when outsourcing their medical information needs, as an alternative to previous decision-making approaches based on subjective evaluations. Each sub-criterion for outsourcing vendors is evaluated using the Delphi method. Moreover, results of interviews with experts are integrated with the entropy method to calculate each criterion of an objective evaluation weight for medical information system (MIS) vendors. Furthermore, a TOPSIS-based survey is designed using comparison to effectively respond to MIS outsourcing demand scores for each item. Furthermore, the proposed entropy and TOPSIS-based decision-making method can provide administrators in hospital clinics with a decision-making and evaluation criteria that actively encourage the medical sector to outsource its information technology needs to contractors.     

Does voluntary balance sheet disclosure mitigate post-earnings-announcement drift?

Theory suggests that balance sheet information such as total assets, total equity, or total liabilities complements earnings information in helping investors assess a firm’s profitability and estimate earnings growth. The voluntary disclosure of balance sheet information at earnings announcement could help investors gather and process this information at a lower cost. We therefore predict that voluntary balance sheet disclosure at the time of an earnings announcement helps investors promptly understand the implication of current earnings news for future earnings and subsequently reduces post-earnings-announcement drift (PEAD). Consistent with these predictions, our results show that when firms provide voluntary balance sheet disclosures, the earnings response coefficient in the event window is significantly higher and the corresponding PEAD is significantly lower. We further find that the impact of voluntary balance sheet disclosure on PEAD is more pronounced when the magnitude of balance sheet value surprise is larger, when balance sheet value is more informative about future earnings, when earnings uncertainty is higher, or when information cost is higher, consistent with our conjectures that helping investors to better understand future earnings performance and lowering information costs are key mechanisms underlying the effect of voluntary balance sheet disclosure on PEAD.