Quantifying shifts in primary factor demand in the South African economy

This article uses a dynamic computable general equilibrium model to explain the persistence in the high levels of unemployment in the South African economy in spite of modest to relatively strong output growth. We make use of a historical simulation for the period 2006–13 and find that the capital–labour ratio increased despite a relative increase in the rental price of capital. Classical economic theory suggests that changes in industry preferences toward capital and labour lead to adjusted capital–labour ratios. We quantify the changes in industry factor preferences during this period and highlight their impact in explaining observed labour market outcomes. Other changes in the economy over this period are also quantified.     

Capital budgeting implications arising from locus of hotel owner/operator power

The findings of a study concerned with the locus of power between hotel owners and operators in Australia and New Zealand with hotels operated via a management contract are reported. Hypotheses are developed and tested in relation to the potential of locus of power to be associated with capital budgeting procedures. Using questionnaire survey data, support has been provided for the view that greater owner power is associated with: greater owner involvement in the capital budgeting process; greater emphasis on financial analytical tools in capital budgeting; and operators experiencing greater difficulty in securing a release of funds from the furniture, fixture and equipment reserve.     

Orderly exits from adjustable pegs and exchange rate bands

This paper examines the exit process from adjustable pegs and exchange rate bands, and the role of capital flows in these exits. It dwells on the experience of various countries, including Chile, Colombia, Egypt, Israel, India, Poland, and Yemen. It begins by identifying conditions under which exits are sought. Next, it discusses the prerequisites for a successful exit, factors affecting the pace of exit, and the nature of the post‐exit regime. It then examines the behavior of private capital flows, interest rates, and official reserves before and after three successful exits (Chile, India, and Poland), and draws broad policy lessons.     

The impact of changes in bank ownership structure on the allocation of capital: International evidence

A new wave of bank privatizations in the past decade has significantly changed the ownership structure of banking systems around the world. This paper explores how these changes affect the allocation of capital within countries. Increases in domestic blockholder ownership of banks adversely affect the allocation of capital through increased lending activity to less productive industries and to those with less dependence on external finance. This result is more pronounced in countries with higher levels of corruption. I find some evidence that foreign presence improves capital allocation efficiency by increasing lending to more productive industries, primarily in common law countries.     

The impact of SFAS No. 123(R) on financial statement conservatism

SFAS No. 123(R) requires firms to recognize the fair value of stock options as compensation expense over the vesting period of the options. Thus, SFAS No. 123(R) leads to an overall increase in financial statement conservatism. However, it is not known whether SFAS No. 123(R) increases conditional and/or unconditional conservatism. Because the different forms of conservatism have different implications for the quality of earnings, I investigate which types of conservatism are impacted by SFAS No. 123(R) to gain insight into the ramifications of the Standard. I find that SFAS No. 123(R) leads to an increase in both unconditional and conditional conservatism. I additionally find that the Standard causes an increased negative relation between contemporaneous economic gains and income. These findings hold outside of the sample period and under a non-priced based model of conservatism.     

房地产企业资本结构影响因素的实证研究——以大陆在港上市公司为例

房地产业是资金密集型高负债的典型行业,其资本结构的形成有其自有特征。本文首先对影响大陆在港上市的房地产公司资本结构的可能影响因素进行理论分析,然后选取相应样本,运用相关性分析和多元回归分析等方法对其进行实证研究。最后得出盈利能力、成长性、股权集中度等因素能在1%或5%水平上显著影响公司的资本结构,而公司规模、经营能力等因素对资本结构影响不显著的重要结论。     

Stock liquidity and enterprise innovation: new evidence from China

We employ data of 6194 firm-year observations for 1058 listed companies in the period 2006–2013 to investigate the interaction between stock liquidity and enterprise innovation in China and confirm that an increase in stock liquidity raises the number of patents granted, R&D investment, and the innovation efficiency of state-owned enterprises, while it decreases innovation significantly in private firms. These findings are also supported by quasi-natural experiments under the split-share structure policy reform and the adjustment of the stamp duty rate using propensity score matching and difference-in-difference methods. We then identify two possible mechanisms through which liquidity increases innovation: the entry of long-term and strategic institutional investors and the gradual privatization of SOEs. Several policy implications are provided in accordance with our findings.     

Capital control reconsidered: financialisation and economic policy

We consider capital controls and their impact on selected countries, providing a critique of IMF policy. We show how the warning signs of the 1970s were ignored and the consequences became apparent during the ensuing period of neoliberal hegemony. We contend that promoting increased capital mobility is counterproductive as it reduces macroeconomic ‘policy space’. We introduce a development of the international policy ‘trilemma’ in the form of a variant of the idea of the ‘quadrilemma’. We suggest that, in most cases, the key policy driving economic growth is fiscal policy but it may be that its unconstrained use (and that of monetary policy) is not possible either under fixed exchange rates or when free capital mobility exists; a nation may face a ‘demi-quadrilemma’. We contend that, in practice, a country can only adopt ‘two from four’; if it chooses to retain free use of monetary and fiscal policy, it must sacrifice both fixed exchange rates and capital mobility. We advocate the rejection of fixed exchange rates and free capital mobility allowing the retention of requisite monetary and fiscal policy space, and that a multinational approach to the capital control policy would effectively contribute to a growth and development strategy.     

Interbank market failure and macro-prudential policies

This paper analyses the effects of several macro-prudential policy measures on the banking sector and its linkages to the macroeconomy. We employ a dynamic general equilibrium model with sticky prices, in which banks trade excess funds in the interbank lending market. We find that an increase in the liquidity requirement effectively reduces the impact of an interbank shock on the real and financial sector, while an increased capital requirement propagates only through nominal variables as inflation and interest rates. We conclude that stricter liquidity measures which limit inside money creation, dampen the severity of a breakdown in interbank lending. Targeting interbank financing directly through liquidity measures along with a moderate capital requirement generates lower welfare losses. We thereby provide a comprehensive rationale in favor of the regulatory measures in Basel III.     

Stock price reactions to stock dividend announcements: A case from a sluggish economic period

The 2007 financial crisis and the Great Recession that followed resulted in a loss of confidence among investors, and regaining their full trust and confidence has been a challenge for companies. Although economic growth has been volatile throughout the postwar World War II period, recent growth (2008–2015) has been remarkably weaker than in the previous low-growth period (1974–1995). The 2006–2015 period is often characterized by sluggish economic growth. This study investigates stock price reactions to stock dividend announcements, 30 days before and after the announcement dates, of publicly traded companies in the period 2006–2012. We use an event study methodology for 460 events and daily stock price data for companies in the CRSP historical data set. The study shows a significant reaction in stock prices around the event date. On average, stock prices reacted positively to stock dividend announcements. However, compared to previous findings of abnormal returns (5.9%), results from this study show small abnormal returns (about 1.81%) attributable to stock dividend announcements that are cumulative of the announcement day and up to 3-day post-announcement days. Our estimates are even lower than the 2.01% stock price reaction obtained in the 1987–1996 period.