A Comparison of Reporting Lags of Multinational and Domestic Firms

This study examines whether multinational firms report earnings sooner than domestic firms. When compared with domestic firms, the reporting environment and business operations of multinational firms are significantly more complex. There is a greater amount of information asymmetry between managers and shareholders of multinational firms. Therefore, multinational firms potentially face higher monitoring and external financing costs. To reduce these costs, we conjecture that managers of multinational firms take steps to reduce the information asymmetry between shareholders and management by increasing the timeliness (a proxy for relevance) of their earnings reports. Specifically, we expect multinational firms to announce earnings earlier than domestic firms. We separate earnings reporting delay into auditor‐related delay and management's discretionary delay. While test results weakly support the hypothesis that auditors take longer to audit multinational firms, there is strong evidence that managers of multinational firms release their earnings reports sooner than domestic firms.     

POVERTY EQUIVALENT GROWTH RATE

This paper proposes a new type of growth rate, called the “poverty equivalent growth rate” (PEGR), which takes into account both the growth rate in mean income and how the benefits of growth are distributed between the poor and the non‐poor. The proposed measure satisfies a basic requirement that the proportional reduction in poverty is a monotonically increasing function of the PEGR. Thus, maximizing the PEGR implies a maximum reduction in poverty. The paper demonstrates that the magnitude of PEGR determines the pattern of growth: whether growth is pro‐poor in relative or absolute sense or is “poverty reducing” pro‐poor. The pattern of growth has been analyzed for Brazil using the National Household Survey (PNAD) covering the period 1995–2005.     

Equity swaps in a LIBOR market model

This study extends the BGM (A. Brace, D. Gatarek, & M. Musiela, 1997) interest rate model (the London Interbank Offered Rate [LIBOR] market model) by incorporating the stock price dynamics under the martingale measure. As compared with traditional interest rate models, the extended BGM model is both appropriate for pricing equity swaps and easy to calibrate. The general framework for pricing equity swaps is proposed and applied to the pricing of floating‐for‐equity swaps with either constant or variable notional principals. The calibration procedure and the practical implementation are also discussed. © 2007 Wiley Periodicals, Inc. Jrl Fut Mark 27:893–920, 2007     

Analysis of the technical efficiency of state rubber farms in Vietnam

This study entails an analysis of the technical efficiency of natural rubber production by state farms in Vietnam. A time-varying stochastic frontier production function model for unbalanced data is estimated for 33 farms. Individual farm technical efficiencies are reported and discussed. One of the main results concerns the bimodal distribution of technical efficiency indices. A few farms operate near the production frontier while the bulk operate well away from the frontier. Some implications are drawn from the results as a guide to future policy research work in the rubber industry in light of recent moves by the Vietnamese government towards economic reform.     

Internal Funds Allocation and the Ownership Structure: Evidence from Korean Business Groups

We examine the relationship between the controlling shareholder’s cash flow rights and the funds transfer in the internal capital market within Korean business groups (chaebols) during the period from 1998 to 2001. We find that the funds allocation in the firms where controlling shareholders have high cash flow rights is better aligned with the investment opportunities and therefore, more efficient than in the firms where they have low cash flow rights. This effect is stronger when they have controlling powers large enough to expropriate minority shareholders. However, during the financial crisis period, funds simply move toward the firms where controlling shareholders have high cash flow rights. The results evidence the tunneling behavior in the internal capital market within a chaebol that the ownership structure distorts the allocation of internal funds in such a way as to benefit the controlling shareholders.JEL Classification: G31, G30     

An Empirical Examination of the Parimutuel Sports Lottery Market versus the Bookmaker Market

A sports lottery in Korea presents a unique opportunity for comparing a parimutuel‐type sports lottery market against a bookmaker market outside the realm of horse racing. Using two‐ and three‐game soccer final‐score betting in the sports lottery market in Korea, which features matches in the English Premier League, we compare winning payoffs in this parimutuel‐type sports lottery against corresponding payoffs from an established bookmaker market in the United Kingdom. We find that for outcomes with relatively high payouts (that is, lower‐probability events), winning bets placed in the sports lottery market have greater payoffs than corresponding bets placed in the bookmaker‐based market. However, the opposite is true for outcomes with relatively low payouts (that is, higher‐probability events). Results suggest that participants in the sports lottery market tend to bet more toward high‐probability events than the amount implied by the bookmaker's odds. Results also suggest that the favorite‐longshot bias is still present in the bookmaker market, even when there is less threat of privately informed bettors than in horse racing.     

Small and Medium‐Sized Enterprises' Collaborative Buyer–Supplier Relationships: Boundary Spanning Individual Perspectives

Boundary‐spanning individuals (BSIs) play a critical role in supply chain management, especially in small and medium‐sized enterprises (SMEs) where interactions with buyers and suppliers can depend heavily on just a few individuals. This study, utilizing data from Korean manufacturing‐sector SMEs, explores whether cooperative social value orientations of SMEs' BSIs influence the effects of collaborative buyer‐supplier initiatives. The results suggested that the performance implication of decision‐sharing initiative increases when BSIs have a high level of cooperative social value orientation. However, it also negatively moderates the relationship between risk/benefit sharing (involving financial losses or gains) and performance suggesting possible negative side effects. However, we found that such orientation also negatively moderates the relationship between risk/benefit sharing (involving direct financial losses or gains) and relationship performance suggesting possible negative side effects.     

Is more IT offshoring better?: An exploratory study of western companies offshoring to South East Asia

We explore the link between a company's performance and the extent of its offshoring of IT-enabled services, focusing on large western companies. Our performance measures comprise sales, profit as percentage of sales, profit/employee and sales/employee over 1999–2004. To measure offshoring, we consider the extent to which these companies have offshored: (1) software development and other IT-related development and maintenance, (2) business processes such as payroll or claims processing, and (3) call centers. We performed cluster analysis using the three corresponding offshoring variables to obtain broad patterns of offshoring. Then we compared the average performance of the companies in different clusters using ANOVA; did a regression analysis of the performance measures against the three offshoring variables; and performed non-parametric correlations within industry sectors. None of these tests indicated any clear link between company performance and the extent of offshoring thus suggesting that further study is needed to understand when to offshore and how best to do it.