Human Resource Management’s Effects on Firm‐Level Relative Efficiency

Using stochastic frontier production functions methodology with data from 1579 private‐sector establishments, we demonstrate that HR practices are significantly associated with differences in relative firm‐level efficiency. Supplemental analysis implies that this efficiency analysis is substantively different than the common approach to evaluating HRM’s relationships with firm‐level labor productivity. The results suggest that HR practices’ contributions to relative firm‐level efficiency are an important but heretofore overlooked factor in the relationship between HRM and firm performance.     

Perceptions of the discount retailer: an analysis of consumers' and managers' ideal discount store

Consumers' and managers' perceived images of three discount department stores and a hypothetical ideal discount store were compared in this study. Results indicate that managers and consumers possess significantly different overall impressions of each store. Significant differences were also identified between the ideal amount of each attribute and the amount offered by the retailer.     

How Laws and Institutions Shape Financial Contracts: The Case of Bank Loans

Legal and institutional differences shape the ownership and terms of bank loans across the world. We show that under strong creditor protection, loans have more concentrated ownership, longer maturities, and lower interest rates. Moreover, the impact of creditor rights on loans depends on borrower characteristics such as the size and tangibility of assets. Foreign banks appear especially sensitive to the legal and institutional environment, with their ownership declining relative to domestic banks as creditor protection falls. Our multidimensional empirical model paints a more complete picture of how financial contracts respond to the legal and institutional environment than existing studies.     

Earnings and Dividend Announcements: Is There a Corroboration Effect?

We examine abnormal stock returns surrounding contemporaneous earnings and dividend announcements in order to determine whether investors evaluate the two announcements in relation to each other. We find that there is a statistically significant interaction effect. The abnormal return corresponding to any earnings or dividend announcement depends upon the value of the other announcement. This evidence suggests the existence of a corroborative relationship between the two announcements. Investors give more credence to unanticipated dividend increases or decreases when earnings are also above or below expectations, and vice versa.     

Default and Recovery Implicit in the Term Structure of Sovereign CDS Spreads

This paper explores the nature of default arrival and recovery implicit in the term structures of sovereign CDS spreads. We argue that term structures of spreads reveal not only the arrival rates of credit events ${(\lambda }^{?})$, but also the loss rates given credit events. Applying our framework to Mexico, Turkey, and Korea, we show that a single‐factor model with ${\lambda }^{?}$ following a lognormal process captures most of the variation in the term structures of spreads. The risk premiums associated with unpredictable variation in ${\lambda }^{?}$ are found to be economically significant and co‐vary importantly with several economic measures of global event risk, financial market volatility, and macroeconomic policy.     

Ordinal Pairwise Partitioning (OPP) Approach to Neural Networks Training in Bond rating

Statistical classification methods such as multivariate discriminant analysis have been widely used in bond rating classification in spite of the limitations of the methodology. Recently, neural networks have emerged as new methods for business classification. This approach to neural networks training is to categorize a new instance as one of the predefined bond classes. Such a conventional approach has limitations in dealing with the ordinal nature of bond rating. In addition, most of the prior studies have used sample data which are evenly divided among the classes. However, the natural population in real application is usually unevenly divided among the classes. Under such circumstances, it is hard to achieve good predictive performance. As the number of classes to be recognized increases, the predictive performance decreases. In this article, to increase the predictive performance in real-world bond rating, we propose the ordinal pairwise partitioning (OPP) approach to backpropagation neural networks training. The main idea of the OPP approach is to partition the data set in the ordinal and pairwise manner according to the output classes. Then, each backpropagation neural networks model is trained by using each partitioned data set and is separately used for classification. Experimental results show that the predictive performance of the proposed OPP approach can be significantly enhanced, when compared to the conventional neural networks modeling approach as well as multivariate discriminant analysis. The OPP approach has two computation methods, and we discuss under which circumstances one method performs better than the other. We also show the generalizability of the OPP approach. © 1997 by John Wiley & Sons, Ltd.     

BEAUTY AND PRODUCTIVITY: THE CASE OF THE LADIES PROFESSIONAL GOLF ASSOCIATION

There is evidence that attractive looking workers earn more than average looking workers, even after controlling for a variety of individual characteristics. The presence of such beauty premiums may influence the labor supply decisions of attractive workers. For example, if one unit of a product by an attractive worker is more rewarded than that by her less attractive coworker, the attractive worker may put more effort into improving her productivity. We examine this possibility by analyzing panel data for individual female golfers participating in the Ladies Professional Golf Association (LPGA) tour. We found that attractive golfers recorded lower than average scores and earn more prize money than average looking players, even when controlling for player experience and other variables related to their natural talents. This finding is consistent with the notion that physical appearance is associated with individual workers' accumulation of human capital or skills. If the human capital of attractive workers is at least partly an outcome of favoritism toward beauty, then the premium estimates obtained by previous studies may have been downwardly biased. (JEL J3, J7, L8)     

CATCHING‐UP AND TECHNOLOGICAL PROGRESS OF THE ASEAN ECONOMIES

Total factor productivity growth of the five ASEAN founding members is estimated by decomposing total factor productivity growth into technical efficiency and technological progress. By using the stochastic frontier model with individual‐specific temporal pattern of technical efficiency for the period of 1981–2003, the present paper identifies the unique temporal pattern of productivity changes in each country, to analyze the relationship between country characteristics and the inherent efficiency and productivity changes. The empirical results indicate that over the study period, growth in Singapore and Malaysia was largely driven by both technological progress and input accumulation, whereas growth in Thailand was induced by an improvement in technical efficiency and through input accumulation.