Feature selection methods involving support vector machines for prediction of insolvency in non‐life insurance companies

We propose two novel approaches for feature selection and ranking tasks based on simulated annealing (SA) and Walsh analysis, which use a support vector machine as an underlying classifier. These approaches are inspired by one of the key problems in the insurance sector: predicting the insolvency of a non‐life insurance company. This prediction is based on accounting ratios, which measure the health of the companies. The approaches proposed provide a set of ratios (the SA approach) and a ranking of the ratios (the Walsh analysis ranking) that would allow a decision about the financial state of each company studied. The proposed feature selection methods are applied to the prediction the insolvency of several Spanish non‐life insurance companies, yielding state‐of‐the‐art results in the tests performed. Copyright © 2005 John Wiley & Sons, Ltd.     

Artificial neural networks with feature transformation based on domain knowledge for the prediction of stock index futures

A feature transformation method based on domain knowledge for arti?cial neural networks (ANNs) is proposed. The method of feature transformation based on domain knowledge converts continuous values into discrete values in accordance with the knowledge of experts in speci?c application domains. This approach effectively ?lters data, trains the classi?er, and extracts the rules from the classi?er. In addition, it reduces the dimensionality of the feature space, which not only decreases the cost and time in the operation but also enhances the generalizability of the classi?er. The experimental results of the proposed approach will be compared and tested statistically with the results of the linear transformation method. The results show that the method of feature transformation based on domain knowledge outperforms the linear transformation in modelling of ANNs. Copyright © 2004 John Wiley & Sons, Ltd.     

The service sector of Cuba: An analysis and critique

The Cuban economy has experienced a significant increase in foreign direct investment over the past decade due to the end of the Soviet Union and the establishment of more liberal trade policies. Although the U.S. embargo of trade with Cuba still exists, there has been movement lately that suggests the end of the four‐decades‐old policy. The purpose of this article is to analyze the current Cuban business environment and to identify potential entrepreneurial opportunities in the service sector. Major trade partners are also reviewed and managerial implications discussed. © 2006 Wiley Periodicals, Inc.     

Identity, identification, and relationship through social alliances

The authors studied social alliances, a type of corporate societal marketing initiative. Their research finds that social alliances are an important means whereby employees identify more closely with their organizations while gaining a greater sense of being whole, integrated persons. Furthermore, this integration allows both organizations and their members to align their commercial identities with their moral and social identities. As organizational members struggled to resolve conflicts within their own identities, they were aided by social alliances, which in turn led them to identify more with their organizations. Unlike previous research, the findings suggest that the kind of connections referred to by the informants went well beyond the cold, rational associations described in previous research to emotional attachments that appear to be critical to organizational identification. The results also suggest that participation in social alliances may result in multiple forms of identification: intra- and interorganiza-tion identification. Ida E. Berger (bergeri@ryerson.ca) is the associate director of faculty affairs and a professor of marketing in the School of Business Management at Ryerson University. She received her Ph.D. from the University of Toronto. Her articles have appeared in leading marketing journals, including theJournal of Consumer Research, Public Policy and Marketing, theJournal of Consumer Psychology, andCalifornia Management Review. Her current research interests include social alliances, voluntary and nonprofit sector studies, diversity, and the value of sports in social inclusion. Her teaching interests include marketing theory, consumer behavior, and marketing communications. Peggy H. Cunningham (pcunningham@business.queensu.ca) is the Marie Shantz Teaching Associate Professor of Marketing, School of Business, in the Queen’s University. She completed her Ph.D. at Texas A&M University. Dr. Cunningham’s research interests revolve around two related themes: marketing ethics and marketing partnerships (international strategic alliances, partnerships between for-profit and not-for-profit organizations, relationships between firms and their customers). These areas of study are linked by their focus on the concepts of trust, integrity, and commitment. She is the coauthor of the Canadian editions of a number of marketing textbooks (Marketing Management; Principles of Marketing; and Marketing: An Introduction). Her work is published in a number of journals, including theJournal of the Academy of Marketing Science, the Journal of International Marketing, and California Management Review. Minette E. Drumwright (mdrum@mail.utexas.edu) is an associate professor with a joint appointment in the College of Communication (Department of Advertising) and the College of Liberal Arts at The University of Texas at Austin. Previously, Dr. Drumwright was on the marketing faculties of Harvard Business School and the University of Texas Business School. She currently is the faculty chair of the Bridging Disciplines Program in Ethics and Leadership at the University of Texas. She has a Ph.D. in business administration (marketing) from the University of North Carolina at Chapel Hill. Dr. Drumwright’s current research is in the areas of corporate social responsibility, marketing for nonprofit organizations, and business ethics. Her focus is on understanding how managers and consumers integrate noneco-nomic criteria related to society into their decision making. Dr. Drumwright has studied noneconomic criteria in various contexts, including cause-related marketing, partnerships between companies and nonprofit organizations, socially responsible buying behavior, and corporate volunteerism. Her articles and cases have been published in various books and journals, includingCalifornia Management Review, theJournal of Advertising, and theJournal of Marketing.     

This is what the leading indicators lead

We propose an optimal filter to transform the Conference Board Composite Leading Index (CLI) into recession probabilities in the US economy. We also analyse the CLI's accuracy at anticipating US output growth. We compare the predictive performance of linear, VAR extensions of smooth transition regression and switching regimes, probit, non‐parametric models and conclude that a combination of the switching regimes and non‐parametric forecasts is the best strategy at predicting both the NBER business cycle schedule and GDP growth. This confirms the usefulness of CLI, even in a real‐time analysis. Copyright © 2002 John Wiley & Sons, Ltd.     

Linking Public Investment to Private Investment. The Case of Spanish Regions

Public investment constitutes one of the main instruments of regional policies. The existence of a direct link between infrastructure and regional income per capita is usually accepted. Literature also describes a positive effect of public investment on private capital accumulation. This paper seeks to provide new empirical evidence on this latter relationship for the case of Spanish regions over the period 1965–1997 using panel data methodology. The results show a positive effect of productive and social public investment (especially in education) on private investment. The spillover effects generated by the productive infrastructures located in other regions do not seem to encourage the private investment in neighbouring regions. Public consumption and interest rate exert a negative influence on private capital accumulation. These results are robust to changes in the econometric specification.     

Effects of Economic Convergence on Stock Market Returns in Major EMU Member Countries

This study updates and extends existing literature by investigating the effects of economic convergence among major European Economic and Monetary Union (EMU) member countries on stock market returns in each respective nation. Main findings include: (1) long-term stability in the EMU appears to be attainable, but further integration of product and factor markets is needed to reinforce convergence of real sectors; (2) the UK can be considered a quasi EMU participant due to convergence of its key economic variables with those of formal EMU members; and (3) economic convergence appears to be an important contributing factor to returns from stock markets in the included EMU countries except Germany.     

Enterprise Risk Management and the Cost of Capital

Enterprise risk management (ERM) is a process that manages all risks in an integrated, holistic fashion by controlling and coordinating any offsetting risks across the enterprise. This research investigates whether the adoption of the ERM approach affects firms' cost of equity capital. We restrict our analysis to the U.S. insurance industry to control for unobservable differences in business models and risk exposures across industries. We simultaneously model firms' adoption of ERM and the effect of ERM on the cost of capital. We find that ERM adoption significantly reduces firm's cost of capital. Our results suggest that cost of capital benefits are one answer to the question how ERM can create value.