Stay in school or start working? — The human capital investment decision under uncertainty and irreversibility

At any moment a student may decide to leave school and enter the labor market, or to stay in the education system. The timing of their departure determines their level of academic achievement and formal qualification. Education is a multi-stage process of investing in an accumulative human capital stock. How long can I expect to go to school? How much will I invest in my education? To answer these questions we apply the real option approach. We depart from recent literature by (1) adding accumulated education costs and determining the expected time of market entry, (2) considering complete earnings profiles including entry-level wages, sheepskin effects and earning dynamics, and (3) discussing the option value of schooling while introducing potential career opportunities or threats of unemployment modeled as major uncertain events connected with particular formal education achievements.     

Pricing factors in capital market and investment strategy： Evidence from Chinese listed companies

This paper explores the performances of some frequently used asset pricing factors and their investment implications in Chinese stock market. It is noted that CAPM model can hardly be applied to Chinese market as portfolios based on 13 values cannot generate high return against high risk. However, two factors （Size and B/M） from Fama-French model （1992） deliver better performances. Such findings indicate that models based on theoretical analysis are somewhat away from practice, and those risk factors from empirical studies are more applicable though not based on theories. Therefore, further researches are desirable concerning asset pricing factors.     

Is corporate tax avoidance associated with investment efficiency?

The purpose of this study is to examine the association between investment efficiency and corporate tax avoidance. Using a large sample of U.S. firms over the period 1993–2016, we show that there is a positive association between corporate tax avoidance activities and investment inefficiency. Moreover, we find that the association is mediated by financial statement readability, financial statement comparability and product market competition. Our results are robust to alternative measures of both tax avoidance and investment inefficiency. Propensity score matching (PSM), difference-in-difference (DID), and two-stage least squares (2SLS) regression analyses confirm our results and mitigate any potential endogeneity issues that might result from the effect of omitted variables, reverse causality or model misspecification.     

Is best practice in development still viable? The case of financial management in fragile Afghanistan

The concept of best practice has few friends in international development; however, the wholesale rejection of best practice is incorrect. The article first reviews the critique of best practice by describing its four main features and analyses it through a case study of public financial management (PFM) in Afghanistan country using three donor-funded projects that employ a best practice approach. The PFM projects are evaluated based on the four components of the critique. The article concludes with a modest reassessment of the continued salience of best practice in international development.     

Barriers to brand building in UK universities?

• Branding in universities has become an increasingly topical issue with practitioners, with some institutions committing substantial financial resources to branding activities. It has, however, received only limited academic investigation, and as the particular characteristics of the sector present challenges for those seeking to build brands, it seems to be timely and appropriate to investigate potential barriers to branding.
• This exploratory study investigates the opinions of the ‘brand guardians’ of UK universities—Vice Chancellors, Principals and Rectors—on the barriers to successfully building brands and draws conclusions on their views of the key challenges facing successful branding activity in the sector. Implications for practitioners are also explored.

Copyright © 2006 John Wiley & Sons, Ltd.     

Is foreign-bank efficiency in financial centers driven by home or host country characteristics?

This paper investigates whether home or host country factors can explain differences in technical efficiency among foreign banks operating in the Luxembourg financial center. We first address heterogeneity across banks by using the group-wise bootstrap to compare DEA measures of bank efficiency between branches and subsidiaries, focused and diversified banks, and euro area and non-euro area banks. We then control for these factors in a second-stage regression indentifying the impact of country-specific regulatory and macroeconomic variables on individual bank efficiency scores. Our regulatory indicators capture the strictness of capital requirements, private monitoring, official disciplinary power and restrictions on bank activities. Our macroeconomic indicators capture GDP per capita in the home country and its position in the business cycle. Our results carry policy implications for bank regulators in both home and host countries and provide insight into banks’ choice between establishing a branch or a subsidiary to develop cross-border activities through international financial centers.     

Is the small-ball strategy effective in winning games? A stochastic frontier production approach

Since the Japanese National Baseball team won the inaugural World Baseball Classic, “small ball” has been accepted, at least by the media, as a mainstream form of baseball management in Korea. Small ball refers to a manager’s active intervention or strategy implementation in baseball games. In general, the frequency of managers’ orders for play actions such as a sacrifice bunt is higher in Asian baseball than in North American baseball. This paper attempts to statistically test the hypothesis that small ball is effective in winning games by using data from Korean baseball. The panel data analysis of a stochastic production frontier model presents somewhat mixed empirical results, but the overall evidence suggests that small ball actually has detrimental effects on the number of runs scored.     

Is PPP sensitive to time-varying trade weights in constructing real effective exchange rates?

While the use of real effective exchange rates in stationarity tests of purchasing power parity (PPP) avoids the problems created using bilateral rates, these rates are often constructed using trade shares that are fixed at a single base year. This method fails to take into account the fact that trade shares can change drastically in parts of the world that are undergoing dramatic transformations. In this study, we apply linear as well as nonlinear stationarity tests to 52 currencies’ real effective rates, which were constructed using time-varying weights. Incorporating a time trend, we are also able to assess whether breakdowns in PPP are due to productivity differentials. We find that while nonlinear tests provide more evidence of “productivity bias” than do linear tests, they do not provide much more evidence of PPP. A comparison to a previous study that used fixed-weight data shows that there is somewhat more evidence of productivity bias using the new dataset, especially in Eastern Europe and Asia. We can conclude that PPP and a key cause of its breakdown are somewhat sensitive to the use of time-varying weights in these stationarity tests.     

The foreign aid–foreign direct investment relationship in Africa: The mediating role of institutional quality and financial development

The interaction of foreign aid and foreign direct investment is an important issue for developing countries in Africa. I probe into the mediating role of institutional quality and financial development using a panel data set of 47 countries over the period 1996–2016. I find that the effectiveness of foreign aid in attracting foreign direct investment is greater in countries with better institutional quality and sound financial development. The implications for policy are outlined.     

Optimal time-consistent reinsurance and investment strategies for a jump–diffusion financial market without cash

This paper considers an optimal reinsurance and investment strategies for an insurer under mean–variance criterion within a game theoretic framework. Specially, it is assumed that the surplus process is governed by a Cramér–Lundberg model, and apart from purchasing reinsurance, the insurer is allowed to invest in a financial market with multiple assets that all can be risky, whose price processes are modeled by the jump–diffusion process. Due to the market without cash, the method of separating the variables is not viable any more. We turn to an alternative approach to solve the extended Hamilton–Jacobi–Bellman equation, and closed-form expressions of the optimal strategies and value function are not only derived but also proved to be uniqueness. Moreover, some special cases of our model are provided and several numerical analyses for our results are presented as well. Under this criterion, different from existing literature, we find that (i) the value function is not linear but quadratic with respect to the current wealth; (ii) the optimal reinsurance and investment strategies depend on the wealth process; (iii) the parameters of risky assets(insurance market) have impacts on the optimal reinsurance(investment) policy; (iv) the safety loading of the insurer affects the optimal strategies.     

Do CEO characteristics influence a firm’s investment in brand equity? Evidence from Chinese listed firms

This paper contributes to the upper-echelons theory by extending the investigation of how CEO characteristics, namely gender, age, tenure, education attainment, and duality, influence firms’ strategic decisions regarding brand equity investment. We gather 8830 firm-year observations from the Chinese listed firms for the period of 2012 to 2018. We develop several hypotheses and use a probit regression specification to test each hypothesis. The empirical results show that a CEO’s tenure and duality have a positive influence. Interestingly, the CEO’s age has a negative influence while their gender and education have no significant influence on a firm’s propensity to invest in brand equity. It indicates that longer tenures and duality lead CEOs to be confident making them more willing to invest in high-risk projects. It also indicates that older CEO’s are risk-averse, while gender does not play a role in the risk-taking appetite of the CEO. The results provide several implications for firms looking to develop influential brands, especially in China.

     

Chinese outward foreign direct investment—a challenge for traditional internationalization theories?

In this paper we explore the current state of research on outward foreign direct investment (OFDI) of Chinese firms. A?literature review identifies 62 articles in 15 peer-reviewed academic journals that were published between 1986 and 2012. We examine the underlying theories, research methods, motives, determinants, host countries, industries, periods of observation, nationality of authors and performance of Chinese OFDI, as well as the degree of consensus with traditional internationalization theories. We find that the majority of studies find these theories not applicable to explain Chinese OFDI. We discuss possible extensions and modifications and derive implications for future research.     

How to optimize the allocation of research resources? An empirical study based on output and substitution elasticities of universities in Chinese provincial level

Although significant progress has been made in China's basic research in recent years, there remains a wide gap between research in China and that from developed countries. How to optimize the allocative efficiency of research resources is of great importance for increasing research output. In this paper, using the fixed effect stochastic frontier model based on the translog production function, we estimate output and substitution elasticities of research and development (R&D) inputs at universities in China's provincial level during 2009–2016. We find that the R&D technical efficiency of China's universities, after a rapid growth, has tended to become relatively stable. Improvements of internationalization degree and exogenous R&D capabilities are conducive to promoting R&D technical efficiency, whereas expenditures from government grants inhibit the promotion of R&D technical efficiency; the effects of R&D capital deepening and internet penetration are not evident. The output elasticity of R&D capital is much higher than that of R&D personnel, suggesting that R&D capital is the main driving force of research output. The substitution elasticity between R&D capital and personnel has experienced a change from substitution to complementary since 2014. To realize sustained growth of research output, we should increase R&D input with positive output elasticity or reduce R&D input with negative output elasticity, making the necessary trade-offs according to the substitution relationship between the two R&D inputs.     

Happy together,or not? Balanced perceived investment in standard and nonstandard employees

This study investigated whether the relationship between temporary employees' perceived investment in employee development and work outcomes was moderated by temporary employees' perceived investment in standard employee development (PISED). A study among 2022 Norwegian temporary employees showed that the relationship between perceived investment in temporary employee development and in-role and contextual performance was moderated by the temporary employees' PISED. These results suggest that client organizations that invest more in standard employee development will get the most of their investments in temporary employee development. Implications for practice and future research are discussed.     

UK universities and the state: A Faustian bargain?

The universities are now 'one of the last semi-nationalised sectors of the British economy, ' used by government as an instrument of social policy. This situation represents a 'Faustian bargain ' which threatens both the quality and the prosperity of universities. One solution would be privatisation of some universities through public flotation. These universities could then contract with government to take state-funded students. Two objections are that the scheme would promote elitism and that it would encourage greater inequality between universities, but the relevant question is whether it would offer an improvement on the present regime.     

How do technological innovations affect corporate investment and hiring?

In this paper, we study the relation between technological advancement, and corporate investment and hiring. We build a corporate investment model with dynamic technology conditions, and we find the optimal investment and labor inputs increase in response to technological innovation shocks. Consistent with the model predictions, we empirically show that corporate investment and hiring increase following technological advancements, using various measures of technological innovation. Further, we find the effect is stronger for firms in more innovative industry, firms with higher capital intensity and firms with higher market-to-book ratio. Our findings provide evidence for the endogenous growth theory, i.e., firms with successful innovations tend to expand in capital investment and employment, suggesting technological innovations are, to some extent, Hicks-neutral.