Asymmetric hedging of the corporate terms of trade

Risk management techniques such as value at risk and conditional value at risk focus attention on protecting the downside exposures without penalizing the upside exposures. The implied welfare functions are equivalent to an otherwise risk neutral agent with a put option exposure on the downside. The correspondence can be exploited to design smoother loss measures and numerically based solutions for optimal hedge ratios. A statistically well‐adapted hedge object for the firm is the corporate terms of trade, which balances up output and expense prices as a single index related to the net profit margin. The methods are applied to the NZ dairy industry to derive optimal foreign exchange forwards based hedges. It is not always optimal to rely solely on forward discounts or premiums. © 2006 Wiley Periodicals, Inc. Jrl Fut Mark 26:1059–1088, 2006     

Computer information systems and strategic corporate planning

How are computers being used to support strategic corporate planning? And what does the future hold, especially for expert knowledge-based systems?     

The use of foreign currency derivatives,corporate governance,and firm value around the world

This paper examines the impact of currency derivatives on firm value using a broad sample of firms from thirty-nine countries with significant exchange-rate exposure. Derivatives can be used for managers' self-interest, for hedging or for speculative purposes. We hypothesize that investors can appeal to a firm's internal (firm-level) and external (country-level) corporate governance to draw inferences on a firm's motive behind the use of derivatives, since well-governed firms are more likely to use derivatives to hedge rather than to speculate or pursue managers' self-interest. Consistent with this explanation, we find strong evidence that the use of currency derivatives for firms that have strong internal firm-level or external country-level governance is associated with a significant value premium.     

The use and abuse of corporate politics

Any manager—but particularly a new manager—needs to understand how corporate politics work.     

Determinants of corporate hedging and derivatives: A revisit

Although the primary purpose of hedging is to reduce earnings volatility, corporate hedging may also increase firm value. Using publicly-available data, we found that hedging reduces the probability of financial distress, reduces the agency costs of debt, and reduces some agency costs of equity. However, we found no support for the hypothesis that hedging increases firm value by reducing expected tax liability. In addition, we suggest that corporate ownership structure may affect the desirability of hedging. We also found that large firms have a stronger tendency to hedge, firms with a larger percentage of value derived from growth opportunities are more likely to hedge, and convertible debt serves as a substitute for corporate hedging. With a dummy variable for multinational corporations as a proxy for operational hedging, we found that operational hedging and derivative hedging are complements rather than substitutes.     

会计信息质量与公司治理结构问题探析

会计信息是两权分离下所有者和经营者沟通受托责任履行情况的桥粱,是资本市场中投资者决策的直接依据.高质量的会计信息对资本市场的完善至关重要,是公司内、外部治理结构有效运行的基础.本文就对会计信息质量与公司治理结构问题进行了分析,以实现资本市场资源的优化配置.     

打造行业上下游企业信息交流平台

本刊讯 2010年8月21日，《船舶经济贸易》第二届理事会第一次会议在山东省青岛市召开。与会代表围绕“船企如何发展”和“如何办好《船舶经济贸易》杂志”两个主题展开研讨．     

Gender and ethnic diversity on boards and corporate information environment

Prior studies argue that demographic diversity on a firm's board impacts its information environment, yet there is limited empirical evidence regarding the relation between board diversity and corporate opacity. We extend this line of research by examining whether gender and ethnic diversity of directors impacts corporate opacity. Using a Herfindahl Index based on directors' gender and ethnicities to measure board diversity, and an opacity index based on analyst following, analyst forecast error, bid–ask spread, and share turnover to measure corporate opacity, we find that board diversity is negatively associated with corporate opacity. Our results are robust to alternative measures of board diversity and the various tests we employ to address potential endogeneity concerns.     

Chief executive officer ability and corporate environmental sustainability information disclosure

This study explores the impact of CEO ability on corporate environmental sustainability information disclosure. We take samples from Chinese A-share listed companies from 2010 to 2019 and use the ordinary least squares as a baseline regression model to check the relationship between CEO ability and corporate environmental sustainability information disclosure. Our findings are robust to different corporate environmental sustainability information disclosure measures and CEO ability. We found a positive association between CEO ability and corporate environmental sustainability information disclosure; thus, firms with a more able CEO are more likely to disclose more corporate environmental sustainability information. Our results also found a significant negative interaction coefficient between CEO ability and CEO career concerns. As the CEO grows older, his/her ability decreases; therefore, corporate environmental sustainability information disclosure reduces. Furthermore, we document that a female CEO strengthens the relationship between CEO ability and corporate environmental sustainability information disclosure. The study results are important for understanding corporate environmental responsibility development and implementation, particularly in China.     

A hybrid information approach to predict corporate credit risk

This study proposes a hybrid information approach to predict corporate credit risk. In contrast to the previous literature that debates which credit risk model is the best, we pool information from a diverse set of structural and reduced‐form models to produce a model combination based on credit risk prediction. Compared with each single model, the pooled strategies yield consistently lower average risk prediction errors over time. We also find that while the reduced‐form models contribute more in the pooled strategies for speculative‐grade names and longer maturities, the structural models have higher weights for shorter maturities and investment grade names.     

How to use bottom-line writing in corporate communications

Efficient writing, or what the authors call bottom-line writing, results from writers telling the reader immediately what is their purpose in writing and what they expect of the reader. Inefficient, non-bottom-line writing does just the opposite. It displays a relentless use of discursive, circuitous organizational patterns.     

Lock in and switch: Asymmetric information and new product diffusion

Many new web-based services are introduced as free services. Depending on the seller??s business model, some remain free in the long run, while others switch to pay mode at some point in time. I characterize the relation between buyers and a new service seller when the former are uncertain about the latter??s business model and need to incur a one-time sunk cost before enjoying the new service. I derive a natural signaling equilibrium where the seller plays a ??lock-in-and-switch?? strategy, while buyers play a ??wait-and-see?? strategy. Specifically, a high-cost seller starts by pricing at zero and waits for a sufficient number of consumers to adopt the new service, at which point the seller switches to pay mode. In this gradual separation equilibrium, the signal is given not by the price level (which always starts at zero) but rather by the duration of the introductory offer. Finally, I show the equilibrium entails diffusion even though consumers are identical and equally aware of the new service??s existence.     

Asymmetric information in commodity futures markets: Theory and empirical evidence

This article examines the theoretical and empirical implications of asymmetric information in commodity futures markets. In particular, it formulates and tests a theoretical model that recognizes two distinct categories of traders: hedgers, who participate in both spot and futures markets, and speculators, who participate only in the futures market. Speculators are assumed to possess differential information about the realized values of selected random variables. Multiperiod futures market equilibria are derived under competitive conditions, and the ability of futures markets to forecast changes in equilibrium spot market prices are examined. The key variable is shown to be the randomness and informational asymmetry in the aggregate supply by participating hedgers in the spot market, whose absence turns out to be the major determinant of the revelation of informational asymmetry. Moreover, under the assumption of independence of error forecasts for prices and spot market supplies, it is shown that futures market equilibrium ends up with linear expressions for prices and futures contract volumes. These linear expressions are then used to develop empirically testable models. The main empirical implications in these models revolve around the role of the basis as a predictor of future spot price changes. The paper provides an empirical investigation of these implications, using three commodities traded on the Winnipeg Commodity Exchange (WCE). © 1998 John Wiley & Sons, Inc. Jrl Fut Mark 18:803–825, 1998     

The role of information technology in corporate strategy of small and medium enterprises

The crisis of the new economy might have cast doubt on the usefulness of the Internet for business activities. However, it is unquestionable that the possibilities offered by Internet-based technologies in terms of information processing, transfer and collection enable the firm to improve market knowledge and the relationship with clients and suppliers. This work explores, theoretically and empirically, the possibilities offered by the Internet to facilitate the internationalization process of Small and Medium Enterprises (SMEs) as well as to improve the relationship with other firms within the same value chain. Using a wide representative sample of Spanish SMEs, the empirical analysis confirms the benefits of the Internet in both cases.     

The use and abuse of executive powers in warding off corporate raiders

As corporate raids become more prevalent, top corporate executives have asked for and often received additional executive power to ward off raiders or “sharks”. For example, they have been given the use of “shark repellents” such as staggered elections for board members, cumulative voting, super majority voting requirements, and the power to sell off the firm's “crown jewels”. Are they abusing these powers as they attempt to save their jobs, at the expense of stockholders, by driving off the corporate raiders who might unseat ineffective management? In this article the practices being used by entrenched managers to make their firms less attractive to raiders and the defense tactics they are using in corporate takeover battles are examined from an ethical viewpoint.     

The strategic use of corporate philanthropy: building societies and demutualisation defences

This paper examines the strategic use of corporate philanthropy in the 1990s by UK building societies faced with an intensification of societal pressure to change legal form from mutual to corporate status. While the economic case for mutuality has been made elsewhere, this paper examines the observation that community relationships were thought by management to be capable of assisting in the strategic positioning of mutual societies with regard to their legal form. By increasing charitable giving to respond to the level of societal scrutiny and discussion on the issue of mutuality, this paper argues that charitable giving, as one proxy for community involvement, was used as a strategic tool to deflect calls for demutualisation, thereby preserving the existing mutual status of building societies.     

公司治理结构对会计信息失真的影响研究

随着上市公司数量的不断增加,会计信息失真现象也随之增多。不真实的会计信息会误导决策者、影响资本市场秩序,于是研究如何改善和提高我国上市公司会计信息质量,解决会计信息失真问题成为当今研究的重要课题。     

The role of an entrepreneurially alert information system in promoting corporate entrepreneurship

The literature has suggested that an entrepreneurially alert information system may be a salient driver of corporate entrepreneurship, even though this role has been neither theoretically articulated nor empirically substantiated. Building upon the organizational learning, information orientation, and entrepreneurial awareness literatures we identify three key elements of a firm's entrepreneurially alert information system, and then develop a parsimonious model that examines the impact of these elements on corporate entrepreneurship. Using both single- and multi-source survey data from 495 small- to medium-sized firms, we test our model and find that each element individually and collectively imparts significant positive influence on corporate entrepreneurship.     

Corporate accountability in Australia: Managing the information environment for corporate accountability

Accountability is a significant factor in the soundness of the organisational environment in Australia, for both the public and private sectors. The accountability process rests on the quality and accessibility of organisational records, the information environment. While the Australian liberal democratic open society and free market system relies on accountability, paradoxically accountability is constrained by the needs of the open society and the market. Setting appropriate mechanisms for accountability while preserving civil liberty and innovative free markets is a difficult task, and is one that falls to government. Governments have a ubiquitous role in implementing accountability in both the public and the private sectors, and the Australian federal system further complicates governments' difficult role. The 1990s will bring further corporate pathologies, similar to those of the 1980's. However the public and private sectors can reduce the impact of corporate pathologies in the 1990's by learning the lessons of the 1980's, through placing a priority on inculcating ethical and moral behavior, emphasising democratic values, and raising the organisational status of records.Lance McMahon is a lecturer specialising in government in the School of Management and Marketing, Curtin Business School. He has previously worked as a senior policy adviser in the Western Australian State Government.