Why is the payoff to schooling smaller for immigrants?

To answer the question, this paper uses the Over-Required-Under Education technique, a new decomposition methodology and data on adult men from the 2000 US Census. Using the 510 three-digit occupational categories, similar patterns emerge whether the mean or mode of education in the occupation is used as the typical (required) level. The partial effect of the occupation's typical schooling level is the same for immigrants and natives. About two thirds of the smaller effect of schooling on earnings is attributable to differences by nativity in the payoffs to over/under education. The remainder is largely due to the different distributions by nativity of over/under education. Favorable immigrant selectivity, especially among the least skilled, and to a lesser extent, limited transferability of foreign schooling, is largely responsible for these patterns. A variety of tests of robustness are performed, including separate analyses for child and adult immigrants.     

Is the housing market set to fall?

Some analysts have suggested that house prices are set to collapse, particularly in the London area. These conclusions are generally based on a rather simple analysis of house price to income ratios. We argue that this is misleading and there is little evidence to suggest a collapse in the market.     

Why do firms cross-list? International evidence from the US market

Using a modified international asset-pricing model we find strong evidence that publicly quoted firms cross-list when exhibiting strong performance in their domestic market and wish to take advantage of this situation. After cross-listing, this advantage disappears. Our sample consists of daily data for 1165 firms from 47 countries that have cross-listed on the US equity markets over the period 1976–2007. Within the context of this model we provide tests of the validity of the main hypotheses of capital market segmentation and investor protection, which provide explanations for equity cross-listing and investigate whether the nature of the market (regulated or unregulated) and the accompanying legal framework (common or civil law) can account for the impact of cross-listing on returns. Supporting the segmentation hypothesis, we report a decrease in local market risk after cross-listing. However, we find that the magnitude of such a decrease is diminishing over time as international markets become more integrated. On the other hand, we do not find any change in the global market risk after cross-listing, except for firms that cross-listed between 2001 and 2007, where their exposure to international market risk decreases. Furthermore, we find no evidence to support the investor protection hypothesis.     

Protective faith? The role of religiosity in the stressor-strain relationship in helping professions

Abstract

Working conditions in western economies keep fueling work stress and psychological ill-health among employees. Job resources as well as personal resources play important roles in alleviating the adverse outcomes. In this article, we analyze religiosity as a rather neglected personal resource and its role in the stressor–strain relationship. Five dimensions of religiosity (intellect, ideology, public practice, private practice, and experience) are tested for their buffering effect on the relationship between work stress, measured as effort-reward imbalance, and psychological strain as well as for their direct relationship with psychological strain. The sample consists of 792 helping professionals and a comparison group of 172 non-helping professionals. The results show that public practice is negatively related to psychological strain for helping professionals while none of the religiosity dimensions has an effect among non-helping professionals. A buffering effect of religiosity on the relationship between work stress and psychological strain is not observed. The results contribute to the literature on the model of effort-reward imbalance as well as religiosity in the workplace and the role of personal resources in the stress process.     

Do policymakers need to cool the UK housing market?

The combination of government schemes and a recovery in the wider economy underpinned a robust pickup in housing transactions and house prices through 2013. But there is no evidence of a housing bubble across most of the country. Across the majority of regions prices are still below previous peaks in nominal terms and much lower still in real terms. Meanwhile measures of affordability and indebtedness are in a much better state than they were prior to the financial crisis. The exception is London, where supply shortages and strong demand have pushed both the price‐to‐income ratio and average income multiple back to previous highs. An improving macroeconomic backdrop and ongoing support from Help to Buy should ensure that demand continues to strengthen, supporting further growth in transactions. There has been a strong supply response over the past nine months and this should continue, which will help to keep a lid on price growth. Divergent macroeconomic prospects across the regions will lead to a wide variation in house price growth, with London expected to lead the way. We do not see a case for changing the terms of Help to Buy, particularly given that the most likely source of a bubble is London, where the impact of Help to Buy is likely to be small. In our view, the average income multiple is crucial and macro prudential tools should be used if it continues to rise above previous peaks in any regions. The most likely cause of a bubble at the national level would be an inadequate supply response. Alongside its policies to support demand, the government should implement a series of measures aimed at increasing supply, including planning reform, and it could also consider using its low borrowing costs to fund public sector house building.     

Company performance in Ukraine: is this a market economy?

This paper examines empirically the responsiveness of firm performance to ownership and market structures, sector and regional specificity, and varying degrees of soft budget constraints. It does so by providing a “snapshot” of the economy. For cross-sectional data on Ukrainian firms in 1998, the paper presents evidence that the firms in the snapshot behaved more as if they were still in a loosely reformed Soviet environment where exchange via interpersonal connections, rather than the price mechanism, determined the allocation of resources.     

What drives the liquidity premium in the Chinese stock market?

This paper examines the dynamics of the liquidity premium in the Chinese stock market by adopting a multivariate decomposition approach to measure the individual contributions of various driving forces of the premium (such as firm size, idiosyncratic volatility, and market liquidity betas). By employing a wide range of liquidity measures, we show that liquidity premium is generally significant in the Chinese stock market. Furthermore, this premium is increasing in recent years starting from 2011; this observation is different from the United States market, in which the premium has declined over the years. Moreover, the multivariate decomposition approach highlights several asset pricing factors as the main driving forces of the premium. Based on the Amihud liquidity measure, the decomposition approach indicates that the size factor contributes 45–65% to the liquidity premium. However, the measure based on turnover suggests that idiosyncratic volatility accounts for at least 60% of the liquidity premium. In contrast, the global market liquidity beta does not significantly contribute to the premium. However, there is some evidence that the local market liquidity beta has become more significant in its impact on the premium during the period from 2011 to 2015. Our results imply that the findings on the liquidity premium in the Chinese stock market could be sensitive to the liquidity measure used and period of analysis.     

Why are the Pentagon and the CIA in Hollywood?

The CIA and the U.S. Department of Defense are both engaged in programs to influence the content of movies produced by Hollywood studios. Although they claim their only purpose in these ventures is to guarantee the accuracy of how military and intelligence activities are conducted, it is clear that their agenda goes beyond that goal. Their true aims include ensuring that movies project a positive image of the relevant government agencies. However, the CIA and DoD differ in their understanding of what constitutes good publicity. Films scrutinized and supported by military agencies are primarily evaluated according to whether they provide a vehicle for showing the technical and organizational competence of the Pentagon. To that end, films based on comic book characters or extraterrestrial invaders are viewed positively because they show the war‐fighting capacity of the military without having to name any actual enemy. The CIA, by contrast, prefers to support films that enable citizens to develop a stronger sense of patriotism in a world of moral ambiguities. As a result, the CIA is much less fearful of revealing the dark side of its undertakings, as long as a given movie presents a story that shows the value of the CIA in protecting the security of the nation.     

Why in the world did they reshore? Examining small to medium-sized manufacturer decisions

Small to medium-sized enterprises (SMEs) are moving their manufacturing operations from low-cost countries back to high-cost countries, reversing earlier offshoring decisions. These reshoring decisions cannot be completely explained by changing location-related costs. To better understand why SMEs are reshoring, we evaluate nine product-line decisions – six to reshore and three to remain offshore – and codify four empirical observations. We then integrate these observations with relevant literature to develop and analyze a system dynamics model of SMEs' offshoring and reshoring decisions. Synthesizing the above, we articulate propositions regarding SMEs’ reshoring decisions. We conclude by discussing these decisions through the lens of the heuristic decision-making literature, providing managerial and policy implications.     

Do foreign institutions outperform in the Taiwan options market?

This paper investigates comparative information advantage for foreign and domestic institutions on Taiwan's index options by examining the intraday information content of limit orders placed by foreign and domestic institutions, respectively. The height and length of limit order book provided by either foreign or domestic institutions exhibit predictive power on subsequent price changes in options, especially for put options. The information advantage is more significant for foreign institutions with respect to both call and put options. On the other hand, the results are mixed when order imbalance is used as the proxy of information on limit order book. Foreign institutions outperform domestic institutions for put options, not call options. Order imbalance, ignoring differential aggressiveness of limit orders, fails to capture comparative information advantage for foreign institutions. The superior information advantage for foreign institutions persists during the financial tsunami of 2008–2009 and periods of substantial price changes.     

Does the market perceive a difference in rating agencies?

A frequent and recent topic in the financial press concerns the two major rating agencies, Moody’s and Standard & Poor’s. The reported perception is that Moody’s is less credible. In this study, we determine whether the market shares this perception and whether this perception carries an economic cost. Since there are many features attached to a bond issue that affect its yield, differences in bond rating cannot be tested in isolation. This paper estimates the impact of differences in ratings as well as several other key bond features (call and sinking fund features, and syndication) of public issues of corporate bonds using regression analysis over the period 1986 through 1996. All features tested except the sinking fund option for doubling and tripling the amount of funds retired are found to be significant including the variable measuring the market’s perception of the informational content of ratings from the two rating agencies. Thus, we conclude that the market finds value in the ratings from each agency, but that the value is not symmetrical between the two agencies. There is not enough evidence that the market values one agency over the other.     

Why is the hypothetico-deductive (H-D) method in information systems not an H-D method?

The hypothetico-deductive (H-D) method is reported to be common in information systems (IS). In IS, the H-D method is often presented as a Popperian, Hempelian, or natural science method. However, there are many fundamental differences between what Popper or Hempel actually say and what the alleged H-D method per Hempel or per Popper means in IS. To avoid possible misunderstanding and conceptual confusion about the basic philosophical concepts, we explain some of these differences, which are not mentioned in IS literature describing the H-D model. Due to these distinctive differences, the alleged H-D method per Hempel or per Popper in IS cannot be regarded as the H-D model per Hempel or per Popper. Further, the H-D model is sometimes confused with another model in IS, the deductive-nomological (D-N) model of explanations. Confusing the H-D and D-N methods can also produce stagnation in the fundamental methodological thinking in IS. As one example, the H-D model (per Hempel or per Popper) does not require hypotheses to be based on existing theories or literature. As a result, misunderstanding the H-D model in IS may seriously limit new hypothesis or theory development, as the H-D model in the philosophy of science allows guessing and imagination as the source for hypotheses and theories. We argue that although IS research (1) generally does not follow the H-D method (per Hempel or per Popper), and (2) should not follow the H-D method, (3) we can still learn from the H-D method and criticisms of it. To learn from the H-D method, we outline method of hypothesis (MoH) approaches for further discussion. These MoH approaches are not hypothetico-deductive, but hypothetico-inductive-qualitative or hypothetico-inductive-statistical. The former MoH endeavors to be suitable for qualitative research, while the latter is aimed for statistical research in IS.     

How quickly is temporary market inefficiency removed?

I provide evidence on the length of time it takes for arbitrageurs to exploit attractive investment opportunities. A unique data set from the Internet sports betting market allows me to focus on the speed of investor response in an environment that is not affected by the joint hypothesis problem. The market does not instantly converge to an efficient level after mispricing occurs, but the adjustment process is rapid. Arbitrageurs remove many of these opportunities within minutes of them being created and the majority are gone within an hour. Arbitrage opportunities that are more difficult to find last for longer.     

Stock holdings over the life cycle: Who hesitates to join the market?

In this paper, we study the empirical relationship between age and individual wealth held in stocks, focusing on the heterogeneity of risk-taking over the life cycle in the population. We use micro-data and nonparametric quantile regression to argue that there is a pronounced life cycle pattern of risk-taking for households, which is conditional upon ownership. Specifically, we show that the fraction of stock investment decreases to bottom significantly in midlife and increases afterwards, contradicting the popular evidence claiming a hump-shaped pattern. The pressure of large financial obligations during middle age may be the reason for the crowding out of stock market risk-taking and could induce low capital returns for households.     

Empowered to do what? Why?

This article reviews an approach to leverage business process reengineering and employee empowerment for not only cycle time and cost reduction opportunities, but also a more exciting and expanded role for the employee. It promotes the reduction of simple, routine tasks, and refocusing the improved skill level of today's employees on higher value adding activities.     

Beating the market? A mathematical puzzle for market efficiency

The efficient market hypothesis is highly discussed in economic literature. In its strongest form, it states that there are no price trends. When weakening the non-trending assumption to arbitrary short, small, and fully unknown trends, we mathematically prove for a specific class of control-based trading strategies positive expected gains. These strategies are model free, i.e., a trader neither has to think about predictable patterns nor has to estimate market parameters such as the trend’s sign like momentum traders have to do. That means, since the trader does not have to know any trend, even trends too small to find are enough to beat the market. Adjustments for risk and comparisons with buy-and-hold strategies do not satisfactorily solve the problem. In detail, we generalize results from the literature on control-based trading strategies to market settings without specific model assumptions, but with time-varying parameters in discrete and continuous time. We give closed-form formulae for the expected gain as well as the gain’s variance and generalize control-based trading rules to a setting where older information counts less. In addition, we perform an exemplary backtesting study taking transaction costs and bid-ask spreads into account and still observe—on average—positive gains.

     

Does weather impact the stock market? Empirical evidence in Taiwan

Psychological evidence suggests close relationships between weather and mood. Individuals feel in a more positive frame of mind on sunny than cloudy days. This study applies GJR–GARCH to examine the relationship among weather, stock returns and risk in Taiwan from 2001 to 2007. The empirical results indicate that precipitation does not significantly influence stock return and risk; likewise, sunshine hours and temperature insignificantly influence stock return, but do significant impact stock risk. These findings demonstrate that weather effect really exist in stock market, and can help investors in making innovative investment and management decisions.     

Why is traditional accounting failing managers?

This article provides an account of activity-based costing. It presents a general overview of this costing method, lists benefits and key concerns, discusses some of the impediments to its spread, and predicts its increasing use.