Stakeholders’ relationships and product market competition

In this article, we study the relationships between main stakeholders (shareholders, consumers and employees) when firms are consumer oriented (CO) in the sense of caring about consumers’ interests in the objective function. We let these firms first bargain with labour union over their employees’ wages and then compete either in the quantity space (Cournot competition) or in the price space (Bertrand competition). Our model shows that taking care of the consumers’ interests when determining product market strategies may reverse the traditional ranking between Cournot and Bertrand equilibria. This implies that if shareholders in a CO firm can choose either a quantity or a price strategy, they will surprisingly choose the latter. Moreover, we show that the conflicting interests between main stakeholders are attenuated under Bertrand competition compared to Cournot competition.     

Objectives of Financial Reporting with Chinese Characters

Objectives of financial reporting are not immutable--they are influenced by a variety of factors, such as the economic, legal, political, and social environment in which financial reporting takes place. As the environmental contexts have changed in China since 1992, objectives of financial reporting have shown even more Chinese characters. In this paper, we focus on these special characters of objectives of financial reporting in China. In order to understand the objectives featured by Chinese characters, we are trying to find the hidden relationships between the objectives and environmental contexts. Our research shows that many researchers have already tried to establish objectives of financial reporting with Chinese characters, however current studies do have their limitations, and further studies should be done.     

Financial advice and individual investors’ investment decisions

Findings from previous studies generally indicate that relying on advice from financial advisors is associated with investment decisions. This study uses data from the 2013 Survey of Consumer Finances (SCF) to mainly investigate three types of advisors: (a) financial planners, (b) accountants, and (c) lawyers. Getting investment advice from financial planners is found to be positively associated with stock ownership, while this relationship is negative for individual investors relying on advice from lawyers. Evidence from this study also suggests that some personal characteristics, such as age, education, risk tolerance may play a key role in shaping individual investors’ investment decisions.     

Financial sector opening and financial constraints: an empirical study based on China’s experiences

ABSTRACT

The paper investigates the effect of financial sector opening on financial constraints based on the experiences in China. We firstly review the policy of China’s financial sector opening and set up exogenous policy measures. Then based on the panel data of listed firms from 2010 to 2015, we calculate four indices to measure China’s firm-level financial constraints through internal and external finance channels. We find that China’s financial sector opening alleviates financial constraints and upgrades the financing structure for China’s listed firms. Financial sector opening also eliminates ownership discrimination and promotes financing efficiency, to alleviate financial constraints of private enterprises and profitable enterprises. The mechanism of the effects of financial sector opening on financial constrain is mainly through the collateral channels and the elimination of information asymmetry.     

The Financial Stability Board and Switzerland’s WiR-Credit Mechanism

Abstract:

The incentives banks face, such as the Basel Capital Accords, motivate them to favor lending with collateralized assets, rather than lending to Small-Medium Enterprises (SMEs), with associated profound economic consequences for society. Since the 1970s there has not been any direct oversight of whether or not credit contributes to GDP. We need a macroeconomic policy tool that can discriminate among different categories of credit extended to curb speculation in existing assets (non-GDP) and promote new business investment (GDP).

Government money creation and private credit growth are often presumed the only two ways to enhance nominal demand, yet the Swiss Economic Circle (Wirtschaftsring-Genossenschaft or WIR) is a Swiss Bank whose creation of purchasing power for SMEs has counter-cyclically stabilized the Swiss economy for over 80 years. The Financial Stability Board (FSB) should create localized credit-creation architectures utilizing a Swiss-WIR type currency to funnel credit that reflects systemic and macroeconomic risks that individually will never be rational for banks left to themselves.     

Zero Lower Bound Monetary Policy’s Effect on Financial Asset’s Correlations

We investigate the hypothesis that zero lower bound monetary policy has an effect on the correlations of financial assets. Using an event-study approach, we evaluate the impact of the zero lower bound monetary policies of the Bank of Japan, the Bank of England, and the Federal Reserve on the bond and equity markets in Japan, the UK, the US, and the Eurozone. We evaluate the bond markets using the Japanese 10-year Sovereign bond (JGB), UK 10-year bond (Gilt), US 10-year Treasury note (T-note), and German 10-year bond (Bund). For the equity markets we use the Nikkei 225, FTSE 100, S&P 500, and Euro STOXX 600 as proxies for each regional market. We also include gold and silver as control commodities. Our analyses demonstrate significant changes not only in the evaluated assets’ correlations with each other, but also in their general behavior. This has major implications for investment portfolio construction and provides useful insight for financial service regulators and the central banks themselves in monitoring the fragility and stability of the financial system.     

The impact of “Mass Entrepreneurship and Innovation” policy on SMEs’ innovation: Using quasi-natural experiments

This study presents an in-depth investigation of the impact of “Mass Entrepreneurship and Innovation” (MEI) policy on small and medium-sized enterprises’ (SMEs’) innovation using the propensity score matching–difference-in-difference method. The MEI policy's R&D subsidies are found to generate a positive effect on SMEs’ innovation. Although R&D subsidies have no significant impact on SMEs’ strategic innovation, they can promote substantial innovation and establish a solid microfoundation for China's high-quality development. Compared with R&D subsidies, tax incentives in the MEI policy cannot encourage SMEs to innovate and may even have a negative impact on SMEs’ innovation.     

Investments in Human Capital： Elements of Investments, Their Valuation, and the Related Financial Performance Ratios

Investments in human capital （employees） include investments in the direct assurance of working abilities, investments in health and well-being, and investments in loyalty to the company. These investments are crucial for the long-term existence and development of a company, but their value is not disclosed on the assets side of the classical balance sheet. The most important argument of the mentioned approach＇s promoters is that the economic benefits stemming from such investments are uncertain. However, investments in human capital are those with the highest long-term benefits for the company. Therefore, human capital is the only element of the business process that can add value. Other elements （equipment, materials, and services） just transfer their value to products and services. In this paper, the elements of investments in human capital and the methods used to evaluate these investments are addressed. In addition, uniquely shaped financial performance ratios related to investments in human capital are presented along with the system of integrated ratios.     

Determinants of the Impact of AEC on SMEs’ Performance in Lao PDR

There is a recognition of 99%of economic enterprises in the Lao People’s Democratic Republic(PDR)is smalland medium-size enterprise(SMEs)and 94%of employment.It...     

British SMEs’ e-commerce technological investments and firm performance: an RBV perspective

Despite the heated debate on the Information Technology (IT) investment–performance paradox, the resource-based view (RBV) has received relatively little attention as an approach to explain such phenomena, particularly in the small and medium enterprise (SME) and e-commerce context. This study draws on the RBV perspective to empirically examine the association between SME e-commerce investments and firm performance. We collected firm-level data from 430 British SMEs across 16 industry sectors. Results demonstrate that RBV provides strong theoretical support, that is, business resources, human resources, and external resources (i.e. e-commerce readiness) strongly contribute to enhanced firm performance. The sophistication of SMEs' e-commerce websites contribute to firm performance, but those firms' capital investments in IT and e-commerce training per se are not significant performance drivers. Our findings suggest that UK SMEs can and do differentiate themselves on the basis of their e-commerce capability, which is created by the synergistic combination of e-commerce resources with other organisational resources and capabilities.     

Strategy and Suggestion on the Development of Credit Reporting Industry in China

Credit reporting industry of China can＇t satisfy the demand of quick economicdevelopment. Considering the condition and requirement for development of credit reporting, this paper firstly discusses preliminary problems related to credit reporting, such as law and regulation, credit information sharing and industry management. Then we study the problems of how to carry out the development of credit reporting system, including which credit reporting pattern, private or public credit reporting, to be adopted, roles of government, etc. At the end of the paper, some relative suggestions about credit legislation, establishment and development of credit system are presented.     

Thorstein Veblen’s Financial Macroeconomics

The purpose of this article is to provide an exposition of Thorstein Veblen’s contribution to financial macroeconomics. I argue that Veblen conceptualizes and contextualizes how the financial structure of effective demand is predisposed to endogenous non-sustainable leverage processes, manipulation, and speculation. I stress that Veblen advances a cultural-financial theory of investment and brings forward the role that pecuniary and emulation instincts play in institutionalizing predatory and fraudulent activities which destabilize the macroevolution of monetary production economies. I underline that Veblen patterns financial macroeconomic fragility and instability within the institutions of the business enterprise system.     

Discussion on the Financial Management Goal and the Investor Supervision for Enterprise

The investors and the managers are different interest entities in a firm, so there must be divergences between them in their value reference and goal selection. When a firm wants to determine its financial management goal, not all the relevant interest parties need to be considered with, but only the principal entities of them. It＇s necessary to set up the investor supervision mechanism by some certain system arrangement in order to realize the interest maximization of shareholders coinciding with the manager＇s interest maximization pursued by managers.     

Dealing with Ignored Attributes in Choice Experiments on Valuation of Sweden’s Environmental Quality Objectives

Using a choice experiment, this paper investigates how Swedish citizens value three environmental quality objectives. In addition, a follow-up question is used to investigate whether respondents ignored any attributes when responding. The resulting information is used in model estimation by restricting the individual parameters for the ignored attributes to zero. When taking the shares of respondents who took both the environmental and the cost attributes (52–69% of the respondents) into account, then the WTP for each attribute changes if the respondents who ignored the attributes have a zero WTP. At the same time, we find evidence that not all respondents who claimed to have ignored an attribute really did. However, the most commonly ignored non-monetary attributes always have the lowest rankings in terms of WTP across all three environmental objectives. Thus, our results show that instead of ignoring attributes completely, respondents seem to put less weight on the attributes they claimed to have ignored.     

Financial innovation,systematic risk and commercial banks’ stability in China: theory and evidence

We are dedicated to revealing the impacts of financial innovation and systematic risk on commercial banks’ stability in China, both theoretically and empirically. We established a theoretical model and derived a theoretical mechanism from this model revealing two distinctive patterns of the impacts determined by the profitability of financial derivatives: the impacts of financial innovation and systematic risk on banks’ stability in China are linear under the circumstances of a positive expected risk premium of financial derivatives; conversely, the impacts can be linear, U-shaped or cubic when the expected risk premium is negative. We make three propositions to analyse the patterns and conditions of these impacts in detail. In the empirical analysis, we do not focus only on the banking industry but also on individual commercial banks. The empirical results demonstrate that the impact of financial innovation on both the banking industry’s and most individual commercial banks’ stability are U-shaped, and the impact of systematic risk on the banking industry’s and on only one commercial bank’s stability are significantly linear, which confirms certain conditions mentioned in the theoretical propositions. Finally, the study’s conclusions are presented, and the contributions of the article to future study are also mentioned.     

Financial Analysts’ Forecasts and Unprecedented Events: The Case of German Reunification

We use the chain of events from the fall of the Berlin Wall to the reunification of Germany to examine how capital market participants respond to momentous and unprecedented events. Our examination measures the impact of these events on analysts’ forecasts for the earnings of West German firms. Our results show a significant decrease in analysts’ ability to accurately forecast earnings. Contrary to the public’s euphoria, the sense of the market was generally negative about the implications of unification for West German firms. This negative sentiment was spread across most of the broad sectors, but within those sectors the results were significantly positive for select groups of industries. It appears that, in the face of this extraordinary event, financial analysts were detached from the emotions it engendered and were discriminating in their assessment of its impact.

Financial crisis and hotels’ labour productivity growth: evidence from Spanish islands

The article examines hotels’ labour productivity growth over the period of financial crisis. We decompose hotels’ labour productivity into three components: technological change, technological catch-up (efficiency improvement/convergence) and capital deepening. Specifically, we apply our analysis over a sample of 820 Spanish hotels from Balearic and Canary Islands distinguishing three different stages during the crisis period. The results suggest that average terms hotels’ labour productivity was resistant to the financial crisis.     

Financial Integration and EMU’s External Imbalances in a Two-Country OLG Model

The pronounced increase in external imbalances in the European Economic and Monetary Union (EMU) during the years running up to 2008 is traditionally explained by financial integration through the common currency. This paper examines in a one-good, two-country overlapping generations’ model, with production, capital accumulation and public debt, the effects of financial integration on the net foreign asset positions of initially low-interest and high-interest rate EMU countries. We find that a lower savings rate and government expenditure quota, together with a higher capital production share in the latter can in fact be transformed into the observed external imbalances when interest rates converge.     

Segment Reporting： Value and Policy Choice

Evidences indicate that segment reporting has the ability to forecast firms＇ performance and reflect risks of stock market. However, there is no consensus between IAS and FASB on the choice of policy for segment reporting. Based on the analysis of IAS and FASB＇s statements for segment reporting, this paper points out that industry and geography are the two vital bases for determining the segments, and internal organizational structure also should be taken into account. Before segment reporting, a primary segment needs to be identified, and others can be regarded as secondary segments. The information of the segments can be disclosed in the form of supporting statement. This paper also gives a concrete format of segment reporting.