Some Methodological Issues on Estimating Foreign Exchange Exposure of US Multinational Firms: Evidence from the Asian Crisis

Abstract

This article asks whether sample specification of firm, period, and exchange rate matters in estimating foreign exchange exposure of US multinational firms. By sampling US firms that had Asian sales and assets from 1996 to 1998, we find that the firms’ returns are more likely to be significantly exposed to the Asian-oriented exchange rate changes for the Asian crisis, when the exchange rate changes were unexpectedly sizable. Also, by examining firms’ exposure in the share of Asian sales and assets, we find that the firms are more exposed as their operations are more involved in the Asian region.     

Japanese Company’s Cultural Shift for Gender Equality at Work

Abstract

The article provides an overview of Japanese Prime Minister Abe’s womanomics policy for gender equality (GD), and poses a question as to why despite a large amount of GD initiatives, Japan’s GD progress has been painfully slow. It then introduces an ethnography of the GD implementation by a Japanese multinational firm (2013–2017). It analyzes the firm’s pedagogical effort to correct the unconscious cultural bias to retool the existing habitus of managers and employees. The firm’s cultural strategies parallel its human resources (HR) reforms in its attempt to change organizational norms regarding how corporate men and women should work. Deploying theoretical perspectives of cultural neuroscience, semiotics, learning theory and interpretive anthropology, the author then identifies seven strategic foci for this firm’s cultural transformation, and terms this habitus-shifting program as MRS-PARC: M?=?magical messages and messengers; R?=?rites of passage and rituals; S?=?signs and symbols; P?=?rewarding and punishing task performances; A?=?clarifying alternatives and affordance; R?=?dealing with unexpected results, resistance and rear guards; and C?=?communication, complexity and continuity. Once MRS-PARC starts, corporate social drama and critical incidents lead the observer to the nexus of symbolic resistance and representation that in turn helps clarify how to modify the existing accommodation-and-redress mechanism for reform. MRS-PARC offers an empirically derived, action-oriented, process-based, analysis for those interested in moderating the people’s referential frameworks and cognitive/emotional orientations for organizational transformation.     

贸易保护事件对中国纺织品出口的影响研究

文章首先对金融领域中应用非常广泛的“事件分析法”进行总结与述评,分析“事件分析法”在经济事件研究中应用的合理性和科学性,为研究特定贸易保护事件提供理论分析工具和研究思路;其次,对国际社会对华纺织品贸易保护事件进行了详细的分析研究,从而量化了贸易保护事件对我国纺织品出口贸易的短期影响;最后,结合我国基本国情和纺织品贸易的实际情况,对事件分析法的研究结果进行全面客观的评价.     

Efficiency and Stability Issues in Monetary Policy

Abstract

The question of why some multinational corporations (MNCs) perform better than others is at the centre of the analysis of many international business disciplines and the subject of a never-ending debate of policy-makers. The dilemma of whether the MNC's organizational culture differs from home countries’ national culture is the subject of our research. We provide empirical evidence that MNCs’ national cultures shape and dominate MNCs’ organizational cultures with a direct impact on their performances. For the first time by using performance measurement techniques and reconstructing cultural distance indexes, we are providing empirical evidence of the impact of home country's national culture on MNCs’ performance.     

美国对外经济制裁研究

美国对外经济制裁是美国对被制裁方现行政策不满,迫使被制裁方改变现行行为的外交政策之一。分析研究美国对外经济制裁的方式和效果可以得出,美国现行的大部分对外经济制裁并未达其初衷。     

Should I stay or should I go? Foreign direct investment,employment protection and domestic anchorage

This paper examines theoretically and empirically how employment protection legislation affects location decisions of multinationals. We depart from the “conventional wisdom” by examining not only the effect of protection on inward foreign direct investment (FDI), but also a country’s ability to “anchor” potential outward investment. Based on our simple theoretical framework, we estimate an empirical model, using data on bilateral FDI and employment protection indices for OECD countries, and controlling for other labour market institutions and investment costs. We find that, while an “unfavourable” employment protection differential between a domestic and a foreign location is inimical to FDI, a high domestic level of employment protection tends to discourage outward FDI. The results are in line with our conjecture that strict employment protection in the firm’s home country makes firms reluctant to relocate abroad and keeps them “anchored” at home.     

Networks and Scientific Integrity: Eli Heckscher and the Construction of Economic History in Sweden, 1920–1950

Abstract

This article deals with the US government's efforts to curb the Swedish ball bearing producer SKF's exports to the East early in the Cold War, 1950–1952, and interprets this process within the framework of hegemony theory. In doing this, the article makes use of previously unutilised US archival material. The period up to mid-1951 saw increasing US pressure upon Sweden and SKF to consent to US hegemony by abiding by the Coordinating Committee for Multilateral Export Controls (CoCom) embargo. To achieve its objectives US policymakers developed a flexible ‘carrot and stick’ approach, and the article adds considerable detail regarding the US government's handling of SKF. US tolerance and flexibility was dependent upon Swedish consent to American hegemony in Western Europe, which was received through the signing of the Stockholm agreement – a hegemonic apparatus through which Sweden's abidance by the embargo was handled – in mid-June 1951. A small amount of exports was accepted by Washington as long as the main US objective – to deny the Eastern Bloc strategic technology – was adhered to by SKF. The article also reveals the lack of policy coordination in the Swedish government, and the conflicts between the government and SKF regarding the responsibility for adhering to the embargo.     

Role of high-speed rail on social fixed assets investments in China

ABSTRACT

Rapid development of high-speed rail (HSR) in the past decade has a tremendous boosting effect on China’s economy and society. Under the ‘New normal’, HSR provides an important physical space for the steady expansion of the national economy. This paper uses a panel dataset comprising 285 prefecture-level cities in 2010–2016 to establish an investment measurement model and estimate the impact of HSR on social fixed assets investment. It also uses the difference-in-difference and propensity score matching tests to verify the results. Two important findings arise from the empirical analyses: (1) HSR development significantly stimulates China’s social fixed assets investment, foreign direct investment and real estate investment; and (2) HSR investment does not substitute for investments in other industries, instead, it supplements them. These findings provide strong theoretical and empirical support for China’s long-term HSR development strategy.     

Europe in the midst of China–US strategic economic competition: what are the European Union’s options?

ABSTRACT

Despite President Trump’s announcement of a partial deal on October 11, the prolonged economic competition between the two superpowers does not bode well for the future. Within this context, the European Union faces an urgent question: how to position itself in the US–China competition. This paper aims at addressing this question after reviewing the milestones of the trade war and the consequences for China, the US and EU. This paper concludes that European companies are to suffer from the trade war but some sectors could experience gains. Also, a trade deal which pushes China to reform and open up would also be beneficial. Against this background, this paper reviews the EU’s options in dealing with the two hegemons in the light of their growing strategic confrontation. These options are safeguarding multilateralism, relying on the Transatlantic Alliance and remaining neutral which implies relative more engagement with China on economic matters.     

R&D and market value of Japanese firms in the 1990s

There is a concern in Japan that the R&D profitability of its domestic firms fell significantly in the 1990s, following the US pattern in the 1980s. This paper finds, however, that the effect of R&D on the market value of a firm, relative to that of tangible assets, increased in the 1990s in terms of both within firm variations and cross section variations, even though the average market value itself significantly fell. More trade and higher foreign ownership significantly enhanced the market value of a firm, and so did more patents in sectors such as pharmaceuticals. J. Japanese Int. Economies 20 (2) (2006) 155–176.     

Creditors’ and Shareholders’ Reporting Demands in Public Versus Private Firms: Evidence from Europe*

In this study we investigate whether the importance of accounting information in contracting and communication with shareholders and creditors affects earnings timeliness in publicly disclosed general‐purpose financial statements. To operationalize the relationship between timeliness demands and the importance of accounting information to shareholders and creditors, we compare the (asymmetry in) earnings timeliness of public firms with that of private firms. We attribute public versus private firm differences in timeliness to shareholders’ demands when a country’s institutions provide strong investor protection. Similarly, we attribute these differences to creditors’ demands when the institutions provide strong creditor protection. Our analysis of public and private firms in 13 Western European countries suggests that creditors and shareholders have different timeliness demands. In particular, we find that the public versus private firm difference in asymmetric timeliness is not associated with a country’s degree of investor protection but positively associated with a country’s degree of creditor protection. The results further suggest that shareholders demand symmetric rather than asymmetric timeliness. An important implication of our study is that general‐purpose financial statements are responsive to creditors’ reporting demands, which contrasts with the idea that these — primarily private — creditors would use special‐purpose reports.     

R&D subsidy,intellectual property rights protection,and North–South trade: How good is the TRIPS agreement?

This paper investigates the competition in technology and production between a firm in the North (developed country) and a firm in the South (developing country), and how such competition may be affected by the North’s subsidy on technology improvement and the South’s intellectual property rights (IPR) protection level. It is argued that allowing the North to choose the policy first could bring Pareto improvement. This paper also shows that requiring only the South to tighten its IPR protection (as required by the TRIPS agreement) without putting similar pressure on the North to provide more R&D hurts the South. A more rewarding outcome exists if both the IPR protection level and the technology subsidy rate are chosen optimally. We point out that maximizing world welfare does not consequently hurt the South, or require a tightening of IPR protection in the South.     

The global faces of China’s incomplete reforms: a perspective from China’s new intellectual property regime

ABSTRACT

The paper probes into an antithetical aspect of China’s economic reforms in the global context by focusing on the recent developments of China’s intellectual property regime. By analyzing this cutting-edge legal system, it highlights China’s political divergence against its economic convergence in its decade-long reforms, in particular, its state-oriented innovation system as against the world’s neo-liberal economic order. The last decade witnessed China’s preeminent transformation from a passive follower to a proactive advocator of IP standards. However, certain entrenched limits characterizing China’s state-oriented economy and cultural systems such as information blockade and coercive technology transfer serve as catalysts that are apt to provoke acrimonious confrontation between China and major economies. In this sense, China’s incomplete reforms have taken on a new form: as China’s influence on the global economy grows, conflicts of diverse national priorities become more palpable than simple-minded economic cooperation.     

Board Gender Diversity,Investor Protection,and Private Information-Based Trading

ABSTRACT

This study examines the effects of board gender diversity and investor protection on private information-based trading and its persistent form. The results generally show that board gender diversity plays a significant part in preventing stock trading activities based on private information as well as persistent private information-based trading. Investor protection is also found to be significant and more pronounced in mitigating private information-based trading, but its function is hindered by the persistence of private information-based trading. Overall, the findings suggest that, besides strengthening the investor protection, policymakers should also encourage the involvement of women on boards of directors.     

Sino-US trade balance from national income perspective and global income chains

ABSTRACT

Trade volume biases trade benefits under the background of economic globalization. Employing the input-output technique, important progress has been made in research on trade in value-added. It is noteworthy that capital globalization is one of the important manifestations of economic globalization. Owing to the ever-increasing transnational flow of capital, mainly by foreign direct investment (FDI), production of exports shows great dependence on foreign capital. A large part of value-added in exports are obtained by foreign factors owners, since foreign-invested enterprises account for a large proportion in host country’s total exports, which is foreign income. The ultimate goal of trade is to boost national income. We propose to study trade benefits and trade balance from national income perspective, and further introduce the concept of global income chains to reveal economic benefits distribution within international specialization.     

Collusion and combines in Canada, 1880–1890

ABSTRACT

It is a little-known fact that Canada adopted its own antitrust law one year before the landmark Sherman Antitrust Act of 1890. The Anti-Combines Act of 1889 (‘the Act’) was adopted after a decade in which ‘combines’ (the Canadian equivalent of ‘trusts’) had grown more numerous. From the combines’ numbers, Canadian historians, legal scholars, and economists have inferred that consumer welfare was hindered. However, price and output evidence has never been marshalled to provide even a first step towards assessing the veracity of this inference. This paper undertakes that task. I highlight the fact that the output from industries accused of collusion increased faster than national output in the decade before the passage of the Act and that their prices accordingly fell faster than the national price index. I argue that these findings militate for the position that the origins of Canada's Anti-Combines Act were partially rooted in rent-seeking processes similar to those that American scholars have found driving the Sherman Antitrust Act of 1890.     

Did the 1998 Merger of Price Waterhouse and Coopers & Lybrand Increase Audit Quality?

We examine the effects of the 1998 merger of Price Waterhouse (PW) and Coopers & Lybrand (CL) on the audit quality of the merged firm PricewaterhouseCoopers (PwC) at both the firm and office levels, where audit quality is surrogated by the auditor's propensity to issue a going‐concern opinion, clients’ likelihood of meeting or beating analysts’ earnings forecasts, and clients’ accrual quality. At the firm level, we find that the merger increased audit quality for PwC relative to the audit quality of the other Big N firms. At the office level, our findings, albeit mixed, collectively suggest that the improvement in firm‐level audit quality was likely driven by the improvement in audit quality at PwC's overlapping offices, that is, offices in cities where both PW and CL had separate offices prior to the merger. Further, our findings suggest that although the PW/CL merger increased auditor concentration in local audit markets with PwC overlapping offices, the merger improved (rather than hurt) audit quality in those markets. Overall, our study contributes to the extant sparse literature on the effect of Big N mergers on audit quality, and is of potential interest to regulators.     

National accounts and international comparisons for the former Soviet Union

Abstract

Despite a long-standing experience in national accounting in the former USSR, it is well established that official Soviet estimates of economic growth were substantially overstated. Furthermore. a peculiar fact showing the internal inconsistency in the official national accounts ofthe Soviet Union is that independent estimates of relative levels of USSR and US national income and GNP comparisons suggested much lower growth rates. However, even the former comparative level estimates are now by many regarded as overstated. This paper briefly reviews the history of the official national accounts in both the former Soviet Union and new Russia. then turns to a review of the revisionist estimates ofgrowth; and finally offers a comparative discussion ofthe USSR/USA levels.     

Earnings Management: Do Firms Play “Follow the Leader”?

In this study we examine whether the reported performance of one firm affects the discretionary reporting behavior of another firm. We do this by identifying the leader within each industry, defined as the first large announcing firm. We find that the discretionary performance of followers (those firms announcing after the leader) relates positively to the leader's reported performance. Specifically, when the leader misses analysts’ expectations, followers report lower discretionary accruals, have fewer income‐decreasing special items, and are less likely to meet analysts’ expectations. In contrast, when leaders report good news, followers report higher discretionary accruals and are more likely to meet expectations (although we do not find evidence of a positive association between leaders’ good news and followers’ income‐decreasing special items). Overall, the results are consistent with managers of followers perceiving that earnings news of the leader will affect investors’ and others’ performance expectations for their firms.     

The Effects of Norms on Investor Reactions to Derivative Use

Prior research indicates that a firm's use of derivatives to manage business risks is viewed favorably by investors. However, these studies do not consider a potentially key factor in this setting—namely, the typical behavior (or norms) regarding derivatives by other firms in the industry or the firm itself. In this paper, we report the results of multiple experiments that test whether norms are influential in affecting investors’ evaluations of firms’ derivatives choices. Our results show that the generally favorable reactions to derivative use actually reverse and become unfavorable when firms’ derivative decisions are inconsistent with industry or firm norms. Somewhat surprisingly, though, we find that industry and firm norms are not viewed similarly by investors. These results expand our understanding of how investors respond to firm's derivative use decisions and demonstrate the role of norms as factors that influence investors’ judgments in financial reporting settings. Our results have implications for firm managers making decisions about derivative use.