THE BLACK-SCHOLES EQUATION REVISITED: ASYMPTOTIC EXPANSIONS AND SINGULAR PERTURBATIONS

In this paper, novel singular perturbation techniques are applied to price European, American, and barrier options. Employment of these methods leads to a significant simplification of the problem in all cases, by reducing the number of parameters. For American options, the valuation problem is reduced to a procedure that may be performed on a rudimentary handheld calculator. The method also sheds light on the evolution of option prices for all of the cases considered, the results being particularly illuminating for American and barrier options.     

Host country competition,labor skills,and technology transfer by multinationals

Host Country Competition, Labor Skills, and Technology Transfer by Multinationals. — This paper examines the impact of local competition and the availability of skilled labor on the technology imports of foreign MNC affiliates in Mexican manufacturing industries. The authors find that proxies for local competition and labor skills are positively related to the recorded technology imports of foreign owned affiliates. The effects of competition appear to be particularly strong in intermediate and consumer goods industries, while the availability of skilled labor seems to be particularly important in durable and capital goods industries. Thus, government policies aiming to create a competitive climate and improve labor quality may also promote inflows of modern technology.     

The interface of the energy and forest sectors—Potential players in the bioenergy business

The upcoming bioenergy business area opens up promising opportunities for the traditional energy and forest sectors. This has motivated us to study existing and potential bioenergy actors that could take up this unique opportunity and develop new business around the “green gold” of the forest. Light is shed on the interface between the energy and forest sectors through a comparison of the most focal bioenergy actors with traditional forest and energy companies. The analytical methods used include both parametric and nonparametric analysis of variance, and cluster analysis. The result is a better understanding of the players that have the potential to capitalize on the emerging business.     

Measuring and modelling changes in strategy: Theoretical foundations and empirical directions

Confronted by increasingly turbulent and complex environments, general managers have become more interested in understanding the conditions and forces that enable or disable successful changes in organizational strategies. Yet, largely because of their tendency to use fuzzy definitions and inadequate methodologies, empirical studies of changes in strategy have not provided practitioners with a set of well-tested theories. To provide a basis for circumscribing, evaluating, and directing future research, this paper begins by developing a framework for assessing and modelling changes in strategy. After discussing the forces that influence their occurrence and performance outcomes, the paper reviews a representative sample of empirical studies in terms of two major questions: (1) how are changes in strategy conceptualized and modelled? and (2) what methods of observation and analysis are employed? This review concludes with a report of important patterns and concerns followed by suggestions for future research.     

Input specificity and global sourcing

This paper identifies a new industry-equilibrium channel through which a firm’s productivity affects its organizational choice. In a two-country model with firm heterogeneity and incomplete contracts, we show that the degree of input specificity and the hold-up friction in an outsourcing relation become a function of the final good firm’s productivity when inputs are not completely specific. We examine the implications for the equilibrium international sorting pattern of firms.     

Waqf,perpetual charity,in a general system theory of tawhidi metascience

This article is premised on the intercausal socioeconomic embedded model of ethical design of perpetual charity in Islam called waqf. Such a model is formalized according to the theory of unity of knowledge in the light of the Primal Ontology of Divine Oneness called Tawhid in the Qur'an. Tawhid is argued to be the only foundational Law of Islam respecting “everything.” The implications of such an epistemic treatment in respect of waqf as an example of the whole class of charities in Islam is shown to be unlike the dissociative and human opinionated nature of what has now come to be known as “shari'ah‐compliance.” The Islamic shortfall of “shari'ah‐compliance” and its segmentation as opposed to organically unified synergy between the socioeconomic and moral/ethical variables of the objective criterion called the Well‐being Function have deprived the entire study of the present days' Islamic economics, finance, and banking from its true epistemological core of Tawhid as Law. To restore this true foundation in Islamic thought, a theory of metascience of Tawhid is presented. Waqf in Malaysia is studied as an example from the perspective of Tawhidi unity of knowledge, contrary to its existing dissociative presence in the ethically exogenous socioeconomic treatment under “shari'ah‐compliance.”     

A model to evaluate transient industry effects

In this paper we present a model to evaluate transient industry effects, that is, the impact of business cycles on the industry. While the importance of the economic cycle for industry and firm performance is widely recognized, we do not know much about how much the business cycle influences industry activity. The aim of this paper is to present a method that helps to understand the relationship between the business cycle and an industry's level of activity. Copyright © 2008 John Wiley & Sons, Ltd.     

Where Do Financial Constraints Originate from? An Empirical Analysis of Adverse Selection and Moral Hazard in Capital Markets

Despite the voluminous and growing literature on financial constraints, the origins of the constraints are hardly ever empirically analyzed. This paper offers such an analysis. We study, in particular, the empirical prevalence of adverse selection and moral hazard in capital markets using a unique survey data on Finnish small and medium-sized enterprises (SMEs). The survey data suggest that adverse selection is empirically more prevalent than moral hazard in the capital markets that the SMEs face. We also find that of the variables indicating the presence of adverse selection and moral hazard, the former has more explanatory power in regressions modeling the availability of external finance to the SMEs than the latter. Finally, we document that our proxies for adverse selection and moral hazard are inversely related to the age of firms, just like Peter Diamond’s (1989) model predicts.     

The daughter effect: do CEOs with daughters hire more women to their board?

Using a sample of S&P 100 firms, we find that CEOs with a daughter are more likely to hire new women to their board of directors than CEOs without a daughter. Our results provide additional evidence that parents’ attitudes and actions are affected by the gender of their children and that the effect is strong enough to influence important decisions at large corporations.     

2022 KLEIN LECTURE PARENTAL EDUCATION AND INVENTION: THE FINNISH ENIGMA

Why is invention strongly positively correlated with parental income not only in the United States but also in Finland, which displays low income inequality and high social mobility? Using data on 1.45 M Finnish individuals and their parents, we find the following: (i) the positive association between parental income and off-spring probability of inventing is greatly reduced when controlling for parental education; (ii) instrumenting for the parents having an MSc degree using distance to nearest university reveals a large causal effect of parental education on offspring probability of inventing; and (iii) the causal effect of parental education has been markedly weakened by the introduction in the early 1970s of a comprehensive schooling reform.