From Voids to Sophistication: Institutional Environment and MNC CSR Crisis in Emerging Markets

Why do multinational corporations (MNCs) frequently encounter corporate social responsibility (CSR) crises in leading emerging markets in the new century? Existing research about institutional impacts on MNC CSR has developed a void-based account about how the flawed institutional system allows misdeeds to happen. But the fact that such misdeeds have turned into increasing CSR crises in the new century along with institutional change is rarely taken into account. This paper combines studies of institutional voids, institutional entrepreneurship, and stakeholder theory to develop a concept of institutional sophistication, which refers to both the top-down maturation of the regulatory system that standardizes firm behavior and the bottom-up diversification and intensification of grassroots initiatives that redefine stakeholder membership. Based on this concept, we developed a framework to comprehensively demonstrate how both institutional voids and sophistication drive the MNC CSR crisis in leading emerging markets. Empirically, we established an original database that includes 309 publicized CSR crises encountered by major foreign MNCs in China, India, and Russia, 2000–2011. Through a content analysis, the paper reveals six common sophistication processes that drive the MNC crisis across contexts and also specifies stakeholder strategies that make these processes happen and vary by social problems and national contexts. We also discussed the value of studying corporate social irresponsible behavior in understanding the institution–MNC relationship.     

CEO Overconfidence and Long‐Term Performance Following R&D Increases

We examine the relation between Chief Executive Officer (CEO) overconfidence and significant increases in research and development (R&D) expenditures. Although prior studies reveal a significantly positive market reaction to increases in R&D expenditures in both the long and short run, we find that long‐run stock performance is positive only for firms whose CEOs are not overconfident. Our findings, which may be attributable to overinvestment and the overestimation of future cash flows, imply that R&D resulting from overconfident behavior does not provide any value to firms.     

The Finance-growth Relationship and the Level of Country Development

We examine whether dynamic impacts of banks and stock markets on economic growth are related to the level of country development. Using annual data from 15 industrial and 15 emerging countries over the period from 1976 to 2005, we find that banking development and stock market development may have distinct short-and long-run impacts on economic growth at various stages of country development. Financial development is not always a panacea for economic growth. Most importantly, our findings suggest that the fully functional tools to render stable growth for a country may depend on the level of the country’s development.     

Can Singapore maintain its competitive edge in manufacturing productivity vis-à-vis China and Malaysia?

This article investigates whether Singapore can maintain its competitive advantage in manufacturing from a labour productivity perspective vis-avis China and Malaysia, which are generally viewed as Singapore's competitors in manufacturing. We also investigate the extent to which China is closing the labour productivity gap with Singapore and Malaysia in technology-intensive segments of manufacturing. Our analysis reveals that China has the potential to develop a high labour-productivity and low-wage manufacturing sector. In terms of manufacturing labour productivity, China is moving towards convergence with Malaysia. Compared with Singapore, China's manufacturing labour productivity is still far behind, especially in key technology-intensive industries like electronics and chemicals, such that it is unlikely for China to catch up with Singapore within a decade.     

JUMPING THE CURSE: EARLY CONTRACTING WITH PRIVATE INFORMATION IN UNIVERSITY ADMISSIONS*

This article introduces a new model of early contracting. Employers who have private information about the applicant's ability worry that applicants who accept their offer are precisely those who were not offered other jobs. To avoid this winner's curse, employers anticipate the time of contracting. The model is developed in the context of university admissions, and is shown to be consistent with several stylized facts in that “market.” We show that, in contrast to received wisdom, allocative efficiency may be improved by the presence of early contracting.     

The inflation rates may accelerate after all: panel evidence from 19 OECD economies

The stationarity of inflation has many important economic implications. Most panel-based empirical studies do not handle cross-sectional dependence, which will result in power distortion. This paper applies a nonlinear IV estimator to calculate the test statistic of panel unit root (Chang in J Econom 110:261–292, 2002), which accounts for general cross-sectional correlation. Using monthly inflation rates, two statistics proposed by Im et al. (J Econom 115:53–74, 2003) reject the unit root; however, the nonlinear IV statistic accepts the unit root. That is, the ignored cross-sectional correlation may lead to over-rejection of the unit root null. In a nutshell, unlike current literature, the inflation rates may accelerate after all.     

ASYMPTOTICS OF IMPLIED VOLATILITY IN LOCAL VOLATILITY MODELS

Using an expansion of the transition density function of a one‐dimensional time inhomogeneous diffusion, we obtain the first‐ and second‐order terms in the short time asymptotics of European call option prices. The method described can be generalized to any order. We then use these option prices approximations to calculate the first‐ and second‐order deviation of the implied volatility from its leading value and obtain approximations which we numerically demonstrate to be highly accurate.     

Silver fetters? The rise and fall of the Chinese price level 1928–34

We show how the silver standard transmitted world silver price fluctuations into China and made the Chinese price level closely linked to the world silver price. Inflation was transmitted between 1929 and 1931 when the world silver price was falling; while deflation was transmitted during 1932 and 1934 when the world silver price was rising. Using micro-level evidence and counterfactual simulations, we show that the exchange rate was the main shock transmission channel, and silver stocks played an insignificant role.     

Behaviour of intra-daily stock return on an Asian emerging market - Hong Kong

This study examines the intra-daily return behaviour of one of the most open Asian emerging markets - Hong Kong. It is found that there is a general increase in the positive skewness and kurtosis of all the intra-daily returns after the 1987 October crash and the distributions of all the returns have become non-normal after the crash. There seems to be more day-of-the-week and time-of-the-day variations in the post-crash period than in the pre-crash period. There also exists some day-end effect in both of the periods and such a day-end effect seems to be related to the day of the week.