Corporate governance in Taiwan: The nonmonotonic relationship between family ownership and dividend policy

This study considers an important aspect of corporate governance: the relationship between cash flow rights and dividend payout policy of listed family firms in Taiwan, an economy characterized by a predominance of family-controlled firms. Dividend payout levels are important because they are crucial to governing the firm and managing its investments. The empirical results show that at a low level of controlling families’ cash flow rights, the threat to lose control at any time makes controlling families claim more in dividends. This yields a positive relationship between dividend payout and the cash flow rights of controlling families at this level. Meanwhile, at a moderate level of controlling families’ cash flow rights, the entrenchment effect becomes more robust and creates a negative relationship with dividend payout. Finally, at the very highest level of controlling families’ cash flow rights, excessive firm-specific risk again helps to again create a positive relationship. This nonmonotonic relationship between controlling family cash flow rights and dividend payout also holds for financially mature firms that have a high earned to contributed capital mix.     

Credit valuation adjustment of cap and floor with counterparty risk: a structural pricing model for vulnerable European options

This study develops a structural pricing model based on the Black 76 formula for the evaluation of the credit value adjustment (CVA) of OTC traded caps and floors, which is mandated as an integral part of Basel III. The proposed structural pricing model improves the existing structural pricing models for vulnerable European options by allowing payments to be made after the exercise of the options. Five crucial determinants of caps’ and floors’ CVAs are identified by the proposed structural model, they are: the cap’s/floor’s tenor, the writer’s total asset value, the correlation between the cap’s/floor’s underlying and the writer’s total asset value, the volatility of the writer’s total asset value, and the writer’s aggregate liabilities. Numerical examples are given to demonstrate the effects of the crucial parameters. Compared to the market practice of CVA calculation based on reduced-form models, the five crucial parameters are the unique features of the proposed structural model.     

Target Costing,Business Model Innovation,and Firm Performance: An Empirical Analysis of Chinese Firms

Market orientation theory was used to relate the implementation of target costing systems and business model innovation to firm performance using a sample of 189 electronics and information industry manufacturers in China. As expected, the implementation of target costing was positively associated with both business model innovations and firm performance. Further, the diversity of product development teams was also crucial. It positively moderated the association between target costing and business model innovation. Finally, the business model innovation was positively related to firm performance. Copyright © 2012 ASAC. Published by John Wiley & Sons, Ltd.     

Using structural equation modeling to predict cabin safety outcomes among Taiwanese airlines

The aim of the study was to examine the relationship between safety culture (e.g. management commitment, various work environment factors) and flight attendant safety performance (e.g. rule compliance, crewmember involvement and participation, accident investigation, injury incidence). A comprehensive questionnaire was derived from the Loughborough University “Safety Climate Assessment Toolkit” and several similar surveys. Additional items were designed for an airline cabin work environment. The questionnaire was distributed to four major Taiwanese national airlines and achieved a valid response rate of 84.65%. Structural equation modeling was used to test a hypothesized model concerning safety culture and cabin safety performance. A variety of fit indices confirmed the overall model fit but not all of the paths in the model were statistically significant. The findings show that safety culture was a predictor of cabin safety outcomes. The results indicated that high management commitment was significantly related to high crewmember participation, and that safe cabin work environment was significantly related to crewmember’s individual behavior. However, the findings showed no relationship between management commitment and injury incidence which means injury incidence might not be predicted by management commitment.     

Trade liberalization,forward‐looking firms,and welfare

We set up an oligopolistic model with two exporting firms selling to a third market to investigate the welfare implications of trade liberalization when the exporting firms are forward‐looking. The results show that with cost asymmetry trade liberalization encourages the exporting firms to engage in tacit collusion, which may not only be detrimental to the domestic welfare, but also to the consumer surplus of the importing country. Moreover, we find that tacit collusion is less sustainable if the government of the importing country imposes a lower (higher) tariff on the more (less) efficient exporting firm. If a nonforward‐looking or a forward‐looking cost‐efficient domestic firm exists in the importing country, then trade liberalization also encourages tacit collusion.     

The antecedents and consequences of job stress of flight attendants – Evidence from Taiwan

This study investigates the relationships between the antecedents of job stress, such as work-to-family and family-to-work conflicts, and consequences, such as job satisfaction, organizational commitment and turnover intentions, of flight attendants who are typically characterized as undertaking ‘emotional labor’. Using a sample of flight attendants collected from Taiwanese airline companies, the study reveals evidence of the following linkages; family-work conflict → job stress → job satisfaction → organizational commitment → turnover intention.     

从一个社会热点问题看统计教学

随着统计学在日常生活、社会调查研究中的应用越来越广泛，统计错用、滥用的现象也层出不穷，造成诸多的错误与误解。根据当下的一个社会热点，分析了当前统计教学与实践中可能出现的问题，如变量定义不明、方法选择不合理、相关关系和因果关系混淆等，并提出了注重方法应用条件、进行探究型教学等开展优质统计教学的几点建议。     

To improve investors' valuation of accounting earnings in emerging markets: evidence from Taiwan

The valuation of accounting earnings is related to the level of earnings management used by the firm. In emerging markets where earnings management is typically pervasive, investors lose confidence in accounting earnings and thus tend to under‐value earnings. Using data from Taiwan, we show that better governance characteristics are associated with improved investor valuation of accounting earnings. Under weaker governance structures, such as excessive control on the part of majority shareholders, small board size, and chief executive officer/chairman of the board duality, the market tends to under‐value accounting earnings. Reducing controlling shareholders' ownership, increasing board size, and reinforcing the monitoring function of the board improves investors' ability to value accounting earnings. Copyright © 2010 ASAC. Published by John Wiley & Sons, Ltd.     

Good deeds earn chits? Evidence from philanthropic family controlled firms

This study examines whether charitable family controlled firms have lower default risk. Using Taiwan data that provide clear information about firms’ benevolent intention and avoid endogeneity issue of risk and charitable activities, we show that charitable family controlled firms have lower default risk, which is proxied by value-at-risk and expected shortfall measures. Our finding shows that charitable activities bring benefits of lower risk to shareholders. This study also provides various channels that can lower default risk for the charitable firms. That is, these firms appear to have higher credit ratings, engage less in earnings management, and have higher worker productivity. This study argues that the benevolent mindset of decision makers at firms help lower default risk.