Pay disparity in multinational and domestic firms in China: the role of pro-disparity norm

A survey of Chinese employees was conducted in China to examine the antecedents and consequences of a pro-disparity norm concerning the pay disparity associated with expatriate managers and with Chinese managers recruited from distant geographical areas (outside managers). These two groups, especially expatriate managers, tend to receive high salaries. Interactional justice received from outside managers was positively related to pro-disparity norm and task interdependence with them was negatively related to pro-disparity norm, but no significant relationship was found for expatriate managers. When innovative climate was high, interactional justice and task interdependence showed a positive relationship with pro-disparity norm. With regard to consequences of pro-disparity norm, when innovative climate was high, it was positively related to compliance with the requests of expatriate and outside managers and positively related to knowledge sharing with them.     

A comparison of graduating seniors who receive job offers and those who do not according to hospitality recruiters’ selection criteria

This study used an exploratory mixed methods approach to identify the characteristics possessed by hospitality graduating seniors who receive job offers. Quantitative analyses reveal that: (a) seniors who receive job offers are different from those who do not in relevant work/internship experience, perceived person-organization and person-job fit, leadership/career preparedness, professionalism, and interview behaviors and (b) student characteristics have various effects on recruiters’ hiring decisions in different hospitality segments. Suggestions are provided to help students better prepare for a hospitality career and hospitality programs better educate students for employments. Future research is advocated to address the limitations.     

The influence of managerial incentives on the resolution of financial distress

This study investigates the influence of managerial incentives on the resolution of financial distress. Our model predicts that when creditors and equityholders prefer different resolution methods, the likelihood of choosing Chapter 11 over private renegotiation is related to the ownership structure of the distressed firm. Empirical test results using a sample of 81 voluntary Chapter 11 firms and 65 private workout firms support the model’s prediction. We show that managerial ownership is positively related to the incidence of Chapter 11 filing when there is conflict between equityholders and creditors over the choice between Chapter 11 and a private renegotiation. Consistent with prior literature, we also find that the choice of resolution methods depends on the extent of creditor holdout problems and the level of economic distress. We also performed the analysis of a subsequent 5 years of post-distress performance for all sample firms. The majorities of firms that file for Chapter 11 lose their independence and are either acquired or liquidated. However, more than half of firms in private workouts survived as independent firms.

CROSS-AUTOCORRELATION BETWEEN A SHARES AND B SHARES IN THE CHINESE STOCK MARKET

Listed companies in China, upon meeting certain requirements, can issue two types of shares: A shares and B shares. Local investors in China can only buy and sell A shares, while foreign investors can only buy and sell B shares. We argue that foreign investors may receive news about China faster than domestic Chinese investors because of information barriers in China. Since foreigners participate in the B-share market, the price movements of B shares should reflect the common information that the foreigners have. Rational A-share investors can therefore condition their trading decisions on the previous price movements of B shares. As a result, returns on B shares should lead the returns on A shares. Using daily prices of A and B shares, we demonstrate that returns of B shares are correlated with those of A shares and that this correlation depends on the information transmission mechanism at work. The pattern of the asymmetric cross-autocorrelation is robust to the inclusion of lagged realized returns and trading volumes.     

Compensation disparity between locals and expatriates: Moderating the effects of perceived injustice in foreign multinationals in China

A large compensation gap exists between local and expatriate employees in foreign multinationals in China. A survey in the Suzhou area confirmed that local employees regarded their compensation vis-à-vis that of expatriates as unfair. Trustworthiness of expatriates by locals showed a stronger effect on their evaluation of expatriates than on their job satisfaction and organizational commitment, whereas perceived compensation received by locals showed the opposite pattern. Trustworthiness of expatriates moderated the negative effect of perceived distributive injustice on evaluation of expatriates, whereas perceived compensation moderated the relationships between perceived distributive injustice and job satisfaction as well as organizational commitment.     

The impact of monetary policy on local housing markets: Do regulations matter?

This paper shows that monetary policy has uneven impacts on local housing markets, and that the magnitude of the impacts are correlated with housing supply regulations. We apply the linearized present value model, which allows the log rent–price ratio to be decomposed into the expected present values of all future real interests rates, real housing premia, and real rent growth, to the housing markets in 23 US metropolitan statistical areas. Based on the indirect inference bias-corrected VAR estimates, we find that MSAs that are more regulated have (i) a higher variance in the log rent–price ratio, (ii) a larger share of the variance explained by real interest rate, and (iii) a stronger impulse response of house price to the real interest rate shock.     

Global factor trade with differentiated factor prices and factor intensities

Abstract .  Relaxing the assumption of internationally identical factor intensity techniques in the HOV model creates two challenges. First, computing actual factor intensity techniques of different countries requires detailed input-output tables and factor usage data, which are not always available. Second, determinants of the factor intensity technique differences across countries need to be identified. This paper explores the role of relative factor price differences in the determination of factor intensity technique differences across countries and proposes an inferring method that infers factor intensity techniques of different countries based on relative factor price differences. The HOV model is then modified accordingly.     

An Empirical Examination of Foreign Exchange Market Efficiency: Applying the Filter Rule Strategy to Intra-Daily DM/$ Exchange Rates

Testing the existence of excess filter rule trading profits is one of the weak-form tests of market efficiency. Using intra-daily Deutsche mark/U.S. dollar exchange rate data from February 1985 to August 1989, this study applies the x' statistic in Sweeney (1986) to examine whether significant excess filter rule profits exist. The results show that many combinations of in and out filters generate significant x' statistics. Among them, in and out filters around 0.05–0.1 % generally lead to the highest excess filter rule profit. Furthermore, the performance of the filters remains stable when the sample period is broken down into three equal subperiods. Such findings indicate that there may be inefficiency in the intra-daily Deutsche mark/U.S. dollar market. An investor may earn excess profit in this market by applying the filter rule strategy.     

Economic Analysis at the Federal Communications Commission

This article reviews a number of the major economic issues confronting the Federal Communications Commission (FCC) over the past year and discusses new analytic techniques that FCC economists applied to some of those issues. The article also identifies several areas in which further academic research would be valuable to this agency.Martin Perry is serving as FCC Chief Economist on leave from Rutgers University, New Brunswick NJ. Jonathan Levy is the FCC Deputy Chief Economist and, like Evan Kwerel and Chuck Needy, works in the FCCs Office of Strategic Planning and Policy Analysis. Mark Uretsky works in the FCCs International Bureau and Tracy Waldon in the FCCs Media Bureau. All authors are economists except for John Williams, an engineer consultant who advises the FCC on spectrum issues.     

QUANTO LOOKBACK OPTIONS

The lookback feature in a quanto option refers to the payoff structure where the terminal payoff of the quanto option depends on the realized extreme value of either the stock price or the exchange rate. In this paper, we study the pricing models of European and American lookback options with the quanto feature. The analytic price formulas for two types of European-style quanto lookback options are derived. The success of the analytic tractability of these quanto lookback options depends on the availability of a succinct analytic representation of the joint density function of the extreme value and terminal value of the stock price and exchange rate. We also analyze the early exercise policies and pricing behaviors of the quanto lookback options with the American feature. The early exercise boundaries of these American quanto lookback options exhibit properties that are distinctive from other two-state American option models.