INSTITUTIONAL TRADING AND OPENING PRICE BEHAVIOR: EVIDENCE FROM A FAST‐EMERGING MARKET

Using daily and intraday data, we investigate the cross‐sectional relation between stock prices and institutional trading in the Taiwan stock market. Consistent with the investigative herding hypothesis, we find that institutional herding exists because of institutional positive feedback trading behavior rather than following trades made by other institutions, as suggested by the information cascade hypothesis. Moreover, the positive correlation between institutional trade imbalance and stock returns mainly comes from institutional positive feedback trading. The institutional trading decisions rely on returns measured not only over the lagged trading day but also over the opening session during the same day.     

Tourism,health and income in Singapore

This paper employs Granger causality test to investigate the long‐run and the short‐run dynamic interactions among tourism, economic development and health care development in Singapore. The test reveals that there is long‐run unidirectional Granger causality from health care development to economic development and from tourism to economic development. Both health care and tourism have positive effects on economic development in the long run. In the short run, there is a unidirectional Granger causality from economic development to health care development and a bidirectional causality between health care development and tourism. Copyright © 2009 John Wiley & Sons, Ltd.     

Deregulation and liberalization of the Chinese stock market and the improvement of market efficiency

This study employs single and multiple variance ratio tests to reexamine the weak-form efficient market hypothesis (EMH) of A- and B-shares on the Shanghai and Shenzhen exchanges in Chinese stock market. The study also examines the influence of the release of investment restriction of B-share markets on market efficiency. For the whole sample period, the weak-form EMH is only supported for Shanghai A-shares, and is not supported for the remaining shares. For the sub-sample period, the Shenzhen A-share and B-shares of both exchanges being rejected for the weak-form EMH in the earlier sample period are supported following the regulatory change. Rolling multiple variance ratio test statistic values provide additional evidence of weak-form EMH. The improvement of market efficiency can be explained by the increased liquidity and maturity accompanying deregulation and liberalization.     

How Does the Use of Credit Default Swaps Affect Firm Risk and Value? Evidence from US Life and Property/Casualty Insurance Companies

This study uses a unique credit default swap (CDS) transaction data set of insurers to examine the effects of CDS usage on the risk profile and firm value of US insurance companies for the period 2001‐2009. Applying a Heckman two‐stage model to adjust for the potential endogeneity of CDS usage with respect to firm risk and firm value, we find consistent evidence that the utilization of CDS for income generation purposes is associated with greater market risk, deterioration of financial performance, and lower firm value, for both Life and Property/Casualty insurers.     

Managerial personal diversification and portfolio equity incentives

This paper examines the diversification choices of top managers and their implications for the levels of portfolio equity incentives as well as for firms' financial policies. Standard portfolio theory should also apply to corporate managers and therefore excessive risk exposures to the firm should create portfolio diversification incentives for the managers. We use a unique dataset from the Taiwan tax data center and construct the measures of the degree of diversification in a manager's equity portfolio that is made up of equities of other firms to capture his motives for diversifying his risk exposure to his own firm. We provide empirical evidence supporting the view that managers have a risk-reduction motive when they trade in the equities of other firms besides their own. Moreover, we document evidence that the degree of diversification in such equity portfolios also significantly affects managerial equity incentives as well as firms' financial policies. Overall, our findings confirm that managers' personal diversification can help make up for the diversification that the managers would otherwise have lost, thereby reducing the agency cost of equity incentive contracts.     

A note on nurse self-scheduling

Self-scheduling began in the 1960s and many hospitals have been using it with success. Benefits include saving management time, improved morale and professionalism, and cost reduction on matters related to personnel turnover. For nursing units experiencing scheduling challenges, self-scheduling may be a solution.     

An intervention analysis for the relationship between capital expenditure decisions and the market value of firms

This article is meant to explore the relationship between corporate capital expenditure decisions and the market value of firms using the intervention technique. The article shows that deep cuts in capital expenditures may, for sink-hole type projects, provide a positive signal to the marketplace. For non-sink-hole type projects, our findings are not quite consistent with those reported in McConnell and Muscarella (1985).     

An Intelligent Idea Categorizer for Electronic Meeting Systems

Research on group decisions and electronic meeting systems have been increasing rapidly according to the widespread of Internet technology. Although various issues have been raised in empirical research, we will try to solve an issue on idea categorizing in the group decision making process of electronic meeting systems. Idea categorizing used at existing GDSS was performed in a top-down procedure and mostly by participants' manual work. This resulted in tacking as long in idea categorizing as it does for idea generating, clustering an idea in multiple categories, and identifying almost similar redundant categories. However such methods have critical limitation in the electronic meeting systems, so we suggest an intelligent idea categorizing methodology which is a bottom-up approach. This method consists of steps to present idea using keywords, identifying keywords' affinity, computing similarity among ideas, and clustering ideas. This methodology allows participants to interact iteratively for clear manifestation of ambiguous ideas. We also developed a prototype system, IIC (intelligent idea categorizer) and evaluated its performance using the comparison experiments with other systems. IIC is not a general purposed system, but it produces a good result in a given specific domain.     

Capital flows and stock price volatility: Evidence from Hong Kong

This paper investigates both the short-run dynamics and the long-run co-movement of stock prices, capital flows and the real interest rates in Hong Kong. By using the Johansen multivariate cointegration technique, this paper finds that there are two cointegration vectors among the variables. In other words, the results show that the three variables in Hong Kong are moving together. This long-run relationship implies that even the stock market is efficient in the short-run. Its long-run movement can, however, be predicted by the activities of the capital market.This paper benefited greatly from the comments of anonymous referees. All remaining errors are ours alone.     

Escaping the poverty trap in a developing rural economy

Abstract. In this paper, we examine the economic policies that might allow a developing rural economy to escape from the poverty trap characterized by a subsistence level of per capita consumption in the long run. In our model where labour is combined to land available in fixed quantity to produce a homogeneous good, saving could be made through only having children, the number of which is an endogenous decision. We provide conditions under which the economy runs into a poverty trap, and proceed to analyse the relevant policies in this case. We demonstrate that an escape from this poverty trap is possible through a suitable technology transfer, or an appropriate child‐rearing tax, but not with a foreign manufacturing sector, which increases only temporarily the labour income in this rural economy. JEL classification: J11, O11, O40