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     

The Use of Debt Covenants Worldwide: Institutional Determinants and Implications on Financial Reporting

This study investigates how the use of debt covenants around the world varies with legal institutions. On the basis of syndicated loans in 36 countries, we find that debt covenants are more prevalent in countries with stronger law enforcement and weaker creditor rights, suggesting that law enforcement facilitates, and creditor rights substitute for, the use of covenants. We also find that the substitution effect between covenant use and creditor rights exists mainly in countries with strong law enforcement, and the effect of legal institutions on covenants is primarily driven by covenants that preserve seniority and capital. In addition, timely loss recognition increases with the use of debt covenants and strong creditor rights attenuate this relation. Overall, our study is the first to provide comprehensive evidence on how the use of debt covenants responds to legal institutions and how it bridges the previously documented link between legal institutions and accounting conservatism.     

Non-productive consumption loans and threshold effects in the inflation-growth relationship

Recent empirical evidence indicates that two inflation thresholdsexist in the inflation-growth relationship. Pre-existing theoreticalmodels, however, fail to generate such a pattern. By addingconsumption loans (which are non-productive) into a standardmodel of imperfect information, this paper finds that an increasein the inflation rate may increase, decrease, or have no significanteffect on economic growth for inflation rates below a thresholdlevel; however, for inflation rates higher than this thresholdlevel, an increase in the inflation rate significantly reduceseconomic growth. Moreover, the marginal impact of an increasein the inflation rate in terms of reducing economic growth increaseswith the rise in the inflation rate, until the inflation ratesreach the second threshold level, from which such a marginaleffect significantly decreases. These results accord well withrecent empirical evidence.     

POVERTY DYNAMICS DURING TRADE REFORM: EVIDENCE FROM RURAL VIETNAM

This paper implements and adapts the conceptual framework developed by Winters (2002) that identifies the transmission mechanisms between trade policy reform and household welfare outcomes. We make use of household panel data from Vietnam collected in two years, 1992–93 and 1997–98 that span the very earliest years of the reform period and its immediate after effects. Poverty dynamics are modeled using changes in consumption expenditure and poverty transition models. The trade effect is captured by a set of variables that are most likely to have an impact on rural poverty, namely prices of staples and employment in the export sector. We show that trade liberalization has a material and positive effect on rural household welfare and this trade effect is largely transmitted to the poor through the labor market channel.     

LINEX Loss Functions with Applications to Determining the Optimum Process Parameters

In the classical Taguchi quality model, the symmetric quadratic loss function has been used to measure the loss of quality. However, there are a number of situations in which the symmetric quadratic loss may be inappropriate. In this paper, we proposed an asymmetric loss function, called linear exponential (LINEX) loss function, to determine optimum process parameters for the product quality. When the coefficient of LINEX loss function is small, it will be close to the quadratic loss. Moreover, the trade-off problem between quality and cost will be discussed.     

Policy System in Taiwan's Industrial Context

Drawing on institutional analysis of politics, this paper proposes a concept of policy system that is then applied empirically to Taiwan's industrial context of 1986–95. Contemporary political sciences now identify the institutionalization of state-business relations. Accounts differ, but generally they retain a strong sense of conventional rules in the formulation and implementation of industry policy. While taking this idea of rules seriously, we extend institutional perspectives on politics from the familiar confines of structural constraints to the institutional context of resources. Thus, a policy system is socially constructed with a variety of rules and resources, appreciable in the Taiwanese context.     

Entrepreneurs in Turkey: A Factor Analysis of Motivations, Success Factors, and Problems

One hundred and thirty-nine entrepreneurs in Ankara, Turkey were surveyed to determine their motivations for business ownership, the factors contributing to their success, and their problems. Based on survey responses, the primary reasons for starting a business are to increase income, to obtain job security, and to secure independence. According to the factor analysis, small and medium-sized enterprises owners are driven more by income rewards than intrinsic rewards. The most important business success variables are the entrepreneurs' reputation for honesty and friendliness. Social skills and good customer service were also cited as critical success factors. The most serious problem faced by entrepreneurs in Turkey is the complex and confusing tax structure. Other important problems include unreliable employees, the inability to maintain good records, and a weak economy.