Evolutionary Characteristics of China＇s Intermediate Manufactures

China's economic development is characterized by progressive integration with international production chains as an assembly producer. Japan and South Korea are the major partners providing intermediate products to China. The present paper analyzes the Chinese intermediate sector's present condition and evolutionary characteristics revealed in bilateral trade with Japan and South Korea. The analysis uses the framework of new trade theory represented by “intra‐industry trade”. Trade statistics from 1997 to 2004 are analyzed using the database published by the OECD. Results show that China's inter‐industrial evolution is characterized by its expanding positioning in the manner of the flying geese development paradigm of Asian countries. Furthermore, intra‐industrial evolution is characterized by a concentration on price competitiveness. The framework and results of the industrial analysis presented in this paper assist in the understanding of China's manufacturing evolution and of the policy‐making decisions taken in the process.     

Firm Efficiency Differences and Distribution in the Kenyan Manufacturing Sector

Abstract: This article provides empirical evidence on technical efficiency differences and efficiency distribution for three Kenyan manufacturing subsectors, namely food, metal and textile, using an unbalanced panel data covering two periods. Econometric production frontiers are estimated for each subsector in each period. The confidence predictions for these efficiencies were, however, found to be quite wide. The results indicate variation of technical efficiency estimates of the sampled firms in each period. The technical efficiency distribution for each subsector changed not only in relation to itself, but also in relation to the other subsectors across the two periods of analysis. The efficiency distribution of the firms for both food and textile (metal) subsectors improved (declined) during the study period but with the food subsector firms remaining relatively inefficient. The improvement of the technical efficiency distribution for both the textile and food subsectors is an indication of intra‐plant improvement during the period of analysis. The decline of the technical efficiency distribution for the metal subsector suggests that the market orientation during the structural reform period did not promote firm efficiencies or the firms were slow in responding to the reforms.     

Did Leaving the Gold Standard Tame the Business Cycle? Evidence from NBER Reference Dates and Real GNP

Cover and Pecorino (2005) claim that the March 1933 departure from the gold standard is the most probable break point ushering in an era of longer U.S. expansions, both absolutely and relative to subsequent recessions. Their analysis is based on cycle durations as defined by National Bureau of Economic Research (NBER) reference dates. However, much of macroeconomic analysis is based on (i) growth cycles (i.e., periods when the economy's production is above or below trend) rather than absolute increases or decreases in economic activity; and (ii) aggregate time series' volatility as the prime indicator of macroeconomic stability. In light of this, we reevaluate the March 1933 break point. First, using HP‐filtered quarterly gross national product (GNP), our analysis of growth cycle durations still implies a break point near 1933. Second, we test for structural breaks in the volatility of GNP growth rates and deviations from trends. These tests suggest a structural break considerably later than 1933, perhaps as late as the 1950s.     

Engagement partner specialization and corporate disclosure transparency

This paper explores the association of audit partners' industry specialization with corporate disclosure transparency and the latter's informativeness. The distinctive institutional designs of partner signature requirement and Information Disclosure and Transparency Ranking System (IDTRS) adopted in Taiwan allow us to empirically address the issue. We posit and find that the rankings from the IDTRS are higher for firms audited by industry specialist engagement partners than for firms audited by non-specialist engagement partners. Additionally, the results show that the probability of informed trade (PIN) proxy for information asymmetry is negatively associated with the rankings for clients of industry specialist engagement partners, but not for clients of industry non-specialist engagement partners. The results are robust with respect to alternative estimation method and alternative measures of industry specialization. Overall, the evidence suggests that industry specialist engagement partners enhance the credibility of corporate disclosure transparency, through which information asymmetry is further declined. The evidence provides policy implications to the partner signature requirement adopted in Taiwan and China.     

Do analysts who understand accounting conservatism exhibit better forecasting performance?

This study investigates the performance of analysts when they match the asymmetric timeliness of their earnings forecast revisions (i.e., asymmetric forecast timeliness) with the asymmetric timeliness of firms’ reported earnings (i.e., asymmetric earnings timeliness). We find that better timeliness‐matching analysts produce more accurate earnings forecasts and elicit stronger market reactions to their forecast revisions. Further, better timeliness‐matching analysts issue less biased earnings forecasts, more profitable stock recommendations and have more favorable career outcomes. Overall, our results indicate that analysts’ ability to incorporate conditional conservatism into their earnings forecasts is an important reflection of analyst expertise and professional success.     

Do political connections affect stock price crash risk? Firm-level evidence from China

Using a sample of Chinese listed firms in the period from 2003 to 2012, this paper empirically investigates how the presence of politically connected directors affects stock price crash risk. We thereby make a distinction between listed state-controlled firms and privately controlled firms due to their different incentives to appoint politicians as directors on the board. Our empirical results show that politically connected directors exacerbate stock price crash risk in listed state-controlled firms, an effect driven by the appointment of local government officials as directors. In contrast, hiring politicians as directors, particularly central-government-affiliated directors, helps listed privately controlled firms to reduce stock price crash risk. Finally, good quality of institutions does not help to alleviate the positive relationship between political connections and stock price crash risk in listed state-controlled firms. However, it does weaken the role of political connections in reducing crash risk in listed privately controlled firms.     

Activation and variation of the United Nation’s cluster coordination model: a comparative analysis of the Haiti and Japan disasters

The coordinated response to extreme events is critical as illustrated by recent disasters in Haiti and Japan. As a way for coordinated provision of international humanitarian assistance to disaster-hit countries, the Office for the Coordination of Humanitarian Affairs (OCHA) developed cluster coordination model (CCM). With content analysis and network analysis of OCHA situation reports, this study checked four premises regarding activation of CCM, interaction between national and international actors, roles of proximity country, and level of cluster coordination. This study found that there were meaningful variations in implementing the CCM for 2010 Haiti and 2011 Japan disasters. From the analyses, we found that the current CCM may be vulnerable to black swan disasters; thus, extensive and active estimation of national disaster management capacities should be conducted to prevent collapse of national disaster management system. However, the reconciliation of state sovereignty and international humanitarian assistance also should be considered.     

Financial market globalization,nonconvergence and credit cycles

This paper explores the dynamic consequences of variable investment-project size in a global economy consisting of many small open countries that are plagued with domestic credit market frictions. As is customary in the literature, borrowers provide some internal funds, but they also need external funds to implement their investment projects, which are subject to the costly-state-verification problem. Contrary to the literature, the investment-project size increases with the country’s own capital stock. We find that financial market globalization may lead to a process of oscillatory convergence, even in the absence of any exogenous shocks, if the investment-project size is very sensitive to the change in capital stock.     

Country asymmetry,trade agreements,and transfers

Using a standard 2 × 2 trade agreement model, I show that the welfare effects of a free trade agreement (FTA) depend on the asymmetry on supply and demand functions. When countries are sufficiently asymmetric with respect to the size or the demand functions, the small country tends to be better off, while the large country is worse off. Thus, the small country must compensate the large country for the FTA to be incentive‐compatible. However, in the presence of sufficient asymmetry in the supply functions, the small country is worse off, while the bigger is better off. In this case, the transfer must flow from the large to the small country. This last finding helps explain why some FTAs between rich and poor countries provide for adjustment transfers to the latter.