Exchange-traded funds,persistence in tracking errors and information dissemination

We estimate tracking errors from 26 exchange-traded funds (ETFs) utilizing three different methods and test their relative performance using Jensen's model. We find that tracking errors are significantly different from zero and display persistence. Based on Jensen's alpha, risk adjusted returns are significantly inferior to benchmark returns for all ETFs with two exceptions at conventional significance levels revealing that passive investment strategy does not outperform market returns. We then examine the degree to which frequently used factors such as expense ratio, dividends, exchange rate and spreads of trading prices may be underlying sources of tracking errors causing this underperformance. We find that the change in the exchange rate is a significant source of tracking errors. Our serial correlation test, runs test and panel regression analysis reveal that Asian markets display relatively greater persistence and therefore are less efficient in disseminating information and noisier in filtering the information contained in returns.     

The Squam Lake Report: Fixing the Financial System*

In these excerpts from The Squam Lake Report, fifteen distinguished economists analyze where the global financial system failed, and how such failures might be prevented (or at least their damage better contained) in the future. Although there were many contributing factors to the crisis—including “agency” problems throughout the financial system and a bankruptcy code poorly suited for reorganizing financial firms—at the core of the problem is a potential conflict between the risk-taking proclivity of financial institutions and the interests of the economy at large that must be managed at least in part through more effective regulation. The Squam Lake Report provides a nonpartisan plan to transform the regulation of financial markets in ways designed to limit systemic risk while preserving—to the extent possible and prudent—the economies of scale and scope that justify the existence of today's large financial institutions. To reduce the risks that large banks will fail, the authors call for higher capital requirements based on more effective assessments of the risks of bank assets and liabilities, as well as a new systemic regulator that should be part of the central bank. To reduce the costs of failure when it occurs, the authors propose that banks be required to create “living wills” laying out their plan to sell assets or shut down operations in the event of financial trouble. As part of that plan, regulators are urged to “aggressively encourage” banks to issue “contingent” debt capital securities that convert into equity.     

Safety,security and peace tourism: The case of the DMZ area

It comes as no surprise that peace and tourism is an important topic today in tourism literature. Despite the strength of global tourist demand, many destinations, especially in the developing world, are facing fluctuations in tourist arrivals, due to unsafe political conditions. This study discusses the symbiosis between tourism and peace and its opposite, war, and the likely impacts of each condition on several tourist destinations. A turbulent security environment, caused by international and civil wars, coup d'etat and terrorist attacks has already demonstrated its negative impact on tourism development in many countries around the world (Taylor & Quayle, 1994). The aim of this study is to examine the relationship between safety, tranquility, peace, and successful tourism, using surveys completed by both international and domestic tourists. More specifically, it is about the effects of the absence of safety, security and peace on domestic and international tourism in the Korean demilitarized zone (DMZ) area. The general findings demonstrate that the subjects of the study view the implication of the existence of a peaceful environment on tourism favourably.     

Motivations behind Consumers’ Organic Menu Choices: The Role of Environmental Concern,Social Value,and Health Consciousness

This study aimed to examine underlying motivations of consumers’ intention to visit a restaurant featuring organic menu items and willingness to pay (WTP) for organic menu items. In particular, this study incorporated environmental concerns, social value, and health consciousness as key motivators. An online survey was conducted with a self-administered questionnaire, and a total of 473 responses were analyzed using structural equation modeling. The results showed that environmental concern was the strongest predictor of WTP, followed by social value and health consciousness, whereas health consciousness was the most influential factor on intention to visit, followed by social value and environmental concern.     

RV Traveler’s Pull Factors to Campgrounds in Leisure Tourism

The purpose of this study was to identify the underlying structures of RV traveler’s pull factors to campgrounds and confirm the results by using exploratory factor analysis and confirmatory factor analysis with multiple data sets. The results identified the following five dimensions of the campground traveler’s key attributes: Activity, Amenity, Essentials, Price, and Store. The “Essentials” factor had a grand mean of 4.47, which was the highest among the five factors. Therefore, campground owners and managers should pay extra attention to maintaining a high quality on those essential attributes first, before considering adding or promoting any other items.     

Exploring the comparative importance of online hotel reviews’ heuristic attributes in review helpfulness: a conjoint analysis approach

Online travel reviews have become increasingly important as a result of the intangible and heterogeneous characteristics of the tourism industry as well as the recent diffusion of social media. This exploratory case study intends to examine the comparative importance of the six heuristic attributes (reviewer location, reviewer level, reviewer helpful vote, review rating, review length, and review photo) with respect to review helpfulness in the online hotel review context. Moreover, the salience of the individual levels within each review attribute and the importance of the attributes in positive and negative review-rating groups are compared. In total, 1,158 reviews of a hotel on TripAdvisor were collected and analyzed through conjoint analyses. This study found that the review rating and reviewer helpful vote attributes are the two most important factors. Finally, three major propositions are suggested based on findings of the study, and several theoretical and managerial implications are discussed.     

Antecedents of consumers’ intention to visit food trucks

The food truck industry has become a national phenomenon in the United States by gaining attention and praise. However, there has been limited attention on how and why consumers decide to patronize food trucks. The purpose of the study is to investigate determinants of consumers’ intention to patronize food trucks by applying the model of goal-directed behavior. Structural equation modeling was employed to assess the relationships among constructs in the proposed research model. This study contributes significant theoretical and practical implications by first attempting to examine what specific psychological variables influence the decision-making process regarding consumers’ intention to visit food trucks.     

Do Nonprofit Hospitals Exercise Market Power?

Several theories of nonprofit hospitals behavior predict that nonprofit hospitals behave in the consumer interest and thus do not exercise market power. If these theories are correct, then antitrust enforcement of hospital mergers should be restricted only to those markets in which a nonprofit hospital cannot offset anticompetitive behavior by for-profit hospitals. In this paper, we examine the relationship between price and market concentration among nonprofit hospitals in California in 1993. We find that nonprofit hospitals set higher prices in more concentrated markets. This result suggests that antitrust enforcement should challenge those mergers of nonprofit hospitals that create market power without creating offsetting efficiencies.     

Analytics of sovereign debt restructuring

This paper develops a simple theoretical model to analyse recent proposals on restructuring of sovereign bonds. We find that collective action clauses (CACs) inserted in bonds resolve the inefficiencies caused by intra-creditor coordination problems providing that all parties have complete information about each other's preferences. In such a world, statutory mechanisms, such as international bankruptcy courts, are unnecessary. This is no longer the case when the benefits from reaching a restructuring agreement are private information to the debtor and its creditors due to inefficiencies caused by the debtor-creditor bargaining problem.