Adverse Selection in Reinsurance Markets

This paper looks for evidence of adverse selection in the relationship between primary insurers and reinsurers. We test the implications of a model in which informational asymmetry—and therefore, its negative consequences—decline over time. Our tests involve a data panel consisting of U.S. property-liability insurance firms that reported to the National Association of Insurance Commissioners during the period 1993–2012. We find that the amount of reinsurance, insurer profitability, and insurer credit quality all increase with the tenure of the insurer–reinsurer relationship.     

Option pricing under short-lived arbitrage: theory and tests

Models in financial economics derived from no-arbitrage assumptions have found great favour among theoreticians and practitioners. We develop a model of option prices where arbitrage is short lived. The arbitrage process is Ornstein–Uhlenbeck with zero mean and rapid adjustment of deviations. We find that arbitrage correlated with the underlying can have sizeable impact on option prices. We use data from five large capitalization firms to test implications of the model. Consistent with the existence of arbitrage, we find that idiosyncratic factors significantly effect arbitrage model parameters.     

Conceptualizing the processes,benefits, and challenges of organizational lifelong learning at Yuhan-Kimberly,Korea: the notion of anticipative affordance

This research investigates, reports, and theorizes Yuhan-Kimberly's journey to establish its organizational lifelong learning program in Korea. Based on a four-year longitudinal study and the principles of grounded theory, we propose the notion of anticipative affordance to elaborate the process through which benefits derived from an organization's lifelong learning are created, interconnected, and amplified through the gradual and long-term building and accumulation of shared understanding and commitment. Main theoretical contributions derived from this study are threefold. First, the concept of anticipative affordance enhances our understanding about the key process and challenges related to organizational lifelong learning. Second, anticipative affordance serves as a bridge to synthesize the separation between the cognitive and situated aspects of learning. Third, our research empirically illustrates how collective benefits of organizational learning are actualized over time through the development of learning mechanisms and through the integration of its individual members' learning.     

The free movement of workers and social Europe: maintaining the European ideal

The big EU enlargement of 2004 has fuelled the debate about whether labour migration from the east to the west is causing social dumping in the European economy, with the effect of upsetting established national systems of labour market regulation. This article reviews the effects of migration on EU labour markets. It also examines three recent industrial relations disputes which were about job displacement. It argues that there is little evidence of greater labour mobility causing new social dumping pressures on a widespread basis. However, it goes on to suggest that the situation may change if the EU adopts neoliberal policies such as the initial draft Services Directive at the same time as promoting greater labour market openness between the Member States. The article concludes by arguing for a better policy mix which would on the one hand involve the EU maintaining its commitment to the free movement of workers and on the other hand strengthen labour standard‐setting mechanisms at both the EU and national levels.     

HOW DO OIL PRICE SHOCKS AFFECT A SMALL NON‐OIL PRODUCING ECONOMY? EVIDENCE FROM HONG KONG

We find no evidence from either in‐sample or out‐of‐sample analyses that an oil price shock would necessarily affect a small non‐oil producing economy such as Hong Kong. In our in‐sample recursive vector autoregressive investigations, oil price does not Granger cause the key macroeconomic indicators. The forecast errors from our out‐of‐sample examination using a vector error correction model with oil shocks, which represents an extension to previous studies, were found to be statistically the same as those from the vector error correction model without these shocks. The analysis leads us to dispel the conventional wisdom that a small non‐oil producing economy is more vulnerable to oil shocks than a larger oil‐producing economy such as the USA.