Personal Guarantees,Loan Pricing,and Lending Structure in Finnish Small Business Loans

This study analyzes the role of personal guarantees and collateral in the context of two different lending structures: one transaction and the other relationship based. The Finnish bank data, which were uniquely accessible for the study, enabled an exploration of credit files with specific details of the characteristics of the lending relationship during the period 1995–2001. According to the empirical results, the use of personal guarantees is an indication of transaction‐based lending. Personal guarantees seem to increase the loan premium in transaction‐based loans more than in relationship‐based loans. Close ties between a bank and a firm seem to be a desirable basis for small and medium‐sized enterprise bank lending.     

Modeling Conditional Skewness in Stock Returns

Abstract

In this paper, we propose a new GARCH-in-Mean (GARCH-M) model allowing for conditional skewness. The model is based on the so-called z distribution capable of modeling skewness and kurtosis of the size typically encountered in stock return series. The need to allow for skewness can also be readily tested. The model is consistent with the volatility feedback effect in that conditional skewness is dependent on conditional variance. Compared to previously presented GARCH models allowing for conditional skewness, the model is analytically tractable, parsimonious and facilitates straightforward interpretation.Our empirical results indicate the presence of conditional skewness in the monthly postwar US stock returns. Small positive news is also found to have a smaller impact on conditional variance than no news at all. Moreover, the symmetric GARCH-M model not allowing for conditional skewness is found to systematically overpredict conditional variance and average excess returns.     

The effect of governance modes and relatedness of external business development activities on innovative performance

This study examines how different governance modes for external business development activities and venture relatedness affect a firm's innovative performance. Building on research suggesting that interorganizational relationships enhance the innovative performance of firms, we propose that governance modes and venture relatedness interact in their effect on innovative performance. Analyzing a panel of the largest firms in four information and communication technology sectors, we find that degree of relatedness for corporate venture capital investments, alliances, joint ventures, and acquisitions influences their impact on innovative performance. Copyright © 2008 John Wiley & Sons, Ltd.     

Formation of firms' production decisions in finnish manufacturing industries

Business survey data have recently been used in several studies to shed light on the formation of firms' plans and expectations. The main tool for analysis has been the multivariate conditional log-linear model. The trichotomous answers in a typical business survey have an ordering. This makes it possible to analyse firms' production decisions with a categorized version of Cox's proportional hazards model. In this paper the production decisions of Finnish firms are investigated using data from the Finnish business survey. The results obtained are largely in accord with the implications of the production smoothing model of Blinder (1982).     

Stock market aversion? Political preferences and stock market participation

We find that left-wing voters and politicians are less likely to invest in stocks, controlling for income, wealth, education, and other relevant factors. This finding from unique data sets in Finland is robust both at the zip code and at the individual level. A moderate left voter is 17–20% less likely to own stocks than a moderate right voter. The results are consistent with the idea that personal values are a factor in important investment decisions, in this case leading to “stock market aversion.” The results are inconsistent with alternative explanations such as wealth effects, risk aversion, reverse causality, return expectations, or social capital.     

The temporal effects of relative and firm‐level absorptive capacity on interorganizational learning

We examine how determinants of absorptive capacity influence learning in alliances over time. Using longitudinal patent cross‐citation data, we find an inverted U‐shaped pattern over time that is influenced by firm‐level and relational factors. Technological similarity only modestly increases learning in the initial stages of a relationship, but moderate levels substantially increase knowledge flows later in the alliance. High technological diversity is related to higher initial learning rates, but the effects diminish over time. Somewhat surprisingly, research and development intensity is negatively related to initial learning rates but has a considerable positive effect later in the relationship. We suggest that initial learning rates in alliances may be constrained by the capacity to absorb knowledge, while later‐stage outcomes are constrained by exploitation capacity. Copyright © 2012 John Wiley & Sons, Ltd.     

Doing by learning: Embedded application systems

We argue that the computerized information system should not look like a system on its own. Rather, it should be conceived as an inherent part of the work of its users. We therefore introduce the concept of an embedded system, which describes work tasks and organization. Computer‐supported information tasks are embedded in this environment: They are not parts of a system separated from other activities. This concept is based on the experiences gained during the development of a user‐interface prototype, derived from a theoretical frame of reference, called act orientation, to information systems, in which all computerized tasks are interpreted as acts performed by the actual user. Our suggestion continues the tradition of on‐line help and support, reaching radically deeper than usual in related approaches. We expect that our suggestion will, when applied, improve the control, productivity, quality of the outcome of work, and quality of working life, assessed from the user's point of view.     

Multi-agent interaction processes: From oligopoly theory to decentralized artificial intelligence

This article examines the group processes studied in oligopoly theory and in decentralized artificial intelligence. We develop a unifying perspective for the research on the behavior of autonomous interacting agents. Among the many questions of interest in these disciplines are the ways of creating and reaching cooperation by a group of self-interested independent decentralized agents. In this respect, the models and results of oligopoly theory can also be used both in decentralized artificial intelligence and in many other areas of research, such as group decision making, negotiation support, and organizational theory. In particular, the important idea of reshaping goals with strategic information sharing and transmission—incentive communication—has received little attention outside the field of economics. On the other hand, oligopoly theory and experimental economics can especially benefit from the computational methods and tools of artificial intelligence and modern decision support technology. To demonstrate this we have built a prototype of an experimental market analysis environment. Its potential in the analysis of group processes is illustrated with examples.     

GMM Estimation with Non‐causal Instruments*

This note provides a warning against careless use of the generalized method of moments (GMM) with time series data. We show that if time series follow non‐causal autoregressive processes, their lags are not valid instruments, and the GMM estimator is inconsistent. Moreover, endogeneity of the instruments may not be revealed by the J‐test of overidentifying restrictions that may be inconsistent and has, in general, low finite‐sample power. Our explicit results pertain to a simple linear regression, but they can easily be generalized. Our empirical results indicate that non‐causality is quite common among economic variables, making these problems highly relevant.