PIGS or Lambs? The European Sovereign Debt Crisis and the Role of Rating Agencies

This paper asks whether rating agencies played a passive role or were an active driving force during Europe??s sovereign debt crisis. We address this by estimating relationships between sovereign debt ratings and macroeconomic and structural variables. We then use these equations to decompose actual ratings into systematic and arbitrary components that are not explained by previously observed procedures of rating agencies. Finally, we check whether systematic, as well as arbitrary, parts of credit ratings affect credit spreads. We find that both do affect credit spreads, which opens the possibility that arbitrary rating downgrades trigger processes of self-fulfilling prophecies that may drive even relatively healthy countries towards default.     

Do Consumption Goals Matter? The Effects of Online Loyalty Programs in the Satisfaction‐Loyalty Relation

This study investigates the effects of online loyalty programs in the customer satisfaction‐loyalty relationship. It is proposed that loyalty programs may induce loyalty toward programs (program loyalty), which may then influence loyalty toward stores (store loyalty). According to the results of a two‐wave survey, consumption goals matter in the effects of program loyalty on online store loyalty. For consumers with hedonic goals, hedonic program loyalty (e.g., free gifts) has a significant effect on online loyalty. For consumers with utilitarian goals, however, utilitarian program loyalty (e.g., coupons) has a significant influence on online loyalty. Theoretical and managerial implications are also discussed.     

Some Reflections on U.S. Treaty Commitments

Abstract

The world oil price has risen significantly since the late 1990s and reached a record high in 2008. The recent oil price hike raises concerns regarding the possible negative effects of the rising oil price on the economy as in the 1970s. We investigate the effects of the oil price hike on the Korean economy using a Bayesian dynamic stochastic general equilibrium (DGSE) model. We explicitly model the small open economy nature of the Korean economy and its oil usage and estimate the constructed model within a unified Bayesian framework. We also examine possible changes in the effects of world oil shocks on the Korean economy using counterfactual simulations. We find the adverse effects of world oil shocks as well as their importance in Korean business cycles have diminished due to reductions in the relative usage of crude oil in the economy, while world oil shocks themselves have changed relatively little over time.     

Mature consumers’ patronage motives and the importance of attributes regarding HMR based on the food-related lifestyles of the upper middle class

The objectives of this study are to explore the food-related lifestyle segments of the mature market, to identify its socio-demographic characteristics, and to investigate the differences in their attitudes toward Home Meal Replacement (HMR). A survey was conducted of adults 55 years of age and older living in Seoul, South Korea. Out of the 600 distributed questionnaires, 361 were retained for final analysis, which is a response rate of 60%. Cluster analysis identified five consumer segments. Significant differences were found among the five segments in terms of socio-demographic characteristics and attitudes toward HMR. This study shows operators of HMR the patronage motives and attributes that each segment values when considering HMR.     

International diversification of the emerging-market enterprises: A multi-level examination

This study develops a cross-level research model based on insights from the capabilities view and institutional theory. We examine the drivers of international diversification for firms from emerging economies, specifically how top managers’ prior experiences and a favorable institutional environment for human capital affects the international diversification of emerging-market enterprises (EMEs). This research demonstrates that firm- and country-level factors collectively influence the international diversification of EMEs. We find that an EME whose top managers have global managerial and technological experiences is more likely to venture into international markets when a favorable institutional environment provides globally competitive, highly skilled human capital. This study demonstrates that for a multidimensional phenomenon such as EMEs’ international diversification, a more complete picture emerges given a theoretical framework that builds on diverse perspectives which are empirically tested across levels.     

A generalized algebraic model for optimizing inventory decisions in a centralized or decentralized multi-stage multi-firm supply chain

First of all, a number of integrated models with/without lot streaming under the integer multiplier coordination mechanism is generalized by allowing lot streaming and three types of inspection for some/all upstream firms. Secondly, the optimal solutions to the three- and four-stage models are individually derived, both using the perfect squares method, which is a simple algebraic approach so that ordinary readers unfamiliar with differential calculus can easily understand how to obtain the optimal solution procedures. Thirdly, optimal expressions for some well-known models are deduced. Fourthly, expressions for sharing the coordination benefits based on Goyal’s (1976) scheme are derived, and a further sharing scheme is introduced. Fifthly, two numerical examples for illustrative purposes are presented. Finally, some future research works involving extension or modification of the generalized model are suggested.     

HOW FIRMS MANAGE RISK: THE OPTIMAL MIX OF LINEAR AND NON-LINEAR DERIVATIVES

This paper provides guidance on how corporations should choose the optimal mix of "linear" and "non-linear" derivatives. Linear derivatives are products such as futures, forwards, and swaps, whose payoffs vary in linear fashion with changes in the un-derlying asset price or reference rate. Non-linear derivatives are contracts with option-like payoffs, including caps, floors, and swaptions.
A company's optimal hedging position should generally consist of linear contracts because of their effective-ness in smoothing corporate cash flows. But as the firm's business (quantity) risk increases, its use of linear contracts will decline due to costs associated with overhedging. At the same time, there will be a shift towards the use of non-linear contracts. The degree of substitution of non-linear for linear in-struments will depend on the relation-ship between the quantities to be hedged and market prices. A negative relationship will tend to exacerbate the substitution effect while a positive re-lationship will dampen the effect. An empirical examination of corporate derivative holdings provides support for all of the major hypotheses.     

From the wired to wireless generation? Investigating teens’ Internet use through the mobile phone

Scholars have an enduring interest in investigating whether a new medium displaces or complements existing media whenever a new medium is introduced to the society. In this study, it is sought to investigate the extent to which the mobile phone would replace or reinforce teens’ traditional Internet use through computers. Surveys were conducted on 1875 youths between 12 to 17 years old in 5 digital cities in East Asia: Hong Kong, Seoul, Singapore, Taipei, and Tokyo. The findings profile a digital generation that is highly connected in the 21st century. Ninety percent of all respondents used the Internet. Almost 90% of the teens in this study used the mobile phone, and two-thirds of them ever surfed the Web via their mobile devices. Through a factor analysis, three dimensions of teens’ use of mobile Internet were identified, namely, task-based activities, information seeking and communication activities, and recreational activities. In general, the teens tend to use the mobile phone for recreation and entertainment purposes, especially playing games and listening to music. They are less likely to use the mobile phone for more sophisticated purposes, such as petitioning, voting, or shopping. Drawing upon the niche theory, the patterns between teens' mobile Internet and PC Internet use were further compared. Our analysis shows that mobile Internet primarily serves as an extension of teens’ Internet activities via PC, rather than as a replacement. Such positive relationships are quadratic and non-linear.