Development,distribution and the future

The distribution of world output between countries, and between social groups within countries, is central to long-term development prospects. Unequal shares mean unequal influence over the future direction of world affairs. The level and structure of demand are conditioned by the distribution of financial resources; while the power to influence the course of development is itself tied to the resources that can be marshalled in support of one's objectives. Two forecasting techniques, scenario construction and global modelling, are used to assess these relationships and explore the consequences of one possible ‘future history’ in which distribution worldwide does eventually begin to improve. Striking limitations to most development strategies are identified; without a wide-ranging set of changes, the prospects for improved distribution—and relief of poverty—are bleak.     

Building deals on bedrock

The headlines are filled with the sorry tales of companies like Vivendi and AOL Time Warner that tried to use mergers and acquisitions to grow big fast or transform fundamentally weak business models. But, drawing on extensive data and experience, the authors conclude that major deals make sense in only two circumstances: when they reinforce a company's existing basis of competition or when they help a company make the shift, as the industry's competitive base changes. In most stable industries, the authors contend, only one basis--superior cost position, brand power, consumer loyalty, real-asset advantage, or government protection--leads to industry leadership, and companies should do only those deals that bolster a strategy to capitalize on that competitive base. That's what Kellogg did when it acquired Keebler. Rather than bow to price pressures from lesser players, Kellogg sought to strengthen its existing basis of competition--its brand--through Keebler's innovative distribution system. A company coping with a changing industry should embark on a series of acquisitions (most likely coupled with divestitures) aimed at moving the firm to the new competitive basis. That's what Comcast did when changes in government regulations fundamentally altered the broadcast industry. In such cases, speed is essential, the investments required are huge, and half-measures can be worse than nothing at all. Still, the research shows, successful acquirers are not those that try to swallow a single, large, supposedly transformative deal but those that go to the M&A table often and take small bites. Deals can fuel growth--as long as they're anchored in the fundamental way money is made in your industry. Fail to understand that and no amount of integration planning will keep you and your shareholders from bearing the high cost of your mistakes.     

Seasonality in Canadian treasury bond returns: An institutional explanation

This paper empirically investigates the seasonality in quarterly bond returns in the Canadian government bond market. Four equally weighted bond return indices were calculated for each quarter in the period from 1963:Q2 to 1990:Q3. The seasonality in these quarterly returns was tested and the results support the existence of seasonality in quarterly bond returns in the Canadian government bond market. It appears that bond returns in the last quarter of the year are significantly higher than in any other quarter of the year. This finding contrasts to the results in U.S. studies on Treasury bond returns. An institutional explanation is offered for the documented seasonality in bond returns, linking it to the annual Canada Savings Bond campaign in the last quarter of the year, a unique Canadian phenomenon. This hypothesis is supported by empirical evidence based on a regression analysis. Such finding is consistent with the fact that no seasonality in Treasury bond returns is found in the U.S., at the U.S. Savings Bonds are sold regularly throughout the year.     

Enhancing the teaching of introductory economics with a team-based,multi-section competition

The authors describe a unique approach to enhancing student learning at the introductory economics level that utilizes a multi-section, team-based competition. The competition is structured to supplement learning throughout the entire introductory course. Student teams are presented with current economic issues, trends, or events, and use economic tools and theories to comprehensively examine the topics. Students present their analyses in their own sections with one team from each section moving on to compete in an inter-section round. Students are judged on technicality, creativity, and applicability of economic concepts. The competition has the potential to advance students' creativity, collaboration, communication, and critical and analytical thinking skills, while enhancing their ability to apply foundational economic concepts to real-world settings.     

Performance deviations and acquisition premiums: The impact of CEO celebrity on managerial risk‐taking

Research summary: This article draws on identity control theory and a study of acquisition premiums to explore how CEO celebrity status and financial performance relative to aspirations affect firm risk behavior. The study finds that celebrity CEOs tend to pay smaller premiums for target firms, but these tendencies change when prior firm performance deviates from the industry average returns, thereby leading these CEOs to pay higher premiums. The study also finds that the premiums tend to be even larger when celebrity CEOs have more recently attained celebrity status. Taken together, these findings contribute to identity control theory and CEO celebrity literatures by suggesting that celebrity status is a double‐edged sword and that the internalization of celebrity status by CEOs strongly influences the decision‐making of CEOs. Managerial summary: The purpose of this article is to examine how CEO celebrity status and financial performance relative to aspirations affect the size of acquisition premiums. The study finds that celebrity CEOs tend to pay smaller premiums for target firms. However, when celebrity CEOs' prior firm performance is either better or worse than the industry average, these CEOs pay higher premiums. This situation is exacerbated when the CEO has only recently been crowned a celebrity. In effect, these CEOs feel great pressure to match the inflated performance expectations that come with celebrity status. These findings suggest that being a celebrity is a double‐edged sword. The implication here is that CEOs who have recently been crowned a celebrity should be aware of these pressures and cope accordingly. Copyright © 2015 John Wiley & Sons, Ltd.     

Stabilization and the aftermarket prices of initial public offerings

The paper examines the determinants of stabilization and its impact on the aftermarket prices. We use a unique dataset to relax several assumptions in the stabilization literature. We find that underwriters support IPO prices shortly after listing, particularly in cold markets and when demand is weak. We also show that stabilized IPOs are more common amongst reputable underwriters. This finding suggests that stabilization may be used as a mechanism to protect the underwriter’s reputation. It also implies that reputable underwriters may possess private information and price IPOs closer to their true values (i.e., higher than those indicated by the weak premarket demand). Consistent with the latter view, we show that stabilized IPOs are offered at higher prices and suffer less underpricing than those indicated by the premarket demand, firm characteristics and market-wide conditions. The post-IPO performance results indicate that stabilized IPOs are unlikely to be mispriced as their prices do not exhibit any significant reversal after the initial stabilization period. We conclude that stabilization may be superior to underpricing as it protects investors from purchasing overpriced IPOs, benefits issuers by reducing the total money “left on the table” and enhances the overall profitability of underwriters.     

The sexual division of care in mainland China and Hong Kong

The aim of this paper is to explore the extent to which the sexual division of domestic labour in Hong Kong and mainland China is influenced by traditional Chinese values and contemporary political and economic factors. It discovers that women in these two societies assume far more caring responsibilities than men. This is similar to women in traditional Chinese society. An important reason is that the political and economic conditions in Hong Kong and mainland China favour the reproduction of traditional Chinese values. Hence it can be argued that the unequal division of domestic labour between men and women will continue as long as the political and economic conditions are unfavourable to women. Le but de cet article est d’explorer jusqu’à quel point les valeurs chinoises traditionnelles et les facteurs politiques et économiques contemporains influencent la division sexuelle du travail domestique à Hong Kong et en Chine. Cet article a découvert que, dans ces deux sociétés, les femmes ont beaucoup plus de reponsabilités sociales que les hommes. Ceci est similaire à la société chinoise traditionnelle. Une raison importante est que les conditions politiques et économiques à Hong Kong et en Chine favorisent la reproduction des valeurs chinoises traditionnelles. On peut donc dire que la division inégale du travail domestique entre les hommes et les femmes continuera tant que les conditions politiques et économiques seront désavantageuses pour les femmes.