The Bankruptcy Cost of the Life Insurance Industry Under Regulatory Forbearance

Abstract

In this study the Taiwan Insurance Guaranty Fund (TIGF) is introduced to investigate the ex ante assessment insurance guaranty scheme. We study the bankruptcy cost when a financially troubled life insurer is taken over by TIGF. The pricing formula of the fair premium of TIGF incorporating the regulatory forbearance is derived. The embedded Parisian option due to regulatory forbearance on fair premiums is investigated. The numerical results show that leverage ratio, asset volatility, grace period, and intervention criterion influence the default costs. Asset volatility has a significant effect on the default option, while leverage ratio is shown to aggravate the negative influence from the volatility of risky asset. Furthermore, the numerical analysis concludes that the premium for the insurance guaranty fund is risk sensitive and that a risk-based premium scheme could be implemented, hence, to ease the moral hazard.     

<Emphasis Type="Italic">Guanxi</Emphasis> and Business Ethics in Confucian Society Today: An Empirical Case Study in Taiwan

Guanxi, or social networks common in Confucian cultures, has long been recognized as one of the major factors for success when doing business in China. However, insider networks in business are certainly not confined to Asian cultures, nor is the attendant possibility for corruption. This study obtained original data to investigate current Taiwanese perceptions of (1) how guanxi is established and cultivated; (2) how guanxi actually is practiced now and people’s acceptance of it; and (3) the effects of guanxi on business operations, employment/promotion, and social justice and fairness. The researchers also hope to (4) verify some arguments made by pioneering researchers. The authors speculate on how these attitudes may affect behavior in business transactions in hopes of making readers more aware of differing cultural values that may create unexpected ethical dilemmas. They suggest that professional ethical codes should provide guidance on the practice of guanxi in a Confucian society and that special emphasis or training in interpreting those codes may be required.     

Do Reverse Stock Splits Benefit Long-term Shareholders?

This paper examines the market response of the reverse stock splits by using the effective date to trace the abnormal returns after reverse splits over the period of 1981 to 2010:3. The findings show that the short-term behavior of the abnormal returns on the effective date is negative and highly significant for all firms. The abnormal returns on the effective month are negative and highly significant. As expected, the cumulative abnormal returns are negative and significant at 10?% level over the period of +1 to +12?months. However, the cumulative abnormal returns from month +13 to month +36 are significantly positive. Our findings also support that institutional investors show confidence by increasing mean holdings of reverse splits of large capital stocks.     

Gender differences in social cognitive learning at a technological project design

This study aims to investigate the differences between male and female students in technology project design. The major gender differences discussed in this study include the problem discovering and solving abilities, maneuverability, and inquiry attitude among middle grade students. In the project design, students were required to design and complete a wooden robot with limited materials in a restricted timeframe. Data was collected through field study during the project making. The results of this study indicated that some differences existed between male and female students. For example, power tool manupulation was more appealing to boys than girls. On the other hand, girls were better at resource management than boys. Through social learning, female students have an overtime improvement. Pedagogical considerations are suggested to strengthen gender-specific problem solving skills, so that all students can realize their design potential.     

A dynamic framework for analyzing technology standardisation using network analysis and game theory

As more technologies and industries converge, technology standards are more likely to be a strategic factor for firms and governments that are interested in the market with standards-based competition. From the previous research, a new standardisation framework was proposed by combining network analysis and the game theory model but was constrained by feasibility and dynamic approach. In this study, the case of the standards war between HD-DVD and Blu-ray was analyzed with patent data as an empirical case considering a dynamic framework. With this framework, we observed a change in a firm’s technology relations and could predict the decline in a firm’s preference and the shift of equilibrium ahead of Toshiba’s resignation.     

Efficiency of Tax Collection and Tax Management in Taiwan's Local Tax Offices

This study investigated the performance of individual departments and the efficiency of resource utilization in tax offices. The results can be used to improve the performance of tax offices and to increase tax revenues. In this study, the operational flow of local tax offices was divided into two stages: tax collection and tax management. Network data envelopment analysis (NDEA) and a Russell directional distance function were used to evaluate operating efficiency in departments of 20 Taiwanese local tax offices for 2013. The results indicated that, first, efficiency was significantly different for tax collection and tax management. Second, the input inefficiency of tax collection was mainly due to total floor area, which was 15% larger than required, and the input inefficiency of tax management was mainly due to total floor area (23% larger than required), followed by direct labour input (19% larger than required). Finally, on average, the amount of collected property transfer taxes was 23% smaller than required. The model used in the present study included undesirable outputs. The findings indicated that the highest levels of overall inefficiency were due to inability to collect taxes (intermediate outputs) in Hsinchu County (9.27%), Chiayi County (3.25%) and Pingtung County (20.44%), which required reduction in the number of instances of inability to collect property taxes by 5619, 1258 and 12 350 cases, respectively. In total, 19 227 fewer cases of uncollectable property taxes in Taiwan would indicate improved arrears settlement and tax prevention measures.     

Analysis of product efficiency in the Korean automobile market from a consumer’s perspective

In this study we develop and describe a conceptual and methodological framework to measure technical and allocative efficiency at the product level considering consumer choice, which encompasses overall efficiency. Empirically, we combined data envelopment analysis and a discrete choice model in order to measure efficiency levels. The suggested framework is applied to the Korean automobile market. The relationship between the level of efficiency and market performance is discussed in terms of market share.     

Energy consumption, CO2 emissions, and economic growth: evidence from Indonesia

Energy policy-makers in Indonesia are interested in the causal relationship between energy consumption, CO₂ emissions, and economic growth. Therefore, this paper attempts to analyze the short- and long-run causality issues between energy consumption, CO₂ emissions, and economic growth in Indonesia using time-series techniques. To this end, annual data covering the period 1965–2006 are employed and tests for unit roots, co-integration, and Granger-causality based on an error-correction model are applied. The results show that there is a bi-directional causality between energy consumption and CO₂ emissions. This means that an increase in energy consumption directly affects CO₂ emissions and that CO₂ emissions also stimulate further energy consumption. In addition, the results support the occurrence of uni-directional causality running from economic growth to energy consumption and to CO₂ emissions without any feedback effects. Thus, energy conservation and/or CO₂ emissions reduction policies can be initiated without the consequent destructive economic side effects.     

The Effect of Diversification on Tail Risk: Evidence from US Equity Mutual Fund Portfolios

This paper examines the effect of diversification on the tail risk of US equity mutual fund portfolios by utilizing classical higher‐moment measures and robust tail weight measures. Empirical results show that market standard portfolios based on the mean‐variance framework are exposed to greater tail risk than benchmark portfolios are and diversification further intensifies this exposure.