A Comparison of Technology Firms in Beijing and Shenzhen

Beijing and Shenzhen are both well known for their high-tech industries. This paper compares the financial performance of the two cities’ technology firms and explores the effects of the firms’ operating characteristics and strategy choices on their performance. We find that when comparable samples are used, the firms in Beijing performed better than those in Shenzhen. In addition, for firms both in Beijing and Shenzhen, the ratio of current asset to total asset had a significantly positive effect while both short-term and long-term debt-asset ratios had a significantly negative effect on the performance. The strategy variable sales expenses as a fraction of the cost of goods sold had a significantly positive effect on the performance of firms in Beijing, but the positive effect on firms in Shenzhen was not significant. R&D inputs contributed significantly to the pre-tax profitability of Beijing firms, but had no significant effect whatsoever on Shenzhen firms.     

An Optimal Currency Basket to Minimize Output and Inflation Volatility: Theory and an Application to Hong Kong

In this paper we develop a theoretical model of an optimal currency basket for a small open economy. A currency basket for the home economy is defined as a chosen weighted average of a subset of foreign currencies, and an optimal currency basket is taken to be one that minimizes a given weighted average of the expected output volatility and expected inflation volatility. This theoretical model is then applied to Hong Kong, which has adopted a currency board system for close to 30 years. We estimate an optimal currency basket for Hong Kong and compare its performance with the existing currency board system as well as with currency baskets whose weights are given by export and import trade shares.     

TECHNICAL PROGRAESS AND INVESTMENT: A VINTAGE MODEL*

The main purpose of this paper is to investigate the optimal investment decision of the firm with a vintage production function. First, the optimal conditions for the investment and replacement permitting jumps in the state variables are derived. Second the effects of exogenous parameters on investment are examined and the following new results are obtained: (1) whether a rise in the current money wage increases or decreases investment depends crucially on the time profile of the existing plants; (2) a rise in the rate of technical progress reduces investment.     

Endogenous timing in a mixed duopoly: price competition with managerial delegation

We introduce a managerial delegation contract into the mixed duopoly model and examine its influence on price setting in a mixed duopoly in the context of the endogenous‐timing problem. We obtain the result that owners of a public and a private firm prefer to delay the setting of the prices of their products as much as possible. Thus, in equilibrium, the firms choose their prices simultaneously in the latter stage of the game. This is in contrast to the findings of the entrepreneurial case, according to which firms choose prices simultaneously in the former stage. Copyright © 2009 John Wiley & Sons, Ltd.