TARIFF FORMATION IN A MULTIDIMENSIONAL VOTING MODEL*

The theory of endogenous trade policy formation argues that tariffs emerge from the political process. This occurs because of conflicting economic interests trying to redistribute income in their favor through the adoption of suitable trade policies. Mayer and Riezman (1987) questioned this view arguing that if individuals differ only in factor ownership they would always prefer some tax/subsidy policy to tariffs. Here we allow individuals to differ not only with respect to factor ownership, but also with respect to consumption preferences and income tax treatment. We show that tariffs might be the social decision even though nobody's individual preferences suggest tariffs as the best choice.     

Work experiences,work adjustment and psychological well-being of expatriate employees in Hong Kong

This study replicated and extended research on expatriate work adjustment by examining the antecedents of work adjustment and its outcomes in terms of psychological well-being. Data were obtained from a nationally heterogeneous sample (N = 184) of expatriate employees in Hong Kong using a structured questionnaire. Results of regression analysis revealed role conflict to be significantly negatively related to work adjustment, while role discretion, co-worker support and work-method ambiguity (clarity) were significantly positively related to work adjustment. Of the three hypothesized outcomes, work adjustment was significantly positively related only to job satisfaction but not to quality of life and marital adjustment. Though not the focus of this study, interaction adjustment was found to be significantly positively related to quality of life. Limitations of the study and implications of the findings are discussed.     

Strategic Similarity and Emergent Conventions: Evidence from Similar Stag Hunt Games

This paper reports evidence on the origin of convention in laboratory cohorts confronting similar but not identical strategic situations repeatedly. The experiment preserves the action space of the game, while randomly perturbing the payoffs and scrambling the action labels in an effort to blunt the salience of retrospective selection principles. Hence, the similarity between stage games is reduced to certain strategic details, like efficiency, security, and risk dominance. Nevertheless, we do observe conventions emerging in half of the laboratory cohorts. When a convention emerges subjects's behavior conforms to the selection principles of efficiency rather than security or risk dominance. Journal of Economic Literature Classification Numbers: C72, C78, C92, D83.     

Technological Scanning by Small Canadian Manufacturers

Given that in many industries new production and information technologies have fundamentally changed the way in which firms must operate and compete, the technological aspect of environmental scanning has become a critical success factor for many small and medium-sized manufacturing enterprises. As little is presently known about how technological scanning manifests itself in these organizations and about what determines the nature and level of this activity, a survey study of 324 Canadian firms was done. Testing a research model resulted in identifying four interrelated dimensions of scanning activity, namely scanning objectives, type of information, information sources, and management practices. Key determinants of this activity were also identified, including the firms' strategy, environmental uncertainty, production technology, level of R&D, information networks, and the owner-manager's education level.     

Accounting Practices and the Market Valuation of Accounting Numbers: Evidence from Indonesia, Korea, Malaysia, the Philippines, Taiwan, and Thailand

This study examines the relation between stock prices and accounting earnings and book values in six Asian countries: Indonesia, South Korea, Malaysia, the Philippines, Taiwan, and Thailand. The analysis is based on a residual earnings model that expresses the value of the firm in terms of book value and residual income. The model holds for any clean surplus accounting system. However, for finite time horizons, biased accounting may affect model estimates. The six countries examined in this study differ in faithfulness to clean surplus accounting as well as bias (conservatism). The study addresses two questions. First, are there systematic differences across countries in the value relevance of accounting, and are these differences related to accounting differences? Second, are there systematic differences in the incremental and relative information content of book value per share (BVPS) and abnormal (residual) earnings per share (REPS) across the countries, and are such differences related to accounting differences? We find differences across the six countries in the explanatory power of BVPS and REPS for firm values. Explanatory power for Taiwan and Malaysia is relatively low while that for Korea and the Philippines is relatively high. These differences are generally consistent with differences in accounting practice; however, since Korean accounting practice is strongly influenced by tax law, we did not expect the high association for Korea. Second, with respect to the incremental and relative explanatory power of BVPS and REPS, we find BVPS to have high explanatory power in the Philippines and Korea but little in Taiwan. In all six countries REPS has less explanatory power than BVPS in most years. Again, the evidence may be interpreted as suggesting accounting practice affects valuation (with Korea again as the exception). Finally, we provide evidence on the sensitivity of the timing of comparisons of stock prices and accounting values. We find that comparing prices at year-end (even though annual accounting information has not been released at that time), in general, provides the highest correlation between market and accounting numbers.     

WHO GETS FORMAL HOUSING FINANCE IN JORDAN?

The role of housing finance in actualizing housing demand is widely appreciated. Many developing nations have established special institutions in an attempt to assure that adequate volumes of financing are made available. Jordan offers an especially interesting case because the Jordan Housing Bank has the resources to serve almost any number of applicants at highly competitive rates. In addition, several other formal lenders make mortgage loans as do some government programs. This paper analyzes the determinants of the likelihood of recent home purchasers actually obtaining a loan from a formal finance institution. We find that purchasers in rural areas are much less likely to obtain such loans. In urban areas, the probability of using formal finance rises steadily with income. Also in urban areas, a household that purchases a unit that is an addition to an existing structure is much more likely to obtain formal financing than an otherwise similar household.     

Retail Leasehold Interests: A Contingent Claim Analysis

This paper develops a contingent claim model to analyze certain aspects of retail leasehold contracts. The approach allows for the explicit consideration of risk without any ad hoc risk adjustment. Both "straight" leases and "percentage" leases are examined with the value of sales as the underlying asset. Each lease value is expressed as a combination of options on sales. The effects of the lease value's determinants and equilibrium risk measurements are also analyzed.     

Schumpeterian economics: some observations on the relevance of his theoretical contributions to the management of industrial research and development

This paper investigates the relevance of the theoretical writings of Schumpeter to the management of research and development (R&D) in small and large industrial firms. Schumpeter's emphasis in his early work on three main aspects of industrial R&D; namely the importance of entrepreneurship, industrial innovation and resultant creative destruction, were major new insights that rejected the long‐standing view that equilibrium was the best state for any industrial economy. This paper, with the aid of relevant literature from both Schumpeter and others, seeks to relate his theoretical approach (that changed over time to favour large firm R&D) to the implication for industrial R&D, and in particular, the relationship between R&D in small and large firms. The paper concludes that if Schumpeter had lived to see the current industrial landscape, he might have returned to his early belief that entrepreneurial new small firms remain key harbingers of technological progress.