INEQUALITY AND MOBILITY OF WEALTH IN SWEDEN 1983/184–1992/193

Using longitudinal data which include real estate wealth, financial assets as well as consumer durables, changes in the distribution of wealth in Sweden are related to major changes in asset prices and in incentives to hold various assets in the 1980s and the beginning of the 1990s. Our analysis of the mobility of wealth indicates that decile mobility is higher in Sweden than in the U.S., while the analysis of who is gaining and who is loosing shows results similar to those of previous studies.     

Does comprehensive education work for the long-term unemployed?

In this paper we evaluate the effects of comprehensive adult education on wage earnings of long-term unemployed, an essentially unexplored issue. We use register data pertaining to a large sample of long-term unemployed in Sweden who enrolled in upper secondary comprehensive adult education. Estimates with propensity score matching indicate that more than one semester of study results in substantial increases in post program annual earnings for both males and females. According to our rough calculations, the social benefits of offering these individuals comprehensive education surpass the costs within five to seven years.     

Evaluation of performance in a product development context

In today's competitive environment, the need is greater than ever to deploy product development investments more effectively. To assist managers, we have developed two conceptual tools to support the evaluation of performance in product development. The Performance Measurement Evaluation Matrix (PMEX) helps managers evaluate performance measurement systems they currently use, in order to identify areas requiring improvement. Results from using the PMEX indicate that it is common to associate performance measurements with the efficiency aspects of time, cost, and quality, without monitoring the value created. Performance is largely perceived by managers in terms of time, cost, and quality of the activities in the later phases of the development process. We contend that an effective performance measurement system is based on performance criteria, and then derives measurements based on these. It is argued that there should be a change in the perception of performance, before performance evaluation systems can be improved. The Product Development Organizational Performance Model (PDOPM) assists in developing the perception of performance by relating uncertainty, efficiency, and effectiveness at three generic activity levels within the product development function. The use of our tools provides an improved perception of performance and its measurement, thus enabling improvements to the evaluation of performance.     

Asian sovereign debt and country risk

This paper analyzes systematic risk of sovereign bonds in four East Asian countries: China, Malaysia, Philippines, and Thailand. A bivariate stochastic volatility model that allows for time-varying correlation is estimated with Markov Chain Monte Carlo simulation. The volatilities and correlation are then used to calculate the time-varying betas. The results show that country-specific systematic risk in Asian sovereign bonds varies over time. When adjusting for inherent exchange rate risk, the pattern of systematic risk is similar, even though the level is generally lower. The findings have important implications for international portfolio managers that invest in emerging sovereign bonds and those who need benchmark instruments to analyze risk in assets such as corporate bonds in the emerging Asian financial markets.     

Choices of savings options related to trust in banks’ competence,benevolence and stability

The study investigates whether beliefs in professional investor skill in conjunction with trust in banks and other fund managers explain choices of options for long-term savings. From questionnaire data obtained for a population-based sample (n=178) and a sample of undergraduates (n=186), two index measures were constructed, one of beliefs in the skill of professional investors and another of trust in fund managers. The trust index was aggregated for the three interrelated components: competence, benevolence and stability. Regression analyses of the likelihood of savings in an actively managed fund showed an expected effect of investor-skill beliefs that was mediated by trust in the fund manager. In addition, self-reported knowledge played a larger role than trust for choices of passively managed index funds and in particular for own investment in stocks.     

Stochastic volatility and time-varying country risk in emerging markets

This study suggests an alternative method to estimate time-varying country risk. We first apply a new multivariate stochastic volatility (SV) model to a set of emerging stock markets. To estimate the SV model, we use a Bayesian Markov chain Monte Carlo simulation procedure. By applying the deviance information criterion, we show that the new model performs well relative to alternative multivariate SV models. We then compute the conditional betas for the different markets and compare the results with an often-used procedure based on multivariate GARCH models. We show that the new multivariate SV model more accurately captures the time-varying nature of country risk. The conditional betas show signs of large variations, indicating the importance of taking time-varying country risk into consideration when managing emerging market portfolios.     

Employee stock option plans and stock market reaction: evidence from Finland

This paper examines whether the adoption of stock option plans results in changes in shareholders’ wealth, and whether the stock market reactions to ESOP announcements could be explained by the target group of ESOP and the dilution effect. Short-horizon test methods are applied for this purpose. The sample consists of ESOP announcements of Finnish publicly quoted companies on the Helsinki Stock Exchange during the time period 1988–1998. The event study results show a slightly positive market reaction to announcements of ESOPs targeted to management and a negative market reaction in the case of ESOPs targeted to all employees. The results of regression analysis show that the ESOPs with limited dilution convey positive information to the stock market and the dilution effect has a negative impact on stock returns, especially in the case of ESOPs targeted to all employees.     

Service encounters as bases for innovation

This article examines the factors affecting the innovativeness of service encounters – either as drivers or as barriers. The assumption is that a considerable number of innovations in service industries are initiated in service encounters and that employees are the core factor in connecting customers with the innovating organization. Based on literature studies and pilot case studies, seven propositions are proposed and tested in a qualitative, hermeneutic way in field experiments in nine service organizations. Important new results are that encounter-based innovation requires mutual empathy between employees and customers, employees investing stubbornness and time can be a driver for innovation, and several layers of management can be a barrier. In the field experiments three new factors for encounter-based innovation were found: translation, multitasking, and hyper-professionalism. The two first are drivers; the third a barrier. A model that summarizes the findings is presented.     

Markets segmented by regional-origin labelling with quality control

The purchasing power parity (PPP) hypothesis is examined in the case of less developed countries. Although the issue has been debated extensively in the context of the developed countries, there has hardly been any study using the experience of the less developed countries. Quarterly data from four countries is used for the period 1961:1—1990:4 and hardly any evidence is found of the hypothesis. A special test (namely, a cointegration test), designed for the hypothesis, has been implemented.