Wage arrears uncertainty and precautionary saving in Russia1

Wage arrears are widespread in Russia, and are one of the main causes of uncertainty in the labour market. In this paper, we use the Russian Longitudinal Monitoring Survey over the period 1994–98 to construct a new and improved measure of household income risk, based on the uncertainty due to wage arrears. We then use this measure of uncertainty to test the precautionary saving hypothesis, according to which households save to self‐insure against risk. We find significant evidence of additional saving by those households whose head is more likely to suffer from wage arrears one year hence. This suggests the existence of a strong precautionary saving motive.     

Executive stock option compensation: The corporate reporting decision

New regulations instituted in 1992 by the SEC require that estimates of the values of executive stock option grants now be included in proxy statement reports on senior executive compensation. We examine the character of firms' reporting choices under the new rules, from a large sample of the first round of proxy statements issued. We find that the majority of firms have elected a reporting approach that provides little additional information to investors, and appear at least in part to have done so because the alternative approach would have caused them to report above-average stock option compensation amounts for their executives.     

The Effects of Consumption Variability on Saving: Evidence from a Panel of Muscovite Households**

Due to the high uncertainty characterizing them, transition economies provide an extraordinary opportunity to test the precautionary saving hypothesis. This paper represents an attempt to exploit this opportunity. We use a panel of 2,346 Muscovite households, over the 12 months of 1996, to construct two time‐varying measures of consumption growth variability, which we use as proxies for households’ perceived uncertainty. We then regress household saving on these uncertainty variables using a GMM‐system estimator. We find that both uncertainty measures generally have a positive and statistically significant effect on saving. This result, which is robust to the use of different measures of saving, supports the precautionary saving hypothesis.     

Economic growth and unemployment in East Asia

Barro and Sala-i-Martin （2004） analyzed the empirical determinants of growth. The data used in this paper consists of panel data of several macroeconomic variables observed for 55 years 0950-2004） in six East Asian countries and regions. Following the implications of semi-endogenous growth theory, the author regressed output growth on the determinants of steady-state income. The estimation and test results suggest the existence of significant relationship between steady-state income and （trend weighted） R ＆ D input both in Japan and South Korea. In addition, following Cellini （1995）, the author also considers cointegration and error-correction methods as the growth regression of East Asian countries. Meanwhile, Chang, et al （2004） derived the conclusion that the decreases in reallocation shocks are main factor in a downward trend in natural rate of unemployment for South Korea. The author extends this analysis using structural VAR to other Asian countries and regions, Japan and Taiwan region. Impulse responses show that the growth of production in Korea and Taiwan reduce unemployment, but, in Japan, this raises unemployment.     

The case of flow and learning revisited

Many business schools are criticized for being ineffective in helping students learn proper management skills and knowledge. Flow theory has been cited as being helpful in many learning environments in that flow experience can enhance student learning. The authors conducted a study of 315 students in an undergraduate operations management (OM) class to assess learning outcomes and flow experience. Results show that student learning performance and flow are related. Implications and suggestions for further research are provided.     

Shortages and the informal economy in the Soviet republics, 1965–89

This study measures the informal economy and shortages of consumer goods in the Soviet republics from 1965 to 1989 to estimate the relationships between these two variables. Using estimation methods, including a fixed‐effect model and the instrumental variable approach, we find that the informal economy and shortages reinforced each other. Results indicate that the Soviet central planning system was difficult to sustain. Substantial heterogeneities across the Soviet republics exist not only in the extent of the informal economy and shortages, but also in the associations between the two variables.     

Business ethics — A developmental perspective: The evolution of the free and mature corporation

Ethics in Business organizations is a multidimensional process involving decision-making, leadership and institution building. The relatively simpler ethics of day-to-day decisions has to be reflected upon in the context of corporate desire for continuity, embedded in the values of a progressive society. At the operating level, the multivalence of decision situations is emphasized in place of the simple good — bad or cost — benefit dichotomies. A decision tree framework is presented to reflect the richness of the decisions. At the corporate level, the concept of responsive strategy as a synthesis of vision, power, and responsibility is proposed. In this, the crucial role of leaders cannot be over-emphasized. Finally, at the societal level, the evolution of capitalism and its corporate forms is seen as a milestone in people's search for enlightened ways to achieve refined ends. As more businesses assert their rightful roles in society, progressive institutional forms more in tune with the values of the twenty-first century should emerge.L. L. Jayaraman is Associate Professor of Management at Montclair State College, New Jersey, U.S.A. He holds a Ph.D. and a Post-graduate Diploma in Management. His research interests include Corporate Strategy and Business Ethics. Recent publications includeHow to Compete in the Global Economy: A Fresh Look at Business Strategy, in the January 1993 issue of theAmerican Business Review. During the Summer of 1992, he was a visiting professor at the School of Management, Comenius University, Bratislava, Slovak Federal Republic.Byung K. Min is Associate Professor of Management and Chairman of the Department of Management at Montclair State College, New Jersey, U.S.A. He holds a Ph.D. His research interests cover Corporate Strategy, Business Ethics, Organizational Behavior and Management Information Systems. His article has appeaed in theJournal of Applied Psychology.     

Multigeneration diffusion model for economic assessment of new technology

In the era of 21st century, development of emerging information technology is the essence of the advancement. This kind of new technology, however, often requires a great deal of amount of initial investment for both procedures of R&D and commercialization. As cost invested in developing the specified technology is increasing, investors are paying more attention to cost to benefit analysis (CBA). One of the basic elements of CBA for new technological development is the diffusion pattern of demand of such technology. Typically, it would be hard to presume the diffusion pattern of demand when the new product or the technology is under development. In this case, a simulation study is necessary. Many studies of technology evaluation have adopted a single generation model to simulate the diffusion pattern of demand. This approach, however, considers the diffusion of the new technology itself, not taking into account newer generation, which can replace the one just invented. In the real market situation, one must consider the competition and substitution phenomena between old and new technologies. In this paper, we show how multigeneration technology diffusion model can be applied for more accurate CBA for information technology. Additionally, Monte Carlo simulation is performed to find influential factors on the CBA of a cybernetic building system (CBS).     

Outsider Board Activity,Ownership Structure and Firm Value: Evidence from Korea

Using a sample of publicly listed firm in Korea from 2002 to 2006, this article examines the impact of board monitoring on firm value and productivity. We use outsider's attendance of board meetings as a proxy for board monitoring. Consistent with the commitment hypothesis, we find that outsider's attendance rate increases firm value, suggesting that attending board meeting itself is a strong signal that reflects outsider's intention to monitor insiders. While ownership of controlling shareholders negatively affects firm value, this relationship is not moderated by increased monitoring by outsiders. Our findings provide further evidence that the outside director system is less effective in chaebol‐affiliated firms. Results also indicate that the effect of outsider's board monitoring activity on investor's valuation of the firm is greater than on productivity improvement of the firm. Our conclusions are robust for possible endogeneity in the relationship between firm value and board attendance by outside directors.