Financial service sector performance measurement model: AHP sensitivity analysis and balanced scorecard approach

This study applies the balanced scorecard in building a framework of wealth management (WM) banks' performance criterion and, using the Delphi method, a sub-criteria framework. The organisational performance of WM banks in Taiwan is evaluated by applying an analytic hierarchy process and sensitivity analysis. The proposed model can assist the banking sector in assessing the organisational performance of WM banks, making it highly applicable for bank managers.     

Application of Relational Models in Mortality Immunization

The prediction of future mortality rates by any existing mortality models is hardly exact, which causes an exposure to mortality (longevity) risk for life insurers (annuity providers). Since a change in mortality rates has opposite impacts on the surpluses of life insurance and annuity, hedging strategies of mortality and longevity risks can be implemented by creating an insurance portfolio of both life insurance and annuity products. In this article, we apply relational models to capture the mortality movements by assuming that the realized mortality sequence is a proportional change and/or a constant shift of the expected one, and the size of the changes varies in the length of the sequences. Then we create a variety of non-size-free matching strategies to determine the weights of life insurance and annuity products in an insurance portfolio for mortality immunization, where the weights depend on the sizes of the proportional and/or constant changes. Comparing the hedging performances of four non-size-free matching strategies with corresponding size-free ones proposed by Lin and Tsai, we demonstrate with simulation illustrations that the non-size-free matching strategies can hedge against mortality and longevity risks more effectively than the size-free ones.     

Hedging Longevity Risk When Interest Rates are Uncertain

Abstract

This paper proposes an asset liability management strategy to hedge the aggregate risk of annuity providers under the assumption that both the interest rate and mortality rate are stochastic. We assume that annuity providers can invest in longevity bonds, long-term coupon bonds, and shortterm zero-coupon bonds to immunize themselves from the risks of the annuity for the equity holders subject to a required profit. We demonstrate that the optimal allocation strategy can lead to the lowest risk under different yield curves and mortality rate assumptions. The longevity bond can also be regarded as an effective hedging vehicle that significantly reduces the aggregate risk of the annuity providers.     

The R&D performance in Taiwan's electronics industry: a longitudinal examination

R&D investment has been widely regarded as an important input for firms, particularly for high‐tech firms, to achieve competitive advantage within their industry. Hence, a number of high‐tech firms are now investing substantial amounts into R&D. Since R&D efforts enable firms to raise the competitive advantage, one noticeable and interesting issue expected to know is the degree to which R&D investment influences firm output performance. In Taiwan, much greater emphasis is also being placed into R&D investment in the high‐tech industries; however, R&D output performance has never been seriously examined within this sector. Since the island's electronics industry is widely regarded as the most promising industry in the ‘high‐tech sector’, and is expected to place greatest emphasis on its R&D efforts, we take the electronics firms as our analytical sample. This paper therefore sets out to estimate the impact of R&D on firm performance, in terms of productivity growth and the rate of return on investment, within the electronics industry in Taiwan, whilst also examining the Schumpeterian hypothesis, that R&D performance is an increasing function of firm size. Our examination of R&D performance is based on a panel sample of 83 large electronics firms, completely balanced over the period from 1994 to 2000, with series data of R&D capital also being constructed. Based upon the extended Cobb‐Douglas production function, a random effects model is developed with the estimations revealing that the output elasticity of R&D is around 0.19 and the average rate of return on R&D is around 22%. These findings clearly demonstrate that investment in R&D by these electronics firms has had an impact on their competitive advantage. Compared to the findings of previous studies, where the analytical unit of data was at firm level, here the rate of return on R&D is consistent with similar estimates for the US and UK, but lower than those for Japan. However, our estimations do not provide support for the hypothesis that the impact of R&D on productivity is an increasing function of firm size.     

Modeling Educational Quality and Student Loyalty: A Quantitative Approach Based on the Theory of Information Cascades

Customer loyalty is widely accepted as a critical factor in the long-term success of a service organization. This study develops a model of information cascades-based student loyalty (ICSL) by embedding information cascades in the context of educational services with insight from more traditional educational research. In the ICSL model, student loyalty is influenced directly by the perceived quality of teaching services (QTS), the perceived signal of retention (PSR), and the perceived quality of administrative services (QAS), while also being influenced indirectly by QTS, QAS, and perceived others’ retention via the mediation of PSR. This study tests the ICSL model using the structural equation modeling approach, implementing empirical data from a survey done on a large private university in Taiwan. The test results reveal that PSR is significantly influenced by QTS, QAS, and perceived others’ retention. Accordingly, the influence of QAS on student loyalty is insignificant, while the influences of QTS and PSR on student loyalty are conversely significant. Finally, implications are also discussed.     

Price dynamics in public and private housing markets in Singapore

In down-payment constrained housing consumption models, increases in house prices could trigger household mobility decisions in housing markets. This study empirically tests house price dynamics associated with the mobility of households in the public resale and private housing markets in Singapore. The results show that stochastic permanent breaks were found in the public housing resale prices and private housing prices. The relative prices drift apart occasionally, but mean-revert to a long-run fundamental equilibrium. Error correction mechanisms and lagged public housing prices were also found to have significant explanatory effects for price changes in the private housing markets. The results support the hypothesis that household mobility creates co-movements of prices in public and private housing submarkets in the long run.     

A Note on the Newsboy Model with a Cutoff Transaction Size and Gauss Holding and Penalty Cost Functions

In recent papers, the inventory models were presented in which customers with an order larger than a prespecified cutoff transaction size are satisfied in an alternative way, against additional cost. They assumed the holding and penalty cost functions are linear functions. In this paper, the Gauss function can be applied such as the cost for mailing letters or packages in the post office. Therefore, we address a variant of the holding and penalty cost functions by considering the Gauss holding and penalty cost functions to fit in with the most practical situations. In addition, we also assume that customers with an order larger than a prespecified cutoff transaction size are still assumed to be satisfied in an alternative way. Moreover, when the maximum demand is large, much more time may be required to determine the optimal solution. Thus, we adopt and modify the algorithm of the Golden Section Search Technique to determine the optimal order-up-to level S and the cutoff transaction size q systematically and provide illustrative numerical example.     

The curvilinear relationships between responsive and proactive market orientations and new product performance: A contingent link

Recent research has defined market orientation as two dimensions, responsive and proactive market orientations, and further argued that an inverted U-shaped relationship exists between each of these two market orientation dimensions and new product performance. However, empirical evidence has not confirmed such a nonlinear relationship. This study argues that the curvilinear relationship between the two dimensions of market orientation and new product performance may depend on external environmental characteristics. A total of 107 new product development programs in five high tech industries constitute the analytical sample. Hierarchical regression analysis reveals that under a high level of technological turbulence, responsive market orientation becomes detrimental to new product performance beyond a certain level; the relationship between proactive market orientation and new product performance is an inverted U-shaped under a low level of technological turbulence or competitive intensity. Results also indicate that responsive and proactive market orientations are important determinants of new product performance. These findings sharpen the understanding of the relationship between market orientation and new product performance.     

The sensitivity of compensation to social capital: Family CEOs vs. nonfamily CEOs in the family business groups

This study examines the role of CEO social capital, defined as external directorship ties held by the CEO, in determining family vs. nonfamily CEOs' compensation in a network-based business society and governance system. Using a sample of pooled data of family firms listed on the Taiwan Stock Exchange (TSE) from 2000 to 2002, the empirical results show that CEO social capital is an important determinant in setting nonfamily CEOs' pay level, consistent with the expectation of the contractual governance model. By contrast, as expected by relational governance model, family CEOs' social capital is not incentive-relevant. This study extends the literature on CEO compensation by documenting that in a market where guanxi and connections are considered valuable business tools, corporations will be willing to compensate professional CEOs for the social capital that they bring to the firm.     

Endorsement advertising in aboriginal tourism: an experiment in Taiwan

Aboriginal cultures have become important tourism attractions worldwide. Cultural villages provide ready access to selected aspects of these cultures in a staged format. They package and promote culture to tourists. Advertising is one component of the promotional mix. Using brochures as the advertising media, the objective of this research is to ascertain the types of advertising endorsers and advertising appeals that are most likely to be successful in attracting visitors to such cultural villages. Adopting an experimental approach, a two‐factor experimental design is manipulated. The causal effect is obtained by using MANOVA and Scheffe tests. The findings are twofold:

• (1) the advertising effectiveness of using an aboriginal employee is better than using other types of endorsers;
• (2) an emotional advertising appeal elicits a better response than a rational advertising appeal. Copyright © 2005 John Wiley & Sons, Ltd.