Investors’ preference towards risk: evidence from the Taiwan stock and stock index futures markets

We apply the stochastic dominance (SD) tests proposed by Linton et al. (2005) and Davidson and Duclos (2000) for risk averters and risk seekers to examine investors’ preferences with respect to the Taiwan stock index and its corresponding index futures. We find that there is no first‐order SD relationship between Taiwan spot and futures. However, for second‐ and third‐order SD, we find that spot dominates futures for risk averters whereas futures dominates spot for risk seekers. The implication is that to maximize their expected utilities, risk averters prefer to buy stocks, whereas risk seekers prefer long index futures.     

From Bastiat's circumference to Knight's wheel: a newly discovered letter of Mr Sherlock Holmes to Dr Watson *

This paper continues the investigation of the antecedents of the Wheel of Wealth, initiated by Don Patinkin as a by-product of his 1973 memoir of Frank Knight. A series of partly chance leads pointed to Bastiat as the earliest author to have employed circle or wheel diagram in an associated context, and one with whose writings most later users of it were acquainted. Although Patinkin mistakenly concluded that late-nineteenth century Contitental European literature completely eschewed diagrams, he was right in hypothesizing the wheel diagram to have originated outside the main stream of economic thought.     

The meaning of industrial prestige

In light of the growing interest in industries as distinct units in the structure of stratification, this research explores the dimensions underlying the social evaluation of industries, with an emphasis on the meaning of industrial prestige. The data collected for this purpose consist of multiple ratings of the banking and insurance industries by a national sample of Israelis. The empirical findings indicate, first, that there exists virtual concensus about all the ratings across various demographic and socioeconomic categories and, second, that industrial prestige is related to instrumental rather than normative considerations of industrial behavior. These results are discussed in terms of the specific characteristics of banking and insurance as well as in terms of the general debate over the meaning of prestige scales of occupations.     

Trends and patterns of the international tropical hardwood trade

In spite of the rapid expansion of tropical hardwood exports since 1960, there was no change in the structure of the trade. For a more equitable distribution of gains from the trade, tropical developing countries need to move away from log exports into domestic processing of wood. The main obstacles to future expansion of tropical hardwood exports are a lack of necessary complementary inputs in the producing countries and the restrictions to market access in the major importing countries. Rationalization of the production and trade of tropical hardwoods could contribute significantly to world welfare.     

Heirs to colonial trade

Decolonization lowered the share of trade ex-colonies conducted with the former metropolitan power. It is sometimes claimed, however, that this development reflected only a change in the identity of the exploiting country. This paper examines the changes which occurred between 1960–1962 and 1968–1970 in the shares of three groups of potential neocolonialists in the trade of 44 former U.K. and French dependencies. It is shown that the gains made by these three groups do not provide evidence of their taking over the trade monopoly formerly enjoyed in effect by the old colonial powers. Most of these gains can be explained by trade diversification, the only notable exception being the gains made by the traditional colonial ‘have-nots’.     

The value of columnists’ stock recommendations: an event study approach

This study examines the value of stock recommendations made by columnists in three leading business magazines; Business Week, Forbes, and Fortune during the period 2000–2003. Empirical results suggest that the anomalous returns documented in prior studies on columnists are sample specific and are not representative of columnist recommendations in general. We also investigate whether columnists’ timing, content and style affect the market reaction to recommendations. We find that recommendations that contain references to management or provide merger & acquisition related rumor trigger significantly greater market reactions. Finally, our long-term performance analysis of columnist recommendations suggests that investors following columnists’ advice during the 2000–2003 period would not have consistently earned abnormal returns controlling for market risk, book-to-market, size, and momentum effects.     

Shareholders Groups,Unbundled Rights,and Corporate Democracy: A Commentary

The commentary proposes a reform in the structure of corporate ownership. This reform would legally require public companies to unbundle their common stock into separately traded voting rights and monetary rights. Arguably, this new unbundled equity structure could profoundly change group dynamics of corporate governance, benefiting shareholder groups, customers, employees, and society at large.     

Index tracking with utility enhanced weighting

Passive index investing involves investing in a fund that replicates a market index. Enhanced indexation uses the returns of an index as a reference point and aims at outperforming this index. The motivation behind enhanced indexing is that the indices and portfolios available to academics and practitioners for asset pricing and benchmarking are generally inefficient and, thus, susceptible to enhancement. In this paper we propose a novel technique based on the concept of cumulative utility area ratios and the Analytic Hierarchy Process (AHP) to construct enhanced indices from the DJIA and S&P500. Four main conclusions are forthcoming. First, the technique, called the utility enhanced tracking technique (UETT), is computationally parsimonious and applicable for all return distributions. Second, if desired, cardinality constraints are simple and computationally parsimonious. Third, the technique requires only infrequent rebalancing, monthly at the most. Finally, the UETT portfolios generate consistently higher out-of-sample utility profiles and after-cost returns for the fully enhanced portfolios as well as for the enhanced portfolios adjusted for cardinality constraints. These results are robust to varying market conditions and a range of utility functions.     

Effects of gender on the performance of micro and small enterprises in Malawi

Women are increasingly venturing into ownership of micro and small enterprises, either on their own or in partnership with male entrepreneurs. Using national survey data from Malawi, this study compares the performance of enterprises owned by females with those owned by males. The results show that the relationship between gender and business performance is complex. While there are no significant differences in profit margins, female-owned enterprises tend to grow more rapidly in terms of employment than male-owned ones. Gender-based regression results also show that while there are common factors that affect the performance of both kinds of enterprise, there are also differential effects in which education is a critical factor for the success of female-owned enterprises.