FOREIGN INVESTOR PARTICIPATION IN PRIVATIZATIONS: DOES THE INSTITUTIONAL ENVIRONMENT MATTER?

We examine the determinants of foreign investors' participation in the privatization process of developing countries. First, we estimate the probability that foreign investors target privatized firms in a given country. We show that a favorable legal environment where investor protection is higher enhances foreign investors' participation. Foreigners also prefer large, strategic firms from high‐growth economies and socially stable countries with low political risk. Second, we restrict our analysis to privatized firms that foreign investors actually choose and show that the stakes foreigners hold are larger if the firms are privatized by private sales as opposed to public offerings.     

Japanese distribution system: The impact of newly designed collaborations on wholesalers' performance

In January 1995, the Kobe earthquake devastated a major part of Kobe's distribution infrastructure. Apart from the expected complaints about lost sales, wholesalers reported some surprising comments after the reopening. Wholesalers stressed the advantages of newly designed distribution channels, especially the opportunity to end longstanding business relationships known as keiretsu. This study is concerned with the recent development of vertical collaboration in the Japanese distribution channel. Multiple regression analysis revealed that the supplier's service to wholesaler, the supplier's offerings to the wholesaler, and buyer's service to the wholesaler did contribute to the enhancement of the performance of the wholesaler. The three factors explained 16% of the wholesaler's performance. The regression analysis also showed that the wholesaler's intra-logistics activities contributed to the improvement of the performance of the wholesaler and explained 5% of its performance.     

Consumer Ethics: Determinants of Ethical Beliefs of African Americans

This study explores the ethical ideol-ogies and ethical beliefs of African American consumers using the Forsyth ethical position questionnaire (EPQ) and the Muncy-Vitell consumer ethics questionnaire (MVQ). The two dimensions of the EPQ (i.e., idealism and relativism) were the independent constructs and the four dimensions of the MVQ (i.e., illegal, active, passive and no harm) were the dependent variables. In addition, this paper explores the consumer ethics of African Americans across four demographic factors (i.e., age, education, gender, and marital status). A sample of 315 African American consumers was used to explore these relationships. Results confirmed that consumers who score high on the idealism scale are more likely to reject questionable consumer activities, but there was no relationship between relativism and consumers' rejection of questionable activities. Older, more educated and married consumers rejected questionable activities more than younger, less educated and single consumers. Gender did not have any significant relationship to consumers' ethical orientation.     

Establishing Maintenance Resource Levels Using Selective Maintenance

We address the performance of a repairable system that is required to perform a sequence of equally spaced, identical missions with breaks between missions. The system is series-parallel in structure, and component repair can only be performed during breaks between missions. Due to limitations on maintenance resources, it may be impossible to make all necessary repairs before the next mission. Such situations require the use of selective maintenance, the process of identifying the subset of maintenance actions to perform from a set of desirable maintenance actions. We build upon previous research in selective maintenance by addressing decisions related to establishing capacities for the limited maintenance resources. We model mission-to-mission changes in maintenance resource capacity, and we develop a methodology for establishing constant resource capacities for a sequence of missions. Finally, we develop a methodology for integrating redundancy allocation and maintenance resource allocation decisions.     

Global Financial Crisis: An African Perspective

This paper reviews the expanding financial turmoil that has been triggered by the Asian crisis. It examines the factors behind the crisis, its impact on African countries and the main lessons and policy implications for African countries. The onset of the Asian crisis seems to have taken everybody by surprise because the Asian countries that were hit by the crisis had been among the most successful in sustaining high rates of economic growth, keeping high saving and investment rates and improving the quality of life of their citizens. However, the emerging consensus is that the Asian crisis is a hybrid of structural and policy distortions (macro- and micro-economic) in the affected economies. The impact of the crisis on African countries was mainly transmitted through declines in export prices and volumes. The low demand for primary commodities induced by the crisis and the large depreciation of Asian currencies appear to have played major roles in depressing commodity prices. With only a few exceptions, the commodities that suffered large price declines are those for which Asia constitutes an important market (e.g. oil) and/or those mostly supplied by Asian countries (e.g. copper, timber and rubber). Africa’s oil-exporting countries, which experienced large deterioration in their terms of trade, were the most affected. For the continent as a whole, export proceeds declined by 9.5 per cent between 1997 and 1998. This was the product of a 7 per cent decline in export prices and a 2.5 per cent decline in the volume of exports. The paper estimates that the crisis has caused the growth rate in the region to slide down by 1.2 percentage points, which indicates a loss of US $6.2 billion using aggregate GDP for 1997 as the base. To put this in an order of magnitude, it is about US $2 billion higher than the annual average flow of FDI to the continent in recent years. For the majority of African countries where the inflow of private capital is small and where public debt is dominant, the traditional risk management policies, such as adopting realistic exchange rates and reducing government deficits and inflation rates, should continue to be major policy tools to prevent financial crisis. However, as the role of private capital increases the design of macroeconomic policies would need to heed the lessons emerging from Asia. One basic lesson is that careful sequencing of domestic and external liberalization is needed. In that, restrictions on the capital account, especially on the more volatile capital flows should be lifted only after the domestic financial sector has been strengthened with adequate regulatory and supervisory institutions. This is particularly true because the Asian crisis has shown that reserves, even at very high levels, can be quickly depleted given the scale and volatility of short-term capital flows. Le présent document analyse le développement de la tourmente financière déclenchée par la crise asiatique. Il examine les causes de cette crise, son impact sur les pays africains, les principaux enseignements à en tirer et ses incidences politiques pour l’Afrique. Le déclenchement de la crise asiatique semble avoir pris tout le monde de court. Les pays asiatiques touchés sont parmi ceux qui avaient enregistré des taux de croissance économique des plus élevés, maintenu des taux d’épargne et d’investissement des plus soutenus, et amélioré le plus la qualité de vie de leurs citoyens. Cependant, de l’avis général, la crise asiatique résulte de la conjonction de distorsions d’ordre structurels et politiques (macro et micro économiques) dans les pays touchés. Son impact sur les pays africains a été principalement ressenti é; travers la baisse des prix et du volume des exportations. Le fléchissement de la demande des produits de base et la forte dépréciation des monnaies asiatiques provoqués par la crise ont manifestement joué un rôle déterminant dans la chute des cours des produits de base. A quelques exceptions près, les produits dont les prix ont sensiblement baissé sont ceux pour lesquels l’Asie constitue un important marché (par exemple le pétrole) et/ ou ceux qui sont essentiellement fournis par les pays asiatiques (cuivre, bois, caoutchouc). Les pays africains exportateurs de pétrole, qui ont subi une détérioration marquée de leurs termes de l’échange, ont été les plus touchés. Pour l’ensemble du continent, les recettes d’exportation ont baissé de 9,5 pour cent entre 1997 et 1998. Cette situation résulte de la baisse de 7 pour cent des prix et de la contraction de 2,5 pour cent du volume des exportations. Ce document estime que la crise a entraîné un ralentissement de croissance de 1,2 point de pourcentage, soit une perte de 6,2 milliards de dollars EU, si l’on utilise comme base le PIB global de 1997. Traduit en ordre de grandeur, ce chiffre est d’environ 2 milliards de dollars supérieur au montant des flux moyens annuels d’IDE obtenus par le continent au cours de ces dernières années. Pour la majorité des Etats africains oú l’apport de capitaux privés est faible, et la dette publique écrasante, les politiques traditionnelles de gestion de risque, comme l’adoption de taux de change réalistes et la réduction des déficits publics et du taux d’inflation, doivent demeurer les principaux moyens d’action pour prévenir les crises financières. Cependant, à mesure qu’augmente le rôle des capitaux privés, la conception des politiques macroéconomiques devrait tenir compte des leçons qui se dégagent de l’expérience asiatique. La principale leçon est qu’il faut faire preuve de prudence dans la programmation de la libéralisation interne et externe. Dans cet esprit, la restriction des mouvements des capitaux, notamment ceux de capitaux les plus volatiles, ne doit être levée qu’après la consolidation du secteur financier au niveau interne avec le concours d’institutions compétentes de réglementation et de contrôle. Cette précaution est d’autant plus nécessaire que la crise asiatique a démontré que les réserves, même à des niveaux très élevés, peuvent s’épuiser rapidement du fait de l’ampleur et de la volatilité des flux des capitaux à court terme.     

The Monetary Transmission Mechanism, Non-residential Fixed Investment and Housing

We specify a vector autoregression (VAR) model for the U.S. for 1980–2008 to investigate the statistical causal relationships between private non-residential fixed investment, the effective Federal funds rate, personal consumption expenditures, nonfinancial corporate profits, and the nonfinancial corporate credit market debt to test the validity of macroeconomic relationships in a macro model. The VAR utilizes the Toda-Yamamote procedure to test for Granger causality. Our preliminary results show that the transmission mechanism does not work as expected; we find that fixed investment depends on the level of demand in the economy and profits but not on the interest rate. This casts doubt on the usual assumptions about how the monetary transmission mechanism is expected to work. The second part of the paper investigates the effects of the change in the monetary regime towards low and stable interest rates, a policy pursued by the U.S. Fed since the beginning of the 1990s. We find that the new monetary policy regime has the following effects: (1) our VAR model does not support the hypothesis that low interest rates lead to higher fixed nonresidential investment; (2) low interest rates led to a search for higher yields through increasing risk, and (3) they led to an increase in the demand for securitized assets, especially mortgage-backed securities, which eventually resulted in a housing bubble. The overall results therefore raise doubts about the effectiveness of low interest rates as a policy regime designed as a component of a counter-cyclical policy.     

A tale of two deficits: an empirical investigation for canada

This article purports to explain the current account behavior for Canada in the context of the twin-deficit hypothesis. The study tests the validity of the hypothesis in a model in which domestic savings and investment are explicitly considered. In this article we use the cointegration analysis to investigate the secular relationship between the fiscal and current account deficits. We also estimate an error correction model to capture the short-run dynamics of the relationship. A major finding of this study is that the current account deficit seems to be related both to the fiscal deficit and the savings—investment gap.     

How do small firms possibly survive? A comparison study of marketing skills and logistics infrastructure of small and large wholesalers

Most wholesalers are small family-owned firms that frequently lack marketing skills and an infrastructure capable of setting into practice state-of-the-art marketing distribution systems. They are much more consumed with daily activities and credit and collection functions than they are with developing marketing skills and logistics networks. The purpose of this exploratory study is to identify the elements of marketing skills and logistics that are associated with the performance of small and large wholesalers, and to compare and contrast these variables. Data were collected from 4500 small and large wholesalers in Hyogo and Osaka prefectures in Japan. Multiple regression analysis of this study found that the factors of supplier's financial assistance and buyer's services to wholesalers explained the performance of small wholesalers, and the factors of supplier's service to wholesalers and buyer's service to wholesalers explained the performance of large wholesalers. Multivariate analysis of variance and multiple discriminant analysis revealed that large and small wholesalers differed with respect to supplier's services to wholesalers, the supplier's financial assistance, and the wholesaler's intra logistics activities. Implications are discussed.     

Shareholders versus stakeholders: corporate mission statements and investor returns

This paper seeks to discover whether companies that adopt a stakeholder approach, and thereby demonstrate a wider remit of corporate responsibility, provide inferior returns to those that embrace the shareholder value approach. To classify approaches, mission statements were analysed, the final sample comprising 32 shareholder oriented companies and 48 stakeholder oriented companies. To assess performance both accounting–based and market–based measures were used. A number of moderating variables were taken into account: systematic (beta) risk, gearing (long–term debt to total long–term finance), tax ratios, and firm size. ANOVA and Kruskall–Wallis tests revealed that mission orientation did not affect performance, whether in terms of stock returns or excess returns. Neither were accounting returns on equity different overall, although shareholder oriented companies experienced wider variations in this measure. A number of multiple regressions were also performed. However, the mission dummy was not found to be a significant variable.