The Cultural Dimensions of Negotiation: The Chinese Case

Culture is one of the major components of negotiation and plays an especially crucial role in international relations. The current state of research is presented and discussed. The type of influence of culture is specified and compared with other categories such as strategic behavior and structural determination.Then, referring to the China case, the way culture impacts on the key elements of negotiation such as actors, structures, strategies, process, and outcome is described and analyzed. Lastly, culture's consequences on the negotiator's cognition, beliefs, behaviors and identity are investigated.     

Implementing technology roadmap process in the energy services sector: A case study of a government agency

Energy sector has become increasingly sensitive to emerging new technologies as our society is seeking alternative energy sources. Many utility companies and government agencies have started to implement technology planning processes for roadmapping their future technology portfolios. This paper focuses on technology planning in the government energy services sector. Through a case study research method, the paper documents how technology planning and specifically technology roadmaps were implemented at a federal agency tasked with managing power transmission in the Northwest United States. Three application areas are covered: transmission, renewables and energy efficiency. The paper provides details on the Energy Efficiency Roadmaps. Through the review of the case a technology planning methodology based on technology roadmaps is detailed. Key conclusions were reached on how to manage such process implementation in similar organizations. Some of these conclusions can be generalized to those that are implementing technology planning processes for the first time. We concluded that adoption of such methods would require a longer time than anticipated. Organizational changes to adopt the process will likely reduce the time it takes to deliver the required roadmaps. We also found that a typical sequence of events would be Technology Gap Analysis and Identification of Technology Candidates, Evaluation and Prioritization of Technologies, Roadmapping of Technologies and Allocation of Resources to the R&D Programs or to the direct acquisition of the technologies.     

How Do Various Forms of Auditor Rotation Affect Audit Quality? Evidence from China

The Enron/Arthur Andersen scandal has raised concerns internationally about auditor independence, audit quality, and the need for regulatory action such as mandatory auditor rotation. China's unique institutional features provide a setting in which we can compare comprehensively the various forms of auditor rotation at different levels (partner vs. firm) and in different settings (voluntary vs. mandatory). In addition, institutional conditions vary dramatically across China, which provides us with an opportunity to test whether the development of market and legal institutions affects the impact of rotation on audit quality. We expect that auditors are less (more) constrained by market forces and less (more) self-disciplined to maintain audit quality in regions with less (more) developed market and legal institutions. Therefore, mandatory rotation may play a more (less) important role in less (more) developed regions. Using auditors' propensity to issue a modified audit opinion (MAO) as a proxy for audit quality, we find that firms with mandatory audit partner rotations are associated with a significantly higher likelihood of an MAO than are no-rotation firms. However, this effect is restricted to firms located in less developed regions. We find similar evidence for voluntary audit firm rotation although the significance level is much weaker than for mandatory partner rotation. Other forms of auditor rotations (i.e., mandatory audit firm rotation and voluntary audit partner rotation), have no effect on MAOs.     

Rotate back or not after mandatory audit partner rotation?

Many countries have implemented rules that require an audit partner to rotate off the audit of a specific client after a certain period of time in the belief that rotation will improve independence and will allow for a fresh look at the audit. The rules are either silent on whether or when a partner can rotate back or else they specify a cooling-off period after which the rotated-off partner can resume the audit. Using archival data from China, a country with a 2-year cooling-off period, this paper explores the determinants of whether the audit partner rotates back or not when the cooling-off period expires, and whether audit quality is weakened by the audit partner rotation-back practice. We find that the audit partner rotation-back practice can be explained by factors relating to switching costs, agency conflicts, client desirability, and the audit partner’s capacity constraint considerations. Interestingly, we find that clients suffering greater audit adjustments immediately prior to the expiration of the cooling-off period are more likely to be associated with subsequent audit partner rotation-back. Furthermore, we find that rotation-back partners tend to treat former clients more favorably than non-rotation-back cases using modified audit opinions as our proxy for audit quality. Overall, our findings offer preliminary explanations for and shed light on the consequences of rotation-back practice arising from mandatory audit partner rotation requirements and lend support to regulatory concerns on rotation-back practice among audit partners.     

Stock salience and the asymmetric market effect of consumer sentiment news

We document asymmetric announcement effects of consumer sentiment news on United States stock and stock futures markets. While a negative market effect occurs upon the release of bad sentiment news, there is no market reaction for the counterpart good news. This supports the “negativity effect” hypothesis. Notably, this effect seems most likely to occur in salient stocks, which is consistent with the availability heuristic.     

Red and Blue: the relationship between the institutional context and the performance of leveraged buyout investments

This paper advances the debate concerning the relationship between politics and business conduct by investigating the influence of the institutional context on leveraged buyout investments. We propose that the formal and informal institution context in ‘red’ states (those dominated by the U.S. Republican Party) is more aligned with the principal strategies through which leveraged buyout investors create value than such a context is in ‘blue’ states (those dominated by the Democratic Party). Therefore, according to institutional theory, one would expect, ceteris paribus, a higher likelihood of buyout transactions in red states and vice versa. We analyze a sample of 10,746 U.S. buyout investments in 4,633 distinct target companies made by 2,396 different funds managed by 1,300 private equity firms from 1980 to 2003. The results indicate strong evidence of a positive association between a more aligned institutional context and both the volume of buyout activity and different measures of performance for these buyouts. Copyright © 2011 John Wiley & Sons, Ltd.     

Composite global indicators from survey data: the Global Economic Barometers

Review of World Economics - This paper presents a coincident and a leading composite monthly indicator for the world business cycle—the Global Economic Barometers. Both target the...     

Reversing disbursement rates to estimate stationary wealth processes for endowments with recursive preferences

Endowments have been accused of hoarding their wealth. However, the theoretically ideal spending plan remains unclear and, in practice, endowments follow a range of rules. Here we derive and estimate the optimal spending plans of an infinitely lived charity or endowment with an Epstein-Zin-Weil utility function, given general Markovian returns to wealth. We analyse two special cases: first, where spending is a power function of last period’s wealth; and second where the endowment uses ‘payout smoothing’. Via non-linear least squares, we estimate the optimal spending rate and the elasticity of inter-temporal substitution for an endowment with a typical diversified portfolio and for a portfolio of hedge funds. In a new approach, we use maximum entropy methods to characterize the returns distribution of an endowment whose spending plan conforms with the optimality condition. We confirm that the estimated returns distribution is largely consistent with the optimal spending plan.