Postponement strategy for international transfer of products in a global supply chain: A system dynamics examination

This paper contributes to research on “postponement” strategy in the context of a global production–distribution system of an automobile manufacturer. It proposes a model that integrates multiple considerations germane to global supply chains. Postponement is important in this context because it is necessary to consider international transfers and tariffs, and it is important to appropriately account for the impact of postponement on total costs. Consideration of several key variables such as shipping point, customs tariff, and cost differences between countries is essential to derive full benefits from postponement strategy in global supply chains. International transfer of goods among countries in global automobile industry is complex and dynamic because of the multitude of factors that must be considered. The paper develops insights regarding postponement strategy in global supply chains via a system dynamics simulation model. The model draws on the experiences of a Korean automobile manufacturer with operations in developing and developed countries.     

Regulatory Climate and Electric Utility Capital Structure Decisions

A theoretical model of the role of regulatory climate in the capital structure decisions of regulated electric utilities is developed that indicates managers can mitigate the consequences of unfavorable regulation by increasing the proportion of debt in the capital structure. The increase in leverage is limited by increased bankruptcy risk with higher levels of debt. The model predicts that utilities will react to their regulatory climate by adjusting capital structure. This behavior may be an undesirable consequence of the regulatory process. Empirical support for the model, both cross sectional and over time, is provided.     

The Impact of Illegal Business Practice on Shareholder Returns

Data regarding illegal firm behavior were obtained for the period 1980–1990. Using the single index market model, the study finds that public announcements of indictments for major corporate crimes have a significant and long-term negative impact upon shareholder wealth, particularly for firms found guilty of the indictment. The results indicate that indictments of larger firms have a proportionally smaller impact on excess returns. Furthermore, indictments handed down since the Levine/Boesky scandal appear to have had a more adverse impact.     

STOCK RETURNS AND OPTION PRICES: AN EXPLORATORY STUDY

This study is an investigation of estimates of expected stock returns implicit in option data. The Lee-Rao-Auchmuty option valuation model provides a unique opportunity to examine whether return measurements derived by nonlinear estimation techniques show any correlation with future stock returns. During the short period covered in this study, the Lee-Rao-Auchmuty estimates give preliminary indications that they are better predictors of actual stock returns than are estimates obtained from historical data.     

Option pricing in a lognormal securities market with discrete trading

This paper derives a call option valuation equation assuming discrete trading in securities markets where the underlying asset and market returns are bivariate lognormally distributed and investors have increasing, concave utility functions exhibiting skewness preference. Since the valuation does not require the continouus time riskfree hedging of Black and Scholes, nor the discrete time riskfree hedging of Cox, Ross and Rubinstein, market effects are introduced into the option valuation relation. The new option valuation seems to correct for the systematic mispricing of well-in and well-out of the money options by the Black and Scholes option pricing formula.     

Monotonicity of the (reversed) hazard rate of the (maximum) minimum in bivariate distributions

It is well known that in the case of independent random variables, the (reversed) hazard rate of the (maximum) minimum of two random variables is the sum of the individual (reversed) hazard rates and hence the onotonicity of the (reversed) hazard rate of the marginals is preserved by the monotonicity of the (reversed) hazard rate of the (maximum) minimum. However, for the bivariate distributions this property is not always preserved. In this paper, we study the monotonicity of the (reversed) hazard rate of the (maximum) minimum for two well known families of bivariate distributions viz the Farlie-Gumbel-Morgenstern (FGM) and Sarmanov family. In case of the FGM family, we obtain the (reversed) hazard rate of the (maximum) minimum and provide several examples in some of which the (reversed) hazard rate is monotonic and in others it is non-monotonic. In the case of Sarmanov family the (reversed) hazard rate of the (maximum) minimum may not be expressed in a compact form in general. We consider some examples to illustrate the procedureResearch of the second author is supported by a grant from Natural Sciences and Engineering Research Council and the research of the other two authors is partially supported by a travel grant from the Canadian American Center of the University of Maine