Macroeconomic uncertainty and performance in the European Union

We use a very general bivariate GARCH-M model and monthly data on EU countries covering the 1962–2003 period to test for the impact of real (output growth) and nominal (inflation) macroeconomic uncertainty on inflation and output growth. Our evidence supports a number of important conclusions. First, in the majority of countries uncertainty regarding the output growth rate is related to the average growth rate and the effect in several countries is negative. Second, in half of the cases there is no significant relationship between inflation uncertainty and output growth performance. Third, inflation and output uncertainty have a mixed effect on inflation. Nevertheless, considerable evidence for the Cukierman–Meltzer hypothesis is obtained. Our conclusions are based on adopting both a structural and a reduced-form bivariate GARCH model. Finally, we also find statistically significant evidence of regime switching for both inflation and output growth volatility throughout the sample.     

Inter-market competition for NYSE-listed securities under decimals

Blume and Goldstein (J Finance 52:221–244, 1997) suggest that quote competition between trading venues may diminish following tick size reductions. We test this suggestion by studying the competitive landscape in the NYSE-listed stocks before and after decimalization. We find that NBBO (National Best Bid and Offer) participation by non-NYSE venues declines following decimalization consistent with the prediction. At the same time, the importance of quote competitiveness in attracting order flow increases. In addition, although not as active in determining and maintaining the best quotes under decimals, non-NYSE venues become more active in price discovery. Finally, decimalization leads to lower trading costs and to smaller differences in trading costs across trading venues.     

Baylor University Roundtable on The Corporate Mission, CEO Pay, and Improving the Dialogue with Investors

A small group of academics and practitioners discusses four major controversies in the theory and practice of corporate finance:

• • What is the social purpose of the public corporation? Should corporate managements aim to maximize the profitability and value of their companies, or should they instead try to balance the interests of their shareholders against those of “stakeholder” groups, such as employees, customers, and local communities?
• • Should corporate executives consider ending the common practice of earnings guidance? Are there other ways of shifting the focus of the public dialogue between management and investors away from near-term earnings and toward longer-run corporate strategies, policies, and goals? And can companies influence the kinds of investors who buy their shares?
• • Are U.S. CEOs overpaid? What role have equity ownership and financial incentives played in the past performance of U.S. companies? And are there ways of improving the design of U.S. executive pay?
• • Can the principles of corporate governance and financial management at the core of the private equity model—notably, equity incentives, high leverage, and active participation by large investors—be used to increase the values of U.S. public companies?

     

风险管理，你犯错了吗？

我们无法预测“黑天鹅事件”的发生,与其一味幻想可以执掌未来,防堵风险,不如设法降低此类威胁带来的不良影响。     

Pattern and Determinants of United States' Intra-Industry Trade

This study identifies country and industry-level determinants of intra-industry trade and its components, vertical (VIIT) and horizontal (HIIT) intra-industry trade, in bilateral U.S. trade. Unlike studies for other countries, U.S. intra-industry trade is found to be dominated by HIIT rather than VIIT. This finding is important because HIIT tends to have relatively low factor adjustment costs relative to VIIT. Industry specialization takes place within, rather than across, product lines within the same industry. Two new variables contribute to our understanding of intra-industry trade. Country-level product differentiation and the interaction between technological innovation and foreign direct investment are found to be important determinants of both HIIT and VIIT. Distance, foreign direct investment flows, scale economies, and seller concentration affect HIIT but not VIIT. Other influences exert similar influences on components of intra-industry trade.     

Beyond brand loyalty: Brand sustainability

Historically, measures of brand value have focused on brand awareness, customer brand equity and measured brand loyalty. While useful, these generally provide little visibility for the future of the brand. A new measure, brand sustainability, is proposed, described and illustrated. Drawing on over 1 million responses to online customer questionnaires, over a 10-year period, covering brands in 73 FMCG product categories, we create, illustrate and demonstrate a brand sustainability measure. That measure consists of brand share of preference, a calculation of their average annual growth rate. That is then compared to the consumer-stated no brand preference in that category. Net promoter scores are used to support those calculations. Findings show that manufacturer brands are challenged, not by private label, but by no brand preference in the category. Research suggestions are made on how to develop and use brand sustainability and the impact of that measure on future brand growth and development.     

Co-production of service innovations through dynamic capability enhancement

The main aim of this paper is to investigate the effect of co-production practices with customers on service innovation. Specifically, we sought to determine whether dynamic capabilities (the specific abilities a company has to shape, reshape, configure, and reconfigure idiosyncratic assets to respond to changing technologies and markets) could mediate the effect of co-production on service innovation. In this paper, we examine the factors that could influence co-production practices and determine whether organizational commitment moderates the effect of co-production practice on an organization's dynamic capabilities. Using a survey approach of Taiwanese firms, we showed that dynamic capability fully mediates the effects of co-production practice on service innovation and that market orientation and customer matching have a significant influence on co-production practices. In addition, this study has empirically demonstrated that service firms would be well advised to engage in developing service innovation through enhancing their own dynamic capabilities.     

Financial market volatility

The volatility of financial markets has attracted a lot of attention in recent years. However, while particular episodes, such as the bond market turbulence in 1994 and considerable exchange rate movements in 1995, may give the impression that markets have become more volatile, there appears to have been no systematic increase in volatility over the last 20 years in major industrialised countries.