Properties of the Sample Autocorrelations of Nonlinear Transformations in Long-Memory Stochastic Volatility Models

The autocorrelations of log-squared, squared, and absolute financialreturns are often used to infer the dynamic properties of theunderlying volatility. This article shows that, in the contextof long-memory stochastic volatility models, these autocorrelationsare smaller than the autocorrelations of the log volatilityand so is the rate of decay for squared and absolute returns.Furthermore, the corresponding sample autocorrelations couldhave severe negative biases, making the identification of conditionalheteroscedasticity and long memory a difficult task. Finally,we show that the power of some popular tests for homoscedasticityis larger when they are applied to absolute returns.     

Hotelling's spatial competition as a model of sales

Hotelling's spatial competition model is used to explain the existence of sales. It is shown that (1) an equilibrium in randomized strategies exists when a pure strategy equilibrium fails to exist, (2) with more dissimilarity among brands prices are chosen from a wider interval.     

The challenges of developing transit tourism

This paper examines the challenges of attracting day-trip transit passengers in Asian hub airports. The rapid expansion of Asian hub airports in the past six years should produce opportunities for destinations to benefit from short-stay visits by transit and transfer passengers, using the hub for convenient connections. However, little short-haul transit tourism seems to occur. The authors propose that two reasons may account for this lack of demand: lack of opportunity or lack of desire. This study examines transit/transfer passengers from Chinese Taipei that pass through Hong Kong's International Airport. The study concludes that interest in transit tourism is high, but a lack of opportunity precludes higher participation rates. Intervention at the travel purchase decision-making point may enhance transit tourism opportunities.     

Wild Bids. Gambling for Resurrection in Procurement Contracts

This paper analyses the problem of abnormally low tenders in the procurement process. Limited liability causes firms in a bad financial situation to bid more aggressively than financially healthy firms in the procurement auction. Therefore, it is likely that the winning firm is a firm in financial difficulties with a high risk of bankruptcy. The paper focuses on the regulatory practice of surety bonds to face this problem. We show that the use of surety bonds reduces and sometimes eliminates the problem of abnormally low tenders. We provide a characterization of the optimal surety bond and show that the U.S. practice of requiring that surety bonds cover over 100% of the contract price can be excessive, implying overinsurance to the problem of abnormally low tenders.     

Ownership structure and diversification in a scenario of weak shareholder protection

This work examines the influences of ownership concentration and insider ownership on corporate strategies for diversification within a scenario characterized by poor protection of shareholder interests. We find evidence of a quadratic relationship between ownership concentration and diversification, and a cubic relationship between diversification and insider ownership. These results point towards the high probability of both expropriation and entrenchment phenomena, respectively, in this kind of scenario. We also find that concentrated ownership requires high levels of insider ownership, in order to prevent negative externalities of diversification. Another result shows that entrenchment externalities affect diversification before they erode firm value, which suggests that for low levels of diversification, firm value is still not negatively affected. Additionally, our results show that control mechanisms, such as debt, director remuneration and compliance with codes of good practice, are negatively related to the level of diversification. Overall, our results confirm the theoretical relevance of agency theory in explaining managerial attitudes towards corporate strategy, i.e. diversification. Furthermore, companies characterized by deficiencies in shareholder legal protection, concentrated ownership structures and a higher likelihood of managers being entrenched, should focus on the correct functioning of corporate governance mechanisms.     

Differentiated industries without entry barriers

Our objective is to predict the evolution of an industry without entry barriers where products are differentiated on the basis of quality. Each firm chooses a single brand whose characteristics and amount of production is determined by the firm. The analysis suggests two different stages in the evolution. The first is a stage of growth and the second is a stationary stage in terms of aggregate production. While during the first stage the entry of additional brands results in the reduction of average quality, during the second stage entry leads to increased average quality. Hotelling's principle of “minimum differentiation” is contradicted in the model.     

The impact of firm strategy and foreign ownership on executive bonus compensation in Japanese firms

Building on information-processing perspectives and the Japanese contextual factors, this study investigates the relationships between firm strategy and executive bonus pay as well as the moderating role of foreign ownership on the strategy-compensation relationship in Japanese firms. We focus on R&D investment and product diversification as strategy variables and investigate their direct effects on executive bonus pay. Further, we examine the moderating effects of foreign ownership on the strategy-pay sensitivity. The results, based on a sample of the 148 largest industrial firms in Japan for the 1990-1997 period, show that both R&D investment and product diversification are positively related to executive bonus pay. Our findings also indicate that foreign ownership negatively moderates the relationships between the strategy variables and executive compensation, suggesting that foreign investors play an active monitoring role, reducing cash bonus payments when their invested firms choose to increase R&D or pursue diversification strategy.     

Cutting the web of interests: Pitfalls of formalizing property rights

Property rights to land can be thought of as a web of interests, with many different parties having a right to use, regulate, or manage the resource, which may be based on a range of customary institutions or local norms as well as state law. These interests often play a critical role in livelihoods, social relations, and ecological functions. The formalization of property rights has historically led to a cutting of this web, creating more exclusive forms of rights over the resource. Drawing from case studies in Kenya the paper emphasizes the risk of excluding legitimate claimants in formalization processes that focus on individual titling. By collapsing all rights within individuals, such programs have negated the distinct multiple claims by women, youths, and seasonal users, among others. We examine ways in which formalization processes can secure diverse claims, and highlight the need for a better understanding of the social and ecological implications of existing land tenure before they are undermined by formalization.     

The 'Hojas de Ganado' of the Monastery of Guadalupe, 1597-1784: an accounting instrument for fundamental economic decisions

This paper examines the development of a new form of accounting system which was introduced at the Monastery of Guadalupe around 1597. Increasing financial pressure on those charged with the management of the economic activities of the Monastery necessitated the development of an accounting system which would enable decision making. The system that was introduced led to the production of documents known as 'Hojas de Ganado', or 'Livestock Sheets'. The nature of the information contained in these sheets suggests a move away from the traditional form of cash accounting, prevalent at the time, towards a more modern system of accounting which enabled the Monastery's management to make decisions, on the basis of profit figures, as to the best way to manage its lands and economic operations.     

Big mountain,big name: globalised relations of risk in Himalayan mountaineering

The paper explores how visitors' perception of a destination's heritage management affects satisfaction with actual visits to the sites and overall perception of the destination's cultural image, using Macao as the case setting. The study will also look at how site visit satisfaction influences the intention to revisit and recommend to others. The findings indicated that perception of the quality of heritage interpretation was significantly associated with destination cultural image and site visit satisfaction. However, associations between site visit satisfaction and intention to revisit and recommend were weak. The findings also led to a discussion on whether the labels ‘cultural’ versus ‘non-cultural’ tourists remain stable over time.