Baltic Dry Index and iron ore spot market: dynamics and interactions

Baltic Dry Index (BDI) is often included in the iron ore spot price. Iron ore market experienced a transition in pricing mechanism from the annual negotiated price to the one based on spot market price in 2008/2009. This paper investigates the dynamics of and the interactions between BDI and iron ore spot price in the regime of the new pricing mechanism. In addition to controlled variables, we find significant spillover interactions between BDI and the iron ore market. We also detect mean-reversion movement in the iron ore market, signalling certain inefficiency in the market pricing.     

A Note on Loss Aversion and Futures Hedging

This note examines the effect of loss aversion on the futures trading behavior of a short hedger. Using a modified constant‐absolute‐risk‐aversion utility function, I show that loss aversion has no effect in an unbiased futures market. It has different, predictable impacts when the futures market is in backwardation or contango. © 2001 John Wiley & Sons, Inc. Jrl Fut Mark 21: 681–692, 2001     

Properties of first-time vs. repeat visitors: lessons for marketing Norwegian ski resorts

This paper explores the potential in foreign markets for winter tourism in Norway and discusses the influencing factors explaining why foreign tourists visit and revisit Norway on ski vacations. In a decreasing market, it becomes increasingly important to destination managers and marketers to choose the right marketing strategies and direction. We focus on characteristics that influence and explain why foreign tourists choose to return. More than 3000 respondents from Sweden, Denmark, and Germany were asked for their image of Norwegian ski destinations and criteria for winter vacation selection. We fitted mainly hurdle and quantile regressions to gain consistent and less biased estimates. Stable snow conditions, combining alpine and cross-country skiing, and no fees for the latter are some of Norway's competitive but seldom marketed advantages, and especially towards repeat visitors. Repeaters typically prefer self-catering accommodation and are less price sensitive. Surprisingly, foreign ski tourists are not very interested in other snow-based activities or cultural attractions. Despite repeaters constituting the majority of foreign ski tourists, neither the national development and marketing agency (Innovation Norway) nor local tourist organizations and marketers have a strategy for targeting them. We recommend a shift from profile marketing towards segmented marketing, aimed especially at the repeat-visitor segment.     

Asymmetric effects of cultural institutes on trade and foreign direct investment

The purpose of a cultural institute is to improve international relations with other countries by promoting language familiarity and cultural awareness. In addition, cultural institutes can provide additional business opportunities that lead to positive economic side effects such as increases in trade and foreign direct investment (FDI). In this study, gravity models were used to analyse the data for the Goethe Institut (Germany), the Cervantes Institute (Spain) and the Confucius Institute (China) to identify any stylised international patterns of the documented economic effects. The study finds significant positive effects on bilateral trade and FDI outflows for all three programmes, along with two important (i) the effects are stronger for non‐advanced economies and (ii) the effects are substantially larger on FDI than on trade. These results suggest that cultural institutes can be an effective policy tool in promoting FDI outflows, with the strongest effect realised when a home country locates its cultural institutes in host countries with developing economies. Importantly, results also suggest that the Chinese government's approach to extend its soft power through rapid expansion of Confucius Institutes worldwide has not been as successful as the efforts by the German Goethe Institut in increasing trade and FDI.     

Subjective Well‐Being and Income: A Re‐Examination of Satiation Using the Regression Kink Model With an Unknown Threshold

A methodological challenge in testing Easterlin's paradox, which states that increasing income fails to boost happiness beyond a satiation point, lies in the determination of this threshold if it exists. In the existing literature, various levels of GDP per capita have been chosen based upon visual inspection of the scatter plots of the data. The estimated income–well‐being gradients are sensitive to the choice of such kink points. We first replicate the results in Stevenson and Wolfers (American Economic Review, Papers and Proceedings 2013; 103 (3): 598–604), then apply the methods proposed in Hansen (Journal of Business and Economic Statistics 2016), which estimate the regression kink model with an unknown threshold, to the data in Stevenson and Wolfers ( 2013 ) to re‐examine the two modified versions of Easterlin's hypothesis. In most cases, we do not find the existence of any kink point. In the few cases where a kink point is detected, the estimated kink point thresholds are different from those chosen in the previous literature. Overall, we find no evidence of a satiation point, which is in support of Stevenson and Wolfers ( 2013 ). Copyright © 2016 John Wiley & Sons, Ltd.     

International ambidexterity and firm performance in small emerging economies

Conventional IB theories stress the importance and implications of a firm's exploitative strategy. However, the unprecedented competitive nature of contemporary business necessitates firm “ambidexterity” — the simultaneous execution of exploitation and exploration activities. Using balanced panel data of 207 Taiwanese firms spanning six years, this research examines the effects of international ambidexterity on firm performance. Findings reveal that ambidexterity promotes a firm's performance. For firms from small emerging economies, international ambidexterity is highly vulnerable to environmental complexity and sensitive to previous international experience and the firm's capability to conduct international business. These factors significantly moderate firm performance.     

Aggregate Australian Takeovers: A Review of Markov Regime Switching Models

This article reviews the case of modeling merger waves in the Australian market for the period 1972–2004. Three Markov switching models are examined, the Gaussian AR(1), Poisson AR(1), and State‐Space autoregressive moving average (ARMA) (1,1), to find which gives the best fit. The State‐Space Markov switching ARMA(1,1) model is found to be the best for describing Australian takeover activity as estimation results based on it have a lower Bayesian information criterion score than the other two models. Each model's ability to predict a ‘wave’ is then tested by including its estimated probability in a macroeconomic model to explain merger activity. The State‐Space model also performs better because the inclusion of its estimated probability substantially increases the explanatory power of the regression model (measured by the regression adjusted R²). In addition, it predicted a takeover wave in 2009, which was closer to the actual incidents of takeover activity in the market at that time than the predictions of the other two models. The results are robust when the measure of takeover activity is changed from the number of takeover bids to the proportion of takeover bids relatively to the number of exchange‐listed companies. JEL classification: G34, C32.     

Consequences of Riding Takeover Waves: Australian Evidence

This paper uses Australian data to analyze takeover bid premiums and long‐term abnormal returns for mergers that occur during wave and non‐wave periods. Findings reveal that bid premiums are slightly lower in wave periods, and bidding firms earn normal post‐takeover returns (relative to a portfolio of firms matched on size and survival) if their bids were made in non‐wave periods. However, bidders who announced their takeover bids during wave periods exhibit significant underperformance. For mergers that took place within waves, there is no difference in bid premiums nor is there a difference in the long‐run returns of bidders involved during the first half and second half of the waves. We find that none of prominent theories of merger waves (managerial, misvaluation, and neoclassical) can fully account for Australian takeover waves and their effects. Instead, our results suggest that Banal‐Estanol et al.'s screening theory of merger activity, by combining the misvaluation and neoclassical theories, may provide a better explanation.