Monday returns and asset pricing

The seasonal patterns observed on Monday stock returns are still unexplained by different asset pricing models. We attempt to fill this gap in the finance literature by using the Fama-French (Journal of Financial Economics 33:3–56, 1993) risk factors to explain the Monday seasonal. The results in the study show that Monday returns are explained by risk factors such as the market return, the size of the firms, and the book-to-market ratios of firms.     

Why do reits engage in open-market repurchases?

We investigate why real estate investment trusts (REITs) still engage in open-market repurchases given the unique 95 percent payout requirement. We provide evidence that the motivations for REITs to repurchase stocks are different from those of unregulated firms found by the existing literature. Instead of using funds from operations, REITs appear to finance stock repurchases by issuing new debt and/or selling assets and investments. Unlike ordinary corporations, REITs stock repurchases are not motivated by cash distribution, capital structure, and undervalued equity. However, REITs are more likely to buy back stocks when employees own a higher level of stock options. Also, we find that REITs are more likely to buy back stocks when they have a higher institutional ownership and/or inside ownership.     

The Volatility of Foreign Portfolio Investment and the Access to Finance of Small Listed Firms

This paper examines the impact of foreign portfolio investment (FPI) volatility on the access to capital of small listed firms. The volatility of FPI is significantly associated with decreased access to finance for small listed firms only in years when nations are considered less “creditworthy.” Even in these times, however, the benefits of FPI are not completely depleted. These results underscore the significance of both a good financial system that minimizes capital flow volatility and national creditworthiness in inspiring confidence in foreign investors.     

Boardroom Strategizing in Professional Associations: Processual and Institutional Perspectives*

abstract This study examines strategic decision‐making at the boardroom level of two non‐profit professional associations, penetrating directors' strategic orientations, discourse and decisions in their holistic context. In comparison with the predominantly survey and interview based literature on board level strategy behaviour, this study employs a longitudinal complete member researcher, participant observer methodology. Its findings are analysed from an institutional theory perspective and reveal selective championing of strategies by directors, the evaluation of strategic proposals and progress in predominantly financial resource/outcome terms, and directors' attention to navigating strategic initiatives through organizational politics. Also revealed are private sector philosophies imported into the non‐profit boardroom, the predominantly ceremonial role of formal strategic plans, and an informally enacted strategic discourse. This study offers a unique insider view of strategizing at the highest organizational level.     

Effect of investor fear on Australian financial markets

We examine the relationship between changes in the level of investor fear (proxied by the ASX 200 implied volatility index) and Australian financial market returns. We document a statistically significant relationship, across asset classes, where returns decline as investor fear increases. Returns are more sensitive to changes in the level of investor fear during the financial crisis of 2008–2009, when investor fear spikes sharply. Taken together, the results confirm that Australian financial market returns are closely related to prevailing levels of investor fear.     

Rethinking the Role of State-owned Enterprises in China’s Rise

The massive overseas expansion of Chinese state-owned enterprises (SOEs) is a central aspect of China’s ‘rise’ to great-power status. There is significant disagreement, however, over how to interpret SOEs’ role. Are they instruments of Chinese statecraft, being directed purposefully from Beijing as part of a ‘grand strategy’? Or are they relatively autonomous, profit-maximising businesses, their free-wheeling behaviour often undermining Chinese foreign policy? Finding that there is evidence for both theses, we provide a framework to explain this. We propose theorising party-state/SOEs relations using the concepts of state transformation and regulatory statehood. We show that the Chinese state’s fragmentation, decentralisation and internationalisation since the late 1970s has substantially increased SOE autonomy and weakened but also transformed the executive’s control, reconfiguring it towards a regulatory mode of governance. Party-state/SOEs relations are thus characterised not by direct command and control but weak oversight and ongoing struggles within the party-state. We illustrate this using a case study of China Power Investment Corporation and its Myitsone hydropower dam project in Myanmar. Here, a central SOE clearly defied and subverted central regulations, profoundly damaging Sino-Myanmar state-to-state relations. Party-state authorities are now struggling to rein in this and other central SOEs.     

The 21st Century Cures Act: pharmacoeconomic boon or bane?

Barriers to entry in healthcare markets constitute one of the overriding concerns of health economists. The recent enactment of the 21st Century Cures Act in the United States reduces statutory entry barriers to the discovery, development, testing, and licensing of drugs and medical devices. Drug and device makers also see the burdensome and time-consuming requirements of the Food and Drug Administration?s approval process as key barriers to lowering the costs of their products, considering it takes a decade of research amounting to $1 billion just to bring a single drug to the market. Along with novel opportunities for medical product innovation and faster treatment of diseases, the expedited approval process carries with it contentious challenges involving the safety, efficacy and value of drugs and devices. The ensuing trade-offs and unintended consequences of such a regulatory game-changer bring to the fore one of the most enduring debates between medicine and economics: Whether – or to what extent – cost and efficiency factors affect clinical inquiry into possible solutions to human illnesses. The practical and theoretical contributions of pharmacoeconomics should enlighten contemporary and future issues and discussions surrounding the implementation of this landmark legislation. After all, despite its undeniably good intent and far-reaching significance, no law can ever be perfect.     

Information Asymmetries and Risk Management in Healthcare Markets: The U.S. Affordable Care Act in Retrospect

This article critically examines the pertinent issues in ex ante and ex post moral hazard in healthcare markets, with the U.S. Affordable Care Act (ACA) as its focal point of inquiry. First, it compares the various types of information asymmetries resulting from the production, allocation, and utilization of health insurance. Second, it reviews the literature on adverse selection, moral hazard, and risk mitigation against which salient ACA reforms are analyzed. In contrasting conventional moral hazard from an alternative theory of welfare maximization, it suggests that healthcare (over)utilization cannot necessarily be considered wasteful, even if it ends up costing insurers more on a short-term basis. Costs and savings attributable to healthcare spending under the ACA will vary between the consumer, insurer, and regulator-subsidizer. Despite the ambiguities surrounding definitions of “health,” the challenge of containing inefficient moral hazard, and encouraging its desirable counterpart, lies in the tradeoffs that arise between consumer access to affordable and quality healthcare and the market competitiveness of health insurers. The new Trump administration will have to address these tradeoffs in repealing and replacing the ACA, particularly in light of escalating insurance premiums and deductibles, narrower provider networks, and technical implementation issues.     

Patterns of technology life cycles: stochastic analysis based on patent citations

Patent analysis has been considered as an effective means of estimating phases of a technology life cycle. However, previous studies have not considered the dynamic and idiosyncratic aspects of a technology’s progression since they were based on deterministic methods, mainly fitting s- or double s-shaped curves to patent application counts. Moreover, previous methods cannot be executed at the individual patent level. We propose a stochastic technology life cycle analysis to trace the phases of a technology’s progression based on patent citations and identify the patterns of technology life cycles at the individual patent level. At the heart of the proposed approach are a hidden Markov model to estimate the probability of a system being at a certain hidden state from observation and cluster analysis to group a set of objects according to their similarities. A case study of patents about laser technology in lithography is presented.