A reply to Randall E. LaSalle: “The civil justice system and going-concern audit reports: Comments on ‘Auditors’ decision-making under going-concern uncertainties in low litigation-risk environments: Evidence from Hong Kong’ ”

In a dissent from the conclusion reached in Lam and Mensah [Lam, K, Mensah, Y.M., 2006. Auditors’ decision-making under going-concern uncertainties in low Litigation-risk environments: Evidence from Hong Kong. Journal of Accounting and Public Policy, 25 (6), 706–739], Lasalle has proposed a number of alternative plausible explanations for our findings that Hong Kong auditors issued disclaimer of opinions in a manner associated with the eventual outcome to the clients. We examine these explanations and attempt to relate them to relevant empirical evidence in the literature. We find that none of his plausible explanations is consistent with the limited empirical evidence available. Thus, we continue to believe that a high litigation-risk environment is not a necessary pre-requisite for high quality audits.     

A Two-Factor Model for Stochastic Mortality with Parameter Uncertainty: Theory and Calibration

In this article, we consider the evolution of the post‐age‐60 mortality curve in the United Kingdom and its impact on the pricing of the risk associated with aggregate mortality improvements over time: so‐called longevity risk. We introduce a two‐factor stochastic model for the development of this curve through time. The first factor affects mortality‐rate dynamics at all ages in the same way, whereas the second factor affects mortality‐rate dynamics at higher ages much more than at lower ages. The article then examines the pricing of longevity bonds with different terms to maturity referenced to different cohorts. We find that longevity risk over relatively short time horizons is very low, but at horizons in excess of ten years it begins to pick up very rapidly. A key component of the article is the proposal and development of a method for calculating the market risk‐adjusted price of a longevity bond. The proposed adjustment includes not just an allowance for the underlying stochastic mortality, but also makes an allowance for parameter risk. We utilize the pricing information contained in the November 2004 European Investment Bank longevity bond to make inferences about the likely market prices of the risks in the model. Based on these, we investigate how future issues might be priced to ensure an absence of arbitrage between bonds with different characteristics.     

Eliciting information about the values of HRM practitioners using laddering interviews

This paper reports on the findings of the first stage of a research project that experiments with the use of laddering technique in an attempt to enhance understanding of the influence of values in the behaviour of HRM professionals. Laddering has been chosen because it allows flexible, systematic investigation of aspects of ethics and people management which have hitherto been difficult to clarify. It also provides the opportunity to undertake both qualitative and quantitative analysis of the data obtained. The research design incorporates two phases – a questionnaire and a laddering interview; it involves a sample of respondents drawn from HRM practitioners participating in the CIPD Professional Qualification Scheme. In comparing the results obtained from each phase of the research, it is clear that the laddering interviews have enabled more detailed information to be elicited and more specific goals to be identified. The authors believe that laddering can provide valuable additional insight into ethical practice, behaviour and goals.     

Economic determinants of the correlation structure across international equity markets

This study investigates whether, how, and why the matrix of correlations across international equity markets changes over time. A theoretical model is proposed to specify potential economic determinants of this correlation structure. The empirical validity of this economic model is investigated by employing daily returns for different national stock indexes, from 1972 through 1993, to construct a quarterly time series of the correlation matrix. This quarterly time series is used to investigate the stability of the correlation matrix over time, and to estimate the economic model. The model is then applied to generate out-of-sample forecasts of the correlation structure.Keywords: International market integrationJEL classification: F36, G15.     

Returns to basic skills in central and eastern Europe

This article uses semi-parametric econometric techniques to investigate the relationship between basic skills and earnings in three post-communist countries: the Czech Republic, Hungary and Slovenia, using the International Adult Literacy Survey dataset. It finds that including a measure of basic skills in a Mincer model reduces the returns to education. In addition, using a partially linear model, in which log earnings is linear in education but is an arbitrary function of basic skills, it finds that this relationship is not well described by the common assumption of linearity at the tails of the distribution.     

迪士尼很中国

迪士尼的影片进入中国已经数年，但在中国成立公司刚刚5年，这5年，迪士尼的中国业务年复合增长率有望超过40％。     

Ethical Standards for Stockbrokers: Fiduciary or Suitability?

What are the ethical obligations of the sellers of financial products to their customers? Stockbrokers in the U.S. have a legal and ethical requirement to recommend only “suitable” investments to their customers. This is a fairly weak standard. Currently, there are proposals to raise the standard to a fiduciary one in which the recommendations would have to be in the best interests of the clients. Brokers sell solutions to financial problems. Similar to an auto mechanic or a doctor, the product often consists of both the professional advice and its implementation. There are numerous conflicts of interest between brokerage firms and their customers in that the products that pay the highest commissions may not be the best ones for the customers. The societal perspective adds complications, however. Society depends on modern financial markets to raise capital for productive enterprises and to spread risk. Issuers of financial products need distribution channels for their products just like the producers of any other products. Commissions create powerful incentives for the distribution channels, but at the same time produce conflicts of interest—a type of ethical pollution. Just as our society tolerates some pollution as a byproduct of other useful activities, it may be useful to tolerate some of these financial conflicts of interest. The nature of the relationship should govern the ethical standard. Those selling advice, regardless of how they label themselves, should adhere to a best-interest fiduciary standard. More limited relationships should be limited to the mandate involved in the relationship.     

Water wars? Inequalities in the Tigris‐Euphrates river basin

The water resources of the Tigris‐Euphrates basin are contested by its three primary riparians ‐ Turkey, Syria and Iraq. Rapid population growth, inefficient methods of water harvesting and massive water development plans are placing considerable strain on the existing water supply of the basin, and in order to avoid conflict, an effective water‐sharing measure is an immediate necessity. However, owing to a number of geopolitical inequalities among the riparians, Turkey has little need to cooperate, and Iraq and Syria can do little to stop this. Without Turkish cooperation, any water‐sharing arrangement in the region is doomed to fail. Therefore finding incentive for Turkey to participate in negotiations is an exceedingly difficult task, but one that must be considered if a water agreement in the Tigris‐Euphrates Basin is to become a reality.     

When does corporate venture capital add value for new ventures?

New ventures face a trade‐off when considering corporate venture capital (CVC) funding. Corporate investors can provide complementary assets that enhance the commercialization of new venture technologies. However, tight links with a particular corporate investor has drawbacks and may constrain new ventures from accessing complementary assets from diverse sources in an open market. Taking this trade‐off into account, we explore conditions under which CVC funding is beneficial to new ventures. Using a sample of computer, semiconductor, and wireless ventures, we find that CVC funding is particularly beneficial for new ventures when they require specialized complementary assets or operate in uncertain environments. Copyright © 2011 John Wiley & Sons, Ltd.     

How does a Brand Ally Affect Consumer Evaluations of a Focal Brand?

Published research has shown that an alliance with a well‐known, reputable brand can improve quality perceptions of a previously unknown focal brand. Much of this research is based on signaling theory's bonding hypothesis. However, customers face information search costs when evaluating brands with which they may be unfamiliar. The authors contend that, since consumers are self‐interested, they will prefer to realize cost savings for themselves relative to a future conditional opportunity to punish a false signal sender. Three studies show that the effect of brand ally information on quality perceptions of an unfamiliar brand is mediated by perceived risk reduction due to lower information search costs.