The influence of managerial discretion,innovation and uncertainty on export intensity: A real options perspective

Geographic sales diversification (i.e., exports) is a multidimensional phenomenon that has primarily been examined using a single theoretical perspective drawn from international trade or organizational strategy. This study uses managerial discretion, real options, and innovation literatures to examine the roles of managers, context, and environment in motivating geographic sales diversification. We contribute to the international business and organizational strategy literatures by highlighting how the combination of managerial discretion, capacity to offer innovative products, and uncertainty can motivate export-driven internationalization.     

China’s business network structure during institutional transitions

This study adopted a structural approach to examine the formation and characteristics of Chinese business networks via interlocking directorates during a stage in China’s institutional transitions. Analyses of the network structures of 949 listed companies revealed that: (1) Chinese business networks were smaller in scale and lower in density than their Western counterparts; (2) no nationwide network with a dominant center existed; (3) interlock occurred mainly in the form of smaller business groups which tended to be regionally fragmented; (4) ties were more prevalent among industrial peers than with financial institutions; and (5) government ownership was predominant. These findings therefore deepen our understanding about the pattern and extent of business interlock in China. Not only do these findings provide substantive implications to the notion and dimensionality of guanxi, but they also offer inspiration to managers and policy makers by illuminating key characteristics of network structure. Laying these foundations shall pave the way for future research in the structure of Chinese business networks.

From theory to practice: Canadian economists’ contributions to public finance

We survey Canadian economists’ contributions to the field of public finance from the mid‐1980s to 2016. We highlight the development and extension of the models and tools of public economics and the empirical studies that have deepened our understanding of the efficiency and distributional issues over a wide range of public finance issues. We also highlight contributions to the development of policies through commissioned reports and the important role that Canadian institutions—the Canadian Tax Foundation, the think tanks and the federal and provincial departments of finance—have played in shaping tax and fiscal policies.     

Post‐IFRS Revaluation Adjustments and Executive Compensation

International Financial Reporting Standards (IFRS) allow firms to record adjustments (gains or losses) from the revaluation of investment properties in their income statements. After Hong Kong adopted IFRS in 2005, property companies were required to move their revaluation gains and losses (RGL) from equity to income. We find RGL to be a significant determinant of executive compensation in these firms after 2005, but not before. We further find evidence that the RGL‐compensation association is driven by firms with relative weak corporate governance structure, such as firms in which the controlling shareholders own a relatively small percentage of shares, firms in which the controlling shareholders have control rights that exceed ownership rights, and firms that are no longer run by their founders.     

Gaus,Hayek, and the place of civil religion in a free society

In The Order of Public Reason, Gerald Gaus uses Hayekian insights to give a contractarian justification for the specific social rules the rules that comprise the social order of a free people. But in doing so, Gaus inadvertently endorses a kind of skepticism about our ability to justify the institutions that comprise our social order as a whole. The disadvantage of a political theory so pervasively skeptical is that, while contractors can arrive at a series of specific solutions to their social problems, they have no way to assure themselves that their moral nature and their moral practices as a whole are sufficiently sound that the rules they endorse are genuinely morally binding. I argue that this problem can be solved in political practice through the adoption of a civil religion. Civil religions provide narratives and social practices that assure members of free orders that their regimes are good or justified on the whole. In this way, we can introduce the idea of civil religion into contractarian political theory as a social technology for sustaining a free social order.     

The role of cross-listing,foreign ownership and state ownership in dividend policy in an emerging market

In this paper, we investigate if dividend policy is influenced by ownership type. Within the dividend literature, dividends have a signaling role regarding agency costs, such that dividends may diminish insider conflicts (reduce free cash flow) or may be used to extract cash from firms (tunneling effect) – which could be predominant in emerging markets. We expect firms with foreign ownership and those that are listed in overseas markets to have different dividend policies and practices than those that are not, and firms with more state ownership and less individual ownership to be more likely to pay cash dividends and less likely to pay stock dividends. Using firms from an emerging economy (China), we examine whether these effects exist in corporate dividend policy and practice. We find that both foreign ownership and cross-listing have significant negative effects on cash dividends, consistent with the signaling effect and the notion of reduced tunneling activities for firms with the ability to raise capital from outside of China. Consistent with the tunneling effect, we find that firms with higher state ownership tend to pay higher cash dividends and lower stock dividends, while the opposite is true for public (individual) ownership. Further analysis shows that foreign ownership mediates the effect of state ownership on dividend policy. Our results have significant implications for researchers, investors, policy makers and regulators in emerging markets.     

Investment opportunity set,political connection and business policies of private enterprises in China

The main purpose of this paper is to examine the factors that determine the business policies of private enterprises in the People’s Republic of China. Little is known about these private enterprises although these are surpassing the state-owned enterprises to become the most important corporate sector in China. The phenomenal growths of these enterprises provide an interesting setting to study the effect of the investment opportunity set (IOS) on business policies. We also examine how a firm’s political connection, generally believed to be instrumental to a firm’s success in transition economies, affects its business policies. We provide evidence on the importance of these factors in shaping the private firms’ business policies in China. More specifically, our results show that growth firms pay lower dividends, have lower overdue receivables relative to sales, have higher percentage of bonus shares, and are more likely to engage in joint ventures. In addition, firms with better political connection are able to borrow more, are more likely to establish a board of directors, and are more likely to acquire SOEs. These results have policy implications with regard to private enterprises in transitional economies in general and those in China in particular.     

Spatial random utility model with an application to recreation demand

The paper examines the relevance of unobserved spatial dependence between individual decision-makers in the analysis of discrete choices. To incorporate spatial interdependencies in the behavioral analysis, we propose a spatial random utility model of recreation demand. The model combines the set-theoretic concept of spatial neighborhood, endogeneity of spatial interdependencies, and unobservable individual preferences. Our estimation procedure uses an efficient pseudo maximum likelihood estimator. We apply the model to the study of recreational travel demand in Iowa and evaluate the significance of unobserved spatial interdependencies between individual households in recreational travel choices.     

Bank resilience to systemic shocks and the stability of banking systems: Small is beautiful

Utilising a novel empirical approach and an extensive sample of listed European banks, we identify which bank characteristics offer a shelter from systemic shocks and compare the relative effects of several hypothetical prudential rules on a bank’s risk exposure. While the results show that restrictions on a bank’s leverage ratio and the imposition of liquidity requirements, as in the Basel III Accord, may improve the resilience of a bank to systemic events, they also demonstrate that bank size, the share of non-interest income and asset growth (none of which are at the centre of the new regulatory landscape) are key determinants of a bank’s risk exposure. In particular, the introduction of a cap on bank absolute size appears the most effective tool, ceteris paribus, to reduce the default risk of a bank given systemic events. Furthermore, in spite of the integration process of the financial industry in Europe, the analysis presented here shows that such a cap should be country-specific with smaller economies requiring smaller banks. Finally, we show that the strengthening of individual bank stability obtained via size restrictions is accompanied by a reduction of the contribution to systemic risk for banks which are relatively large compared to the domestic economy.