Inventories,sales uncertainty,and financial strength

We investigate the empirical linkages between sales uncertainty and firms’ inventory investment behavior while controlling for firms’ financial strength. Using large panels of manufacturing firms from several European countries we find that higher sales uncertainty leads to larger stocks of inventories. We also identify an indirect effect of sales uncertainty on inventory accumulation through the financial strength of firms. Our results provide evidence that financial strength mitigates the adverse effects of uncertainty.     

Capitalizing R&D expenses versus disclosing intangible information

We study how to improve the value-relevance of financial information for intangible-intensive firms by investigating two alternatives: capitalizing research and development (R&D) expenses and disclosing intangible information. Using patent counts/citations to proxy for intangible intensity, we find that the incremental value-relevance of disclosing patent counts/citations is greater than that of capitalizing R&D expenses for the high-patent group and vice versa for the low- or medium-patent group. Investors favor the disclosure of patent information for firms with more successful innovations. Since disclosing intangible information may lead to appropriation by rivals, we find that, for the high-patent group, the incremental value-relevance of disclosing patent counts/citations is more pronounced for firms in industries with stronger protection of intellectual property. Overall, our results suggest that disclosing R&D outputs can improve the value-relevance of financial statements for firms rich in intangibles and the incremental benefits of such disclosure will be greater in industries with strong protection of intellectual property.     

Antecedents of Corporate Entrepreneurship in SMEs: Evidence from an Emerging Economy

Corporate entrepreneurship (CE) research has reached a certain degree of consensus around five core internal antecedents that enable CE, but consensus remains focused on large‐sized firms in Western economies. Using institutional theory, we argue that contextual factors may undermine the viability of internal antecedents in emerging economy contexts. Our qualitative study shows that the organization of the internal environments for CE among service sector Kenyan SMEs is much more interactive and complex than currently presented in the literature. Specifically cultural and contextual factors appear to influence the extent to which the antecedents are able to produce CE activity. Our findings provide a more fine‐grained depiction of the internal environment for CE in emerging economy SMEs.     

Implied Risk Aversion Parameter from Option Prices

This paper estimates the representative investor's coefficient of relative risk aversion using option price data. Estimation is carried out using the method of simulated moments. Employing the following assumptions: a) agents have constant proportional risk averse preferences, b) complete markets exist, and c) asset returns are distributed lognormally, an objective function is constructed within the equivalent martingale measure framework. Unlike the case of equity markets, the implied risk aversion parameter from option prices is quite low and stays between zero and one.     

Capacity building challenges in Malawi's local government reform programme

Since the advent of multiparty democracy in June 1994, the Malawi government has embarked on a local government reform programme involving political and administrative decentralisation to promote democratic governance, local development and effective public service delivery. However, the wholesale adoption of the decentralisation process tends to ignore a critical debate on capacity challenges in local government. The main argument is that the success of the reform programme is contingent upon the availability of adequate capacity in local government institutions. Therefore, this article examines the critical contingencies, namely administrative, technical and economic capacity, in the context of local government reform and decentralisation in Malawi. The major conclusion is that capacity problems, including the lack of appropriately trained personnel and a shortage of funds, seriously hamper effective public service delivery. Thus, there is a need for implementing comprehensive capacity building programmes, including training and development, and financial management strategies to attain the desired objectives.     

Hedge Fund Performance and Manager Skill

Using data on the monthly returns of hedge funds during the period January 1990 to August 1998, we estimate six‐factor Jensen alphas for individual hedge funds, employing eight different investment styles. We find that about 25% of the hedge funds earn positive excess returns and that the frequency and magnitude of funds' excess returns differ markedly with investment style. Using six‐factor alphas as a measure of performance, we also analyze performance persistence over 1‐year and 2‐year horizons and find evidence of significant persistence among both winners and losers. These findings, together with our finding that hedge funds that pay managers higher incentive fees also have higher excess returns, are consistent with the view that fund manager skill may be a partial explanation for the positive excess returns earned by hedge funds. © 2001 John Wiley & Sons, Inc. Jrl Fut Mark 21:1003–1028, 2001     

Social movements and globalization

Pierre Hamel, Henri Lustiger‐Thaler and Margit Mayer (eds.) Urban movements in a globalizing world John Guidry, Michael Kennedy and Mayer Zald (eds.) Globalizations and social movements: culture, power, and the transnational public sphere     

Does Real Exchange Rate Volatility Affect Sectoral Trade Flows?

This article investigates empirically the effect of real exchange rate volatility on sectoral bilateral trade flows between the United States and its top 13 trading partners. Our investigation also considers those effects on trade flows that may arise through changes in income volatility and the interaction between income and exchange rate volatilities. We provide evidence that (i) exchange rate volatility does not systematically affect sectoral trade flows, (ii) income volatility has little impact on trade flows, and (iii) the effect of the interaction term on trade flows is opposite that of exchange rate volatility, dampening its impact on trade flows.     

Contractual relationships in family firms： An agency theory interpretation from a managerial perspective

This study examines the contractual relationships from a managerial point of view by a sample of 55 family firms in an industrial zone in Turkey. The results show that the type of contract （i.e., behavior or outcome-based） is not affected by a professional manager＇s tenure, position and his/her education level. It is also presented that the type of contract does empirically not have a relationship with information asymmetry and risk taking/uncertainty in a family firm setting. Furthermore, its relationship to goal conflict and job complexity is weak and negative, which necessarily means that any increase in goal conflict or job complexity requires an outcome-based contract to be written between an owner and a professional manager. Yet, only goal conflict is significant in explaining the type of contract. From the managerial perspective, these findings imply that the agency theory is not suitable for relatively small family firms.