Utilization of family-friendly policies in Hong Kong

Employees in Hong Kong, like those in many other industrialized societies, face the competing demands of work and family. Long working hours and the associated problem of work–family conflict is a serious problem for the workforce. Although a number of family-friendly policies, such as the five-day working week, paternal leave and so on, have been introduced, they are not necessarily used to their fullest extent. This paper examines the utilization of family-friendly incentives using a telephone survey of 661 employees in Hong Kong with access to such measures. Its major strength is the use of a well-established model of health care utilization, the Andersen model, to conceptualize the factors associated with the uptake of family-friendly policies. The results indicate that the Andersen model works very well in this context, and further demonstrate that access to family-friendly policies in Hong Kong is not equitable. The study makes a number of significant contributions to the literature on work–life balance and the uptake of supportive measures, and shows that enabling (such as perceived effectiveness) rather than need factors explain most of the variance in such use.     

Configuration of innovation and performance in the service industry: evidence from the Taiwanese hotel industry

This study attempts to state some facts about the importance of innovation in the service economy, and especially the hotel industry by classifying the configurations of innovation in Taiwanese hotels, as well as considering the types of innovation configuration that will maximise performance. Technological innovation, organisational innovation, and human capital innovation may be key sources of innovation. This study classified the configurations of innovation based on several innovation activities with two-step cluster analysis. Numerous empirical findings facilitate improved understanding of the relationship between the configurations of innovation and firm performance in the Taiwanese hotel industry.     

MARKET REACTIONS TO THE PASSAGE OF THE FINANCIAL HOLDING COMPANY ACT IN TAIWAN

Abstract. We examine how financial institutions react to various events surrounding the passage of Taiwan's Financial Holding Company Act in June 2001. Empirical results indicate that the financial system experiences significant abnormal returns along the legislative process. Smaller firms have significantly higher abnormal returns, thus lending no support for the hypothesis that larger firms benefit more from the Act. Further analysis shows that the significance of market value is replaced by a significant securities industry effect, thereby consistent with the observation that Taiwan's securities firms are generally smaller in market values and are potential target firms for financial holding companies.     

Modelling Social Infrastructure and Economic Growth

This paper develops a growth model with a public sector and a human capital sector to explore the impact of social infrastructure on investment in physical capital, the accumulation of skills, output, and consumption. We show that the implications of the model are consistent with the empirical observations of Hall and Jones (1999 ). Economies where government policies and institutions encourage production over diversion have a larger 'stock' of social infrastructure, conditional on population size and sophistication of diversion technologies, which raises output per worker by increasing the extent of participation in market, rather than diversive, activities. The magnitude of these effects depends on economic agents' inherent propensity for rent-seeking. In addition, economies with unstable governments may suffer from an under-provision of social infrastructure and, consequently, have reduced levels of capital and output per worker.     

Information content of credit ratings in pricing of future earnings

This paper examines whether credit ratings convey information about the firm’s future earnings to the capital markets. Using the future earnings response coefficient methodology, we find that the current stock returns of rated firms reflect more future earnings than do the stock returns of non-rated firms. We also find that the market reflect more future earnings in current returns for higher-rated firms. In addition, we present evidence that returns impound future earnings to a greater extent after a ratings initiation or upgrade. We empirically eliminate the possibility that our findings are driven by earnings smoothing, market liquidity or omitted default risk factors associated with ratings. Our results are robust to controlling for potential omitted variables, endogeneity bias, loss versus profit firms, and serial correlation of error terms. Overall, the evidence suggests that credit ratings help disseminate private information to reduce information uncertainty about the firm’s future profitability among market participants.     

Risk aversion and price limits in futures markets

Assuming that a representative trader is risk-neutral, Brennan [1986. Journal of Financial Economics 16, 213–233] shows that price limits, in conjunction with margins, may help reduce the default risk, lower the margin requirement, and decrease the total contract cost. We show that Brennan's result is true only when the trader's degree of risk aversion is low and the precision of additional information about the equilibrium futures price is also low. When the trader either is more risk-averse or can receive precise information, price limits become ineffective in either reducing the default probability, cutting down the margin requirement, or lowering the contract cost.     

The control of game form recognition in experiments: understanding dominant strategy failures in a simple two person “guessing” game

This paper focuses on instructions and procedures as the reasons that subjects fail to behave according to the predictions of game theory in two-person “guessing game” (beauty contest game) experiments. In this game, two individuals simultaneously choose a number between 0 and 100. The winner is the person whose chosen number is the closest to 2/3 of the average of the two numbers. The weakly dominant strategy is zero. Because of the simplicity of the game, the widespread failure of subjects to choose the weakly dominant strategy has been interpreted as evidence of some fundamental inability to behave strategically. By contrast, we find that subjects’ behavior reflects a lack of understanding of the game form, which we define as the relationships between possible choices, outcomes and payoffs. To a surprising degree, subjects seem to have little understanding of the experimental environment in which they are participating. If subjects do not understand the game form, the experimental control needed for testing game theory is lost. The experiments reported here demonstrate that the failure to act strategically is related to how the game is presented. We test how well subjects are able to recognize the game under a variety of different presentations of the game. Some subjects fail to recognize the game form when it is presented abstractly. When the game is transformed into a simple isomorphic game and presented in a familiar context, subjects do choose weakly dominant strategies. While our results confirm the ability of subjects to make strategic decisions, they also emphasize the need to understand the limitations of experimental subjects’ ability to grasp the game as the experimenter intends. Given these limitations, we provide suggestions for better experimental control.     

Is Concentration a Good Idea? Evidence from Active Fund Management

In this paper, we examine whether mutual fund managers in Taiwan produce superior performance through concentrated investment strategy, and find that mutual funds with higher degree of concentration have higher investment performance and lower risk during the period 2001–2009. Moreover, when the degree of industry concentration of fund holdings is higher, there is less impact on stock market performance. However, the premium of the market portfolio has more impact on the performance of funds when there is lower degree of industry concentration. We also find that the stock-picking and market-timing abilities of mutual fund managers result in funds with high degree of industry concentration having more returns and lower risks than the funds with low degree of industry concentration.     

Rational expectations,changing monetary policy rules,and real exchange rate dynamics

This paper reexamines the explanatory power of Taylor rule fundamentals for real exchange rate determination. We assume the agents know the time-varying parameters in central bank policy rules. The empirical results suggest that a monetary policy rule with regime switching is better able to explain the real Deutschemark/dollar exchange rate from 1976 to 1998 compared with a fixed-regime monetary policy rule. The findings show the importance of accounting for the expectation formation effect in changing policy rules as emphasized by the Lucas critique. Ignoring these effects can undermine the value of the rational expectations models.