Cross‐border Insolvency Problems: Is the UNCITRAL Model Law the Answer?

This paper examines the impact that the United Nations Commission on International Trade Law (UNCITRAL) Model Law on Cross‐border Insolvency has had on States in the light of the central problems often associated with transnational insolvencies. Despite the accolades that it has received, the Model Law has been adopted in only 19 countries in the last 15 years and that too in many different ways. If the number of adoptees and the rather conditional acceptance of the Model Law's provisions represent a lack of international enthusiasm for adopting the Model Law, what are the reasons for this? The paper concludes by asking whether the UNCITRAL Model Law presently has a future in dealing with cross‐border insolvencies. Copyright © 2012 INSOL International and John Wiley & Sons, Ltd.     

The Timing of Option Repricing

We investigate whether executive stock option repricings are systematically timed to coincide with favorable movements in the company's stock price. For a sample of 236 repricing events, we observe sharp increases in stock price in the 20‐day period following the repricing date. In addition, repricing dates tend to either precede the release of good news or follow the release of bad news in the quarterly earnings announcements. Since information about stock option repricing is not generally released to the public around the repricing date, these findings suggest that CEOs opportunistically manage the timing of the option repricing date.     

A behavioural explanation to the asymmetric volatility phenomenon: Evidence from market volatility index

This study examines how the behavioural explanations, in particular loss aversion, can be used to explain the asymmetric volatility phenomenon by investigating the relationship between stock market returns and changes in investor perceptions of risk measured by the volatility index. We study the behaviour of India volatility index vis‐à‐vis Hong Kong, Australia and UK volatility index, and provide a comprehensive comparative analysis. Using Bai‐Perron test, we identify structural breaks and volatility regimes in the time series of volatility index, and investigate the volatility index‐return relation during high, medium and low volatility periods. Regardless of volatility regimes, we find that volatility index moves in opposite direction in response to stock index returns, and contemporaneous return is the most dominating across the four markets. The negative relation is strongest for UK followed by Australia, Hong Kong and India. Second, volatility index reacts significantly different to positive and negative returns; negative return has higher impact on changes in volatility index than positive return across the markets over full‐sample and sub‐sample periods. The asymmetric effect is stronger in low volatility regime than in high and medium volatility periods for all the markets except UK. The strength of asymmetric effect is strongest for Hong Kong and weakest for India. Finally, negative returns have exponentially increasing effect and positive returns have exponentially decreasing effect on the changes in volatility index.     

International equity portfolio allocations and transaction costs

In spite of the critical role of transaction cost, there are not many papers that explicitly examine its influence on international equity portfolio allocation decisions. Using bilateral cross-country equity portfolio investment data and three direct measures of transaction costs for 36 countries, we provide evidence that markets where transaction costs are lower attract greater equity portfolio investments. The results imply that future research on international equity portfolio diversification cannot afford to ignore the role of transaction costs, and policy makers, especially in emerging markets, will have to reduce transaction costs to attract higher levels of foreign equity portfolio investments.     

Heterogeneity of farm loan packaging term decisions: a finite mixture approach

This article revisits the minority borrowers’ discrimination issue in farm lending by departing from traditional loan approval-rejection or default rate-based analytical models to focus on loan packaging decisions. This study analyses such decisions using a Finite Mixture Model that optimally separates the borrowers into two sub-classes allowing for a priori unspecified heterogeneity in borrowers’ data, which has not been accounted for in previous loan discrimination analyses. Results show that non-white farm borrowers tend to receive larger loans among those in the lower loan latent class, but receive relatively lower loans in the larger loans borrower category. These farmers are also charged higher interest rates vis-à-vis their peers in both the low and high interest rate latent classes. This study’s results also indicate that male borrowers are accommodated with larger loans and longer maturities in all loan amount and maturity latent classes. This study validates the interplay among significant trends in loan packaging terms for racial and gender minority borrowers that seems logical from the lenders’ credit risk management perspective.     

Adoption of performance-vested equity incentives under investor pressure: window dressing or taking the window of opportunity?

Review of Quantitative Finance and Accounting - Companies are increasingly adopting performance-vested equity compensation plans while the performance consequences are not clear. In this paper, we...     

Volatility–volume causality across single stock spot–futures markets in India

This study examines the causal relationships between volatility and volume across spot and futures market for the 50 constituent stocks of the CNX NIFTY Index. Granger non-causality tests implemented using vector autoregression (VAR) and asymmetric VAR models indicate the presence of significant causal relations from both the spot and futures volume to both the spot and futures volatility. Bidirectional causal relationships between spot and futures volume were observed for almost all stocks but few stocks displayed a similar relationship between volatilities. The results highlight the importance of volume in absorbing information and its behaviour as the conduit of information.     

Country-specific equity market characteristics and foreign equity portfolio allocation

Do country-specific equity market characteristics explain variations in foreign equity portfolio allocation? We study this question using comprehensive foreign equity portfolio holdings data and different measures of country-specific equity market factors for 36 host countries. Employing panel data econometric estimations, our investigation shows that foreign investors prefer to invest more in larger and highly visible developed markets which are more liquid, exhibit a higher degree of market efficiency and have lower trading costs. The findings imply that by improving the preconditions necessary for well-functioning capital markets, policymakers should be able to attract higher levels of foreign equity portfolio investments.     

Diversification in Indian Agriculture toward High‐Value Crops: The Role of Small Farmers

Diversification by small farmers toward high‐value crops (fruits and vegetables [F & V]) that can raise farm incomes significantly has always been in question because of several reasons such as diseconomies of scale and lack of access to inputs such as capital and information. We present evidence that in India diversification toward high‐value crops exhibits a pro‐smallholder (rather than anti‐smallholder) bias. The smallholders however play a proportionally larger role in vegetables than in fruits cultivation. These patterns are consistent with simple comparative advantage‐based production choices. Even with small landholdings if labor endowments are high, such farmers diversify toward F & V. Though fruits cultivation is also labor intensive relative to cereals, it is less so relative to vegetables. Greater capital intensity implies a comparatively important role of credit in fruits. The results are robust to several tests on specification including those related to self‐selection. Chez les petits exploitants agricoles, la diversification en faveur de cultures à valeur élevée (fruits et légumes) permettant d’accroître considérablement le revenu agricole a toujours été remise en question pour diverses raisons, notamment les déséconomies d’échelle et le manque d’accès aux intrants comme le capital et l’information. Dans le présent article, nous montrons qu’en Inde, la diversification en faveur de cultures à valeur élevée semble plutôt favorable que défavorable aux petits exploitants agricoles. Toutefois, les petits exploitants sont proportionnellement plus présents dans la culture maraîchère que dans la culture fruitière. Ces observations concordent avec les choix d’une production fondée sur les avantages comparatifs. Même dans le cas des petites exploitations, lorsque les besoins de main‐d’?uvre sont élevés, elles se tournent vers les cultures fruitière et maraîchère. Bien que la culture fruitière soit une activitéà forte intensité de main‐d’?uvre comparativement à la culture céréalière, elle l’est moins que la culture maraîchère. L’intensité de capital élevée de la culture fruitière signifie que le crédit joue aussi un rôle important. Les résultats de plusieurs tests de spécification sont robustes, y compris ceux liés à l’auto‐sélection.     

Strategically employing natural channels in an emerging market

In an era in which the cost efficiencies associated with standardization tend to be the dynamic force that drives international strategy, the growing movement toward understanding and adapting to natural channels of distribution appears to be an anomaly. The authors explore the natural channel phenomena—i.e., the local or national channel that has evolved within a market—within the context of U.S. multinational operations in the emerging market of India. Twenty‐two in‐depth interviews conducted with U.S. multinational international marketing managers engaged in distribution operations in India guide the exploration of the internal and external factors influencing channel strategy. The interviews provide validity for the natural channel model put forth by Griffith and Ryans (1995) while substantially advancing theoretical and managerial insights into the importance of factors influencing distribution. Finally, strategic distribution approaches employed by U.S. multinationals to effectively operate in India are presented. Insights for academics and practitioners are addressed. © 2005 Wiley Periodicals, Inc.