Existence of Unsolicited Ratings

Rating agencies provide unsolicited ratings voluntarily without the borrowers’ consent. Therefore, the agencies do not get paid for this service. While, supporters of unsolicited ratings argue that voluntary disclosure is done to build reputation, those opposing this practice argue that this leads to financial blackmail. In this paper, we build a model that addresses these issues. We identify the scenarios where rating agencies will provide unsolicited ratings. Finally, we find the welfare effect of unsolicited ratings and suggest policy implications.      

Growth via Intellectual Property Rights Versus Gendered Inequity in Emerging Economies: An Ethical Dilemma for International Business

In this paper, we critique the emergent international normative framework of growth – the knowledge economy. We point out that the standardized character of knowledge economy’s flagship – intellectual property rights (IPRs) – has an adverse impact on women in emerging economies, such as India. Conversely, this impact on women, a significant consumer segment, has a feedback effect in terms of market growth. Conceptually, we analyze the consequences of knowledge economy and standardized IPR through a feminist lens. We extend the analyses by pointing to various contradictions surrounding growth norms; for example, there are inherent contradictions between established “formal” legalistic interpretation of IPR, “soft law” norms of corporate social responsibility, a fluid situation of moral claims of human rights, and different institutional capabilities at the international and domestic level. Consequently, we are able to demonstrate how standard IPR laws fail to deliver equity for all. We argue our case through exploring the growth aspects of the agricultural sector in India and the adverse impact of standard biopatenting on women farmers’ rights (as producers and consumers) and preservation of environment. We suggest that desired gendered equity is better achieved when there is a constellation of actors – private-sector business, the state, and civil-society leaders – working together to ensure a balanced development through tailoring of IPR to local needs.     

Impact of Regional Economic Integration in East Asia

The current study evaluates the economy wide impact of trade liberalization in the ASEAN region along with China, Japan and Korea (ASEAN + 3) by the year 2020 using the GTAP framework. The study also assesses the environmental impact of the trade liberalization in the region focusing on the seven environmental indicators (CO₂, CH₄, N₂O, BOD, COD, Suspended Solid and Industrial Waste). The result shows that the countries under agreement (ASEAN + 3) will benefit with increased output, expansion of trade and welfare due to trade reforms. Further, the integration will increase the global welfare, although the regions not under agreement in the world will show a decline in output growth. Vietnam will be gaining with the highest output growth among the ASEAN region; however, the impact on the environment would not be favourable. The environmental impact reveals a mixed outcome for participating countries under the agreement. The paper provides useful insight in pursuing greater trade liberalization among the countries under the study.     

Strengthening Stakeholder–Company Relationships Through Mutually Beneficial Corporate Social Responsibility Initiatives

Corporate social responsibility (CSR) continues to gain attention atop the corporate agenda and is by now an important component of the dialogue between companies and their stakeholders. Nevertheless, there is still little guidance as to how companies can implement CSR activity in order to maximize returns to CSR investment. Theorists have identified many company-favoring outcomes of CSR; yet there is a dearth of research on the psychological mechanisms that drive stakeholder responses to CSR activity. Borrowing from the literatures on means-end chains and relationship marketing, we propose a conceptual model that explains how CSR provides individual stakeholders with numerous benefits (functional, psychosocial, and values) and how the type and extent to which a stakeholder derives these benefits from CSR initiatives influences the quality of the relationship between the stakeholder and the company. The paper discusses the implications of these␣insights and highlights a number of areas for future research.     

International market selection and subsidiary performance: A neural network approach

How should multinational enterprises (MNEs) select international markets? We develop a model of international market selection that adds firm-specific advantages and transaction cost considerations to previously explored target market factors based on Dunning's Eclectic Framework. Results obtained using neural network (NN) analysis indicates that our model has strong predictive power in explaining international market selection. Further tests show that firms selecting international markets predicted by the model reported significantly higher subsidiary performance relative to firms whose investments were not predicted by the model. Our results provide strong initial evidence that a firm-level strategic approach to international market selection facilitates MNE success.     

A Stackelberg model of pricing of complementary goods under information asymmetry

We consider a duopoly market where two separate firms offer complementary goods in a leader–follower type move. Each firm has private forecast information about the uncertain market demand and decides whether to share it with the other firm. We show that information sharing would benefit the leader firm but hurt the follower firm as well as the total system if the follower firm shares information unconditionally. We then devise a “simple to implement” information sharing scheme under which both firms and the total system are better off. We also provide several interesting managerial insights and establish the robustness of the model in managing a supply chain through our analytical and simulation results.     

Role of forecast effort on supply chain profitability under various information sharing scenarios

In this paper, we consider a manufacturer who sells a product to a retailer in a single selling season. Each party obtains a forecast of the market demand independent of each other. We study three different forecast scenarios: Non-Information Sharing, Information Sharing, and Retailer Forecasting cases. In the first scenario, both parties make their forecasts, but do not share the information with the other firm. In the second scenario, they share the information with each other, while in the last scenario, only the retailer makes the forecast, and shares it with the manufacturer. Noting that the forecast accuracy comes at a cost, we derive the optimal price and forecast accuracy level for each of the three cases. We then compare the optimal policies of the three cases and derive conditions under which the two parties should share information with each other. Results of extensive numerical experimentation are also presented.     

Sequential estimation problems for the scale parameter of a Pareto distribution

Abstract

The Pareto distribution plays a central role in many areas of econometrics. So, we first consider sequential point estimation problems for the scale parameter of a Pareto distribution. Under a very general loss structure, we derive several asymptotic results regarding the associated “risk” and “regret” functions. Then, we consider the problem of constructing a fixed-ratio confidence interval for the scale parameter, and we propose various sampling techniques to achieve the intended goal. Most of our theoretical findings are asymptotic in nature for either problem, and thus we have presented extensive simulation studies to examine moderate sample performances of all the procedures. The findings in the point estimation problem are also supposed to fill many important gaps left in the paper of Wang (1973).     

On the performance of the ordinary least squares method under an error component model

Starting from the one-dimensional results by Wang et al (1994) we consider the performance of the ordinary least squares estimator in comparison to the best linear unbiased estimator under an error component model with random effects in units and time. Upper bounds are derived for the first-order approximation to the difference between both estimators and for the spectral norm of the difference between their dispersion matrices.     

When Are Investors Rational?

Taking our cue from certain recent advances in experimental psychology, the authors propose a plausible theory of conflict between rationality and inherent behavioral biases of investors. In this theory no investor is fully rational or fully behavioral at all times. An investor faces a continuum between behavioral and rational positions. A movement toward rationality is a choice; it is costly to be fully rational which requires serious mental calculations. On the other hand, there could be some benefits to rationality in special circumstances that compensate for the costs. Using a unique and extensive investor-level database, the authors show that the degree of nonrationality decreases as rational behavior becomes more attractive. In the empirical setting, the proxy for rational behavior is investor's use of private predisclosure information during earnings announcement periods, while the disposition effect they display serves as an estimate of their behavioral bias. The paper contributes to the existing literature in several dimensions.