Efficiency in the international insurance industry: A cross-country comparison

The purpose of this paper is to provide new empirical evidence on frontier efficiency measurement in the international insurance industry, a topic of great interest in the academic literature during the last several years. A broad efficiency comparison of 6462 insurers from 36 countries is conducted. Different methodologies, countries, organizational forms, and company sizes are compared, considering life and non-life insurers. We find a steady technical and cost efficiency growth in international insurance markets from 2002 to 2006, with large differences across countries. Denmark and Japan have the highest average efficiency, whereas the Philippines is the least efficient. Regarding organizational form, the results are not consistent with the expense preference hypothesis, which claims that mutuals should be less efficient than stocks due to higher agency costs. Only minor variations are found when comparing different frontier efficiency methodologies (data envelopment analysis, stochastic frontier analysis).     

Do foreign institutional investors destabilize China’s A-share markets?

This paper investigates the effect of foreign institutional investors on the stability of Chinese stock markets. Previous literature views this investor group as destabilizing feedback traders. We use the abolition of ownership restrictions on A shares as a natural experiment. There is strong evidence that foreign institutions have a stabilizing effect on Chinese stock markets and contribute to market efficiency. This finding is robust across exchanges, sample periods, size quintiles and alternative model specifications. By contrast, domestic investors appear to engage in positive feedback trading. Our results have important implications for market regulation.     

Evaluating the risk of patent infringement by means of semantic patent analysis: the case of DNA chips

In this paper, we are going to present a method for detecting the risks of patent infringement by evaluating similarities between patent documents on the basis of semantic patent analysis. This approach enables the user to visualize similarities in the contents on a semantic patent map by means of multi‐dimensional scaling. The effectiveness of the semantic patent map has already been demonstrated by Dressler (2006) with regard to patents of seal technology, in which documents are commonly kept short and the extracted contents are concise. This paper will open out to the field of biotechnology, where patents can easily comprise several hundreds of pages. The method presented here conveys an interdisciplinary approach and combines computer‐aided natural language processing with domain‐specific expertise of biochemical processes. This is illustrated by an authentic case of infringement involving two manufacturers of DNA chips. Our experiment will show how the infringement case is visualized on a patent map based on semantic patent analysis. This experiment can be compared with the search for a needle in a haystack, the two competitive patents representing significantly conflicting ‘needles.’ From an approximate number of 4,000 patents in the current US Class 435/6, a set of patents was selected that included the ‘needles’ mentioned. This paper will point out how such mutual interference can be detected by way of semantic patent analysis, and what advice may be given to R&D managers who are faced with the risk of patent infringement.     

Bioenergie im globalen Energiesystem Möglichkeiten und Grenzen

Biomass as a source of energy becomes more and more important world wide. At the same time the demand for food and fodder as well as for renewable raw material is increasing significantly. On this background the goal of this paper is it to discuss based on a presentation of the world wide energy system the potentials of an energy provision from biomass and to discuss these potentials within the context of the dimensions of the global energy system. Based on these data statements are made under which circumstances the contribution of biomass within the energy system can be increased.     

Economics at the FTC: Office Supply Retailers Redux,Healthcare Quality Efficiencies Analysis,and Litigation of an Alleged Get-Rich-Quick Scheme

We discuss in this essay three of the matters on which economists in the Bureau of Economics (BE) at the Federal Trade Commission have worked this past year. BE revisited familiar ground in the first matter, a proposed merger of office supply retailers. The second part of the essay considers efficiency claims in health care mergers, with focus on the acquisition of a physician group by a health care system in Idaho. The final part of the essay discusses empirical work that was undertaken by the Bureau to investigate claims made by marketers of an alleged get-rich-quick scheme.     

The term structures of equity and interest rates

This paper proposes a dynamic risk-based model capable of jointly explaining the term structure of interest rates, returns on the aggregate market, and the risk and return characteristics of value and growth stocks. Both the term structure of interest rates and returns on value and growth stocks convey information about how the representative investor values cash flows of different maturities. We model how the representative investor perceives risks of these cash flows by specifying a parsimonious stochastic discount factor for the economy. Shocks to dividend growth, the real interest rate, and expected inflation are priced, but shocks to the price of risk are not. Given reasonable assumptions for dividends and inflation, we show that the model can simultaneously account for the behavior of aggregate stock returns, an upward-sloping yield curve, the failure of the expectations hypothesis, and the poor performance of the capital asset pricing model.     

The innovation catalysts

A few years ago the software development company Intuit realized that it needed a new approach to galvanizing customers. The company's Net Promoter Score was faltering, and customer recommendations of new products were especially disappointing. Intuit decided to hold a two-day, off-site meeting for the company's top 300 managers with a focus on the role of design in innovation. One of the days was dedicated to a program called Design for Delight. The centerpiece of the day was a PowerPoint presentation by Intuit founder Scott Cook, who realized midway through that he was no Steve Jobs: The managers listened dutifully, but there was little energy in the room. By contrast, a subsequent exercise in which the participants worked through a design challenge by creating prototypes, getting feedback, iterating, and refining, had them mesmerized. The eventual result was the creation of a team of nine design-thinking coaches--"innovation catalysts"--from across Intuit who were made available to help any work group create prototypes, run experiments, and learn from customers. The process includes a "painstorm" (to determine the customer's greatest pain point), a "soljam" (to generate and then winnow possible solutions), and a "code-jam" (to write code "good enough" to take to customers within two weeks). Design for Delight has enabled employees throughout Intuit to move from satisfying customers to delighting them.     

Organizational ambidexterity and financial performance in the banking industry: evidence from a developing economy

Journal of Financial Services Marketing - The paper examined the relationship between organizational ambidexterity on the attitude of employees and the financial performance of the banking sector...     

Joint tests of contagion with applications

Joint tests of contagion are derived which are designed to have power where contagion operates simultaneously through coskewness, cokurtosis and covolatility. Finite sample properties of the new tests are evaluated and compared with existing tests of contagion that focus on a single channel. Applying the tests to daily euro zone equity returns from 2005 to 2014 shows that contagion operated mainly through higher order moment channels during the GFC and the European debt crisis, which were not necessarily detected by traditional tests based on correlations. The empirical results have important implications for pricing risk and constructing well diversified portfolios.     

Jensen's alpha and the market‐timing puzzle

Theory predicts that market‐timing activities bias Jensen's alpha (JA). However, empirical studies have failed to find consistent evidence of this bias. We tackle this puzzle in a nested model analysis and show that the bias contains an exogenous market component that is unrelated to market‐timing skill. In a comprehensive empirical analysis of US mutual funds, we find that the timing‐induced bias in JA is mainly driven by this market component, which is uncorrelated with measured timing activities. Measures of total performance that allow for timing activities are virtually identical to JA, even if timing activities are present in the evaluated fund. Hence, we conclude that JA is a sufficient measure of total performance.