Disharmony in international accounting standards setting: The Chinese approach to accounting for business combinations

The paper addresses two distinct aspects of disharmony in international accounting standards setting. The first aspect relates to the political economic context of financial accounting standards. This is illustrated by the Chinese standards setters’ decision to allow the pooling of interests method of accounting for business combinations despite the prohibition of this method by both the FASB and the IASB. This decision by the Chinese standards setters appears to have been based on political economic factors related to the need for industrial reorganization in China rather than a desire to serve the needs of global capital markets. The second aspect of disharmony relates to the role played by differential understandings of the fundamental objectives of financial reporting in an international context. The IASB's goal of producing one set of global accounting standards to serve the needs of global capital markets has led to a reduction in the number of permissible accounting methods and a move towards the fair value accounting model. In particular, the IASB concluded that the acquisition method of accounting for business combinations should be the only method allowed for business combinations. In contrast, the Chinese standards setters have recognized the existence of both mergers and acquisitions, and in response they created two different methods of accounting for business combinations. Effectively, the Chinese standards setters developed an alternative approach to accounting for business combinations which challenges the IASB's goal of achieving international accounting convergence through the fair value model.     

Changes in Russian managerial values: a test of the convergence hypothesis?

This paper considers how Russian managerial values are developing in the context of the sweeping economic, political and social changes associated with the transition of Russia to a market economy.

By replicating earlier research (Holt et al., ; Ralston et al., ), it was possible to overcome the weaknesses of previous cross-sectional studies by tracking changes in Russian managers' values over time.

The paper concludes that some convergence between the values of Russian and US managers can be observed, but that the form of this convergence is not uniform. In addition, the way in which Russian managers act upon these values in the context of their own national context means that considerable divergence in managerial behaviour is still evident. Implications for international human resource management are discussed.     

Gas transportation, geopolitics and future market structure

Recent studies have shown the important role of geography, politics and technology for the evolution of markets for natural gas. Gas market differs from other markets due to high share of transport and infrastructure costs. Since investment is location specific, it involves also geopolitical aspects as a consequence. Future market structure becomes path dependent on the investment decisions, particularly in gas infrastructure (pipelines and LNG). Another important aspect that shapes future gas market is heterogeneity in reserve-production ratios across gas producing countries that will eventually lead to the emergence of narrow oligopoly formed by countries with the largest reserves: Russia, Iran and Qatar. The goal of this paper is to analyse a long run gas game. There exist several time scales, and by backward induction we arrive at the conclusion that some time during the 21st century (we name it long run) there will be an oligopoly consisting of only three major gas reserve holders: Russia (26%), Iran (15%) and Qatar (14%). They will face the demand from three major gas importers: EU, USA and Core Asia. While the development paths and market structures are highly uncertain in the middle run (when temporal competition with rivals having 3% or less of gas reserves is feasible), the cloud of uncertainty shrinks in the long run. But investment strategies of major players in the middle run will determine the topology of gas infrastructure in the long run. All the players have a vector of strategic choices where geography, politics and technology set their limitations. Putting it in a simple formal framework, we can say that players choose: intensity of exploitation and shares of investment in transport infrastructure (LNG and location-specific pipelines). Geographical analysis of gas fields of Russia shows that it has moderate flexibility, but still can control the future share of LNG and pipeline flows to Europe and Asia. Pipelines to EU are slightly preferred to pipelines to Asia but political aspects may play crucial role. Qatar is likely to invest only in LNG, but has the flexibility in the speed of its field exploitation (it may be lower that for Russia). Iran has the highest technological and geographical freedom in choices. Future market structures for gas can vary from oligopolistic to monopolistic–monopsonistic relationship, with possibly different prices.     

How Did the Dollar Peg Fail in Asia?

In this paper, we have constructed a theoretical model in which the Asian firm maximizes its profit, competing with the Japanese and the U.S. firms in their markets. The duopoly model is used to determine export prices and volumes in response to the exchange rate fluctuations vis-à-vis the Japanese yen and the U.S. dollar. Then, the optimal basket weight that would minimize the fluctuation of the growth rate of trade balance was derived. These are the novel features of our model. The export price equation and export volume equation are estimated for several Asian countries for the sample period from 1981 to 1996. Results are generally reasonable. The optimal currency weights for the yen and the U.S. dollar are derived and compared with actual weights that had been adopted before the currency crisis of 1997. For all countries in the sample, it is shown that the optimal weight of the yen is significantly higher than the actual weight.J. Japan. Int. Econ.,Dec. 1998,12(4), pp. 256–304. Institute of Economic Research, Hitotsubashi University, Kunitachi, Tokyo 186, Japan; Department of Commerce, Hitotsubashi University, Kunitachi, Tokyo 186, Japan; Department of Commerce, Takachiho University, Suginami, Tokyo 168, Japan.Copyright 1998 Academic Press.Journal of Economic LiteratureClassification Numbers F31, F33, O11.     

Semi-Static Hedging Based on a Generalized Reflection Principle on a Multi Dimensional Brownian Motion

On a multi-assets Black-Scholes economy, we introduce a class of barrier options, where the knock-out boundary is a cone. In this model we apply a generalized reflection principle in a context of the finite reflection group acting on a Euclidean space to give a valuation formula and the semi-static hedge. The result is a multi-dimensional generalization of the put-call symmetry by Bowie and Carr (Risk (7):45–49, 1994), Carr and Chou (Risk 10(9):139–145, 1997), etc. The important implication of our result is that with a given volatility matrix structure of the multi-assets, one can design a multi-barrier option and a system of plain options, with the latter the former is statically hedged.     

On the law of one price

We consider the standard discrete-time model of a frictionless financial market and show that the law of one price holds if and only if there exists a martingale density process with strictly positive initial value. In contrast to the classical no-arbitrage criteria, this density process may change its sign. We also give an application to the CAPM.Received: November 2003, Mathematics Subject Classification (2000): 60G44JEL Classification: G13, G11Freddy Delbaen: This research was done during the stay of the author at Université de Franche-Comté.