The Effect of Junk Bond Defaults on Common Stock Returns

This paper examines the effect of junk bond defaults on common stock returns. The evidence indicates that stockholders uncover the signs of financial distress long before the default date. Stock prices fall sharply at the time of the default announcement. Although stocks of fallen angel sample recover slowly and steadily after the default announcement, stocks of the original-issue junk bond sample continue to decline. On average, bankrupt firms suffer larger negative stock returns than defaulted firms not only at the time of announcement, but also in both pre- and post-event periods.     

Firm Networking and Bribery in China: Assessing Some Potential Negative Consequences of Firm Openness

Economic openness, both in terms of increased international trade exposure and enhanced inter-firm networking, has been a key element of China’s economic emergence since the implementation of market reforms and the “opening-up policy” over 30 years ago. Unfortunately, these changes have also coincided with the increased incidence of bribery and corruption. Both in general, and in the specific context of China, research on the relationship between a firm’s tendency toward openness and its propensity to engage in bribery is scarce. This study seeks to fill this gap based on empirical evidence provided by a large sample of Chinese firms. The findings of the study reveal that firms’ increased networking and openness tend to occur contemporaneously with greater bribery and corruption. We suggest that this may be due to the misuse of guanxi-based networks that coincide with the presence of firms’ open network strategies, heightened by the potential loss of resource and capability heterogeneity (and hence reduced competitive advantages) in the context of openness. We further find that firms paying bribes do so as an attempt to overcome unnecessary bureaucratic processes and ineffective institutional support that might tend to hinder their development.     

Foresight education in Australia—Time for a hybrid model?

This paper revisits the original design parameters of what was a ‘new’ Masters in Strategic Foresight that commenced at Swinburne University in 2001. It explores which of the original purposes and assumptions have stood the test of time over the course of a decade and analyses how the course has evolved, partly through design and partly through necessity. The paper reflects on the primary contribution of the Masters teaching experience and proposes that encouraging the students to develop philosophical ‘literacy’ operated to develop both the practicality of their use of methods and the capacity of their leadership and critical thinking. A secondary contribution reiterates the importance of ‘place’ and the necessity of ‘sufficient time’ for adult development to occur.     

A Comparative Study of the Benefits of Applying Target Cost Contracts Between South Australia and Hong Kong

This article aims to identify and analyze the key benefits of adopting Guaranteed Maximum Price and Target Cost Contracts (GMP/TCC) over and above the traditional lump‐sum contractual arrangement through an empirical questionnaire survey conducted in South Australia and compared with the findings in Hong Kong. The Mann‐Whitney U Test indicated differences in perception between the two groups of respondents on the majority of the identified benefits. The study has provided an in‐depth understanding of the perceived benefits of the GMP/TCC scheme, hence leading to a wider application of those alternative integrated procurement strategies in both regions for reference by the construction community at large.     

Bank Consolidations and Minority Neighborhoods

This paper explores the relationship between neighborhood racial composition and the level of banking services. We use unique census tract-level data on banking services and neighborhood characteristics in Alameda County, California, from points in time before and after the recent wave of bank consolidations to eliminate as well as possible the potential for omitted variables bias that could plague cross-sectional study of the issue. Using a variety of specifications and numerous sensitivity checks, we find that minority neighborhoods (particularly black neighborhoods) are less likely to have banking services, and are more likely to lose services during bank consolidations.     

Telematics: Decision Time for Detroit

With implications for navigation, safety, entertainment and vehicle maintenance as well as regulation and infrastructure investment in roads, telematics has the potential to transform driving more than any other innovation for decades. In the already well-established Asian telematics industry, revenue tends to come from extra charges at the time of vehicle-sale, with most subsequent services provided free. The US model has evolved differently, with much of the cost of telematics hardware and software subsidized in the initial vehicle sale price and revenue coming from services used. The decision to invest in telematics is therefore riskier in the US. This article first briefly summarizes the potential of telematics. It then analyzes the investment risks, particularly for automakers. It concludes with recommendations on how the US auto industry can minimize risk and make the most of the opportunities.     

Canadian Inter-City House Price Differentials

The purpose of this paper is to identify the sources of intercity house price differentials in Canada. The results indicate that demand factors are important explanatory variables; a 1% increase in the income of households raises house prices by 1.11%; higher rates of anticipated inflation result in higher house prices as households increase their demand for real assets such as housing during inflationary periods; and finally, the fraction of households that are non-family households is positively associated with house prices. These results are in agreement with those of other countries.