Bank monitoring,managerial ownership and Tobin's Q: an empirical analysis for India

The paper examines how banking relationships and managerial ownership relate to firm valuation. It is argued that both the number of banking relationships (which serves as an external monitoring function) and managerial ownership (which serves as an internal monitoring function) affect firm value, while internal monitoring by managers and external monitoring by banks were viewed as substitutes or complements. After controlling for the effect of exogenous variables, the results reveal the existence of a complementary monitoring effect between banks and the managerial group. On the other hand, the results indicate that increased external monitoring by banks will simultaneously raise the incentive on the part of managers to engage in internal monitoring. Also, firm valuation is found to be a significant determinant of managerial ownership. A disaggregated analysis of firms according to size and leverage suggests the existence of a complementary monitoring effect between banks and managers, except for small‐sized firms. Copyright © 2007 John Wiley & Sons, Ltd.     

Director Compensation and CEO Bargaining Power in REITs

We analyze director compensation for Real Estate Investment Trusts (REITs) and investigate the relations between director compensation and other measures of the board independence and board monitoring. Using 136 REITs in 2001, we find that REITs that pay higher equity-based compensation to their board members are associated with higher financial performance. Our data indicate that board equity-based compensation is positively related to the existence of an independent nomination committee, however, it has no significant relationship with board size, proportion of outside directors, CEO duality and CEO tenure and ownership.

Arbitrage with hedging by forward contracts: exploited and exploitable profits

The theoretical conditions for covered interest arbitrage and exploitable profit opportunities out of simple and triangular arbitrage in the absence and presence of market imperfection are enunciated. A distinction is made between pure arbitrage profits and arbitrage-induced total profits attainable under the risk-free environment. Operational feasibility of iterative arbitrage is also examined.     

Exchange rate pass-through in Korea and Thailand: Trends and determinants

An important but age-old transmission channel of global factors into domestic prices is via exchange rate movements. This paper examines the extent and evolution of exchange rate pass-through (ERPT) into Korea's and Thailand's consumer and import prices at the aggregate level for the period over the last two decades. We find that ERPT appears to be consistently higher for Thailand compared to Korea; while for both nations ERPT of their respective bilateral rates with respect to the US dollar is higher than with respect to the Japanese yen. The paper also investigates if and how ERPT has changed over time, especially during and after the currency crisis period of 1997–1998, as well as its macroeconomic determinants.     

Cross‐border Economic Activities,Human Capital and Efficiency: A Stochastic Frontier Analysis for OECD Countries

We study the growth effects of outward‐ori,ented econ,o,mies by using sto,chas,tic fron,tier anal,y,sis to mea,sure the effi,ciency exter,nal,i,ties of three forms of eco,n,omic cross‐bor,der activ,i,ties – inter,na,tional trade, for,eign direct invest,ment (FDI) and migra,tion – for OECD coun,tries. The study also exam,ines whether the effi,ciency of these cross‐bor,der activ,i,ties is affected by the level of human cap,i,tal in the host coun,try. We find that inter,na,tional trade and FDI are impor,tant chan,nels for improv,ing effi,ciency, as is human cap,i,tal accu,mu,la,tion, and that the positive effects of inter,na,tional trade, FDI, and migra,tion depend cru,cially on the level of accu,mu,lated human cap,i,tal. Our results show that the impact of human cap,i,tal is impor,tant for increas,ing effi,ciency via inter,na,tional trade flows and FDI flows, while immi,gra,tion into coun,tries that are richer in human cap,i,tal enhances their effi,ciency rel,a,tively more than immi,gra,tion into coun,tries with lower human cap,i,tal. These results remain robust to alter,nate mea,sures of human cap,i,tal, con,trols on edu,ca,tion lev,els among immi,grants, and to a non‐para,met,ric esti,ma,tion of the model.