Restructuring of the Hungarian Electricity Industry

Restructuring the monopolistic, state-owned, obsolete and polluting utility industries of post-socialist economies poses a challenge for the utility deregulation wave travelling around the world. Utility restructuring in the Central and Eastern Europe (CEE) region is unique from several perspectives, including the domination of foreign capital vs. national resources as the only feasible vehicle for a drastic change in the industry and the ambitious goals of harmonisation with the EU liberalisation schedule to accelerate accession. It is also widely expected that deregulation will help bring down world-record high energy intensities in these economies. Hungary has been the pioneer among economies in transition in unbundling, deregulating and privatising the utility industries and taking the first steps towards EU-conforming market liberalisation within less than half a decade. The first stages of privatisation and restructuring have been declared a success story in the Western media. However, what is a success story from a foreign perspective may be seen differently from other viewpoints. The article describes the process of utility restructuring in Hungary and examines its impact from the economic, environmental and policy perspectives. The article also compares the pioneer Hungarian deregulation with other CEE countries' restructuring of their energy sectors. However, the lessons to be learned from the Hungarian electricity industry restructuring are not only vital for other economies in transition but are often universally applicable.     

Examination of the effects of the relationship marketing orientation on the company performance

The research objective is to examine empirically the relationship marketing and its successful implementation in Turkish Beverage Companies. Three scales were used to generate the data. Relationship marketing scale, environmental factors scale and company performance scale. Some of the variables in questionnaire used as control variables that reflect company-specific characters namely, company size, business type and sales volume. First the main effect of relationship marketing orientation on company performance was assessed, and then the moderating effect of environmental factors on the relationship between relationship marketing orientation and company performance was estimated by using multivariate techniques.     

Determinants of state equity ownership,and its effect on value/performance: China's privatized firms

Evidence on the relationship between state ownership and performance in China's privatized firms is convex, concave and linear. Hence, the nature of this relationship is not resolved. This study examines this relationship for a larger, more recent sample of 4315 firm year observations of privatized Chinese firms during 1996–2003. Results support the hypothesis of a convex relationship between state ownership and performance showing benefits from strong privatization and state control. Not only is ownership structure found to affect performance, but also ownership concentration and balance of power jointly affect performance. Chinese firms with mixed control show significantly poorer performance than state or private controlled firms affirming the problem of ambiguity of ownership control, property rights, agency issues, profits and welfare objectives. New determinants of state ownership in China's firms are strategic importance, legal ownership, profitability, and market performance. Privatization benefits because there is a causal relation between ownership and performance.     

Informal Institutional Arrangements in Credit,Land Markets and Infrastructure Delivery in Trinidad

Informal institutional arrangements, permeating both formal and informal housing settlements, allow markets to function in developing countries. Yet their economic, social and policy impacts are largely unexamined. Insights from the new institutional economics literature are used to show the significance of informal institutional arrangements in credit, land markets and infrastructure delivery. The analysis is grounded in the experience of Trinidad and Tobago, with empirical information drawn from fieldwork research done in 1993 and 1997. Research findings show that informal institutions of cooperation (e.g. sou‐sou, CBOs) support transactions by reducing transaction costs, by lowering risk and by providing mechanisms to cope with uncertainty. They are therefore used instead of formal institutions. Policy‐makers should expect intense utilization of such locally designed institutions that use social capital in the process of land and housing market reform in developing countries. Ce sont les arrangements institutionnels informels, organisent l'habitat officiel et officieux, qui donnent aux marchés la possibilité de fonctionner dans les pays en voie de développement. Néanmoins leur impact économique, social et politique n'ont généralement pas été examinés. J'utilise des outils provenant des travaux sur l'économie neo‐institutionaliste pour démontrer la signification des arrangements institutionnels officieux pour le crédit, les marchés agraires et la distribution des infrastructures. L'analyse est basée sur l'expérience de Trinidad et Tobago, et l'information empirique provient d'une recherche de terrain faite entre 1993 et 1997. Les résultats montrent que les institutions officieuses de coopération (par exemple sou‐sou, CBOs) supportent les transactions en réduisant leurs coûts, en abaissant les risques, et en fournissant des mécanismes pour faire face à l'incertitude. Elles sont donc utilisées à la place des institutions officielles. Les politiciens peuvent s'attendre à une utilisation intense de telles institutions désignées localement et qui utilisent le capital social dans le processus de réformes du marché agraire et du logement dans les pays en voie de développement.     

Trust Me! I am a European Central Banker

In the aftermath of the financial crisis, the European Central Bank (ECB) has experienced an unprecedented deterioration in the level of trust. This raises the question as to what factors determine trust in central banking. We use a unique cross‐country data set that includes a rich set of socioeconomic characteristics and supplement it with variables meant to reflect a country's macroeconomic condition. We find that besides individual socioeconomic characteristics, macroeconomic conditions play a crucial role in the trust‐building process. Our results suggest that agents are boundedly rational in the trust‐building process and that current ECB market operations may even be beneficial for trust in the ECB in the long run.     

Delineating Foreign Market Potential: A Tool for International Market Selection

International expansion is becoming more imperative in today's marketplace. However, determining which markets best suit a specific company is not a straightforward task. This study tackles the question of how managers should go about identifying, evaluating, and selecting foreign markets. For this purpose, we propose a practical, flexible, and forward‐looking three‐stage template for assessing foreign market opportunities and identifying the most promising international markets. The three stages include determining country responsiveness for a specific industry, estimating future industry growth, and incorporating an industry‐relevant aggregate measure. The study illustrates the tool for three companies from various industries and discusses the implications. The proposed tool offers insights on crucial dimensions for the industry‐specific market potential, and assists managers in identifying favorable foreign markets. This study also addresses the gap in the international market selection literature by developing a new empirical tool for foreign market analysis and selection using longitudinal secondary data. © 2015 Wiley Periodicals, Inc.     

The “Boston” school-choice mechanism: an axiomatic approach

The Boston mechanism is a popular student-placement mechanism in school-choice programs around the world. We provide two characterizations of the Boston mechanism. We introduce two new axioms; favoring higher ranks and rank-respecting invariance. A mechanism is the Boston mechanism for some priority if and only if it favors higher ranks and satisfies consistency, resource monotonicity, and rank-respecting invariance. In environments where each type of object has exactly one unit, as in house allocation, a characterization is given by favoring higher ranks, individual rationality, population monotonicity, and rank-respecting invariance.     

Currency total return swaps: valuation and risk factor analysis

Abstract

Currency total return swaps (CTRS) are hybrid derivative instruments that allow us to simultaneously hedge against credit and currency risks. We develop a structural credit risk model to evaluate CTRS premia. An empirical test on a sample of 23,005 price observations from 59 underlying issuers yields an average percentage error of around 10%. This indicates that, beyond interest rate risk, firm-specific factors are major drivers of the variations in the valuation of these instruments. Regression analysis of residuals shows that exchange rate determinants account for up to 40% of model pricing errors, indicating that a currency risk premium affects the CTRS price significantly but only marginally, which confirms the prevalence of credit risk in the pricing of CTRS.     

Private equity leveraged buyouts in European telecoms: The case of Eircom

Highly leveraged buyouts (LBOs) of former state owned telecoms operators by private equity groups have occurred in a number of countries in recent years. This paper examines the case of Eircom in Ireland which has experienced five changes in ownership since full privatisation in 1999, two of which were LBOs. Enormous increases in Eircom’s debt levels as a result of the LBOs resulted in the company’s bankruptcy in 2012. This paper argues that this outcome was largely attributable to the short-termist strategies adopted by the private equity groups that assumed ownership of the enterprise. These strategies included high leverage, cash extraction and underinvestment in the fixed-line network which contributed to the demise of the enterprise and had wider economic and social effects. The Eircom case demonstrates the risks attendant to ownership of important network infrastructure by private equity groups and the need for regulatory safeguards to protect the public interest.     

Hedonic price estimation for the Turkish bread wheat characteristics

This research has been made to assess the effects of the characteristics of bread wheat quality on the prices in the Turkish bread wheat market. A hedonic price model was used to analyze factors affecting the variability in bread wheat prices. Results indicate that prices received by bread wheat producers reflect the presence of basic quality characteristics of bread wheat. According to the research consequences, the hectoliter and sedimentation are the major factors that have the greatest effect and influence on Turkish bread wheat market in respect to the quality aspects. The study shows that the five regions in Turkey, which have been chosen as the research area and are important in bread wheat production, have differences in terms of bread wheat quality characteristics.