Small worlds: Modeling attitudes toward sources of uncertainty

We introduce the concept of a conditional small world event domain—an extension of Savage's [The Foundations of Statistics, Wiley, New York, 1954] notion of a ‘small world’—as a self-contained collection of comparable events. Under weak behavioral conditions we demonstrate probabilistic sophistication in any small world event domain without relying on monotonicity or continuity. Probabilistic sophistication within, though not necessarily across, small worlds provides a foundation for modeling a decision maker that has source-dependent risk attitudes. This also helps formalize the idea of source preference and suggests an interpretation of ambiguity aversion, often associated with Ellsberg-type behavior, in terms of comparative risk aversion across small worlds.     

The projective independence axiom

Summary A new axiom for preference orderings over lotteries, called the projective independence axiom, is formulated. Given suitable continuity and monotonicity assumptions, the axiom implies that utility is either in the weighted utility class or is quadratic in probabilities. The betweenness axiom is used to distinguish between these two classes of functions.We gratefully acknowledge the financial support of the National Science Foundation and the Social Sciences and Humanities Research Council of Canada.     

Harmonising European Insolvency Law: The Emerging Role of Stakeholders

In recent years, the European Commission has given increased room for stakeholder involvement in the area of insolvency and restructuring. In revising the European Insolvency Regulation in 2012–2015 and preparing the proposal for a directive on preventive restructuring frameworks 2016, the role and direct influence of stakeholders has been noteworthy. In these efforts, the Commission touched upon a field of law characterised by diverse stakeholders with strongly opposing interests. Following the active involvement of all stakeholders by the Commission, this study examines what relevant stakeholders are, what their positions are with respect to European Union insolvency legislation and what their role has been and can be in legislative processes in the area of insolvency and restructuring. Copyright © 2018 INSOL International and John Wiley & Sons, Ltd.     

Market Behavior of Institutional Investors around Bankruptcy Announcements

This paper examines, using proprietary ASX data containing institutional holdings, if institutional investors exit en mass prior to announcements of financial distress. Evidence indicates that while some institutional investors exit the stock, the withdrawal is gradual, commencing approximately 115 days prior to event. This is driven by active institutional investors reacting to the release of the financially distressed companies’ last publicly released financial reports. There is no significant decline in institutional holdings before announcements; most institutional investors hold financially distressed shares through to failure. There is evidence that the lack of disclosure drives the increase in information asymmetry prior to company failure.     

Output and Productivity Performance of Hong Kong and Singapore's Transport and Communications Sector, 1990 to 2005*

This paper uses the industry of origin approach to analyze value added and labor productivity outcomes arising from progressive liberalization of government and from statutory board control of transport and communications in Singapore. The paper compares these outcomes with those from the market‐orientated, more privatized transport and communications sector in Hong Kong, for the benchmark year 2004 and a review period from 1990 to 2005. The study is among the first to carefully compare labor productivity in specific sectors between the two countries. Although Singapore generally recorded higher levels of labor productivity, there was some catch‐up by Hong Kong in the later part of the review period. There was also substantial variation in labor productivity performance within sectoral branches in the two sectors. The study suggests there is some evidence that the different political–economic structures and policy approaches to deregulation and liberalization played a role in determining productivity performance in the transport and communications sectors in Singapore and Hong Kong. The analysis infers a potential, increasing focus on privatization as the driving force for further liberalization of the transport and communications sector in Singapore.     

The dynamic interactions between hotel room rates and international inbound tourists: Evidence from Singapore

Recognizing the possible existence of mutual interactions between hotel room rates and the number of international inbound tourists, this research note investigates the short-run and the long-run dynamic interactions between these two variables for Singapore. It tests for the existence of any cointegrating relationship between them using the bounds testing approach to cointegration. The causal effects between them are tested with Granger causality test. We find no evidence that Singapore's hotel room rates and international inbound tourists are cointegrated. The results also suggest that there is a bi-directional short-run causal relationship between these variables.