Capital Structure Theory: Evidence from European Property Companies' Capital Offerings

This study examines the stock price reactions on announcements of both equity and debt offerings by European property companies. The unique setting in which corporate tax rates vary between different countries enables us to test established theories in the field of capital structure. In accordance with theory, we find a negative price reaction on equity offering announcements, which is less severe for low-tax countries and positive price reactions on the announcements of debt offerings. Besides tax arguments, we also test alternative explanations by analyzing variations in stock reactions based on differences in the relative size of the issue, the pre-offer leverage, the underlying property types, and operational performance. The results show that corporate taxation, issue size, and operational performance are significant explanatory factors in the negative price reactions.     

Management Control and Innovative Activity

This paper discusses theoretically the different incentives of managers versus firm owners to invest in innovative activities. There are opposing effects concerning R & D intensity in the manager-controlled firm. Our study on the determinants of R & D intensity presentsempirical results concerning this question. A sample of German firms with 4,126 observations is used to estimate Tobit and semiparametriccensored least absolute deviation (CLAD) models. It turns out that the owner-led firms invest less into R & D than the managerial firms. With respect to the manager-ledfirms, we have mixed results concerning the question whether expenditures on R & Ddepend on the control exerted.     

Strategic human resource management,firm performance,and employee relations climate in China

We examined strategic human resource management (SHRM) and human resource practices in the People's Republic of China to assess the impact of these practices on firm performance and the employee relations climate. We also tested whether firm ownership moderates the above relationships. Empirical results from a sample of Chinese firms from various industries and regions showed that the levels of adoption of SHRM and HR practices were lower in state‐owned enterprises (SOEs) than in foreign‐invested enterprises (FIEs) and privately owned enterprises (POEs). Both SHRM and HR practices were found to have direct and positive effects on financial performance, operational performance, and the employee relations climate. However, the moderating effect of ownership type was significant for financial performance only. © 2008 Wiley Periodicals, Inc.     

Hong Kong-Inflation and Liquidity

Property-Keep stepping on the brakes The Hong Kong Monetary Authority (HKMA) on 10 June announced new measures to tackle housing-price in- flation. The intention this time, as in previous rounds, is to limit leverage. The government also said it would introduce more land supply in Q3-2011, which would create about 6,000 new residential units. In 2010, 13,405 residential units were completed. The HKMA’s latest measures came as leverage levels     

False Discoveries in UK Mutual Fund Performance

We use a multiple hypothesis testing framework to estimate the false discovery rate (FDR) amongst UK equity mutual funds. Using all funds, we find a relatively high FDR for the best funds of 32.8% (at a 5% significance level), which implies that only around 3.7% of all funds truly outperform their benchmarks. For the worst funds the FDR is relatively small at 7.6% which results in 22% of funds which truly underperform their benchmarks. For different investment styles, this pattern of very few genuine winner funds is repeated for all companies, small companies and equity income funds. Forming portfolios of funds recursively for which the FDR is controlled at a ‘acceptable’ value, produces no performance persistence for positive alpha funds and weak evidence of persistence for negative alpha funds.     

Evidence on performance pay and risk aversion

Making use of a unique representative data set, we find clear evidence that risk aversion has a highly significant and substantial negative impact on the probability that an employee's pay is performance contingent, which confirms the well known risk-incentive trade-off.     

Urban Responses to Climate Change: Theories and Governance Practice in Cities of the Global South

Cities around the world have recently started to become ‘proactive’ initiators of climate strategies containing both mitigation and adaptation elements. The experience of these first movers has been studied and documented both empirically and, to a lesser extent, theoretically, primarily for cities in the global North. This symposium addresses related knowledge gaps by exploring case studies of urban regions in the global South confronting their projected climate change challenges, showcasing the experiences of Delhi, Santiago de Chile and Bogotá. Its specific aim is to explore the urban social response to nature change, the adaptation challenges faced by cities across the world and current practices of urban adaptation. Further, the symposium seeks to understand to what extent and in what respect current conceptual frameworks — which highlight urban ecological security and vulnerability — provide a useful context/framing to assist cities in confronting their challenges and to explain their actions. This introductory article examines current knowledge of the theory and practice of urban climate response. It introduces the concepts of ecological security and vulnerability and discusses the adaptive capacity of cities and how they are starting to respond to the emerging challenges of climate change. It concludes with a synthesis of the case articles and highlights some of the findings.     

The Impact of a Rapidly Expanding Service Sector on Private Office Property: The Case of Hong Kong

Hong Kong's economy has undergone a remarkable transformation over the past two decades. The rapid expansion of the service sector is a major outcome. Within the services sector, the finance, insurance, real estate (FIRE) and business services sub-sector is the most influential and also the major source of generating demand for office space in the economy. This paper examines how the rapid expansion of the FIRE and business service sub-sector influences new office construction. Using the Engle-Granger (1987) methodology for cointegration and error correction mechanism (ECM), the causal relationships between growth of sub-sectors of the services sector and the new office space construction were explored. The FIRE and business services sub-sector growth is shown to be cointegrated with new office space construction. The paper reports empirical findings based on a sample survey on location and quality of space. The study reveals that the growth of the FIRE and business service sector has influenced office space development in terms of location of space, per capita space and the type and quality space during 1981-2000.