Bankruptcy risk and impaired investment decisions

This paper examines situations where the firm's investment decisions are impaired due to the presence of bankruptcy risk. Two situations are examined, one in which the firm is motivated to reject a positive NPV project and another in which the firm is motivated to accept a negative NPV project.     

The role of tourism in the economy of Scotland

This paper examines the economic impacts of tourism on the Scottish economy. Three study areas were defined on the basis of economic characteristics: the north of Scotland; the central lowlands (which generate more than half the total economic benefits attributable to tourist spending); and the south of Scotland. Financial information was obtained from businessmen involved in tourist-related industry. In 1980 about £231 million (35% of tourist spending) was retained as income to Scottish residents, and tourism was responsible for, directly and indirectly, over 100000 jobs. The ‘multiplier’ effect generates income, employment and tax revenues beyond the immediate tourist system. This summary of economic estimates should be of value to tourism planners.     

Repressed inflation in the Soviet Union: A temporary equilibrium approach

The Soviet economy is modeled by means of temporary general equilibrium theory. Three temporary equilibrium states are distinguished. In Walrasian equilibrium, all markets clear. Under repressed inflation, there is excess consumer demand for goods marketed by the state, while consumer demand is deficient in the underconsumption regime. The dynamics of these temporary equilibrium states are studied and the dynamic adjustment equations fitted to Soviet data. Simulation of the model offers an explanation for the tendency of the inventories/cash balances ratio to fall since 1965.     

The determinants of export behaviour in UK service firms

This paper examines the determinants of export behaviour for a panel of UK service industry firms from 1988 to 2001. Export behaviour is modelled in a dual manner: as both the decision to export and the intensity of exporting. The results indicate that firm size, research intensity, average director's pay and the variance of the sterling–dollar exchange rate all increase the probability of becoming an exporter. In addition, the results indicate that the process underlying a firm's decision to export is a separate one from that determining export intensity, implying that the two decisions should be modelled separately.     

The antecedents of political capabilities: A study of ownership,cross-border activity and organization at legacy airlines in a deregulatory context

Governments and ownership structures can both facilitate and constrain organizational value creation. Firm-level political strategy is a frequent response to protect or promote organizational interests. When effectively configured and implemented, these political strategies can become capabilities. This inductive study examines the antecedents of political capabilities in European airlines within the context of cross-border market deregulation. Our central contribution is an understanding of how management teams from non-state and state airlines organize and develop divergent corporate political capabilities in this context. While managers’ actions in response to specific public policy processes can create political capabilities, the outcome is moderated by the nature of corporate ownership and the relative influence of public and private stakeholders on capability formation. Our theoretical contribution is to extend the study of organizational capabilities into the non-market context through analyzing how European flag carrier airlines organized their political capabilities in anticipation of a changing transnational policy context.     

How China＇s Holdings of Foreign Reserves Affect the Value of the US Dollar in Europe and Asia

By January 2009, China held almost US$2tn in foreign reserves. The present paper estimates the marginal effect of China changing its holdings offoreign reserves on the value of the US dollar in Europe and dsia. Because using traditional techniques to find this estimate would be inappropriate due to severe problems resulting from omitted variables, the present paper uses a new approach, bidirectional-reiterative trucated projected least squares, that has been proven to minimize problems associated with omitted variables. It is found that if China would sell 1 percent of its foreign reserves, then the value of the US dollar would fall by 0.44 percent. With such a large effect, China has an incentive to either not sell arty of its US dollar reserves or sell all of its US dollar reserves.     

Singleton bias and lexicographic preferences among equally valued alternatives

Two experiments examined a form of singleton bias deducible from lexicographic choice and Tversky’s theory of elimination by aspects. In Experiment 1, 100 decision makers who chose from a set of job applicants defined by equal numbers of equally important qualifications tended to ignore the singleton defined by possession of a relevant attribute but tended to rank-order the attributes as predicted by lexicographic choice theory and showed various forms of singleton bias. In Experiment 2, 100 decision makers who chose from sets of unspecified alternatives, universities, and houses/apartments defined by attributes that they had individually rated as equally important ignored the attribute-defined singleton in every alternative set but manifested a different singleton bias in favor of the middle option of the on-screen display.     

Business start-up regulations and the complementarity between foreign and domestic investment

This paper shows that the complementarity between foreign direct investment (FDI) and domestic investment significantly depends on regulations required to start a new domestically owned business in host economies. It finds evidence that FDI crowds out domestic investment in countries with entry regulation cost above a certain level, and many of these countries are in the bottom quartile of GDP per capita. Reforms in business start-up regulations can therefore play a critical role in enhancing the complementarity between foreign and domestic investment and thereby increase entrepreneurship and economic growth in low-income countries. The analysis takes into account other significant factors which affect domestic investment such as the cost of capital, government’s economic growth track record, institutional quality, and market size.