Redefining psychological contracts with the U.S. work force: A critical task for strategic human resource management planners in the 1990s

The well-publicized waves of layoffs in recent years have destroyed the long-standing psychological contract between employees and their employers which promised pay, promotion, and job security in exchange for worker skills, effort, and loyalty. This article provides empirical support for the transformational effect layoffs have had on psychological contracts and discusses the critical role human resource management must play in establishing and developing new contracts to guide future employment relationships between employers and employees. Implications for both academics and practitioners are provided. © 1998 John Wiley & Sons, Inc.     

A capital adequacy buffer model

We develop a new capital adequacy buffer model (CABM) that is sensitive to dynamic economic circumstances. The model, which measures additional bank capital required to compensate for fluctuating credit risk, is a novel combination of the Merton structural model, which measures distance to default and the timeless capital asset pricing model (CAPM), which measures additional returns to compensate for additional share price risk. We apply the model to a portfolio of mid-cap loan assets over a 10-year period that includes pre-GFC (global financial crisis), GFC and post-GFC. An analysis of actual defaults over this period shows the model to be far more accurate in determining the capital adequacy levels needed to counter credit risk than an unresponsive ratings model such as the Basel standardized approach.     

Embedded autonomy,political institutions,and access orders

We construct a model of “embedded autonomy,” the idea that the closeness of bureaucrats and business people may lead to growth-promoting policies by the government, though at the risk of leading to crony capitalism. We analyze how the level of monitoring to control corruption and the weight given to the future affect the nature of the possible outcomes. We explore possible tradeoffs between growth and inclusiveness and discuss how our model relates to more general concepts of inclusiveness of institutions, as framed by Acemoglu and Robinson, or the nature of “access orders,” as introduced by North, Wallis, and Weingast.     

Machine Learning and Expert Judgement: Analyzing Emerging Topics in Accounting and Finance Research in the Asia–Pacific

In this paper, we focus on the question to what extent machine learning (ML) tools can be used to support systematic literature reviews. We apply a ML approach for topic detection to analyze emerging topics in the literature—our context is accounting and finance research in the Asia–Pacific region. To evaluate the robustness of the approach, we compare findings from the automated ML approach with the results from a manual analysis of the literature. The automated approach uses a keyword algorithm detection mechanism whereby the manual analysis uses common techniques for qualitative data analysis, that is, triangulation between researchers (expert judgement). From our paper, we conclude that both methods have strengths and weaknesses. The automated analysis works well for large corpora of text and provides a very standardized and non-biased way of analyzing the literature. However, the human researcher is potentially better equipped to evaluate current issues and future trends in the literature. Overall, the best results might be achieved when a variety of tools are used together.     

Multinational capital structure and financial flexibility

We address multinational capital structure decisions when firms have varying degrees of financial flexibility for shifting income and/or tax shields between subsidiaries. We find: (1) firms can use leverage to dramatically reduce negative valuation effects from operating in a high-tax country; (2) financial flexibility is a key determinant of optimal capital structure, acting as both a substitute and a complement for leverage; (3) multinational firms derive a synergistic effect from financial flexibility, which can enhance their value beyond that for a single-country firm from a low-tax jurisdiction; and (4) optimal capital structure typically differs substantially across subsidiaries, with each having positions in multiple currencies.     

Diversification and performance: evidence from East Asian firms

We examine the impact of diversification on performance for firms operating in different institutional environments during a relatively stable period and during a major economy‐wide shock. We locate our study in six Asian countries at different levels of institutional development. Results indicate that diversification negatively impacts performance in more developed institutional environments while improving performance only in the least developed environments. Even in the least developed institutional environments, diversification offers limited benefits when an economy‐wide shock strikes. Though successful diversifiers are sometimes affiliated with business groups, diversification is associated with poorer performance for both affiliated firms and independent firms. In sum, we find that the outcomes of diversification are influenced by institutional environments, economic stability and affiliation with business groups. Copyright © 2007 John Wiley & Sons, Ltd.     

Competition or Comparative Advantage: What Drives Cross Border Mergers and Acquisitions?

The theory of comparative advantage explains the upsurge of cross border mergers and acquisitions (CBMAs) in the era of reform led trade liberalization. This paper tests the theory of comparative advantage for CBMAs by firms belonging to a developing country, viz. India. Using count data the paper also shows that CBMAs have occurred in country and sector specific waves. This implies in developing countries, it is competition rather than comparative advantage which drives CBMAs. However, the paper finds that occurrence of the country specific wave and sector specific wave are negatively affected by favourable outward FDI policy.

     

A Survey of Agricultural Household Models: Recent Findings and Policy Implications

Semicommercial farms that produce multiple crops make up a largepart of the agricultural sector in developing economies. Thesefarms or agricultural households combine two fundamental unitsof microeconomic analysis: the household and the firm. Traditionaleconomic theory has dealt with these units separately. But indeveloping economies in which peasant farms dominate, theirinterdependence is of crucial importance. Researchers at theFood Research Institute, Stanford University, and at the WorldBank have developed models of agricultural households that combineproducer and consumer behavior in a theoretically consistentfashion. Recent empirical applications of these models haveextended them and expanded the range of policy issues whichcan be investigated using this general framework. This article reports the results of empirical applications ofthis model in India, Indonesia, Japan, the Republic of Korea,Malaysia, Nigeria, Senegal, Sierra Leone, Taiwan, and Thailand.It provides a comparative analysis of the policy implicationsof the approach for such matters as the welfare of farm households,the size of marketed surplus, the demand for nonagriculturalgoods and services, and for hired labor, and the availabilityof budget revenues and foreign exchange.     

Shareholder Value Maximisation,Stock Market and New Technology: Should the US Corporate Model be the Universal Standard? 1

In 1992 a blue‐ribbon group of US economists led by Michael Porter concluded that the US stock market‐based corporate model was misallocating resources and jeopardising US competitiveness. The faster growth of US economy since then and the supposed US lead in the spread of information technology has brought new legitimacy to the stock market and the corporate model, which is being hailed as the universal standard. Two main conclusions of the analysis presented here are: (a) there is no warrant for revising the blue‐ribbon group’s conclusion; and (b) even US corporations let alone developing country ones would be better off not having stock market valuation as a corporate goal.