Parcel distribution timetabling problem

In this paper we propose a model to generate an effective timetable for time definite parcel distribution companies operating a hierarchical hub-and-spoke network. The model, referred to as parcel distribution timetabling problem, provides the departure times from each serviced city and each servicing facility in order to minimize the travel times of all shipments from their origin cities to their destination cities. Although the problem is faced by every parcel distribution company, it is rarely addressed in the literature. There is no evidence that parcel distribution companies, including the international ones, are developing operational research models in generating their timetables. The application of the model to a real-world case led to a decrease of more than 11% in the average travel time of the shipments. The company was even more delighted by the rapidity of the model in generating the timetable; this task that used to take weeks is decreased to just minutes.     

Political and Interlocking Connections in the Boardroom on Private Equity Placements

This study examines the influence of directors who are politically connected and/or have boardroom interlocking on private equity placements (PEPs) in Chinese listed firms. We document that interlocked directors can significantly influence the propensity to apply for PEPs and approval of PEPs and reduce the cost of PEPs while providing greater access to proceeds from PEPs through lowering information asymmetry and information cost. Although politically connected directors have a significant role in the approval of PEPs, they are more likely to reduce the monitoring effects and increase agency problems, which lead to increased cost of PEPs and reduced proceeds from PEPs. The results also reveal that political connection diminishes the benefits of interlocking directors for firms having directors with both interlocking and political ties.     

Artificial decision-making and artificial ethics: A management concern

Expert systems are knowledge-based information systems which are expected to have human attributes in order to replicate human capacity in ethical decision making. An expert system functions by virtue of its information, its inferential rules, and its decision criteria, each of which may be problematic. This paper addresses three basic reasons for ethical concern when using the currently available expert systems in a decisions-making capacity. These reasons are (1) expert systems' lack of human intelligence, (2) expert systems' lack of emotions and values, and (3) expert systems' possible incorporation of intentional or accidental bias. For these reasons artificial ethics seems to be science fiction. Consequently, expert systems should be used only in an advising capacity and managers should not absolve themselves from legal and ethical responsibility when using expert systems in decision making.Omar E. M. Khalil is a visiting Lecturer of information systems at the University of Massachussets at Dartmouth. He has published in theInternational Journal of Man-Machine Studies and in several proceedings.     

The Wealth and Risk Effects of the Gramm‐Leach‐Bliley Act (GLBA) on the US Banking Industry

Abstract:   The Gramm‐Leach‐Bliley Act (GLBA) of 1999 marks the end of Depression era regulations like the Glass‐Steagall Act of 1933 and Bank Holding Company Act of 1956. These acts have restricted banks from securities and insurance underwriting business. This paper examines the impact of the GLBA on the banking industry. We find that the banking industry has a welfare gain from this law. We investigate two different categorizations of the banking industry. We find that Money Center banks followed by the Super Regional banks benefited most from this deregulation. On the other hand, banks that had Section 20 investment subsidiaries gained more than other banks in the second category. The results also show that the exposure to systematic risk for different categories of banks decreased after the passage of this law, which implies that the GLBA is fairly successful in containing the risk that accompanied the act and also created diversification opportunities. For Money Center banks, Super Regional Banks, banks with a section 20 subsidiary and banks with a new financial subsidiary, a shift in the exposure to systematic risk can explain the overall cross sectional variation in return from the deregulation. In both categorizations we find that larger banks gained more, while the overall explanatory power of profitability is not conclusive.     

Vertical Integration,Foreign Multinationals and Stigler's Hypotheses: An Empirical Test Using Malaysian Data*

In this paper the hypotheses on motives for vertical integration as proposed by Stigler are empirically tested using a panel dataset from Malaysian manufacturing under both fixed‐effects and random‐effects specifications. Because the degree of multinational participation is expected to influence the results of the regression estimates, empirical tests are conducted with and without controlling for the effect of foreign firms’ participation. Depending on model specifications, evidence is found in favor of Stigler's hypotheses where vertical integration is positively related to demand growth and industry concentration. This result is generally consistent with those found in other vertical integration studies. Significantly, the coefficient estimates of the growth variable are not significant and biased downwards if there is no control on the effect of foreign multinationals in the estimation process.     

The Value of Equitable Redemption in Commercial Mortgage Contracting

Equitable redemption is a feature of all common law mortgages that allows a borrower a chance to “redeem” the real estate in the event of default. What is puzzling is that equitable redemption is universally enforced in all mortgages, including commercial mortgages. The purpose of this study is to understand if there might be conditions under which the universal enforcement of equitable redemption could be an efficient legal doctrine. We build a model of asymmetric information where the cash flows from the investment are known to the borrower but not to the lender. We show that there exists a separating equilibrium where high-risk borrowers choose to include equitable redemption (and pay a higher interest rate) while low-risk borrowers choose not to (and pay a lower interest rate). We then show that there exist conditions under which a universal enforcement of equitable redemption results in a higher total surplus than this separating equilibrium.

Screening equilibria in experimental markets

We conduct an experimental test of a screening model of an insurance market with asymmetric information. We first conduct three sessions in which the proportion of high risk buyers is such that a separating equilibrium should exist. We then conduct three more sessions in which the only change we make is decreasing the proportion of high risks such that the equilibrium is now a pooling equilibrium. In both treatments, the observed behavior converges to the equilibrium prediction.

BOOK REVIEW

Using panel data methods to analyze data from 14 Latin American countries from 1978 to 2003, this paper empirically examines the links between foreign direct investment (FDI), local conditions, and economic growth. The results suggest that FDI plays an important role in contributing to economic growth. However, the effect of FDI on economic growth is dependent on host economy–based conditions. The empirical results from this study show that there is a positive interaction effect of FDI with technology gap and a negative interaction effect of FDI with the level of school attainment on economic growth. Furthermore, the empirical results from the FDI equation suggest that inflation, trade, school attainment, and telephone lines are the most determinant of location decisions for foreign investors. To explore the relationship between FDI and economic growth further, this paper examines Granger-causality between FDI and economic growth. Our empirical evidence shows that the direction of causality is from economic growth to FDI and not the reverse for Asian countries. Therefore, the causal link between FDI and economic growth is unidirectional. We also provide evidence that the link between FDI and economic growth is bidirectional for Latin American countries, which indicates that economic growth initially could attract more FDI, which, in turn, would then result in accelerated economic growth.