Capital Flight: China's Experience

We study the empirical determinants of China's capital flight. In addition to the covered interest differential, our empirical exercise includes a rather exhaustive list of macroeconomic variables and a few institutional factors. Overall, our regression exercise shows that China's capital flight is quite well explained by its own history and covered interest differentials. The other possible determinants offer relatively small additional explanatory power. It is also found that China's capital flight responds differently to the components of covered interest differentials and to the positive and negative components of these variables. The response pattern, however, depends on the choice of data frequency. The general impression is that the monthly results are more intuitive than the quarterly ones.     

An Examination of Sales Promotion Programs in Hong Kong: What the Retailers Offer and What the Consumers Prefer

This study gives an insight into the retailer's capability of managing sales promotion by examining the sales promotion programs offered by Hong Kong cosmetic and toiletry retailers and the consumers’ preferences. The results indicate that instant-reward programs are popular among retailers and preferred by consumers. The results also show that the preferences for sales promotion programs are dependent upon consumers’ demographic and sociocultural characteristics. Implications for advertisers designing and communicating sales promotions are offered.     

How regulatory changes affect IPO underpricing in China

This paper examines the underpricing of IPOs in the Chinese A-share market during the period 1992–2006. Since its inception, the Chinese IPO market has transformed from a tightly-controlled system to a more market-oriented system. Reforms include the abolishment of listing quotas and fixed issue price determination; allowing for more market participation in IPO pricing. The regulatory changes of Chinese IPO market, though improving over time, actually are not monotonic. The regulatory framework started from over-restrictive to over-unrestrictive, then fine-tuned with additional restrictions. This study documents the regulatory reforms during the sample period and investigates how these regulatory changes affect IPO underpricing in China. During this period, we find that Chinese IPOs exhibit a huge underpricing. The size of the underpricing, however, decreases over the sample period. This study further finds that the IPO pricing method before the regulatory changes, which was based on a fixed P/E ratio pre-determined by the regulators, contributed significantly to the IPO underpricing in China. After adopting a series of regulatory reforms allowing underwriters discretion in the determination of issue price, this regulatory underpricing component vanishes. This study has policy implications in demonstrating the impacts of regulatory frameworks on IPO underpricing.     

The impact of managerial values on decision-making behaviour: A comparison of the United States and Hong Kong

This study addresses cross-national value differences and how values held by managers influence their decision-making behaviour. A two-by-two research design was used to examine values held by practising managers and future business leaders in the United States and Hong Kong. Machiavellianism, locus of control, intolerance of ambiguity, and dogmatism were the measures used to assess these values. Social desirability scores were used as covariants to help control for cultural differences. The findings indicate that differences exist to affect decision-making behaviour. Consequently, managers in both environments must make adaptations to accommodate the values of those involved in transnational businesses.The authors thank Michael H Bond for his many helpful comments. Also, we thank Priscilla Elass for her assistance with data collection.     

Testing for output convergence: a re-examination

This paper investigates output convergence for the G7 countriesusing panel time-series techniques. We consider both the nullhypotheses of no convergence and convergence. It is shown thatinferences on output convergence depend on which one of thetwo null hypotheses is considered. Further, the no convergenceresults reported in previous studies using the time-series definitionmay be attributed to the low power of the test procedures beingused. Our results also highlight some potential problems oninterpreting results from some typical panel unit root and stationaritytests.     

Information search behavior of Hong Kong's inbound travelers‐a comparison of business and leisure travelers

Abstract

The purpose of this study is to examine the information search behavior of Hong Kong's inbound tourists, in particular business and leisure travelers. The study clearly shows that business and leisure travelers demonstrate different information search behavior. ‘Personal experience,’ ‘Travel agency/tour company,’ ‘Airlines’ and the ‘Internet’ are most frequently relied upon by business travelers in searching for travel information, while leisure travelers prefer ‘Travel agency/tour company,’ ‘Friends or relatives,’ ‘Travel guide books,’ and ‘Personal experience.’ The study also reveals that the total number of information sources used and the length of pre‐trip planning lead‐time are significantly different between these two groups of travelers. First time travelers also have a longer pre‐trip planning lead‐time than repeat travelers. Furthermore, business and leisure travelers perceive the levels of influence of several information sources, including ‘Corporate travel departments,’ ‘Friends or relatives,’ ‘Travel guide books,’ and the ‘Internet,’ differently. These information sources were classified into five different dimensions, including ‘Media,’ ‘Neutral,’ ‘Retail,’ ‘Interpersonal,’ and ‘Personal experience.’ Analysis based on travelers' purpose for traveling and demographic information was performed. Leisure travelers perceive the level of influence of ‘Neutral’ sources as significantly higher, and those with lower household incomes perceived the level of influence of ‘Personal experience’ as lower. The results of this study will allow marketers in Hong Kong to better understand travelers’ information search behavior so that they can more effectively tailor their marketing strategies to these two major markets.     

The Transmission of Pricing Information of Dually-Listed Stocks

We use the daily opening and closing prices of eighteen dually-listed Hong Kong companies to investigate the transfer of pricing information between the Stock Exchange of Hong Kong (SEHK) and the London Stock Exchange (LSE). Evidence shows that (1) SEHK overnight returns respond significantly to change in LSE intraday returns, but the transmission process is not completed at the opening of the SEHK; (2) LSE overnight returns respond significantly to changes in SEHK intraday returns, but the transmission process is not completed at the opening of the LSE, either; (3) the impact is stronger moving from the LSE to the SEHK. This evidence indicates that information transfer runs in both directions and that most of the transmitted information continues to be processed throughout the following trading day (JEL G15).     

Board Structure and Intragroup Propping: Evidence from Family Business Groups in Hong Kong

Using earnings announcement events made by group member firms in Hong Kong, this study examines the governance role of boards of directors in curbing propping activities within family business groups. We find that earnings released by group member firms affect the stock prices of their nonannouncing group peers in a manner consistent with intragroup propping. More importantly, this effect is less pronounced when the announcing firms have a larger board or a board with a higher proportion of independent directors, but more pronounced when they have an executive director from their controlling families acting as board chairperson. Furthermore, the monitoring effect of boards of directors is strengthened for firms subject to new regulations increasing board power. Our results suggest that board oversight can mitigate propping activities.