Investment with network externality under uncertainty

The purpose of this paper is to develop a real option model with a stochastic network size to simultaneously consider firm’s investment and household’s consumption behaviors in an equilibrium framework. First, the consumer’s waiting-to-buy effect is crucial in determining trigger network size of firm’s investment. Second, increasing network externality has an ambiguous effect on trigger network size of firm’s investment. Third, using NPV rule not only underestimates trigger network size but, also possibly results in the misleading relationship between network externality and trigger network size.     

Long-term relationship between political behavior and stock market return: new evidence from quantile regression

The stock market is an extremely sensitive and comprehensive indicator of the fluctuating political climate as well as investor confidence. Therefore, in an era of fierce media competition, the long-term influence of political behaviors on the Taiwan stock market is an important issue. However, the traditional regression model can only describe the “average” influence of variables on rate of return rather than completely describe conditional distribution as in quantile regression, which also analyzes correlations between stock return and the congressional effect.     

Evaluating and improving GARCH-based volatility forecasts with range-based estimators

This article investigates the feasibility of using range-based estimators to evaluate and improve Generalized Autoregressive Conditional Heteroscedasticity (GARCH)-based volatility forecasts due to their computational simplicity and readily availability. The empirical results show that daily range-based estimators are sound alternatives for true volatility proxies when using Superior Predictive Ability (SPA) test of Hansen (2005) to assess GARCH-based volatility forecasts. In addition, the inclusion of the range-based estimator of Garman and Klass (1980) can significantly improve the forecasting performance of GARCH-t model.     

Effect of Cross-Border E-Business Policy on the Export Trade of an Emerging Market: A Dynamic Study of Institutional Support to Cross-Border E-Business at Chinese Pilot Cities

Policies to offer institutional support to cross-border E-business are processed in the development of export at emerging markets. This research estimates the effect of institutional support to cross-border E-business on export trade in an emerging market by a difference-in-difference model. It is found that the institutional support to cross-border E-business at the pilot cities had a positive effect on export trade. Further, a decision tree of predictions to export is developed, based on the cross-border E-business policy and regional economic factors shown to have effect on export, and the complex network of interconnections across the cities in different conditions is revealed. The estimation of probability for export increase based on the effect of cross-border E-business policy is further performed by Bayesian model. This research can be helpful to policy makers and business administrators in understanding the effect of cross-border E-business policies on export at emerging markets.     

Reconciling the paradox of supply-side and demand-side strategies in industrial innovation

Abernathy and Utterback [Abernathy, W.J. & Utterback, J.M., (1978). Patterns of industrial innovation. In Burgelman, R.A., Maidique, M.A. and Wheelwright, S.C., Strategic management of technology and innovation: 149-155. McGraw Hill.] argued that successful firms seek a functional product performance strategy in the early stage of industrial innovation and seek a cost reduction strategy in the late stage. However, Adner and Levinthal [Adner, R. & Levinthal, D., (2001). Demand heterogeneity and technology evolution: Implications for product and process. Management Science, 47(5), 611-628.] argued firms enhance functionality or reduce prices to a level that corresponds to consumer willingness to pay in the early stage, and increase performance at a relatively stable product price (i.e. new strategy they claimed) in the late stage. This study reconciles this paradox of choosing strategies using an integrative framework for theory development. Generated from the framework, a numerical indicator of performance/cost ratio directs firm strategy choices in industrial innovation when an environment changes. This study justifies the popular use of performance/cost ratio in practices as primary criteria to predict the winning dominant standard from a value creation perspective and elucidates an evolution of industrial innovations by using a three-year field study.     

Cross-Industry Emission Permits Trading

The present paper examines the effectiveness of emission permits trading across industries. We find that, while permits trading in a competitive environment minimizes costs of compliance, it also enhances product market imperfections. We also find that a standard-setting regulation yields superior welfare results if policy makers have able information. Standard setting allows policy makers the flexibility of taking into account the existing imperfections in each industry. Although not surprising, this result has important policy implications in situations in which policy makers consider establishing permits trading between publicly owned dominant polluters and other industrial polluters. Since policy makers have able information on publicly-owned firms, it might be welfare improving to directly control emissions of the dominant publicly-owned polluters. Given that many of the major polluters in the real world are large firms in heavily concentrated industries many of which are also regulated, our result warrants policy makers' attention.     

关于广州市酒店客房限价的探讨

针对广州交易会期间政府该不该对酒店客房实施限价所引起的争论，全面分析了实施限价的利弊，并通过调查酒店房价的实际情况，阐述政府放开酒店房价，是符合市场经济的行为，不会破坏广州会展业的发展。     

Corporate financing and anticipated credit rating changes

Firm circumstances change but rating agencies may not make timely revisions to their ratings, thereby increasing information asymmetry between firms and the market. We examine whether firms time the securities market before a credit rating agency publicly reveals its decision to change a firm’s credit rating. Using quarterly data, we show that firms adjust their financing structures before credit rating downgrades are publicly revealed. Specifically, firms on average increase their debt financing by 1.29 % before the disclosure of a rating downgrade, and this increase is due to the issuance of debt rather than the repurchase of equity. In contrast, firms do not take significant financing actions before credit rating upgrades.