Volatility information implied in the term structure of VIX

This study uses multiple maturity-independent variables to examine whether the volatility information implied in the term structure of volatility index can improve the prediction of realized volatility. The empirical results for the S&P 500 index show that, in terms of both the in-sample estimation and out-of-sample forecasting, the term structure variables provide substantial incremental contribution to the models with only level variables. Our empirical results are robust to various forms of volatility, alternative ways to develop the term structure variable, the impact of macroeconomic variables, and alternative underlying assets.     

Adolescents’ perceptions of mother–father dominance in family vacation decisions: a 25-society study

Service Business - This study applies and builds on Davis and Rigaux’s (J Consum Res 1(1):51–62, 1974) triangle of spousal dominance styles of family purchase decisions. We explored...     

A general equilibrium model of bilateral trade with strategic public investment in commercial infrastructure

We explore how public investment in commercial infrastructure affects the composition of trade between countries. To this end, we develop a model of bilateral trade in which two countries produce, consume, and trade a continuum of goods. Goods are produced by a single homogeneous factor, labor, the productivity of which depends on the quality of the country’s commercial infrastructure, broadly conceived to encompass transportation, communication, and power transmission networks; regulatory and legal institutions; and basic research and educational systems. Countries may improve the quality of their commercial infrastructures through increased public investment. However, returns on these investments are constrained by fixed ‘natural’ endowments, with the better-endowed country enjoying greater labor productivity for a given level of public investment. We begin by analyzing optimal investment in public infrastructure in one country when public investment by the trading partner is fixed. We find that, ceteris paribus, greater public investment in commercial infrastructure raises general labor productivity, leading to gains in workers’ real income. We then analyze a non-cooperative game in which both countries strategically vary public investment in commercial infrastructure. We find that, in a Nash game, the better-endowed country optimally spends more on infrastructure and produces the goods requiring the greatest labor productivity. However, in a Stackelberg game, the results are ambiguous. An empirical analysis based on recent international trade data supports our theoretical finding that investment in public infrastructure is positively related to the export of ‘high-end’ goods.     

The Effects of Moral Development and Adverse Selection Conditions on Managers’ Project Continuance Decisions: A Study in the Pacific-Rim Region

According to agency theory, agents base their economic decisions on self-interests when adverse selection conditions exist. However, cognitive moral development theory predicts that ethics/morals may influence decision-makers not to behave egoistically. Rutledge and Karim (1999; Accounting, Organizations and Society 24(2), 173–184) find both the moral reasoning level of the managers and an adverse selection condition affect a manager’s project evaluation decisions significantly. Since prior studies have shown that national␣culture might influence the application of agency theory in project evaluation, this current study uses a different moral development measurement to reexamine Rutledge and Karim’s hypotheses in another culture. A total of 73 Taiwanese executive MBA students with an average of 12.17 years work experience participated in this study. We found that both moral development level and adverse selection conditions significantly affect managers’ project continuance decisions. The interaction effect of these two factors indicates that, when adverse selection conditions exist, participants with a high level of moral development exhibit less of a tendency to continue an unprofitable project than those with a low level of moral development. With subjects from a different culture, our results confirm the findings of Rutldege and Karim. That is, the effects of moral development and adverse selection conditions on managers’ project continuance decisions are robust and can be generalized to different cultures. Implications of the findings of this study to multinational firms are also discussed. C. Janie Chang, Ph.D., is the Vern Odmark Professor of Accountancy at San Diego State University. She received her Ph.D. from the University of California, Irvine. She is the co-editor of the Review of Accounting and Finance, and has published in the areas of auditing, managerial accounting, and information systems to investigate information processing of experts. She has also studied cross-cultural issues related to professional judgments and decisions in auditing and managerial accounting. Sin-Hui Yen, Ph.D., is currently a Professor of Accounting at Tamkang University in Taiwan. He received his Ph.D. from national Taiwan University. He is the executive editor of the Journal of Contemporary Accounting, and has published in the areas of accounting and finance to investigate human information processes, as well as ethical issues related to business professionals.     

Rethinking guanxi and performance: Understanding the dark side of Sino–U.S. business relationships

Previous studies on guanxi (關係) have focused on how guanxi contributes positively to business relationships, without addressing the pivotal role that guanxi plays in managing the dark-side of business relationships. To address this knowledge gap, this study specifically investigates guanxi’s influence on conflict, opportunism, and switching intention in Sino–U.S. business relationships and examines how guanxi mediate the positive effect of performance as well as the negative effect of uncertainty on such dark-side constructs. Drawing on data from over 270 Chinese firms, the findings reveal that guanxi is undermined by relationship uncertainty but enhanced by performance, guanxi also reduces the dark-side of Sino-US business relationships. Chinese buyers’ guanxi with U.S. suppliers significantly lessens their switching intention, opportunistic behavior, and the perceived levels of conflict in Sino-US relationships. The findings explain how guanxi is employed as a tool to reduce the burden associated with the dark-side of business relationships and give relevant implications.