WHY IS CASH (STILL) SO ENTRENCHED? INSIGHTS FROM CANADIAN SHOPPING DIARIES

One similarity among many developed economies is the predominance of cash over electronic payments in terms of payment frequency, especially for the low‐value transactions that are the bulk of retail payments. We use the Bank of Canada's 2009 Methods‐of‐Payment Survey, which collected information on consumers' payment choices through shopping diaries, to estimate a simple model of choice between cash and other payment methods. Results suggest that the main reasons cash is still a popular payment instrument in Canada, especially for low‐value transactions, are its wide acceptance among merchants compared with other alternatives, speed and ease of use, and low marginal cost when on hand. (JEL E41, D12, L81)     

HOW STOCK-SWAP MERGERS AFFECT SHAREHOLDER (AND BONDHOLDER) WEALTH: MORE EVIDENCE OF THE VALUE OF CORPORATE "FOCUS"

Alfred Chandler once described the U.S. conglomerate movement of the 1960s and '70s as an "historical aberration and a 'disaster." And the recent trend in corporate mergers and acquisitions away from "diversifying" acquisitions would seem to confirm Chandler's argument.
In what constitutes yet another piece of evidence in support of Chandler's argument, the authors of this article conducted a study of changes in debt and equity values in 260 stock-forstock mergers completed between 1963 and 1996. With a sample almost evenly divided between conglomerate and "related" mergers, the authors report significant net wealth gains for all securityholders as a group in "related" mergers, but generally insignificant net gains for securityholders in conglomerate mergers. Not surprisingly, target firm shareholders experienced net wealth gains in both kinds of acquisitions; but for acquiring company shareholders, there was a striking difference: economically and statistically significant gains for acquirers in related transactions, and significant losses for acquirers in conglomerate deals.
Perhaps the biggest surprise of the study, however, was that even the bondholders of acquirers in related mergers benefited more than bondholders in conglomerate deals. The result is surprising because, to the extent bondholders benefit from corporate diversification, one would expect the opposite result. That bondholders in related mergers experience larger wealth increases than those of conglomerate acquirers is just one more sign of the dramatic differences in total value created by the two kinds of mergers.     

Assessing the needs of international markets against an emerging market company's capabilities: A tool for internationalization

Senior managers in emerging markets often strive to ensure that their companies develop sufficient capabilities to confront the needs they encounter in international markets. However, extant research and practice remain unclear as to how senior managers in emerging market companies can approach assessing the needs of their international markets against their own company's capabilities, to aim for a balance between both. This article offers an innovative approach for assessing the needs of international markets against an emerging market company's capabilities. Based on the assessments of 100 senior managers leading emerging market companies, we explain how this approach can provide two key insights. First, evidence of a balance between the needs of international markets and an emerging market company's capabilities, that indicates the company's competitive position is focused; or evidence of an imbalance between the needs of international markets and an emerging market company's capabilities, that indicates the company's competitive position is either vulnerable or overqualified. Second, an understanding of where the gaps between the needs of international markets and an emerging market company's capabilities are, that enables improving the company's competitive position by closing these gaps. Drawing on this approach, we offer an open access tool that allows senior managers in emerging markets to identify and improve their own company's competitive position for internationalization. Using this tool, senior managers can lead their emerging market companies toward a focused competitive position in international markets, providing better chances of successfully capturing potential benefits.     

The economic return on education for hotel managers

This paper estimates econometrically the economic return on education among Portuguese hotels managers, based on a survey carried out in 2003. A Mincerian human capital model is estimated. The main findings indicate that the rate of return is in the range 12–15%, signifying that Portuguese hotel managers are better paid than the average population. The results also indicate that in this sector, the return on education does not depend on the number of employees in the hotels in which the individual works, nor on the region where the hotel is situated. Gender has an impact in this labour market. Being a foreign manager has a positive impact on earnings, as is also the case for partners in the hotel company. The research draws the attention of hotel managers to the need to acquire human capital to enable them to perform their tasks effectively in a globalised world. Copyright © 2007 John Wiley & Sons, Ltd.     

Feature selection methods involving support vector machines for prediction of insolvency in non‐life insurance companies

We propose two novel approaches for feature selection and ranking tasks based on simulated annealing (SA) and Walsh analysis, which use a support vector machine as an underlying classifier. These approaches are inspired by one of the key problems in the insurance sector: predicting the insolvency of a non‐life insurance company. This prediction is based on accounting ratios, which measure the health of the companies. The approaches proposed provide a set of ratios (the SA approach) and a ranking of the ratios (the Walsh analysis ranking) that would allow a decision about the financial state of each company studied. The proposed feature selection methods are applied to the prediction the insolvency of several Spanish non‐life insurance companies, yielding state‐of‐the‐art results in the tests performed. Copyright © 2005 John Wiley & Sons, Ltd.     

The evolution of world trade from 1995 to 2014: A network approach

This paper employs network analysis to study world trade from 1995 to 2014. We focus on the main connective features of the world trade network (WTN) and their dynamics. Results suggest that countries’ efforts to attain the benefits of trade have resulted in an intertwined network that is increasingly dense, reciprocal, and clustered. However, these features do not correspond to a linear aggregation of the characteristics of its constituents (trade sectors). Trade linkages are distributed homogeneously among countries, but their intensity (i.e. their value) is highly concentrated in a small set of countries. The main connective features of the WTN were not affected by the 2007–2008 international financial crisis. However, we find that the crisis marks a turning point in the evolution of the WTN from a two-group (led by the US and Germany) to a three-group (led by the US, Germany, and China) hierarchical structure.     

Inequality and entrepreneurial thresholds

We explore the relationship between inequality and entrepreneurial activity. Drawing on cross-sectional data from a largescale survey of the economic conditions of individuals across India, we develop a number of dimensions of inequality to explore empirically how inequality interacts with entrepreneurship, operationalized as self-employment or as employing other people. We find compelling evidence that there are thresholds to becoming self-employed, and even more so to assembling the combinations of resources and personal attributes required to become an employer. Greater inequality leaves more people unable to make the transition to self-employment, leaving casual laboring as the occupation of necessity. At the same time, inequality increases the number of employers in a society, by concentrating resources - particularly land and finance - enough for significant numbers of people to be able to cross this higher threshold. Lastly, greater differentiation into social or religious groups curtails the ability to cross either entrepreneurial threshold, presumably by limiting the extent and benefits of social networks of value for entrepreneurship.     

Perceptions of Urban Parks as Havens and Contested Terrains by Mexican-Americans in Chicago Neighborhoods

The objectives of this study were to (1) identify the benefits of parks for Mexican-American urban residents and the roles they play in the dynamics of their communities and (2) explore issues related to their existence and utilization in Latino communities. Bedimo-Rung, Mowen, and Cohen's (2005) model of the Role of Parks in Public Health was employed as a conceptual framework in this study. Data were collected in the summer of 2007 with two focus groups with 26 Mexican-American residents from two predominantly minority Chicago communities. Benefits of urban parks for Mexican-American residents were classified into five categories—environmental, social, psychological health, physical health, and cultural. The study also identified many problems related to the existence and utilization of parks in Latino communities that detracted from the benefits Mexican-Americans could obtain from visiting parks. They included insufficient access to parks, poor maintenance of the existing parks, crime and safety issues, and interracial conflict and discrimination. A new framework was proposed to model the benefits of parks for minority urban residents and factors that affect utilization of parks in minority communities.