Forecasting Employment Growth in Indonesia

This note discusses the dangers of using the employment-output elasticity to forecast employment creation in Indonesia. It demonstrates the unreliability of employment-output elasticity estimates for Indonesia obtained using various methods, and argues, that, in addition to the estimation problems, the elasticity method has inherent weaknesses that should preclude its use to forecast employment growth in a dynamic world.     

State Power and Private Profit: the political economy of corruption in Southeast Asia

This article reviews the extensive political and economic literature since 1990 on corruption in Indonesia, Philippines, Thailand, Malaysia and Singapore. After considering each country's individual recent history of corruption, the article comparatively analyses the relationship of corruption in these countries with, respectively, the roles of the state, the private sector and external actors, democratisation and decentralisation, and the impact of corruption on economic growth and inequality. Our conclusion is that while economic liberalisation, democratisation and centralisation of state power influence the forms of corruption and its impact on national economic performance, they are neither necessary nor sufficient for its decline.     

The Effect of Multiknowledge Individuals on Performance in Cross‐Functional New Product Development Teams*

This study examines the effect of multiknowledge individuals (especially those possessing both marketing and technological knowledge) on performance in cross‐functional new product development teams. A survey of 62 cross‐functional teams shows that the proportion of multiknowledge individuals has an indirect positive effect through information sharing on product innovativeness and a direct positive effect on time efficiency of new product development teams.     

Dark tourism through the lens of attachment theory and domestic tourists

This study explores the factors that affect domestic tourist attachment to dark tourism destinations by developing a hybrid model using several methods, including structural equation modeling (SEM) and fuzzy analytical hierarchy process (FAHP), predicated on attachment theory. The study collected data from 60 tourism experts and 622 domestic tourists. The study found that tourist motivation, national identity, tourism impacts, and destination attachment are all crucial factors that explain domestic tourist behavior towards dark tourism. The results of the mediation analysis indicate that destination attachment mediates the relationship between tourist motivation, national identity, and negative tourism impact with tourist satisfaction. The FAHP results show that place identity has the highest influence while place dependence has the lowest influence in shaping domestic tourists' selection of dark tourist destinations. The study's findings provide valuable insights for tour operators and destination managers to meet domestic tourists' expectations of dark tourism, adding to the existing knowledge related to the factors that impact dark tourism.     

Modelling tourist flow association for tourism demand forecasting

The purpose of this study is to examine tourism demand for Singapore from 1995 to 2013 by six major origin countries which belong to three different regions. Unlike prior tourism research, we take into account the dependence relations among the different tourist flows via copula. Copula is a statistical model of dependence and measurement of association. Specifically, we investigate the association between two tourist flows in each region. Based on empirical copula estimation, the Frank function has been identified as the most appropriate to capture the pairwise dependence structures of tourist flows. The copula-based approach combined with econometric models is proposed for tourism demand analysis that can be used to predict tourist arrivals. We apply the copula-ARDL and copula-ECM frameworks to generate joint forecasts of tourist arrivals from three regions. The findings show that the forecast performance of the Frank copula-based model outperforms the benchmark model which corresponds to the independence structure (no association) of tourist flows.     

Learning and the monetary policy strategy of the European Central Bank

This paper examines the welfare implications of alternative inflation targeting proposals for the monetary policy of the European Central Bank. We assume that policy makers have to “learn” the laws of motion of inflation in an economy characterized by “stickiness” in domestic price setting behavior and subjected to recurring shocks to productivity, exports and foreign price. We find that a switch from an “asymmetric” inflation targeting strategy to an “symmetric” makes little difference in welfare payoffs, but it comes at a cost of much higher interest-rate variability. We also find that there are practically no welfare gains from switching from an inflation-targeting strategy based on the Harmonized Index of Consumer Prices (HICP) to a strategy based on the domestic price component of the HICP.     

Rethinking the effectiveness of asset and cost retrenchment: The contingency effects of a firm's rent creation mechanism

This paper posits that the efficacy of different retrenchment strategies depends upon the firm's core rent creation mechanism. We focus on two distinct mechanisms of rent creation: Ricardian rent creation based on the exploitation of resources and Schumpeterian rent creation based on explorative capabilities. We argue that cost retrenchment may have detrimental effects on firms with a relatively high Schumpeterian rent focus. On the other hand, asset retrenchment may erode the basis for future rent creation for firms with a higher Ricardian rent focus. Our findings based on a sample of large nondiversified Japanese firms highlight the differing degrees of fragility and recoverability of the two rent creation mechanisms in the context of different retrenchment strategies. Copyright © 2012 John Wiley & Sons, Ltd.     

Does information risk affect the implied cost of equity capital? An analysis of PIN and adjusted PIN

Using a unique dataset of Korean listed companies for which trade initiators are correctly identifiable, we estimate bias-free PIN (probability of informed trading) that is no longer subject to the trade misspecification problem and test whether it is related to expected returns. Unlike prior studies, we find that bias-free AdjPIN, the adjusted PIN purged of a liquidity component, is positively related to implied cost of equity. Our findings suggest that the errors in PIN variables hamper a proper identification of PIN pricing in prior studies.     

Were In-Process Research and Development Charges Too Aggressive?

Abstract:  Prior research documents that US firms write off large in-process research and development charges (IPRD) for acquisitions, possibly overstating the current period expense to inflate future earnings. Consequently, in 1998, the US Securities and Exchange Commission (SEC) began scrutinizing IPRD charges. We use pre-acquisition R&D expenses of 144 target firms as a benchmark for assessing whether IPRD charges are appropriate. Overall, the results suggest that most firms during our sample period were not overly aggressive in expensing IPRD–especially for acquisitions subsequent to the SEC's scrutiny. The results also indicate that the SEC's intervention reduced the frequency of overstated IPRD charges.