The information content of the S&P 500 index and VIX options on the dynamics of the S&P 500 index

Given that both S&P 500 index and VIX options essentially contain information about the future dynamics of the S&P 500 index, in this study, we set out to empirically investigate the informational roles played by these two option markets with regard to the prediction of returns, volatility, and density in the S&P 500 index. Our results reveal that the information content implied from these two option markets is not identical. In addition to the information extracted from the S&P 500 index options, all of the predictions for the S&P 500 index are significantly improved by the information recovered from the VIX options. Our findings are robust to various measures of realized volatility and methods of density evaluation. © 2011 Wiley Periodicals, Inc. Jrl Fut Mark     

INTERNATIONAL ORIGINAL EQUIPMENT MANUFACTURING AND ORIGINAL DESIGN MANUFACTURING CONTRACTS WITH QUALITY‐DIFFERENTIATED PRODUCTS

We build a model of international subcontracting in quality‐differentiated goods. Assuming no entry in an original equipment manufacturing (OEM) market, we show that the foreign outsourcer will choose an original design manufacturing (ODM) contract only if the subcontractor is good enough at product design. However, the product quality with the ODM contract is not necessarily higher than that with the OEM contract. When the subcontracting market becomes perfectly competitive, the outsourcer will always choose an OEM contract. In a two‐period model with learning and entry effects, the foreign outsourcer chooses between different modes of manufacturing contracts. We demonstrate that a laissez‐faire policy on research and development (R&D) activity may be optimal even if the subcontracting firm can only obtain an OEM contract. In the case where the OEM market becomes perfectly competitive in the second period, we predict that a positive R&D subsidy in the first period can help the domestic subcontractor obtain OEM–ODM contracts and, as a result, national welfare rises.     

Effects of an anticipated expansion in international public goods on public capital accumulation

This paper presents a generic model to include public capital accumulation and the services of international public goods provided by a neighbor country. It examines the long-run and short-run responses of private and public capital accumulation in the home country to an anticipated increase in international public goods. It is found that the home economy in effect cuts its public capital stock, but keeps an unchanged private capital stock in the long run when a neighbor commits itself to expanding the stock of public goods in the future. The key factor determining the short-run responses of the home country is the extent to which it will match its government spending with a neighbor country's policy, which is associated with the relative difference between the marginal utility of consumption and that of home public capital affected by an increase in international public goods.     

Markov-switching model selection using Kullback–Leibler divergence

In Markov-switching regression models, we use Kullback–Leibler (KL) divergence between the true and candidate models to select the number of states and variables simultaneously. Specifically, we derive a new information criterion, Markov switching criterion (MSC), which is an estimate of KL divergence. MSC imposes an appropriate penalty to mitigate the over-retention of states in the Markov chain, and it performs well in Monte Carlo studies with single and multiple states, small and large samples, and low and high noise. We illustrate the usefulness of MSC via applications to the U.S. business cycle and to media advertising.     

Dynamic organizational learning: a narrative inquiry into the story of Huawei in China

In this paper, we apply a model derived from dynamic capability theory to analyse the evolution and development of Huawei as an emerging MNC that is also a dynamic learning organization. We show how this firm has evolved through four distinct eras, characterized in succession by imitation, improvement, integration and cross-disciplinary engagement. Each era has involved a sequence of steps, beginning with opportunities, and followed by path, position, processes and transformation. Through much of its history, Huawei drew heavily on outside expertise. By contrast, the contemporary Huawei has become self-sufficient, as progressive transformations have enabled the firm to acquire dynamic capability for developing unique client-driven solutions by combining knowledge from diverse internal expert communities.     

An exploratory study of the relationship between customer-based casino brand equity and firm performance

This exploratory study examines the relationship between customer-based casino brand equity and firm performance using Macau casinos as a sample. The results indicated that better-performing casino brands were associated with greater customer-based brand equity, which comprises brand loyalty, brand image and brand awareness. Furthermore, Asia Pacific-based casino brands in Macau outperformed their U.S.-based counterparts in terms of customers’ perceived quality, suggesting the need for U.S.-based casino brands to better cater for the needs of Macau casino visitors and to localize their services. Future research directions are also suggested.     

Population decentralization policies: the experience of Taiwan

"Social and economic policies and programs adopted by the government of Taiwan have slowed the pace of population concentration and prevented the highly concentrated distribution of population experienced by many developing countries. After presenting a brief analysis of Taiwan's population growth and distribution during the past three decades, this text examines the policies and programs credited with having curbed population concentration. They include both spatial development policies established for the purpose of decentralizing the population and its economic activities, and development policies that, although not designed expressly to curb population concentration, have had such an effect."     

Main banks’ influence on financial reporting quality in Japan

This study investigated main banks’ influence on the quality of accounting firms’ audits and corporate firms’ earnings, focusing on companies on Japan’s Nikkei 500 index. We posed three questions in this research study about main banks’ influence on corporate clients’ earnings management. First, does a weakened main bank relationship influence corporate clients’ financial reporting quality? Second, does Japan’s firewall deregulation influence firms’ earnings quality? Finally, does the relationship between accounting firms and main banks affect client firms’ earnings quality? Our main findings were that main banks are not related to client firms’ earnings management; however, main banks mitigate client firms’ earnings management after firewall deregulation. On the other hand, firewall deregulation does motivate firms to manipulate their earnings management. Finally, using Pong and Kita’s (2006) study as a framework, we found that main banks and client firms using the same accounting firms had no influence on earnings management. Based on these evidences presented, our findings suggest that the quality of corporate clients’ financial reporting changes before and after firewall deregulation.     

ENTRY AND IMPORT QUOTA

An import quota set stricter than the free trade level is quite common for the domestic entry protection. However, this paper shows that as the products are vertically differentiated, an import quota that is simply set at the original free trade level could be effective on entrant protection. This quota policy also improves both consumer surplus and total domestic welfare, which is in sharp contrast to the implications of existing literature. Our result suggests that an import quota has a stronger protection effect on domestic production if the domestic and foreign products are vertically differentiated.