Effects of Preferred Stock Re-rating on Common Stock Prices: Further Evidence

This study examines the price reactions of common stocks to changes in preferred stock ratings, with focuses on firms with less information available in the market as well as on firms with a relatively larger proportion of preferred stock financing. Emphasis on differential information and the relative size of preferred stocks across firms provide a more powerful test of the effect of rating changes on stock prices. Contrary to previous studies that report no price effect on common stocks due to preferred stock re-ratings, these results show that for low-information firms and for firms with a larger proportion of preferred stocks in their capital structure, a preferred stock rating downgrade exerts significant negative price effect on common stocks during the two-day announcement period. Our findings also have implications for future studies of other firm-specific events such as security offerings, stock repurchases, and convertible calls.     

The Independence of the Italian Constitutional Court

It is often asserted that the Italian Constitutional Court is not independent of the Executive and Legislative branches of the government in Rome. We offer a view of independence that is congruent with bodies such as constitutional courts. We argue that the evidence, both qualitative and quantitative, however poor it may be, indicates that the Italian Constitutional Court is as independent as any other corresponding constitutional or supreme court of democratic countries. The evidence is not directly conclusive because the question, in the end, is not whether the judges, one by one, are independent, but whether the Court is independent. The evidence we offer pertains mostly to judges. If judges are independent, as that evidence seems to indicate, the Court is a fortiori even more independent.     

Dynamic linkages between exchange rates and stock prices: Evidence from East Asian markets

This study examines dynamic linkages between exchange rates and stock prices for seven East Asian countries, including Hong Kong, Japan, Korea, Malaysia, Singapore, Taiwan, and Thailand, for the period January 1988 to October 1998. Our empirical results show a significant causal relation from exchange rates to stock prices for Hong Kong, Japan, Malaysia, and Thailand before the 1997 Asian financial crisis. We also find a causal relation from the equity market to the foreign exchange market for Hong Kong, Korea, and Singapore. Further, while no country shows a significant causality from stock prices to exchange rates during the Asian crisis, a causal relation from exchange rates to stock prices is found for all countries except Malaysia. Our findings are robust with respect to various testing methods used, including Granger causality tests, a variance decomposition analysis, and an impulse response analysis. Our findings also indicate that the linkages vary across economies with respect to exchange rate regimes, the trade size, the degree of capital control, and the size of equity market.     

How to create competitive advantage: the moderate role of organizational learning as a link between shared value,dynamic capability,differential strategy,and social capital

Based on the organizational strategy and capability perspective, we theorized a serial mediation-moderation analysis that links critical beneficial attributes of dynamic capabilities, differential strategies, social capital, shared goals, and organizational learning to creating competitive advantage. Results from a survey of 328 travel agencies were analysed to support our hypotheses. We found that travel agencies’ shared goals may influence competitive advantage through the characteristics of dynamic capability development, differential strategy implications, and social capital accumulation. We also found that organizational learning is the most critical attribute for improving the relationships between shared goals, dynamic capabilities, and social capital to achieve competitive advantage. The implications of these findings for managerial and theoretical frameworks are also discussed.     

金融危机让国家干预在西方复活

在金融危机中，没有原则可言：在全世界，国家干预复活了，用于拯救受到沉重打击的银行。有的银行已经干脆国有化了。这真的有必要吗？这是否会引起另一场危机呢？德国之声记者采访报导如下。     

Non‐linear Predictability of Value and Growth Stocks and Economic Activity

Recent empirical evidence suggests that stock market index returns are predictable from a variety of financial and macroeconomic variables. We extend this research by examining value and growth portfolios constructed by book-to-market ratio, and consider whether such predictability is evident here. Further, we assess whether such predictability is better characterised by a non-linear form and whether such non-linear predictability can be exploited to provide superior forecasts to those obtained from a linear model. General non-linearities are examined using non-parametric techniques, which suggest possible threshold behaviour. This leads to estimation of a smooth-transition threshold model, with the results indicating an improved in-sample performance and marginally superior out-of-sample forecast results.     

The role of technical expertise in firm governance structure: evidence from chief financial officer contractual incentives

We provide evidence that the presence of technical expertise in firm governance structure reduces reliance on contractual incentives to control the potential agency problem for executives whose responsibilities require specialized knowledge. Specifically, we find that firms with financial expertise in the form of a board finance committee, or a chief executive officer with a financial background, tend to use lower levels of incentive‐based compensation for their chief financial officers. Our findings suggest financial experts provide stronger oversight and/or direction with regard to firm financial policies and strategies, thereby allowing firms to reduce reliance on incentive compensation. Our study provides insight into the role of technical expertise and board committees in firm governance, and into the benefits of common functional expertise within top management teams. Copyright © 2010 John Wiley & Sons, Ltd.