Temporal dimension and equilibrium exchange rate: A FEER/BEER comparison

This paper investigates the temporal links between two models of equilibrium exchange rate, namely the behavioral and the fundamental approaches. Our results show that, even though in the long-run they are closely related, important differences are observed for some countries and/or some periods. Contrary to previous contributions, we analyze the factors that explain this disconnection. We outline structural changes in matter of competitiveness, the dynamics of foreign assets and valuation effects as explanations. This novel evidence is important if the two approaches for assessing misalignments are used for policy decisions such as setting tariffs to cope with the “currency war”.     

Human Rights Performance Disclosure by Companies with Operations in High Risk Countries: Evidence from the Australian Minerals Sector

The aim of this study is to explore whether Australian mineral companies operating in high human rights risk countries provide more human rights disclosures than companies operating in low risk countries. A content analysis instrument containing 88 specific human rights performance items derived from a number of international human rights guidelines has been developed to investigate the annual reports, social responsibility reports and corporate websites of the top 50 Australian mineral companies (2010/2011). The findings show that human rights performance disclosures by companies with operations in high human rights risk countries are significantly higher than companies with operations in low risk countries. By disclosing extended human rights performance information, companies operating in high risk countries appear to ease community concerns about human rights violations. The finding is consistent with legitimacy theory, which posits that organisations respond to community concerns in relation to particular social issues.     

Designing an immunized portfolio: Is M-squared the key?

The theoretical and empirical properties of M-squared, a measure of cash flow dispersion used in designing duration-hedged portfolios, are examined. Contrary to prior research, minimizing M-squared is not independent of the stochastic process and the minimum M-squared portfolio is a ‘bullet’ only under a specific, convexity condition derived in the paper.Using a data base of default-free, Government of Canada bonds to set up minimum M-squared, duration-matching portfolios, we find that the convexity property does not hold in general and that minimum M-squared portfolios fail to hedge as effectively as portfolios including a bond maturing on the horizon date.     

Forecasting Earnings Using Geographical Segment Data: Some UK Evidence

This study examines the question of whether or not the geographical segment data disclosed by UK companies can be used to generate forecasts of earnings that outperform forecasts based upon past consolidated data. One year ahead forecasts of attributable earnings or net income before extraordinary items are generated for both geographical sales data combined with a consolidated attributable earnings to sales margin and segmental earnings data. The forecasts are based upon forecasts of changes in the GNP of individual countries, both with and without the addition of forecasted inflation rates. It is found that models based upon both geographical segment sales and segment earnings outperform the random walk and random walk plus drift consolidated models for the years 1981 to 1983. The difference in the sizes of the errors generated by the segment data based models and the consolidated data based models are significant in the majority of cases especially when the errors are truncated at 100%. However, there is no additional advantage in terms of forecast accuracy in using segment earnings data rather than segment sales data.     

Perceptions of the political environment and top management orientations in Hong Kong public enterprises

Although the scope for unfettered private initiative in the Territory remains substantial, the degree of government economic intervention in Hong Kong is greater than is generally realised. Thus,inter alia and contrary to popular belief, public enterprise constitutes a noticeable segment of the local economy. In the present article, an attempt is made to draw some conclusions about this sector's characteristics on the basis of attitudinal data.Both authors are with the University of Hong Kong, Hong Kong     

Investment in South Africa – a comment on recent contributions

This article questions the interpretation of investment made by Fedderke et al. in the October 2001 issue of Development Southern Africa, in particular the conclusion that the higher investment rates of manufacturing in the 1990s are associated with the reduction in state intervention. Rather than improved manufacturing investment, the striking feature of the 1990s is the low level of investment by the government and parastatals. After making a brief review of investment performance over the past decade, manufacturing investment at the sectoral level is assessed, highlighting the very large investments in heavy industries. It is state support in the form of development finance from the Industrial Development Corporation that underlies these patterns, and not the withdrawal of the state as argued by Fedderke et al.     

ON PREFERRED STOCK

Preferred stock is issued by many corporations in spite of its apparent disadvantages. This study explains why. A simple partial equilibrium model is presented in which preferred shares are both supplied and demanded. Stronger tax incentives in Canada than in the United States may create a positive preferred equilibrium. Empirical evidence on the relative use of preferred stock in the two countries is presented to support this hypothesis.