Plant Scale and Exchange‐Rate‐Induced Productivity Growth

This paper examines the impact of exchange rate movements on firm‐level productivity through changes in the scale of production. We employ plant‐level data to examine whether, and in what direction, exchange rate movements affect the scale of production, and how these changes in scale influence productivity. The paper finds that a real appreciation of the domestic currency reduces shipments and this negative effect is larger for exporters (both domestic and foreign owned). The paper also finds evidence that the appreciation‐induced reduction of scale negatively affects productivity at the plant level. This scale effect more than offsets any potential gains from the appreciation‐induced reduction in the price of imported inputs.     

China＇s Outward Direct and Portfolio Investments

This paper analyzes developments and trends related to China's outward direct and financial investments by examining Chinese firms’overseas acquisitions, China's holdings of US Treasury securities, and the recently formally launched Qualified Domestic Institutional Investor programs. Strategies should be developed to reach optimal decisions for both direct and portfolio investments. We argue that China should have a longer‐term view for both direct and portfolio investments, enabling China to become the leader in Asia while maintaining its sustainable growth objective. China should invest heavily in the development of the Asian bond market and the Asian Currency Fund when making both portfolio and direct investment decisions.     

IMPACT OF DIVIDEND‐PROTECTED EMPLOYEE STOCK OPTIONS ON PAYOUT POLICIES: EVIDENCE FROM TAIWAN

Abstract. This study used a sample of 1035 Taiwanese firms to examine the impact of dividend protected employee stock options on stock repurchase and cash dividend policies from 2000 to 2005. This study finds a positive relationship between cash dividends and executive options, implying that executives holding stock options might prefer to distribute cash dividends to boost the stock price. This result, unlike in earlier studies, arises from the dividend protected characteristic of Taiwanese employee stock options. Finally, free cash flow, firm profitability, level of debt, investment opportunities and firm size are found to considerably influence payout decisions.     

Adjusting for the intervalling effect bias in beta: A Test using Paris Bourse Data

This paper uses a sample of daily returns data from the Paris Bourse to test the predictions of and adjustment procedures implied by the Cohen-Hawawini-Maier-Schwartz-Whitcomb (1983a,b) model of the intervalling effect bias in OLS beta estimates. CHMSW show that the bias diminishes asymptotically to zero as the differencing interval increases and that the sign of the bias depends on a stock's relative value of shares outstanding. We employ the three-pass regression procedure of CHMSW (1983b), but we test a broader set of second pass functional forms and use the Box-Cox (1964) transformation model to verify our chosen form. The CHMSW adjustment procedures are compared with that of Scholes-Williams (1977), and the latter is shown to contain a significant intervalling effect bias.     

The impact of the Internet on human activity–travel patterns: analysis of gender differences using multi-group structural equation models

The widespread use of the Internet for conducting various types of activities may be leading to considerable change in people’s activity–travel patterns. Past studies, however, have left many issues unaddressed. Using an Internet-activity diary dataset and multi-group structural equation modeling, this study examines the complex interactions between different types of Internet and physical activities, with a special focus on gender differences and Internet maintenance and leisure activities. The results indicate that the impacts of Internet activities on people’s activity–travel patterns are significantly different across gender. In general, Internet use for maintenance purposes has a greater impact on women’s activity–travel in the physical world, while Internet use for leisure purposes affects men’s physical activities and travel to a greater extent. Further, breaking Internet activities down into different categories reveals some hidden patterns that would not have been detected if these different types of Internet activities were lumped together as a single category.     

Earnings quality: Some evidence on the role of auditor tenure and auditors’ industry expertise

Prior studies suggest that auditors with short tenure are associated with lower earnings quality because of the lack of client-specific knowledge and/or low balling. In this study, we examine whether industry specialization of auditors and low balling affect the association between auditor tenure and earnings quality. We find that the association between shorter auditor tenure and lower earnings quality is weaker for firms audited by industry specialists compared to non-specialists. In addition, we do not find results consistent with the low balling explanation.     

The information content of option implied volatility surrounding the 1997 Hong Kong stock market crash

This study examines the information conveyed by options and examines their implied volatility at the time of the 1997 Hong Kong stock market crash. The author determines the efficiency of implied volatility as a predictor of future volatility by comparing it to other leading indicator candidates. These include volume and open interest of index options and futures, as well as the arbitrage basis of index futures. Using monthly, nonoverlapping data, the study reveals that implied volatility is superior to those variables in forecasting future realized volatility. The study also demonstrates that a simple signal extraction model could have produced useful warning signals prior to periods of extreme volatility. These results indicate that the options market is highly efficient informationally. © 2007 Wiley Periodicals, Inc. Jrl Fut Mark 27:555–574, 2007     

Europe,Germany and “The German Model”: Economic Links and Implications for China

Abstract

In this paper, I examine the economic links first between the European Union (EU) and China and then I focus on the economic relationships between Germany and China. The links I will consider include international trade and direct investment. Lastly I highlight some elements of the so-called “German Model” or the “Berlin Way” and examine if they can be of policy relevance to China. There are four main results: first, EU-China trade and investment relationships are strong, deepening rapidly but they are somewhat unbalanced and asymmetric. Second, the economic relationships between Europe and China are focused on manufacturing. Third, the EU-China relationships are primarily Deutschland-centric. Lastly, elements of the “German Model” such as Mitbestimmung, Mittelstand and the German apprenticeship system can have important structural and policy implications as China continues to grow and experiment with reforms aiming at combining stability, harmony and competitiveness.     

Firm Size and Performance of Manufacturing Enterprises in P.R. China: The Case of Shanghai's Manufacturing Industries

This paper studies the relationship between firm size and technical efficiency of manufacturing enterprises in Shanghai's manufacturing sector from 1989 to 1992. Although our empirical results show that technical efficiency is increasing in the firm size, the group of the smallest enterprises (0–99 workers) have very high technical efficiency. The group of enterprises with size of 100–249.9 workers have the lowest technical efficiency while the largest size (1000 workers or above) group usually have the highest technical efficiency. Finally, technical efficiency computed from net industrial product has large upward biases compared with that computed from gross industrial product.