The economic effects of the 1920 eight-hour working day reform in Sweden

In 1920, the working day in Swedish manufacturing and services was cut from 10 to 8 hours without wages being cut correspondingly. Since workers demanded and got the same daily wage working 8 hours as they had with 10, real hourly wages increased dramatically; they were about 50% higher in 1921–1922 than they had been in 1919. This is the largest wage push in Swedish history, and this paper studies the consequences for profits, investments, capital intensity and unemployment. In traded manufacturing employers responded by increasing capital intensity and did not compensate for rising wages by raising prices, which led to a combination of jobless growth and low profit rates in the 1920s. Firms in non-traded manufacturing and services could raise prices and conserve profitability to a higher degree. In total, the effects of the reform were pro-labour. We discuss the implications for our understanding of interwar wages and employment, the literature on the decrease in inequality found in most industrial countries around 1920 and the rise of the ‘Swedish model’ in the 1920s and 1930s.     

Analysing Systemic Risk in the Chinese Banking System

We examine systemic risk in the Chinese banking system by estimating the conditional value at risk (CoVaR), the marginal expected shortfall (MES), the systemic impact index (SII) and the vulnerability index (VI) for 16 listed banks in China for the 2007–2014 period. We find that these measures show different patterns, capturing different aspects of systemic risk of Chinese banks. However, rankings of banks based on these measures are significantly correlated. The time‐series results for the CoVaR and MES measures suggest that systemic risk in the Chinese banking system decreased after the global financial crisis but started rising in 2014.     

Talent management and organisational justice: employee reactions to high potential identification

We examined how perceived distributive and procedural justice affected the relationship between an employee's identification as a high potential (drawn from archival data), job satisfaction and work effort. A questionnaire was distributed within one large company among employees who were and employees who were not identified as a high potential (n = 203). The results indicated that perceptions of distributive justice were significantly higher for employees identified as a high potential. Moreover, perceived distributive justice fully mediated the relationship between an employee's identification and his or her level of job satisfaction. The results also revealed that perceptions of procedural justice moderated the relationship between perceived distributive justice and work effort. Theoretical and practical consequences of these findings are discussed.     

How credible is the North Korean threat?

We perform event analysis on particular episodes of tension in the Korean peninsula between 2000 and 2008, and investigate the effect of the events on South Korean financial markets (stock markets, bond yield spreads and the exchange rate) given that South Korea would be the first affected by a military aggression from North Korea. Surprisingly, in nearly all cases, these events, which have often been dramatized in the world media, have no significant impact on either of these variables or only a very small one. We also find no significant impact of events on listed firms that would a priori be likely to suffer from increased tension between the two Koreas. Since financial markets often contain better predictions than expert opinions or surveys, these results strongly suggest that the North Korean threat is non‐credible.     

International project finance: review and implications for international finance and international business

This literature review analyzes the global phenomenon of international project finance (PF) as both a management and finance instrument, allowing practitioners to realize large scale infrastructure projects in high risk contexts. After describing the characteristics of PF, its historical origins and its unique benefits for empirical inquiry, I summarize the findings of academic research from an interdisciplinary perspective. Based on this integration of Finance, Management and International Business research, I discuss the theoretical implications for each field that emanate from PF. Finally, I identify possibilities for future research and propose a more balanced, interdisciplinary academic treatment of PF.     

COMMUNICATION ABOUT FUTURE POLICY RATES IN THEORY AND PRACTICE: A SURVEY

We discuss the theoretical rationale for central bank communication about future policy rates, either as part of inflation targeting or in the form of forward guidance. We also summarize both actual central bank communication about future policy rates and empirical evidence on the effectiveness of these types of communication. We argue that there is a disconnect between the theory and practice of forward guidance, as theory assumes commitment on the part of the central bank, while in practice central banks generally do not commit. Future theoretical research on forward guidance should therefore take the absence of commitment by central banks into account.     

The tactical and strategic value of hedge fund strategies: a cointegration approach

This paper analyzes long-term comovements between hedge fund strategies and traditional asset classes using multivariate cointegration methodology. Since cointegrated assets are tied together over the long run, a portfolio consisting of these assets will have lower long-term volatility. Thus, if the presence of cointegration lowers uncertainty, risk-averse investors should prefer assets that are cointegrated. Long-term (passive) investors can benefit from the knowledge of cointegrating relationships, while the built-in error correction mechanism allows active asset managers to anticipate short-run price movements. The empirical results indicate there is a long-run relationship between specific hedge fund strategies and traditional financial assets. Thus, the benefits of different hedge fund strategies are much less than suggested by correlation analysis and portfolio optimization. However, certain strategies combined with specific stock market segments offer portfolio managers adequate diversification potential, especially in the framework of tactical asset allocation.

Negative externalities on property values resulting from water impairment: The case of the Pigeon River Watershed

The objective of this research was to determine whether willingness to bear the negative externality from water quality impairment differs between those who do and those who do not receive economic benefit from the impairment source. Differences were tested using a hedonic analysis of ambient water quality in two discrete housing markets in the Pigeon River Watershed, which have been polluted by the operation of a paper mill. The results suggest that North Carolina residents residing in subwatersheds with impaired portions of the Pigeon River, who experience economic benefit from the paper mill in addition to its harmful effects on water quality, do perceive the pollution as a negative externality. In contrast, the effects of both the degraded river and its contributing streams on property values are perceived as negative externalities by watershed residents in Tennessee who experience only harmful effects from the pollution. Differences in willingness to bear the water-impairment externality were not indicated by variables representing view of and proximity to impaired water bodies. The results suggest that the perception of water quality to which property owners implicitly apply value should be considered when establishing water-quality regulations.