WAR AND LIBERTY: WISDOM FROM LEONARD E. READ AND F. A. ‘BALDY’ HARPER

This year marks the 60th anniversary of Leonard E. Read's Conscience on the Battlefield and F. A. ‘Baldy’ Harper's In Search of Peace. This article reviews the main themes of these anti‐war pamphlets and argues that the ideas contained within are as important and relevant today as they were 60 years ago.     

Homer Sarasohn and American Involvement in the Evolution of Quality Management in Japan, 1945–1950

The history of Quality Management, and of the role of Statistics in Quality Management, is inextricably bound to the reconstruction of Japan immediately following the Second World War, and then to developments in the United States over three decades later. Even though these periods are, in societal history, just moments ago, yet there is profound lack of agreement about what was actually done, and who should be recognized for their contributions. This paper draws on historical materials recently made publicly available in order to clarify what actually took place between 1946 and 1950, and in particular the contribution of a remarkable engineer, Homer Sarasohn.     

孔夫子大获全胜

美国人认为，中国的战略挑战来自于新式的隐形战斗机。不过，我认为中国发起的真正的挑战，是其教育体系的崛起以及对教育的浓厚热情     

Asset pricing and foreign exchange risk

According to the International Capital Asset Pricing Model (ICAPM), the covariance of assets with foreign exchange currency returns should be a risk factor that must be priced when the purchasing power parity is violated. The goal of this study is to re-examine the relationship between stock returns and foreign exchange risk. The novelties of this work are: (a) a data set that makes use of daily observations for the measurement of the foreign exchange exposure and volatility of the sample firms and (b) data from a Eurozone country.The methodology we make use in reference to the estimation of the sensitivity of each stock to exchange rate movements is that it allows regressing stock returns against factors controlling for market risk, size, value, momentum, foreign exchange exposure and foreign exchange volatility. Stocks are then classified according to their foreign exchange sensitivity portfolios and the return of a hedge (zero-investment) portfolio is calculated. Next, the abnormal returns of the hedge portfolio are regressed against the return of the factors. Finally, we construct a foreign exchange risk factor in such manner as to obtain a monotonic relation between foreign exchange risk and expected returns.The empirical findings show that the foreign exchange risk is priced in the cross section of the German stock returns over the period 2000-2008. Furthermore, they show that the relationship between returns and foreign exchange sensitivity is nonlinear, but it takes an inverse U-shape and that foreign exchange sensitivity is larger for small size firms and value stocks.