Economic Consequences of the Cancellation of Inner Reserves for Hong Kong Banks

Inner reserves, which allow banks to report a higher or lower earnings at managerial discretion, bring into focus the ability of the market to make an informed judgment of banks' performance. This study examines the market response to the disclosure and elimination of inner reserves by Hong Kong banks resulting from a change in the regulatory reporting system. Test results show that despite a significant increase in the variability of bank earnings in the post-compared to the pre-disclosure period, there is no evidence of a significant increase in banks' systematic risk in the post-disclosure period. Earnings-returns association is significantly stronger in the post- than in the pre-disclosure period, indicating an improvement in the value relevance of reported earnings. Disclosure of inner reserve transfer is found to provide incremental information over reported earnings over a short disclosure window. These results suggest that the increased value relevance of earnings outweighs the costs of inner reserve cancellation, thus supporting greater reporting transparency for Hong Kong banks.     

Exports and technology in manufacturing industry

Zusammenfassung Exporte und Technologie der Verarbeitenden Industrie. — Die Verfasser nehmen die Behandlung der Technologie in der modernen Au\enhandelstheorie kritisch unter die Lupe. Unter Anwendung einer dynamischen Perspektive liefern sie einige neue empirische Erkenntnisse über die Beziehung zwischen der technologischen Wettbewerbsf?higkeit eines Landes und seiner Exportleistung. Anhand von fünf Industriel?ndern (Deutschland, Japan, Frankreich, Schweden und den Niederlanden) wird gezeigt, da\ es in dieser Hinsicht betr?chtliche Unterschiede zwischen den L?ndern gibt. Diese Unterschiede k?nnen teilweise auf l?nderspezifische Entwicklungspfade und auf Unterschiede in der Industriestruktur zurückgeführt werden, aber nach Ansicht der Autoren k?nnten sie auch durch eine unterschiedliche nationale Technologiepolitik beeinflu\t worden sein.

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Résumé Les exportations et la technologie des industries manufacturières. Cette étude examine le traitement du facteur de technologie dans la théorie moderne du commerce international. En utilisant une perspective dynamique, les auteurs donnent quelque évidence nouvelle pour la relation entre la compétitivité technologique et la performance dans le commerce international. En considérant cinq pays industriels (R.F.A., le Japon, la France, la Suède, et les Pays Bas), il est évident qu’il y a des différences remarquables entre ces pays. On peut attribuer ces différences aux processus du développement spécifiques de ces pays et aux différences entre la structure industrielle de ces pays examinés. Mais d’après les auteurs, ces différences pourraient être influencées aussi par les différences entre la politique de la technologie de ces pays.

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Resurnen Exportaciones y tecnologia en la industria manufacturera. — Este trabajo estudia el trato del factor tecnologia en la teoria moderna del comercio. Utilizando un enfoque dinámico se presenta evidencia empirica nueva de la relation entre la competitividad technológica y la performance del comercio. Considerando los casos de cinco paises industrials (Alemania, Japon, Francia, Suecia y Holanda) se demuestra que existen notables diferencias entre los países en este aspecto. Si bien estas diferencias se pueden atribuir parcialmente a las trayectorias de desarrollo especificas de cada pais y a diferencias en la estructura industrial, se sugiere que también podrian ser influenciadas por las diferencias entre las politicas tecnológicas nacionales.

     

Results on the bias and inconsistency of ordinary least squares for the linear probability model

This note formalizes bias and inconsistency results for ordinary least squares (OLS) on the linear probability model and provides sufficient conditions for unbiasedness and consistency to hold. The conditions suggest that a “trimming estimator” may reduce OLS bias.     

The underpricing of initial public offerings: A theoretical and empirical reconsideration of the adverse selection hypothesis

In this paper we generalize Rock's theory regarding the underpricing of IPOs. In Rock's model, informed investors have a firm-specific informational advantage pertaining to a firm's cash flow. We derive the new results that the level of beta and the size of the market risk premium positively affect underpricing. These implications extend the adverse selection theory and further distinguish this theory from the current state of signalling theories of underpricing. The results put the “hot and cold” issue markets phenomenon in a theoretical context. Empirical results are consistent with the theoretical propositions and provide support for Rock's theory of underpricing.     

A Model of Value Creation: Strategic View

Value creation has long been hailed as the major objective of business firms by many management researchers. Some authors state that a firm must create value for its shareholders; some insist that value must be created not just for shareholders but also for all stakeholders. However, most discussions of value creation do not address an important question: "For whom the value is created?" The purpose of this paper is to take a first step to fill this void and propose a model of value creation along three dimensions: financial, nonfinancial, and time. It is hoped that the model will contribute to a better understanding of how strategic and operational decisions of managers may create value for some stakeholders while destroying it for others.     

Skill compression, wage differentials, and employment: Germany vs the US

Germany's more compressed wage structure is widely viewed asthe main cause of the German-US difference in employment andunemployment, but part of the compression is due to Germanyhaving a narrower distribution of skills than the US. Even adjustedfor skills, however, we find that Germany has a more compressedwage distribution than the US. But relatively little of theUS-German employment difference can be attributed to the compressedwage distribution. We find that jobless Germans have nearlythe same skills as employed Germans and look more like averageAmericans than like low skilled Americans, which runs counterto the wage compression hypothesis. Given these patterns, thepay and employment experience of low skilled Americans is apoor counterfactual for assessing how reductions in pay mightaffect jobless Germans.