Unsolicited Versus Solicited: Credit Ratings and Bond Yields

This paper is the first attempt to analyze Standard & Poor’s unsolicited and solicited ratings by using bond-yield data in Japan. Our findings show that there are differences in firm characteristics between firms seeking solicited ratings and those that receive unsolicited ratings. Firms with solicited ratings have less information asymmetry and are more likely to be owned by foreign investors, generate more revenue from exports, be cross-listed in the US, and have higher firm quality. But, firms with unsolicited ratings pay higher costs for debt, and their bond prices react more strongly to credit-rating changes. Yield spreads for new bonds with unsolicited ratings are higher than those with solicited ratings, because unsolicited ratings have higher information asymmetry, and investors therefore demand higher yields. We find that bond-price reactions to the announcements of unsolicited rating downgrades (upgrades) are negative (positive) and significant, while bond prices do not react significantly to solicited rating downgrades or upgrades.     

Profitable growth: Avoiding the ‘growth fetish’ in emerging markets

Growth management is a challenging but critical corporate strategy facing the fast economic growth in emerging markets. An overemphasis on growth would lead to the growth fetish, where growth is unqualified and seen as an end in itself. By examining the performance of 105,260 firms in key sectors of Brazil, Russia, India, and China (BRIC) from 2002 to 2011, this study presents quantitative evidence that supports a profit-oriented strategy as a more effective path to sustained profitable growth in emerging markets. To further support this argument, this study also provides qualitative evidence of a group of 70 sustained high-performing firms that are superior to their peers (the top 500 private companies in each of the BRIC countries) in terms of profit, growth, market share, and efficiency over a 10-year period. The study shows that sustained profitable growth requires qualified sales growth (i.e., organic growth), competence-based and competence-enhancing growth, and continuous product diversification.     

Social learning in networks: a Quantal Response Equilibrium analysis of experimental data

Individuals living in society are bound together by a social network and, in many social and economic situations, individuals learn by observing the behavior of others in their local environment. This process is called social learning. Learning in incomplete networks, where different individuals have different information, is especially challenging: because of the lack of common knowledge individuals must draw inferences about the actions others have observed, as well as about their private information. This paper reports an experimental investigation of learning in three-person networks and uses the theoretical framework of Gale and Kariv (Games Econ Behav 45:329–346, 2003) to interpret the data generated by the experiments. The family of three-person networks includes several non-trivial architectures, each of which gives rise to its own distinctive learning patterns. To test the usefulness of the theory in interpreting the data, we adapt the Quantal Response Equilibrium (QRE) model of Mckelvey and Palfrey (Games Econ Behav 10:6–38, 1995; Exp Econ 1:9–41, 1998). We find that the theory can account for the behavior observed in the laboratory in a variety of networks and informational settings. This provides important support for the use of QRE to interpret experimental data.     

Who should be the respondent? Comparing predictive powers between managers' and employees' responses in measuring high-performance work systems practices

This study first examines the association between the effectiveness of high-performance work systems (HPWS) and two types of firm performance (the financial performance and productivity of a firm) in Korea and then compares the relative predictive power between employee responses and manager responses. The results indicate that the effectiveness of HPWS has a statistically significant positive effect on firm performance and that employee perception of the effectiveness of human resource (HR) practices explains more variance in the financial performance and productivity of firms than does managers' corresponding perception. This study highlights the importance of a firm's employees as a source of HR information.     

The iron cage exposed: Institutional pressures and heterogeneity across the healthcare supply chain

The healthcare industry has been known to operate in a strong institutional environment (i.e. government regulations), and the implementation of inter-organizational systems (IOS) has followed an institutional process. Extending this perspective across different tiers in the healthcare supply chain, we investigate how organizations in different tiers in the supply chain (i.e. hospitals, distributors and manufacturers) respond to institutional pressures when implementing IOS. How institutional dynamics unfold across multiple tiers of a supply chain is an uncharted area of research, and we take the theory-building case study approach using data collected from ten organizations. Because organizations are embedded in their respective tiers, our within-tier analyses are equivalent to cross-organization analyses. In this regard, the cross-case analyses occur at two different levels: at each tier level (i.e. across multiple hospitals, multiple distributors and multiple manufacturers) and across the supply chain (i.e. across all three tiers). The study shows how different institutional pressures such as coercive, mimetic, and normative manifest across the tiers. It also demonstrates how a differential mix of endogenous and institutional pressures lead to mixed organizational responses across the tiers. The propositions developed from the study enrich institutional theory arguments within the information systems and supply chain management disciplines. They highlight how the IOS implementation dynamics within and across different tiers in a supply chain result in heterogeneous rather than isomorphic consequences, thereby exposing the “iron cage” of institutionalization.     

Some Methodological Issues on Estimating Foreign Exchange Exposure of US Multinational Firms: Evidence from the Asian Crisis

Abstract

This article asks whether sample specification of firm, period, and exchange rate matters in estimating foreign exchange exposure of US multinational firms. By sampling US firms that had Asian sales and assets from 1996 to 1998, we find that the firms’ returns are more likely to be significantly exposed to the Asian-oriented exchange rate changes for the Asian crisis, when the exchange rate changes were unexpectedly sizable. Also, by examining firms’ exposure in the share of Asian sales and assets, we find that the firms are more exposed as their operations are more involved in the Asian region.     

The Rising Supply of College Graduates and Declining Returns for Young Cohort: The Case of Korea

Abstract

This study analysed the effect of an increase in the supply of youth college graduates, in terms of the return on education. The rate of return on education in Korea substantially dropped from 1983 to 1994. Since then, however, the declining trend of the rate of return on education stopped and turned upward. The rate of return has declined especially for college graduates, and such a decline has been most prominent for young cohorts, among college graduates, since 1987. The observed trend of the rate of return appears to be related to the sharp increase of labour supply of college graduates since the mid 1980s.

The elasticity of substitution between education levels and age groups was estimated in this study, using a generalized demand-supply model. The effects of relative supply of college graduates (as a whole and by age) on the relative wages of college graduates by age were analysed under the assumption of constant skill-biased technological change. As it turned out, the relative college graduates’ labour supply of each age group had large bearings upon relative wages of each corresponding group, while the relative labour supply of all college graduates did not. It implies that labour is an imperfect substitute, not only between education levels but also between age groups.

Thus, as youth college graduates’ supply increases, there needs to be a corresponding demand increase for them, to avoid the drop in the wage or employment level for them. Therefore, to tackle with the issues of youth labour market, such as youth unemployment, separate policies targeting the youth group are called for.     

Competition principles and policy in the APEC: How to proceed and link with WTO

There is a growing consensus that competition‐oriented policy framework would be instrumental in achieving the Bogor goal of trade and investment liberalization by 2010/2020. As of now, only eight economies have the experience of operating competition policy for more than a decade. Many emerging economies of the APEC have only begun to introduce competition policy. The Auckland APEC Leaders Meeting of 1999 adopted the APEC competition principles. It is a significant step forward, but more hard work lies ahead: the issue of developing specific and concrete work program to implement the competition principles within the APEC and how to put competition policy in the much broader context of a multilateral trading system. The paper maps out a specific strategy to move the competition policy agenda forward at the APEC and how to link to the WTO and identifies the sources of such value‐added and makes a proposal in order to best utilize them.     

Fashion retail forecasting by evolutionary neural networks

Recent literature on nonlinear models has shown that neural networks are versatile tools for forecasting. However, the search for an ideal network structure is a complex task. Evolutionary computation is a promising global search approach for feature and model selection. In this paper, an evolutionary computation approach is proposed in searching for the ideal network structure for a forecasting system. Two years’ apparel sales data are used in the analysis. The optimized neural networks structure for the forecasting of apparel sales is developed. The performances of the models are compared with the basic fully connected neural networks and the traditional forecasting models. We find that the proposed algorithms are useful for fashion retail forecasting, and the performance of it is better than the traditional SARIMA model for products with features of low demand uncertainty and weak seasonal trends. It is applicable for fashion retailers to produce short-term retail forecasting for apparels, which share these features.