The Big Family: Informal Financing of Small‐ and Medium‐Sized Businesses by Guanxi

Guanxi facilitates interaction between companies and people in Confucian societies. Does this type of social construct still play the key role, when the entrepreneurs live in Western societies? The objective of this article is to verify the impact of Guanxi on the capacity of small and medium‐sized businesses accessing financial resources informally. To this end, data collected from small Chinese entrepreneurs active in the principal business center of Brazil were used. From nonparametric tests, the results suggest that: (1) different levels of Guanxi allow small and medium‐sized businesses to access informal financial resources; (2) different types of informal financing are mostly used, or judged to be more significant, depending on the level of Guanxi of the entrepreneur in terms of parental and nonfamily ties; and (3) unlike the Western literature on the financial cycles of start‐ups, this type of informal financing can extend beyond the initial stage of the business. © 2014 Wiley Periodicals, Inc.     

The Internationalization of Spanish- and Portuguese-Speaking Banks

This article investigates which variables affect the location choice of banks from Spanish- and Portuguese-speaking countries in their process of internationalization. The article compares the differences in these variables for public and private banks. The sample consists of 141 banks operating in 58 countries. Results show that internationalization is undertaken by the largest banks, which preferably choose countries with similar language, close to the home country, and with the most opportunity for growth. Additionally, the effects of certain explanatory variables on the probability of expanding to a given country are different for public and private banks.     

Advertising competition and industry channel structure

The introduction of independent retailers has long been recognized as a buffer that alleviates the price competition between channels. In this paper, we argue that this effect may be counter-balanced if the manufacturers compete along dimensions that differ from prices (such as advertising). We find that delegating to retailers may intensify other non-price competition between the manufacturers and therefore make the manufacturers worse off. Our analysis shows that the “retailer buffer” may be a two-edged sword and thus suggests that channel structure may critically depend on the specific dimensions along which the manufacturers compete with each other.     

The use of Fx derivatives and the cost of capital: Evidence of Brazilian companies

Large corporations have been using derivative instruments as a tool to protect their indirect exposure, as FX risks. A sample with 47 non-financial Bovespa Listed Brazilian companies from 2004 and 2010 was used to test the hypothesis that use of derivatives as a risk management policy tool reduces companies' cost of capital. In contrast to other countries, results rejected this hypothesis, showing that in Brazil there is a positive relationship between using these tools and cost of capital. However, a more in-depth analysis based on the TACC model for a Brazilian company, this hypothesis was not rejected after the 2008 crisis.     

Beef import market shares in Taiwan: implications for Australia

Market shares of major beef suppliers to Taiwan, including Australia, the United States and New Zealand, were estimated econometrically to determine their relative competitiveness. The analysis, based on monthly data from June 1990 to August 1997, showed that relative prices and consumer incomes were important factors influencing suppliers' market shares. Specifically, the demand for Australian beef responded little to an increase in price and negatively to an increase in consumer income. Furthermore, the growth in Taiwan beef consumption has slowed down and Australian beef suppliers need to re-assess the market potential and develop appropriate marketing strategies to maintain competitiveness.     

Is Beta Dead or Alive?

The debate about whether beta is dead or alive has heated up once again. We believe the empirical work supporting either side of the argument is limited because market frictions are not adequately addressed. This study clarifies the controversy about the issue by creating a new moving-average beta and analyzing two market anomalies: the turn-of-the-year and the Monday effects. What is discovered in this research is (1) that a fundamental source of the problem underlying the two types of market anomalies is the persistence of market frictions that retard the arbitrage process; (2) that beta is seriously ill if the effects of market frictions are ignored; and (3) that beta is alive and well if the effects of market frictions are accommodated. Also, we show, by using an optimal lead/lag structure, the moving-average beta provides significantly higher explanatory power for the turn-of the-year and the Monday effects than betas created from ordinary least squares regression and Scholes-Williams and Fama-French methods because the moving-average beta accommodates the effects of market frictions into the body of beta itself. This new type of beta, a moving-average beta, is demonstrated to be robust.     

SYNERGY,DIVERSIFICATION, AND INCENTIVE EFFECTS OF CORPORATE MERGER ON BONDHOLDER WEALTH: SOME EVIDENCE

The theory relating to the effects of a merger on the wealth of bondholders implies countervailing results. On the one hand, bondholders might share the benefits of operating synergies and diversification with shareholders. On the other hand, they might suffer from an incentive effect—the expropriation by the shareholders. Studies by Kim and McConnell (1977) and Asquith and Kim (1982) find that the wealth of bondholders is not significantly affected by conglomerate mergers. Using a more inclusive sample and a different methodology, this study finds that the wealth of bondholders is affected positively by merger, which implies synergies to bondholders and/or a diversification effect. Furthermore, an incentive effect would be inferred if leverage were increased substantially after merger and if the size of the increase were inversely related to bondholder gains. Since neither of these events is observed, this study finds no evidence for an incentive effect.     

Parent control mechanisms,knowledge attributes,knowledge acquisition and performance of IJVs in Taiwan service industries

The study explores parent companies' use of control mechanisms in their international joint venture (IJV), IJV knowledge acquisition and IJVs' performance. Traditionally, control mechanisms are criticized for potentially limiting autonomous learning. However, we propose that knowledge-oriented control mechanisms used by the parent company on its subsidiaries could facilitate knowledge acquisition and learning. This study takes samples from 104 Sino-foreign joint ventures in service industries in Taiwan. The results of the study indicate that in IJV, parent companies require a ‘personnel training’ control mechanism as a guide for gaining codified knowledge from foreign partners. MNCs should apply ‘culture’ and ‘performance’ control mechanisms to gain non-codified knowledge. In turn, the tacit knowledge of IJV results in a better economic, competency-based performance, while explicit knowledge more significantly influences the synthetic performance.     

COMPARATIVE EFFICIENCY OF MARKET INDICES: AN EMPIRICAL STUDY

This study ranks eight widely used market indices using two mean-variance efficiency scores developed from Roll's geometric representation of the Shanken's CRS T² test statistic and the likelihood ratio test statistic of Kandel. The results indicate that, over the period of 1973–1982, the CRSP equally weighted, CRSP value weighted, and S&P 500 emerge consistently as the three most efficient indices under all market conditions.