Prepurchase financing pool: Revealing the IRR problem

Internal rate of return (IRR) is one of the most common and important indicators in investment analysis because it is often used by managers and practitioners as a decision-making criterion. Moreover, the IRR reflects the financial cost in financing decisions and it helps to answer the following question when comparing different financing alternatives: “Which loan is the cheapest?” Among the different types of loans in Brazil, there is a financial product called a prepurchase financing pool (PPFP) that is generally regarded as the best option for financing or loans. The objective of this article is to use the prepurchase financing pool to show the flaws of IRR in financial analysis. In particular, when IRR is used to evaluate the prepurchase financing pool, one finds problems of reliability regarding (i) existence, (ii) uniqueness, and (iii) economic interpretation of the rate. The results show that the prepurchase financing pool is relevant evidence that the IRR flaws are found in financial products.     

Does Foreign Direct Investment Affect the Growth of Local Firms？ The Case of China＇s Electrical and Electronics Industry

Does foreign direct investment(FDI) into developing countries affect the growth of local firms in host countries? Using a dataset of 38 sectors in China’s electrical and electronics industry,in this paper,we analyze whether FDI has a positive effect on local firms,with technology spillovers,added value and increasing total factor productivity,or a negative, market stealing,effect.Estimating the relationship between growth of local firms and investment of foreign firms,our results show that FDI is likely to have a negative impact on the growth of local firms in sectors with large disparities in technology and less experience in business.Therefore,local firms lacking in technology need to find markets with no competition from foreign firms or determine strategies to compensate technology disparities.     

Christmas in Japan: Globalization Versus Localization

Products and services promoted on a global scale raise issues of globalism that are more superficial than the issues raised by the globalization of world holidays. It is one thing to have an Ikea and a KFC in the city, and conceivably quite another thing to have Christmas, Valentine's Day, and Halloween. Holidays like these have more complex cultural ideologies behind them. They threaten to displace traditional local holidays. And they offer a significant context in which to examine the interplay of global and local forces in the contemporary marketplace. We ask to what degree Christmas in Japan represents Western cultural imperialism, global homogenization, and a Westernization of Japan, versus local cultural adaptation, hybridization, and appropriation.     

The Dynamics of Poverty and the Promotion of Transition from Non‐Regular to Regular Employment in Japan: Economic Effects of Minimum Wage Revision and Job Training Support

Comparison between Japan and other advanced countries shows that the relative poverty rate is high in Japan, and that many of the poor households are those with a non‐regular worker. As for mobility between income classes, the proportion of households remaining in the poor class for a long period of time in Japan is close to the average for EU countries. The panel estimation of its effect on wages shows that the raising of the minimum wage is statistically significantly associated with an increase in wages of non‐regular workers, in particular, female, but does not seem to decrease employment. The result shows that for male non‐regular workers, firm‐provided training promotes their transition to regular employment, and that for female non‐regular workers, occupational training promotes their transition to regular employment at different firms.     

Intra‐firm differentiation of compensation systems: evidence from US high‐technology firms

While scholars have long recognised the influence of firm decisions on aspects of compensation (e.g. pay level and pay mix), prior compensation studies offer an ambiguous understanding regarding their scope. Some studies argue that firms customise compensation decisions according to employee groups, whereas others assume that firm compensation decisions apply uniformly throughout a firm. To address this research gap, the current study analyses pay levels and pay mixes for R&D employees and administrative employees in US high‐technology firms. Our empirical analyses show that firms make distinct compensation decisions for these two job families, but these decisions are ultimately consistent. These findings highlight firms' intention to strike a balance between customising compensation systems according to employee groups and maintaining internal consistency. Our findings add interesting insights to the strategic HRM and talent management literatures, which claim that firms should differentiate among employees when designing HRM systems.     

The Moderating Effects of Political Skill and Leader–Member Exchange on the Relationship Between Organizational Politics and Affective Commitment

Previous empirical studies have shown that perceptions of organizational politics are negatively related to individuals’ affective commitment. The key contribution of this study was that it found the interactive moderating effects of political skill and quality of leader–member exchange (LMX) on the relationship between perceptions of organizational politics and affective commitment. Our results indicated that politics perception affective commitment relationship was weaker when both political skill and quality of LMX are high. When only political skill is high and the quality of LMX is low, or LMX quality is high but political skill is low, the negative relationship between politics perception and affective commitment was not mitigated. Limitations and implications for future research are discussed.     

Optimal Mortgage Refinancing with Regime Switches

A model of rational mortgage refinancing is developed where the drift and volatility of interest rate process switch between two regimes. Because of the possibility of a regime shift, the optimal refinancing policy is characterized by the different threshold of interest differential for each regime. Numerical simulation demonstrates that the optimal refinancing threshold in each regime can be smaller or larger than the threshold under single-regime models. Finally, we evaluate the predictions of the model, based on the estimated parameters for a two-regime model to capture the evolution of the mortgage rates in the US. Our model can produce both late and early refinancing, which is consistent with the observed refinancing behavior. The views expressed in this paper are solely those of the authors and do not necessarily reflect official positions of the Sumitomo Trust and Banking Co., Ltd.     

The Relationships of Informal High Performance Work Practices to Job Satisfaction and Workplace Profitability

Recent empirical evidence reveals considerable divergence between management reports and employee reports regarding organizational high performance work practices (HPWPs). This divergence implies that employees may not participate in some HPWPs that are formally present in their organizations, but also, that employees may participate in HPWPs that are not formally present in their organizations. In this study, we examine the implication of the latter case (i.e., employee participation in “informal” HPWPs) for employee‐level and organization‐level outcomes. Our analyses, using data from the Statistics Canada Workplace and Employee Survey, suggest that employee participation in informal HPWPs is associated with enhanced job satisfaction and workplace profitability in a similar way as employee participation in formal HPWPs is associated with these outcomes.     

Minimal Entropy Martingale Measures of Jump Type Price Processes in Incomplete Assets Markets

We consider the incomplete assets market and assume that the market has no-arbitrage. Then there are many equivalent martingale measures associated with the market. Among them, a probability measure which minimizes the relative entropy with respect to the original probability measure P, has a special importance. Such a measure is called the minimal entropy martingale measure (MEMM). In a previous paper, we have proved the existence theorem of the MEMM for the price processes given in the form of the diffusion type stochastic differential equation. In this article we discuss the MEMM of the jump type price processes, or especially of the log Lévy processes, and we give the explicit form of MEMM.     

Small business in Japan: A historical perspective

Small firms have been considered to be an important element of the industrial structure in Japan since the turn of the century. In this paper the history of small business in Japan is examined. In particular, the dramatic development of the technological and managerial ability of small firms within the last two decades is analyzed. Under the regime of rapid industrial restructuring in Japan, small firms are identified as developing their own diversive management strategies, especially with respect to international trade and the implementation of information and high technology.