Operations of a Pension Fund after the Asian Crisis: The Thai Experience*

During and after the Asian crisis, institutional investors and pension funds in Asian financial markets have been confronted with a number of difficulties effecting their performance and the way they carry out their role within the national pension system. We analyze these problems by comparing the actual investment policy of an institutional investor with an optimal investment strategy derived from the insights of modern portfolio theory. We also analyze whether the organizational set‐up of a pension fund allows it to adequately perform its role within the pension system. As an example, we examine the operations of the Thai Government Pension Fund (GPF). We find that allowing international investments and reducing restrictions on equity investments while lowering the implicit requirements for investments in government debt would allow the GPF to further diversify its investment risk and to increase its risk‐adjusted return. We also show that some changes in the governance structure of the GPF would lower the occurrence of conflicts of interest for the management and increase the efficiency of the GPF operations.     

OWNERSHIP STRUCTURE AND FIRM EXIT ROUTES

ABSTRACT

Our study presents empirical evidence about the role of ownership structure for firm exit probability by explicitly differentiating between distinct exit routes (bankruptcy and forced liquidation, voluntary liquidation, mergers and acquisitions – M&A, and removal from the court register). Based on the population of Slovenian firms in the 2006–2012 period and using multinomial probit, our findings support the predictions of agency theory. Ownership concentration, share of the largest owner, and the difference in shares between two largest owners all decrease the likelihood of exit for all studied exit routes but M&A. The magnitude of their impact is largest for exits, in which owners play a decisive role, i.e. voluntary liquidation and removal. The link between the number of primary owners and exit likelihood is U-shaped with the lowest exit probability for firms with around two owners.     

Developing Equity Release Markets: Risk Analysis for Reverse Mortgages and Home Reversions

Equity release products are sorely needed in an aging population with high levels of home ownership. There has been a growing literature analyzing risk components and capital adequacy of reverse mortgages in recent years. However, little research has been done on the risk analysis of other equity release products, such as home reversion contracts. This is partly due to the dominance of reverse mortgage products in equity release markets worldwide. In this article we compare cash flows and risk profiles from the provider's perspective for reverse mortgage and home reversion contracts. An at-home/in long-term care split termination model is employed to calculate termination rates, and a vector autoregressive (VAR) model is used to depict the joint dynamics of economic variables including interest rates, house prices, and rental yields. We derive stochastic discount factors from the no arbitrage condition and price the no negative equity guarantee in reverse mortgages and the lease for life agreement in the home reversion plan accordingly. We compare expected payoffs and assess riskiness of these two equity release products via commonly used risk measures: Value-at-Risk (VaR) and Conditional Value-at-Risk (CVaR).     

Evaluating,Comparing, Monitoring,and Improving Representativeness of Survey Response Through R‐Indicators and Partial R‐Indicators

Non‐response is a common source of error in many surveys. Because surveys often are costly instruments, quality‐cost trade‐offs play a continuing role in the design and analysis of surveys. The advances of telephone, computers, and Internet all had and still have considerable impact on the design of surveys. Recently, a strong focus on methods for survey data collection monitoring and tailoring has emerged as a new paradigm to efficiently reduce non‐response error. Paradata and adaptive survey designs are key words in these new developments. Prerequisites to evaluating, comparing, monitoring, and improving quality of survey response are a conceptual framework for representative survey response, indicators to measure deviations thereof, and indicators to identify subpopulations that need increased effort. In this paper, we present an overview of representativeness indicators or R‐indicators that are fit for these purposes. We give several examples and provide guidelines for their use in practice.     

Rewarding customers who keep a product: How reinforcement affects customers' product return decision in online retailing

A lenient product return policy represents the status quo of current return management practice in online retailing because it increases customers' order tendency. However, at the same time, many customers tend to return products under this policy, which incurs considerable costs for retailers. The present research introduces a keep reward (i.e., providing incentives to keep a product) as a new promotion strategy to improve the conventional lenient policy. Drawing on operant conditioning, the authors propose and test the reinforcing effect of a keep reward on customers' keep decision, compared to the conventional lenient policy. Results of a qualitative pilot study suggest that a keep reward is generally feasible in online retailing practice, especially in the low‐ to mid‐price segment and with rewards that are linked to future purchases. Two experimental studies verify the positive effect of a keep reward. Study 1 shows that it substantially increases keep intention compared to a conventional lenient policy. Study 2 shows that the effect on keep intention is moderated by customers' online shopping frequency, and this moderating effect is mediated by repurchase intention. In particular, the keep reward is most effective among frequent shoppers because they are more inclined to repurchase and thus, benefit from the reward. In summary, both studies support the keep reward as a valuable add‐on to the conventional lenient policy because order intention remains comparably high, while keep intention is higher. Theoretical implications and recommendations for online retailers on how to implement a keep reward in different industries are discussed.     

I Have Paid Less Than You! The Emotional and Behavioral Consequences of Advantaged Price Inequality

This study examines the emotion blends and the subsequent customer reactions that occur in advantaged price inequality situations, that is, when consumers learn that retailers charged them a lower price than what the same retailers charged another customer. Drawing on the appraisal theories of emotion and on social comparison theory, an experiment (n = 272) and a field study (n = 261) are conducted. The results reveal that in advantaged price inequality situations, customers experience a host of positive and negative emotions depending on two factors: the quality of relationship that the customer has with a disadvantaged other customer (neutral, positive, or negative) and the attribution of agency for the price advantage (situational attribution to competition, external attribution to store policies, or internal attribution to customer abilities). Positive emotions include happiness, gratitude, pride, and malicious joy; while negative emotions include pity, outrage, and guilt. These emotions are shown to mediate the occurrence of customer reactions (i.e., customer satisfaction, loyalty, WOM referral, and WOM activity). The article concludes with theoretical implications and recommendations for retail practitioners on how to use dynamic pricing.     

Bürgerversicherung — Die Wirkung von Kopfprämien auf den Arbeitsmarkt

Capitation fees are considered to be an option for a change in funding principles for statutory health care insurance. This paper discusses several models of capitation fees either to be introduced for a part of the population or for all citizens. It analyses the impact of a change in financing health care on the labour market. Therefore microeconomic theory and a QUERU-model is applied. It also considers the issue of presently co-insured dependents.     

Effectiveness of Absurdity in Advertising Across Cultures

This paper examines the effect of absurd advertising on memory and persuasion across cultures. Drawing on Hofstede's cultural dimensions, it is hypothesized that the effect of absurdity on recall is culturally invariant, whereas the effect on attitude toward the ad is contingent on the recipients’ cultural orientation. The assumptions are tested using a between-subjects experimental design, in which we manipulated type of absurdity and used the cultural dimensions as blocking variables. Data was collected from 274 students in the United States, Germany, Russia, and China. We discuss theoretical and managerial implications of these findings as well as guidelines for further research.