POSTERIOR‐PREDICTIVE EVIDENCE ON US INFLATION USING EXTENDED NEW KEYNESIAN PHILLIPS CURVE MODELS WITH NON‐FILTERED DATA

Changing time series properties of US inflation and economic activity, measured as marginal costs, are modeled within a set of extended New Keynesian Phillips curve (NKPC) models. It is shown that mechanical removal or modeling of simple low‐frequency movements in the data may yield poor predictive results which depend on the model specification used. Basic NKPC models are extended to include structural time series models that describe typical time‐varying patterns in levels and volatilities. Forward‐ and backward‐looking expectation components for inflation are incorporated and their relative importance is evaluated. Survey data on expected inflation are introduced to strengthen the information in the likelihood. Use is made of simulation‐based Bayesian techniques for the empirical analysis. No credible evidence is found on endogeneity and long‐run stability between inflation and marginal costs. Backward‐looking inflation appears stronger than forward‐looking inflation. Levels and volatilities of inflation are estimated more precisely using rich NKPC models. The extended NKPC structures compare favorably with existing basic Bayesian vector autoregressive and stochastic volatility models in terms of fit and prediction. Tails of the complete predictive distributions indicate an increase in the probability of deflation in recent years. Copyright © 2014 John Wiley & Sons, Ltd.     

A LONGITUDINAL STUDY OF CHANGE IN THE ENGLISH NATIONAL HEALTH SERVICE

This paper reports the findings of a longitudinal comparative case study of three National Health Service (NHS) hospital Trusts in England, investigating the perceptions of clinical, managerial and accounting professionals towards changing cost accounting and performance measurement practices. It incorporates both qualitative and quantitative data analysis, and is based on a contextualist understanding of change management, utilising the content‐process‐context approach (Pettigrew and Lapsley, 1994) to investigate the influence of receptive versus non‐receptive contexts on change. The analysis reveals limited success in improving performance measurement practices (the content of change) in Trusts. Nevertheless the specific context within which change was operationalised was found to be very important, with central mangers playing a key role in influencing change. The process of change indicated slow shifts in clinical‐accountant‐managerial relations, partly driven by changes in financial flows within the organisations.     

Merchanting and Current Account Balances

Merchanting is goods trade that does not cross the border of the firm's country of residence. Merchanting grew strongly in the last decade in several European economies and has become an important determinant of these countries’ current account. Because merchanting firms reinvest their earnings abroad to expand their international activities, this practice raises national savings in the home country without increasing domestic investment. This paper examines the empirical linkages between merchanting and the current account balance. Using a sample of 53 countries during 1980–2011, it shows that merchanting activity is a determinant of the medium‐term current account balance.     

Online RPM and MFN Under Antitrust Law and Economics

The legal framing of a firm’s pricing strategy can determine whether it constitutes online resale price maintenance (RPM) or online most favored nation (MFN). Together, cases that involve online RPM and MFN can be viewed as a natural experiment of how antitrust economics and law may adapt to an online world. Thus far, legal theories that have been inconsistent with economic theories have dictated enforcement across jurisdictions, which has led to confusion that thwarts potentially efficient business practices. This paper distinguishes issues of online RPM from traditional RPM and online RPM from online MFN. We apply the economics learning to RPM and analyze the antitrust cases of online RPM and MFN to date in the United States, Europe, and Australia. Finally, we offer policy recommendations that reduce the confusion in current legal doctrine.     

Corporate governance and incidences of listing suspension by the JSE Securities Exchange of South Africa: An empirical analysis

We examine the association between corporate governance structures and incidences of listing suspension from the JSE Securities Exchange of South Africa. Using a matched-pairs research design, we compare 81 firms suspended between 1999 and 2005 to an equal number of control firms matched in terms of time, size and industry. Employing a conditional logistic model, we find that the likelihood of suspension is higher in firms with a smaller proportion of non-executive directors, without an audit committee, and with greater block-share ownership and higher gearing (i.e. leverage). Further analysis splitting block-share ownership into institutional and non-institutional investors provides mixed results. While we find a positive association between suspension and non-institutional investors, we observe no association with institutional investors. No association is detected for board size, role duality, directors' share ownership, auditor quality and return on assets. Given the paucity of studies examining listing suspension from stock exchanges and corporate governance mechanisms, these findings contribute to the literature. Additionally, the dearth of research on corporate governance in developing countries suggests that our findings have important implications for policy makers in these countries as they endeavor to improve corporate governance.     

Corporate Compliance with Non-Mandatory Statements of Best Practice: The Case of the ASB Statement on Interim Reports

ABSTRACT

This paper contributes to our understanding of compliance with non-mandatory statements of best practice. Specifically, we examine the efficacy of agency-related mechanisms on the degree of disclosure compliance with the ASB Statement on interim reports. Using data drawn from a sample of 259 UK companies listed on the London Stock Exchange, we show that although overall disclosure compliance is high (74.5% of the items of information being disclosed), companies do not fully comply with the ASB Statement on interim reports. We employ an ordinary least square (OLS) regression model to establish whether selected company-specific and corporate governance characteristics (proxying for agency-related mechanisms) are related to the degree of disclosure compliance. Our results indicate that multiple listing, company size, interim dividend and new share issuance are positively associated with the degree of compliance. We also find that the degree of disclosure compliance is positively associated with auditor involvement, audit committee independence and audit committee financial expertise. These results have important implications for policy because they suggest that whilst agency-related mechanisms may motivate compliance with best practice non-mandatory statements, full compliance may be unattainable without regulations.     

Credit growth,current account and financial depth

Exploring the determinants and dynamics of the current account balance is one of the priorities of academic literature and policy circles. Although the effects of structural variables are deeply analysed, a lesser attention has been paid to the impact of financial variables. Drawing on standard empirical current account models and with a large sample of industrial and developing countries, we report a significant deterioration in the current account balance in case of an increase in the credit growth. Moreover, we find that this link is substantially stronger for the developing ones motivating a closer examination. Therefore, we further advance our analysis and show that credit growth causes a stronger impact on the current account balance for lower levels of financial depth. In other words, at the early stages of financial development, acceleration in the credit growth might cause a larger deterioration in the current account balance; thus, it might be suggested that monetary policy and macro-prudential measures aimed at preventing financial excess might be more effective to reduce the external imbalances at the early stages of financial deepening.     

Identifying risk issues and research advancements in supply chain risk management

The purpose of this paper is to investigate the research development in supply chain risk management (SCRM), which has shown an increasing global attention in recent years. Literature survey and citation/co-citation analysis are used to fulfil the research task. Literature survey has undertaken a thorough search of articles on selected journals relevant to supply chain operations management. Meanwhile, citation/co-citation analysis uses Web of Sciences database to disclose SCRM development between 1995 and 2009. Both the approaches show similar trends of rising publications over the past 15 years. This review has piloted us to identify and classify the potential risk associated with different flows, namely material, cash and information flows. Consequently, we identify some research gaps. Even though there is a pressing need and awareness of SCRM from industrial aspect, quantitative models in the field are relatively lacking and information flow risk has received less attention. It is also interesting to observe the evolutions and advancements of SCRM discipline. One finding is that the intellectual structure of the field made statistically significant increase during 2000-2005 and evolved from passively reacting to vague general issues of disruptions towards more proactively managing supply chain risk from system perspectives.     

Disclosure, Corporate Governance and Foreign Share Ownership on the Zimbabwe Stock Exchange

We investigate the association of foreign share ownership with firm‐level disclosure and corporate governance structures in Zimbabwe, a developing country in Southern Africa. Our motivation for the study derives from the literature, which suggests that foreign investors: (1) generally have a preference for companies in which they are well informed and where their investments are more likely to be protected, and (2) avoid companies in developing countries because of weak corporate governance structures and low disclosure. Using data drawn from companies listed on the Zimbabwe Stock Exchange, we examine the effect of disclosure and corporate governance on foreign share ownership. We find that disclosure, proportion of non‐executive directors, institutional share ownership and audit committee independence are all positively and significantly associated with foreign share ownership. Our results also demonstrate that market capitalization, return on equity and liquidity ratios are significantly associated with foreign share ownership. These results are consistent with the notion that foreign investors have a preference for companies with effective corporate governance structures, companies with less information asymmetry, as well as companies with healthy cash positions. The results have implications for policy‐makers in developing countries in their endeavour to improve liquidity on stock markets through the participation of foreign investors. The results are also useful to managers in developing countries who are keen to increase the market value of their company, thereby reducing their cost of capital.