Labour unions and leverage: evidence from firm-level union data

ABSTRACT

Using firm-level labour union data from Japan, this paper investigates the effect of labour unions on firm leverage. We find that as union coverage increases, both the level of and extent of change in leverage decreases. These relations remain robust when a firm falls into deficit. We also find that firms with higher union coverage have a higher interest coverage ratio. In addition, we find that firms with higher union coverage are less likely to choose issuing debt compared to issuing equity when they face financial distress. Our results imply that significant employee influence enhanced by labour unions increases fixed costs, crowds out the firm’s debt capacity and consequently reduces the firm’s leverage.     

Optimal pair-trading strategy over long/short/square positions—empirical study

Suzuki [Automatica, 2016, 67, 33–45] solves the optimal, finitely iterative, three-regime switching problem for investing in a mean-reverting asset that follows an Ornstein–Uhlenbeck price process and find explicit solutions. The remarkable feature of this model is that the investor can explicitly take either a long, short or square position and can switch the position, with transaction costs, during the investment period. We run empirical simulations of such multiple-regime switching models. There are very few such attempts in the existing literature because it is difficult to find, first, an explicit solution to the problem and second, appropriate financial assets that follow the artificial stochastic process required by the mathematical model. According to the Monte Carlo simulations of the optimal pair-trading strategy, the mean daily Sharp ratio is more than 2.3, whereas the mean Sharp ratio for the historical simulation of the ‘stub’ pairs (combinations of parent/subsidiary companies) is 0.6886. We believe that the results obtained from performing the empirical simulations are remarkable and consider that the optimal switching strategy of the rigorous mathematical model is applicable to businesses in the real world. For the reference many pseudo-program codes are added, which can help to replicate the optimal trading strategies.     

Does oligopsony power matter in price support policy design? Empirical evidence from the Thai Jasmine rice market

In the oligopsony market, farmers may receive low prices and policy analysis assuming perfect competition can yield serious bias results. In this paper, we estimate oligopsony power between processors and farmers and evaluate the welfare impact of the paddy pledging program (PPP), a generous price support program in the Thai Jasmine rice market, with an imperfect competition model. We develop a model that consists of rice supply equation and derived demand equation. We then simultaneously estimate these equations using system estimation methods to recover oligopsony power parameters. Finally, we use these parameters to assess the welfare impact of the price support program. Using annual panel data running from crop marketing year 2001/2002–2015/2016 and exploiting the institutional feature of the PPP, we find strong evidence of some oligopsony power, a moderate level of oligopsony price distortion, and a negative relationship between price support and oligopsony power. We also find that the PPP is inefficient but effective in income redistribution. Moreover, the program benefits both farmers and consumers. With better policymaking decisions, the PPP can be efficient by setting a suitable support price. Therefore, our results show that in the case of the Thai Jasmine rice market, the generally accepted “wisdom” about agricultural price support policy does not necessarily hold, and price support can be designed to improve the efficiency of the market.     

PERSONAL AND REGIONAL DETERMINANTS OF OUT‐MIGRATION FROM METROPOLITAN AREAS IN JAPAN

In this study, we focus on migration from metropolitan to outside areas in Japan, and quantitatively examine the personal and regional determinants of this process. At the regional level, our results show that the determinants of migration differ depending upon whether migration occurs from smaller to larger cities or vice versa. In the case of migration from larger to smaller cities, the residential environment beyond the metropolitan area is more important than employment opportunities. At the personal level, we analyzed the differences among the determinants of migration, looking at migrants according to age categories and based on their motivations for migrating. The main factors encouraging migration comprised opportunities for employment, education, and marriage.     

Defect Detection Using Unanimous Vote Among Mahalanobis Classifiers for Each Color Component

In manufacturing industries, product inspection is automated and the use of image data is increasingly being employed for defect detection. A manufacturing company in Japan produces an item and inspects the produced products using image data. Reducing the error rate is important in product inspection because poor inspection of products might lead to the delivery of defective products to consumers (consumer’s risk) and strict inspection increases production cost (producer’s risk). To reduce the error rate, we highlighted fault points using a two-dimensional moving range filter and discriminated defect production through a unanimous vote among Mahalanobis classifiers for each color component. For results, we achieved a lower error rate than the current system. This research is an empirical study of how to use image data in defect detection.     

Shift of the short-term temperature mortality relationship by a climate factor - some evidence necessary to take account of in estimating the health effect of global warming

Several studies have reported a 'V'-shaped relationship between short-term temperature and mortality rates, characterized by mortality rates that are higher when the temperature is extremely low or high than when the temperature is moderate. To quantify the effect of adaptation to a certain climate on this V-shaped short-term temperature-mortality relationship, we studied the prefecture-specific relationship between daily maximum temperature and mortality rates for 65+-years-old Japanese from 1972 to 1990. For both genders, the optimum daily maximum temperature (OT) category at which the mortality rate was minimum ranged from 23C-28 C to 33+C, and the OT level became lower when the climate became colder. The mean OT level was lower for women than for men by 1.7C. The mortality rate at the OT was almost constant across prefectures, regardless of the climate. From the results, we considered that the adaptation effect on the short-term temperature-mortality relationship is mainly described by the 'horizontal shift model': the V-shape moves horizontally according to the climate. This 'shift' should be taken into account in estimating the health effect of global warming, and the model would be useful for the estimation.