the swedish unemployment experience abstract since the 1960s sweden has sustained a remarkably low unemployment rate while the average duration of unemployment spells has been increasing over time this pattern is reproduced in an equilibrium search model incorporating progressive income taxes generous unemployment compensation and a program for preventing unemployed workers from abusing the system our analysis raises concerns about how well the swedish system is equipped to handle the current situation of high unemployment

proper risk aversion on introduit et on etudie une condition comportementale significative sur les fonctions d utilite pour les richesses qui signifie qu une loterie indesirable ne peut jamais etre rendue desirable par la presence d une loterie indesirable independante

standard risk aversion this paper introduces the concept of standard risk aversion a von neumann morgenstern utility function has standard risk aversion if any risk makes a small reduction in wealth more painful in the sense of an increased reduction in expected utility also makes any undesirable independent risk more painful it is shown that given monotonicity and concavity the combination of decreasing absolute risk aversion and decreasing absolute prudence is necessary and sufficient for standard risk aversion standard risk aversion is shown to imply not only pratt and zeckhauser s proper risk aversion individually undesirable independent risks always being jointly undesirable but also that being forced to face an undesirable risk reduces the optimal investment in a risky security with and independent return similar results are established for the effect of broad class of increases in one risk on the desirability of or optimal investment in a second independent risk

portfolio choice and liquidity constraints we study the infinite horizon model of household portfolio choice under liquidity constraints and revisit the portfolio specialization puzzle we show why the puzzle is robust to several model variations and argue that positive correlation between earnings shocks and stock returns is unlikely to provide an empirically plausible resolution we find that relatively small fixed costs for stock market entry are sufficient to deter stockholding because for a plausible range of parameter values households can achieve desired consumption smoothing with small or zero holdings of stocks such costs could arise from informational considerations sign up fees and investor inertia

the liability of localness in innovation i analyze differences in the innovativeness of domestic firms and subsidiaries of foreign firms operating in the same country i argue that domestic firms suffer a liability of localness in innovation or a competitive disadvantage in product innovation relative to subsidiaries of foreign firms i propose that this liability of localness is driven by the relatively lower levels of multiculturalism in employees of domestic firms in comparison with subsidiaries which limit the identification transfer and integration of a large diversity of knowledge that supports product innovation i also propose that managers of domestic firms can compensate for this liability of localness in two ways by investing in the training of their employees and by exporting training modifies the mindsets and abilities of employees and enables them to become more cognitively multicultural which facilitates product innovation exporting changes employees mindsets as they become exposed to new ideas available abroad which also facilitates product innovation i test these arguments on a sample of manufacturing firms and find that although domestic firms introduce fewer new products than subsidiaries of foreign firms they introduce more new products than subsidiaries at the same level of investment in language training and of exports

the translation of corporate governance changes across national cultures the case of germany contrasting systems of corporate governance persist internationally but are subject to regulatory and firm level institutional change such changes may be viewed as organisational innovations often imported from the usa in the face of different national cultures this paper analyses the implications of national culture for the translation of innovations and provides case study illustrations of regulatory and firm level governance changes experienced in germany these illustrations demonstrate that the diffusion of both kinds of change has been subject to substantial translation that is consistent with german national culture

income hedging and portfolio decisions we examine whether the decision to participate in the stock market and other related portfolio decisions are influenced by income hedging motives economic theory predicts that the market participation propensity should increase as the correlation between income growth and stock market returns decreases surprisingly empirical studies find limited support for the income hedging motive using a rich unique dutch data set and the national longitudinal survey of the youth nlsy from the united states we show that when the income return correlation is low individuals exhibit a greater propensity to participate in the market and allocate a larger proportion of their wealth to risky assets even when the income risk is high individuals exhibit a higher propensity to participate in the market when the hedging potential is high these findings suggest that income hedging is an important determinant of stock market participation and asset allocation decisions

temperance in stock market participation evidence from france we explore empirically whether earnings uncertainty and borrowing constraints deter households from the stock market consistent with the predictions of theoretical studies of portfolio choice in the presence of uninsurable earnings since recent extensions highlight the importance of the correlation between earnings and financial risks here we use a self assessed proxy from the delta tns 2002 cross sectional survey to empirically assess the impact although income risk does not affect the participation decision of households reporting a negative correlation it does lower the participation of those who report a non negative sign consistent with economic theory predictions

stickiness and the adaptation of organizational practices in cross border knowledge transfers the reuse of organizational practices in multiple locations is a fundamental way in which mncs leverage knowledge to seek competitive advantage scholars approaching the issue of adaptation from both a market and an institutional perspective argue that in order to achieve fit with the local environment some degree of adaptation is advisable and the need for adaptation increases as the institutional distance between source and recipient locations increases however arguments to date have examined the effect of adaptation primarily on a subsidiary s long term performance a necessary precursor is to understand the effect of adaptation on the transfer process itself as transfer difficulty or stickiness may preclude the reuse of an organizational practice in the first place in this paper we explore how the adaptation of organizational practices affects the stickiness of cross border transfers we use structural equation modeling to analyze data from 122 internal transfers of best practice contrary to expectation we find that adaptation significantly increases rather than decreases the stickiness of cross border knowledge transfer

investment allocation decisions home bias and the mandatory ifrs adoption abstract we examine the familiarity hypothesis of home bias by studying how foreign ownership of swedish firms is affected by the mandatory adoption of ifrs we decompose foreign investors into institutional and non institutional investors foreign investors are further decomposed into eu ifrs adopting countries and non eu residents non ifrs adopting countries we analyse the equity investments of these foreign investor groups in sweden during the period of 2001 2007 we find that after the mandatory adoption of ifrs foreign ownership owners from countries that adopted ifrs and particularly those from the eu increased these effects are particularly strong in small firms foreign institutional investors increased their ownership stake after the mandatory ifrs adoption whereas foreign non institutional investments were not affected significantly by the ifrs adoption in contrast to ownership from non adopting countries ownership from the eu increased in firms with both more and less tangible assets similarly foreign ownership from the eu increased in firms with both concentrated ownership and dispersed ownership after the adoption because sweden has already had strict legal enforcement and a low level of earnings management prior to the adoption our results suggest that increased foreign ownership is due to better abilities to compare firms rather than an improved quality

sector choice multiple job holding and wage differentials evidence from poland this article uses data from poland to investigate the role played by wage differentials between the public and private sectors in influencing sector choice and the decision to moonlight standardising for worker characteristics and allowing for sector selection effects we find i a substantial private sector wage premium ii wage differentials are a significant determinant of sector choice and iii the desire to moonlight is particularly strong among those who face the greatest wage gap that is university educated employees

a switching regression model for wage determinants in the public and private sectors of a developing country governments in less developed countries face severe budgetary constraints given that public sector employment is a large part of modern sector employment the government wage bill h as come under increased scrutiny the central question is how do gove rnment wages compare with those in the private sector in this paper the authors develop and estimate a model to answer this question an important aspect of this model is the endogenous treatment of sector choice the estimation results full information maximum likelihood sound a strong warning against the use of ordinary least squares est imates that are based on sector specific samples data are from the i vory coast copyright 1988 by mit press

saver behavior and 401 k retirement wealth contributions to 401 k plans are now the most important form of retirement saving since 401 k plans were introduced in the early 1980 s they have expanded rapidly and continuously by 1998 roughly half of all households were eligible to participate in 401 k plans and more than 36 million workers made contributions to these employer provided saving plans in 1995 the last year for which the u s department of labor has released definitive data 401 k contributions amounted to 87 4 billion or 55 percent of all contributions to employer sponsored pension plans the level of contributions and their share of all pension contributions is probably significantly higher today the spread of 401 k plans is the most important indicator of the move to personal retirement saving in 1980 almost 92 percent of pension plan contributions were to traditional employer provided plans and about 64 percent of these contributions were to conventional defined benefit plans today almost 60 percent of contributions are to personal retirement accounts including 401 k ira and keogh plans including employerprovided non 401 k defined contribution plans over 76 percent of contributions are to plans that are controlled in large measure by individuals these individuals make participation contribution asset allocation and withdrawal decisions in this paper we describe the likely importance of 401 k assets for future older americans and the effect of investment decisions on asset accumulation we also examine the extent to which retirement assets may be affected by several decisions preretirement withdrawals management fees and expenses contribution rates and early retirement our analysis focuses on 401 k saving but applies more broadly to other forms of individual retirement saving

twin picks disentangling the determinants of risk taking in household portfolios this paper investigates risk taking in the liquid portfolios held by a large panel of swedish twins we document that the portfolio share invested in risky assets is an increasing and concave function of financial wealth leading to different risk sensitivities across investors human capital which we estimate directly from individual labor income also affects risk taking positively while internal habit and expenditure commitments tend to reduce it our microfindings lend strong support to decreasing relative risk aversion and habit formation preferences furthermore heterogeneous risk sensitivities across investors help reconcile individual preferences with representative agent models

the nature of precautionary wealth abstract this paper uses the panel study of income dynamics to provide some of the first direct evidence that wealth is systematically higher for consumers with predictably greater income uncertainty however the apparent pattern of precautionary wealth is not consistent with a standard parameterization of the life cucle model in which consumers are patient enough to begin saving for retirement early in life wealth is estimated to be far less sensitive to uncertainty than implied by that model instead our results suggest that over most of their working life time consumers behave in accordance with the buffer stock models of saving described in carroll 1992 1997 or deaton 1991 in which consumers hold wealth principally to insulate consumption against near term fluctuations in income

cultural industries in international business research progress and prospect cultural industries systems of organizations that produce and distribute cultural goods with substantive symbolic aesthetic or artistic value represent an important exciting and complex context that receives growing scholarly attention as the first review of management research on cultural industries this paper aims to provide a systematic synthesis of current research summarizing distinctive characteristics of cultural industries and highlighting research gaps we also illustrate how the unique nature dynamics and evolution of cultural industries provide opportunities to broaden international business theories in four research themes i e internationalization strategy cross border innovation social inclusion in the global economy and emerging market research

the underdetermined knowledge based theory of the mnc in this note we revisit two core propositions of the knowledge based view of the firm found in the seminal work of kogut and zander 1 that multinational corporations mncs exist because transfers and re combinations of knowledge occur more efficiently inside mncs than between mncs and third parties and 2 that the threat of opportunism is not necessary although it may be sufficient to explain the existence of the mnc their knowledge based view shifted the conceptualization of the firm from an institution arising from market failure and transaction costs economizing to a progeny of superior knowledge governance we question these conclusions arguing that firms are but one of the many types of epistemic communities possessing and nurturing procedural norms identity and the cognitive linguistic and reflexive attributes conducive to efficient exchange and re combination of knowledge among their members important insights may be gained by applying the concept of epistemic communities implicit in the knowledge based perspective beyond firm level hierarchies journal of international business studies 2011 42 427 435

optimal portfolio choice for long horizon investors with nontradable labor income this paper examines how risky labor income and retirement affect optimal portfolio choice with idiosyncratic labor income risk the optimal allocation to stocks is unambiguously larger for employed investors than for retired investors consistent with the typical recommendations of investment advisors increasing idiosyncratic labor income risk raises investors willingness to save and reduces their stock portfolio allocation towards the level of retired investors positive correlation between labor income and stock returns has a further negative effect and can actually reduce stockholdings below the level of retired investors financial advisors typically recommend that their customers invest more in stocks than in safe assets when they are working and to shift their investments towards safe assets when they retire jagannathan and kocherlakota 1996 malkiel 1996 by contrast the standard academic models of portfolio choice merton 1969 1971 samuelson 1969 show that retirement is irrelevant for portfolio decisions if investment opportunities are constant and human capital is tradable in this case the fraction of wealth optimally invested in risky assets should be constant over the lifetime of an individual recent research building on the pioneering work by merton 1971 shows that time varying investment opportunities result in portfolio rules with an intertemporal hedging component whose magnitude depends on the investment horizon of the investor kim and omberg 1996 balduzzi and lynch 1997 brennan schwartz and lagnado 1997 brandt 1999 campbell and viceira 1999 2001 barberis 2000 with time variation in investment opportunities retirement and death play an instrumental role as events that exogenously fix the individual s investment horizon more importantly retirement also marks the time at which individuals stop working and thereafter must live off their lifetime savings and possibly transfers from this perspective retirement matters for portfolio choice

improved price indexes for real estate measuring the course of swedish housing prices this paper presents an improved methodology for estimating asset prices for real estate and other durables the method is used to analyze house price dynamics by exploiting an unusually rich and detailed body of data extensive descriptive and financial information on every house sale in sweden during a 12 year period the results confirm the importance of many aspects of quality in affecting the course of housing prices as well as the role of individual specific and idiosyncratic aspects of housing the results are compared with the price trends produced by more primitive methods and published by official sources q 1998 academic press

the internalisation theory of the multinational enterprise a review of the progress of a research agenda after 30 years this paper reviews the progress of the research agenda initiated by the future of the multinational enterprise 1976 focusing initially on the problem of explaining the existence of the multinational enterprise the agenda soon broadened to encompass the analysis of alternative modes of foreign market entry the role of international joint ventures the impact of innovation on corporate growth and the role of culture in international business the core philosophy based on the coasian nature of the firm and on rational action modelling has remained constant while the widening range of applications has encouraged synthesis with theories developed in other fields of research success in answering any one question invariably generates new questions which must in turn be answered through a further extension of the theory and this dynamic continues to drive the development of the theory today internalisation theory has retained its validity and its vitality over the past 30 years and is currently being extended into new fields of international business research

the economics of moonlighting a double self selection model the model proposed here for obtaining the labor supply functions of moonlighters uses a double self selection system to explore the husband s decision to moonlight together with his wife s decision to work subsequently the labor functions are classified under two regimes depending on whether the wife works the model is estimated based on a cross section of 4 448 married couples from the survey of income and program participation wave 2 i find that the household production time of husbands and wives are substitutes and that specific human capital deters moonlighting copyright 1990 by mit press

knowledge sharing and social interaction within mnes social interaction between managers from different units of a multinational enterprise mne has been shown to be an important factor stimulating intra mne knowledge sharing face to face social interactions form a communication channel particularly conducive to the transfer of tacit non codified knowledge but intensive social interaction also provides opportunities for social construction of knowledge in a learning dialogue the first explanation sender receiver makes us expect social interaction to moderate positively the effects of the factors giving rise to knowledge flows in the first place such as differences in capabilities between mne subsidiaries the second perspective social learning also grants an independent effect to social interaction as a main factor stimulating intra mne knowledge flows we formulate hypotheses based on both perspectives and test these on data from 169 mne subsidiaries our findings show a considerable main effect of social interaction on all intra mne knowledge flows confirming the expectations based on the social learning model interaction effects based on the predictions of the sender receiver model are only partly confirmed these findings suggest that future research should devote more attention to the social constitution of mne knowledge

from crossing cultures to straddling them an empirical examination of outcomes for multicultural employees international organizations ranging from large mncs to small born global firms are increasingly recognizing that multicultural employees can help them operate across countries and across cultures however multiculturals individuals who identify with and internalize more than one culture are a diverse group and organizations seeking to leverage their potential can benefit from a deeper understanding of the resources they possess and the challenges they face we conducted three studies with a total of 1196 participants to test relationships between multicultural identity patterns and personal social and task outcomes consistent results across studies indicated that individuals with more cultural identities higher identity plurality had more social capital and higher levels of intercultural skills than those with fewer cultural identities while individuals who integrated their cultural identities higher identity integration experienced higher levels of personal well being than those who separated them based on these results we advocate for two directions in future research on multicultural employees moving beyond cognitive mechanisms alone and examining monocultural and multicultural individuals simultaneously along the spectrum of identity plurality

the income and tax share of very high income households 1960 1995 this paper presents new information on the fraction of adjusted gross income and of wages and salaries that is reported by taxpayers in the top one half of one percent of the income distribution this corresponds to roughly five hundred thousand households in the late 1990s this paper relies on data from the treasury s individual income tax model for the period 1960 1995 the definition of adjusted gross income is standardized so that changes in the tax law do not affect the measured concentration of agi the results suggest that the share of agi reported by the highest income households increased significantly between the early 1980s and the mid 1990s with most of the increase taking place in the years immediately following the tax reform act of 1986 while we find some evidence of transitory changes in the concentration of income around major tax changes which may be the result of income retiming by high income taxpayers re timing does not seem to explain most of the changes since 1986 this abstract was borrowed from another version of this item

portfolio choice in the presence of background risk in this paper we focus on how the presence of background risks from sources such as labour and entrepreneurial income influences portfolio allocations this interaction is explored in a theoretical model that is calibrated using cross sectional data from a variety of sources the model is shown to be consistent with some but not all aspects of cross sectional observations of portfolio holdings the paper also provides a survey of the extensive theoretical and empirical literature on portfolio choice

glocal understandings female readers perceptions of the new woman in chinese advertising research in international advertising has often taken a dichotomized approach as exemplified by the global standardization vs localization debate it is assumed under the standardization approach that the globalization process will absorb different national cultures into a global commercial culture such that standardized advertising should be preferred the current research argues that the dichotomization approach may have oversimplified the way consumers read and interpret ad images we postulate that consumers in a transitional economy apply a variety of reading approaches including different cultural interpretive strategies and self referencing to absorb global images into their cultural and consumption schemas this is commonly referred to as glocalization we developed a typology of modern women images in chinese magazine advertising potential interpretive strategies and self referencing responses in this research results of a content analysis and a reader response study support our postulations implications are discussed

cultural gap bridging in multinational teams multinational teams are an organizational reality but they present several challenges the literature suggests that individuals with multicultural identities are more likely to show behaviors that aim at improving intercultural interactions in multinational teams though scholars have yet to determine the precise nature of these behaviors we address this research gap in a multimethod two study design by identifying five team cultural gap bridging behaviors cgb behaviors facilitating translating integrating mediating and empathetic comforting in study 1 we draw on one qualitative and two quantitative datasets to identify within team cgb behaviors and develop a measure of cgb behaviors in study 2 drawing from two wave survey data we investigate and find support for the direct relationships between cultural identity plurality and cgb behaviors and the indirect relationships via cultural intelligence

the future of the multinational enterprise in retrospect and in prospect we are sometimes asked how the future of the multinational enterprise came to be written and whether we think that a similar book could be written today it is always difficult to be objective about your own work but we doubt that a similar book could appear today this is not because there is a dearth of talent or because all the important issues have been resolved it is simply that the academic environment in which research in international businesses is carried out has fundamentally changed political salience the future was written at a time of great debates in international political economy multinationals stood accused of global hegemony there were strident calls for the american challenge to european industry to be repelled servan schreiber 1968 foreign investment in third world countries was leading to uneven development technology was overpriced a conspiracy of oligopolistic firms was holding consumers and workers to ransom what nonsense you might say but the united nations took it seriously enough and set up a committee of eminent persons to consider a possible code of conduct for multinationals a process that led to the formation of the un centre on transnational corporations in this heady atmosphere separating fact from fiction was crucial a lot of good statistical work was being done indeed it is probable that more was known about patterns of foreign direct investment than about any other aspect of industrial economics at the time us bureau of commerce the harvard project led by raymond vernon but how could the statistics be interpreted general equilibrium theory did not seem to be up to the task a new framework was needed that would allow the statistics to reveal the underlying dynamics of multinational behaviour with the right theory it would be possible to use the statistics to pass judgement on competing views positivism political salience prompted many scholars to write about multinationals the future was distinguished by its strongly positivist stance the book began by summarizing the stylized facts revealed by the published statistics the well known distinction between direct and indirect investment was carefully examined journal of international business studies 2003 34 219 222 2003 palgrave macmillan ltd all rights reserved 0047 2506 25 00

repatriation of debt in the euro crisis with the beginning of the euro crisis the long standing trend of european financial integration reversed investors unwound cross border positions of debt obligations and increased holdings of locally issued debt in other words debt obligations were repatriated we use data on bank portfolios to document three new empirical regularities of the financial disintegration i repatriation affected mainly debt of crisis countries ii repatriation affected mainly public debt iii the public debt of crisis countries that was not repatriated was reallocated to large and politically influential countries within the euro area we read these results in light of standard theories of cross border portfolio allocation and argue that the sum of these patterns constitutes evidence for the secondary market theory of public debt

segmentation and time of day patterns in foreign exchange markets abstract this paper sheds light on a puzzling pattern in spot foreign exchange markets domestic currencies appreciate depreciate systematically during foreign domestic working hours this phenomenon spans many years and several exchange rates and overrides calendar effects we argue that it is mainly due to liquidity and inventory patterns that emerge from the combination of two factors domestic agents tend to be net buyers of foreign currency and to trade mostly in their country s working hours the prevalence of domestic foreign traders demanding the counterpart currency during domestic foreign working hours implies sell price buy price pressure on the domestic currency during domestic foreign working hours

the effects of within country linguistic and religious diversity on foreign acquisitions this article explores how within country diversity of both language and religion influences the ownership structure of foreign acquisitions commentators have acknowledged the potential importance of within country diversity but to date this issue has received minimal empirical attention we propose that diversity plays two distinct roles namely diversity within the host country may be an additional source of behavioral uncertainty and information asymmetry over and above the effects arising from cross national differences moreover diversity within the home country may increase the cognitive complexity of the decision makers moderating the firm s response to the distance and diversity of the host country results based on foreign acquisitions across 67 acquirer and 69 target countries confirm both of these roles while the main focus of this article is on the role that within country diversity plays in international business decisions it also makes contributions in terms of expanding the range of dimensions of distance investigated in the cross border acquisition literature in highlighting a potentially positive role that diversity might play in such acquisitions and in providing a potential explanation for asymmetries in distance that is differences in cognitive complexity

knowledge transfer in international acquisitions this paper reports on a multimethod study of knowledge transfer in international acquisitions using questionnaire data we show that the transfer of technological know how is facilitated by communication visits meetings and by time elapsed since acquisition while the transfer of patents is associated with the articulability of the knowledge the size of the acquired unit and the recency of the acquisition using case study data we show that the immediate post acquisition period is characterized by imposed one way transfers of knowledge from the acquirer to the acquired but over time this gives way to high quality reciprocal knowledge transfer

a retrospective on culture s consequences the 35 year journey abstract our 2006 journal of international business studies article a quarter century of culture s consequences a review of the empirical research incorporating hofstede s cultural values framework provided a comprehensive review of 180 empirical journal articles and edited volume chapters published between 1980 and june 2002 that incorporated hofstede s cross cultural values framework we examined empirical research that positioned culture as either a main or moderating effect the review attempted to make sense of the almost quarter century of research examining the impact of culture at the individual group organization and country levels in the present commentary we provide a a summary of the progress that has been made in the intervening decade and most importantly b a new set of recommendations for the next decade to guide those wishing to study the role of national culture in organizations

is local bias a cross border phenomenon evidence from individual investors international asset allocation abstract extant literature consistently documents that investors tilt their domestic equity portfolios towards regionally close stocks local bias we hypothesize that individual investors local bias is not limited to the domestic sphere but instead also determines their international investment decisions our results confirm the presence of a cross border local bias specifically we show i that the stockholdings of individual investors living within regional proximity to a foreign country display a significantly lower foreign investment bias towards investment opportunities in that country and ii that this drop in foreign investment bias levels is disproportionately driven by investments in regionally close neighbor country companies the impact of cross border local bias on investors bilateral foreign equity investments is economically significant and holds even after controlling for previously identified explanations of international asset allocation

knowledge transfer in international acquisitions a retrospective in this retrospective we summarise and discuss the findings of our 1999 jibs paper knowledge transfer in international acquisitions and we consider how research in this area has evolved over the last decade the paper s key contribution was to show how the post acquisition integration process in a sample of three international acquisitions led to the creation of a social community characterised by two way knowledge sharing between the acquirer and acquired companies we discuss how the timing of this publication as an early contribution to the knowledge based perspective on the firm helped its visibility and we consider the boundary conditions around our findings

the effect of liquidity constraints on consumption a cross sectional analysis this paper examines the effect of liquidity constraints on consumption expenditures using a single year cross section data set a reduced form equation for consumption is estimated on high saving households by the tobit procedure to account for the selectivity bias since high saving households are not likely to be liquidity constrained the estimated equation is an appropriate description of how desired consumption that would be forthcoming without liquidity constraints is related to the variables available in the cross section data when the reduced form equation is used to predict desired consumption the gap between desired consumption and measured consumption is most evident for young households

think glocally act glocally a culture centric comment on leung bhagat buchan erez and gibson 2005 culture is a critical variable in international business ib and leung bhagat buchan erez and gibson 2005 enrich our understanding of its role however that said their framing of this variable conflates the role of national culture nc a particular form of culture with culture itself a more pivotal holistic and central construct this paper by commenting on and critiquing their approach seeks to shift the theoretical center of gravity from a nc centric paradigm to a culture centric constructivist one and from a top down bottom up view to a flatter glocalized one implications are provided which suggest that research should address cultural processes of patterning and production as well as cultural forms such as global communities and global culture gc which share with or even capture the spotlight from nc as a focus for studying and developing ib cultural theory journal of international business studies 2009 40 237 254 doi 10 1057 palgrave jibs 8400410

asset pricing in large information networks we study asset pricing in economies with large information networks we focus on networks that are sparse and have power law degree distributions in line with empirical studies of large scale social networks our theoretical framework yields a rich set of novel asset pricing implications we derive closed form expressions for price volatility profitability and trading volume as functions of the network topology we also study agent welfare and show that the network that optimizes total welfare is typically a uniform one with an intermediate degree of connectedness

segmented or competitive labour markets a normal roy model with four sectors is developed it allows to derive tests of several assumptions on the working of the labor market strongly or weakly competitive or segmented it shows that more important a feature of labor markets than segmentation is the presence of comparative advantages for individuals between the various economic sectors the model is applied to data on women s labor force participation in the main towns of colombia in 1980 it uses multivariate probit and tobit techniques copyright 1991 by the econometric society

asset pricing puzzles and incomplete markets the representative agent theory of asset pricing is modified to incorporate heterogeneous agents and incomplete markets the model features two types of agents who differ up to a nontradable idiosyncratic component in their endowment processes numerical solutions indicate that individuals are able to diversify a substantial portion of their idiosyncratic income risk through riskless borrowing and lending alone restrictions on the variability of intertemporal marginal rates of substitution hansen and jagannathan 1991 are used to argue that incomplete markets as modeled here cannot account for the properties of asset returns that are anomalous from the perspective of representative agent theory a large literature in financial economics has investigated the extent to which variants of the lucas 1978 general equilibrium theory of asset pricing can account for the joint behavior of aggregate u s consumption and asset returns by and large this literature has concluded that a theory based upon frictionless arrow debreu markets and or a representative agent makes strongly counterfactual predictions regarding even the simple unconditional properties of this relationship mehra and prescott 1985 for instance show that the theory drastically underpredicts the average excess rate of return on u s stocks the so called equity premium puzzle weil 1989 points out as did mehra and prescott that the magnitude of the average risk free rate is far below that predicted by the theory this has been dubbed the risk free rate puzzle numerous authors including grossman melino and shiller 1987 and backus gregory and zin 1989 show that the theory cannot account for term premia inherent in the yield curve hodrick 1987 surveys a large literature which documents the theory s shortcomings in accounting for excess expected returns in foreign exchange markets the notion that the representative agent model cannot account for excess returns across a wide array of asset markets can be made more precise by using tools developed by hansen and jagannathan 1991 and shiller 1982

organizing knowledge processes in the multinational corporation an introduction this introduction discusses the contrast between on the one hand the current popularity of addressing mnc organization in knowledge terms and on the other the lack of adequate understanding of many of the causal mechanisms and contextual factors in relations between knowledge processes and organizational factors a number of the relevant research challenges are identified and it is clarified how the five articles in this focused issue addresses some of these

multiple job holding in the united kingdom evidence from the british household panel survey this article examines the determinants of multiple job holding in the uk we address these issues using data from the first 11 waves of the british household panel survey bhps which covered the period from 1991 to 2001 evidence from the bhps does not support the hypotheses of main job hours constrained and main job insecurity we argue that the incentive for moonlighting in the uk is due to financial pressures and the desire for heterogeneous jobs the empirical work is carried out separately for men and women

optimal consumption and investment with capital gains taxes this article characterizes optimal dynamic consumption and portfolio decisions in the presence of capital gains taxes and short sale restrictions the optimal decisions are a function of the investor s age initial portfolio holdings and tax basis our results capture the trade off between the diversification benefits and tax costs of trading over an investor s lifetime the incentive to rediversify the portfolio is inversely related to the size of the embedded gain and investor s age contrary to standard financial advice the optimal equity holding increases well into an investor s lifetime in our model due to the forgiveness of capital gains taxes at death taxes play an important role in the decision making process of individuals concerning their consumption and investment plans the taxation of returns on financial assets alters the benefits of saving for future consumption and thus affects the trade off between current consumption and investment moreover the ability of investors to defer the taxation of capital gains alters the relative valuation of stocks and bonds and thus affects the optimal portfolio composition of investors the deferral feature of capital gains taxes also affects the trade off investors face regarding taxes and diversification investors would like to maintain an optimally diversified portfolio over time

location matters an examination of trading profits the electronic trading system xetra of the german security exchange provides a unique data source on the equity trades of 756 professional traders located in 23 different cities and eight european countries we explore informational asymmetries across the trader population traders located outside germany in non german speaking cities show lower proprietary trading profit their underperformance is not only statistically significant it is also of economically significant magnitude and occurs for the 11 largest german blue chip stocks we also examine whether a trader location in frankfurt as the financial center or local proximity of the trader to the corporate headquarters of the traded stock or affiliation with a large financial institution results in superior trading performance the data provide no evidence for a financial center advantage or of increasing institutional scale economies in proprietary trading however we find evidence for an information advantage due to corporate headquarters proximity for high frequency intraday trading

why do so few hold stocks the authors investigate why 75 percent of u s households do not hold stocks despite the equity premium and predictions of expected utility models the question is relevant for privatization asset pricing and tax progressivity issues they show that risk aversion per se heterogeneity of beliefs habit persistence time nonseparability and quantity constraints on borrowing do not account for the phenomenon a wedge between borrowing and lending rates and minimum investment requirements are plausible but empirically weak factors more promising explanations are inertia and departures from expected utility maximization there is also qualified support for nondiversifiable income risk as a contributing factor copyright 1995 by royal economic society

diversification as a public good community effects in portfolio choice within a rational general equilibrium model in which agents care only about personal consumption we consider a setting in which due to borrowing constraints individuals endowed with local resources underparticipate in financial markets as a result investors compete for local resources through their portfolio choices even with complete financial markets and no aggregate risk agents may herd into risky portfolios this yields a pareto dominated outcome as agents introduce community risk unrelated to fundamentals moreover if some agents are behaviorally biased or cannot completely diversify their holdings rational agents may choose more extreme portfolios and amplify the effect

multiculturalism from a cognitive perspective patterns and implications multiculturalism the internal representation of multiple cultural meaning systems has critical implications for global managers and multinational corporations mncs understanding multiculturalism is becoming increasingly important given that the locations within which mnc activity resides and the composition of the workforce even within a given location are more diverse building on the connectionism perspective we offer a novel cognitive conceptualization of multiculturalism that incorporates the individual s multicultural cognitive content and structure based on that we explain how specific sociocultural experiences interact with existing individual cognitions to form different patterns of multiculturalism specifically we propose five stylized patterns compartmentalization integration inclusion convergence and generalization and explain how they are developed through specific sociocultural experiences we discuss how different patterns of multiculturalism influence specific capabilities of multicultural mnc managers and their effectiveness in a variety of critical mnc tasks we believe the cognitive connectionist perspective which has not been brought before into international business discussions of culture and cultural capabilities holds great promise for better understanding global managers capabilities and development

wage differentials and moonlighting by civil servants evidence from cote d ivoire and peru as part of their efforts to reduce fiscal deficits many governments have allowed public sector salaries to erode often on the assumption that government workers are overpaid vis a vis those in the private sector that assumption is tested by analyzing public private pay differentials in cote d ivoire and peru switching regressions models are estimated using full information maximum likelihood fiml and the results are compared to those obtained using ordinary least squares ols techniques the ols yields seriously biased estimates of the pay structure suggesting that public wages are higher than private wages the fiml estimates show the opposite our probit analysis also shows that the wage disadvantage of civil servants is a determinant of the greater prevalence of moonlighting among public than private employees the evidence suggests that reductions in employment rather than pay while being less palatable in the short term will be more effective in the long run

hedging familiarity and portfolio choice we exploit the restrictions of intertemporal portfolio choice in the presence of non nancial income risk to design and implement tests of hedging that use the information contained in the actual portfolio of the investor we use a unique dataset of swedish investors with information broken down at the investor level and into various components of wealth investor income tax positions and investor demographic characteristics portfolio holdings are identi ed at the stock level we show that investors do not engage in hedging but invest in stocks closely related to their non nancial income we explain this with familiarity that is the tendency to concentrate holdings in stocks with which the investor is familiar in terms of geographical or professional proximity or that he has held for a long period we show that familiarity is not a behavioral bias but is information driven familiarity based investment allows investors to earn higher returns than they would have otherwise earned if they had hedged

precautionary portfolio behavior from a life cycle perspective abstract the literature on household asset accumulation draws a sharp distinction between short run precautionary motives to buffer consumption from annual income shocks and long run life cycle considerations under income certainty however estimates of shock persistence imply considerable career uncertainty we study long run precautionary motives for life cycle wealth accumulation and portfolios allowing for uncertain returns incomes and lifespan we separate the effects of various factors on mean and median asset holdings including education risk aversion household heterogeneity bequests impatience variance and serial correlation of income shocks numerical solutions are compared with data from the 1992 survey of consumer finances

restoring rational choice the challenge of consumer financial regulation abstract this lecture considers the case for consumer financial regulation in an environment where many households lack the knowledge to manage their financial affairs effectively the lecture argu

optimal investment with minimum performance constraints abstract we consider the portfolio problem of an investor whose wealth is constrained to be at least as large as that generated by investment in a stochastic benchmark portfolio using standard option pricing results the optimal portfolio policy of a hara utility investor is derived explicitly this policy is shown to be equivalent at any point in time to the investor s optimal unconstrained policy when he has contracted to paying out a proportion of the value of the benchmark portfolio at the terminal date this proportion which lies between zero and one is smaller the more likely it is that the investor will strictly outperform the benchmark over the investment horizon

wealth information acquisition and portfolio choice i solve with an approximation a grossman stiglitz economy under general preferences thus allowing for wealth effects because information generates increasing returns decreasing absolute risk aversion in conjunction with the availability of costly information is sufficient to explain why wealthier households invest a larger fraction of their wealth in risky assets one no longer needs to resort to decreasing relative risk aversion an empirically questionable assumption furthermore i show how to distinguish empirically between these two explanations finally i find that the availability of costly information exacerbates wealth inequalities copyright 2004 oxford university press

diversification and its discontents idiosyncratic and entrepreneurial risk in the quest for social status social status concerns influence investors decisions by driving a wedge in attitudes toward aggregate and idiosyncratic risks i model such concerns by emphasizing the desire to get ahead of the joneses which implies that aversion to idiosyncratic risk is lower than aversion to aggregate risk the model predicts that investors hold concentrated portfolios in equilibrium which helps rationalize the small premium for undiversified entrepreneurial risk in the model status concerns are more important for wealthier households consequently these households own a disproportionate share of risky assets particularly private equity and experience greater volatility of consumption consistent with empirical evidence diversification and risk sharing are fundamental principles of modern finance and macroeconomics however empirical evidence suggests that household portfolios are poorly diversified with many people reporting substantial holdings of a single stock for the wealthiest households large shares in closely held businesses constitute a particularly important source of risk e g heaton and lucas 2000a it is not surprising that entrepreneurs bear substantial undiversified risk since it is important for mitigating moral hazard and or adverse selection problems yet from a standpoint of portfolio theory entrepreneurship does not appear to be well compensated implying that many investors are willing to take poorly rewarded risks despite the availability of superior investment opportunities such as public equity that earns a large risk premium e g moskowitz and vissing j0rgensen 2002 hall and woodward 2007

language policies and practices in wholly owned foreign subsidiaries a recontextualization perspective this study adopts a recontextualization perspective on language policies and practices in wholly owned foreign subsidiaries drawing on a field study of 101 subsidiaries in japan we develop a contingency model that distinguishes between four different types of recontextualization with characteristic language policies and practices developing locally adaptive developing globally integrated established locally adaptive and established globally integrated our analysis shows how each of these four types is accompanied by specific problems and challenges in particular it elucidates five important aspects of language implementation 1 the emergence of language praxis from the interplay of headquarters strategies and local responses 2 the hybridization of language practices 3 the central role of key actors such as subsidiary presidents in recontextualization 4 the pervasive power implications of language policies and practices and 5 the multifaceted implications for strategic human resource management by so doing our analysis opens up new avenues for context specific and practice oriented studies of language in multinational companies

stock market wealth and consumption this paper explores the link between changes in the aggregate value of corporate stock and changes in consumer spending it presents data on the distribution of corporate stock ownership based on the 1998 survey of consumer finances it also uses time series evidence on the comovement of stock market wealth and various categories of consumer spending to calibrate the wealth effect it concludes that in the year after a change in stock market values consumer spending is likely to rise by between one and two cents for each dollar increase in the value of corporate stock

the causal effects of proximity on investment evidence from flight introductions we use the introduction of direct flights as an exogenous shock to the travel time between mutual funds and firms to estimate the causal effects of proximity on fund investment decisions and performance we find that a fund invests significantly more in firms that become more proximate following the introduction of direct flights and that these more proximate investments exhibit superior performance our findings are robust to including a variety of fixed effects and potential confounders such as firm level shocks fund level shocks and time trends collectively our results indicate that proximity enhances investors ability to acquire value relevant information about firms

optimal consumption and equilibrium prices with portfolio constraints and stochastic income abstract this paper examines the intertemporal optimal consumption and investment problem in the presence of a stochastic endowment and constraints on the portfolio choices short sale and borrowing constraints as well as incomplete markets can be modeled as special cases of the class of constraints we consider existence of optimal policies is established under fairly general assumptions on the security price coefficients and the individual s utility function this result is obtained by using martingale techniques to reformulate the individual s dynamic optimization problem as an equivalent static one an explicit characterization of equilibrium risk premia in the presence of portfolio constraints is also provided in the unconstrained case this characterization reduces to consumption based capital asset pricing model journal of economic literatureclassification numbers g11 g12 c61 d52 d91