corporate philanthropic disaster response and ownership type evidence from chinese firms response to the sichuan earthquake this article examines whether the charitable giving amount and likelihood of firm response to catastrophic events relate to firms ownership type using a unique dataset of listed firms in china where state ownership is still prevalent based on the data of chinese firms response to the 2008 sichuan earthquake we find that the extent of corporate contributions for state owned firms following this disaster is less than that for private firms state owned firms are also less likely to respond in this disaster compared to private firms the results also reveal that firm size profitability geography cash resource available and leverage affect firms philanthropic disaster response behavior in china

mutual funds ownership and firm performance evidence from china mutual funds have emerged and rapidly developed since 2000 in china this study tests empirically the impact of mutual funds ownership on firm performance in china using a large sample for the period of 2001 2005 we find that equity ownership by mutual funds has a positive effect on firm performance the result is robust to several measures of firm performance and various estimations our finding supports recent regulatory efforts in china to promote mutual funds as a corporate governance mechanism and suggests that pooling diffuse minority interests of individual shareholders who are prone to free rider problems via mutual funds is beneficial

organizational membership and environmental ethics a comparison of managers in state owned firms collectives private firms and joint ventures in china abstract this study empirically examines the relationship between organizational type and the environmental ethical orientation of managers in the people s republic of china prc on three dimensions stewardship and long and short term utilitarianism it was found that chinese managers uniformly self report strong ethical commitments to environmental protection in addition organizational type was found to be a significant predictor for the different ethical dimensions overall managers in state owned firms uniformly reported the strongest values managers in private firms on the other hand self reported lower values and appeared relatively more skeptical of emergent utilitarian arguments that economic performance and environmental performance are compatible in the short term

does corporate governance influence earnings management in latin american markets although us and european research has documented improvement in earnings quality associated with corporate governance characteristics the situation in latin america is questionable given the business environment in which firms operate which is characterized by controlling family ownership and weak legal protection the purpose of this study is to examine the relation between the internal mechanisms of corporate governance and earnings management measured by discretionary accrual we use a sample of listed latin american non financial companies from the period 2006 2009 our results show how in the latin american context the role of external directors is limited and that boards which meet more frequently take a more active position in the monitoring of insiders so showing a lower use of manipulative practices in addition we find a non linear relation between insider ownership and discretionary accruals also pointing to the fact that ownership concentration may be a manipulative practices constrictor mechanism only when the ownership of main shareholders is moderate the findings have important policy implications since this is to the best of our knowledge the first study to analyze the relation between the effectiveness of the government and the earnings management behavior as policy implications we document how when a country implements controls aimed at reducing corruption strengthening the rule of law or improving the effectiveness of government this leads to a reduction in firm earnings management

retrospectives the law of diminishing returns from introductory economics to theoretical papers the law of diminishing returns is a part of every economist s tool kit but the evolution of this law in the history of economic analysis reveals more complexity than is perhaps generally understood even among those most responsible for its evolution the law has been loosely defined and many so called proofs of the law have been weak and incomplete moreover those who expounded the law and its economic implications rarely offered empirical evidence to support it in fact economists have offered alternative explanations for rising short run marginal cost curves and other implications of the law of diminishing returns this last point raises an interesting question have economists used the law of diminishing returns simply for convenience or is the law fundamental to economic analysis

observability and the payback criterion among the enigmas of corporate finance theory that have received little attention is the puzzling use of the payback method as a capital budgeting tool although the payback method has many drawbacks it is widely used in industry see klammer 1972 fremgren 1973 schall sundem and geijsback 1978 1 gordon 1955 attempted to explain this anomaly by observing that the inverse of the payback period is an approximation for the internal rate of return but as sarnat and levy 1969 point out the accuracy of the approximation depends on the life of the project and its irr for low values of irr the inverse of payback is a very poor approximation moreover it is difficult to believe that corporations that use complex and sophisticated technologies need a rule of thumb to approximate something as simple to compute as the irr in fact empirical evidence shows that most firms compute both the irr and the payback period see schall the payback criterion continues to be widely used in industry although there is little support for it among the academicians this paper attempts to find an economic rationale for it by using an incentive model with asymmetric information it argues that when the managers possess private information regarding projects selected for implementation it is in their interest to choose ceteris paribus projects that pay back faster since manager s wages depend on output because their productivity is unknown by choosing projects that pay back fast they hope to improve their reputations i wish to thank milton harris and an anonymous referee for their helpful suggestions while i retain the responsibility for any remaining errors 1 it has been found that payback is rarely used as a primary capital budgeting method it is used as a secondary criterion to a discounted cash flow method such as npv net present value or irr internal rate of return

the dark side of board political capital enabling blockholder rent appropriation resource dependence theorists argue that boards of directors with political capital can benefit focal firms by reducing uncertainty and providing preferential resources here we develop theory reg

strategic behavior of federal open market committee board members evidence from members forecasts abstract in this paper we use panel data to test whether federal open market committee fomc board members forecasts are rational rationality is rejected in the sense that forecasts by members are heavily dependent on previous own forecasts and last consensus made in fomc furthermore we reveal the strategic behavior of fomc board members forecasts by governors who always have voting rights agree much with the previous consensus of fomc members forecasts in contrast non governors who rotate voting rights exaggerate their forecasts they aggressively deviate their forecasts from previous consensus the former is herding behavior and the latter is anti herding behavior our results imply that individual members behave strategically governors want to present policy consistent forecasts to the congress and non governors utilize their forecasts to influence decision making in fomc

gift giving guanxi and illicit payments in buyer supplier relations in china analysing the experience of uk companies this paper explores the relationship between gift giving guanxi and corruption through a study of the relationships between uk manufacturing companies in china and their local component suppliers the analysis is based on interviews in the china based operations of 49 uk companies interviews were carried out both with senior often expatriate staff and with local line managers who were responsible for everyday purchasing decisions and for managing relationships with suppliers the results suggest that gift giving is perceived to be a significant problem in uk owned companies in china however the relationship between these payments and established understanding of gift giving within guanxi networks appears to be weak gift giving appears to be associated with illicit payments corruption and the pursuit of self interest firms seek to reduce the incidence of illicit transactions by changing staff roles instituting joint responsibilities which include the separation of different aspects of sourcing purchasing ineasing the involvement of senior staff in the process and through the education of employee and suppliers

the structure of technical efficiency it is common practice to decompose measures of efficiency into component measures of technical and allocative efficiency in this paper we show how and why to decompose a general measure of technical efficiency into component measures of purely technical efficiency congestion and scale efficiency and we investigate the properties of each measure we do so for a multiple output technology which satisfies a weak axiom system that does not include either constant returns to scale or strong input disposability

energy efficiency and congestion assessment with energy mix effect the case of apec countries abstract to save energy and improve the environment has become a general consensus in the whole asia pacific economic cooperation region this study focuses on the issue of energy congestion which has been considered as one of the key factors influencing energy efficiency we employ a two stage data envelopment analysis model to assess the energy efficiency and congestion of asia pacific economic cooperation countries from 1995 to 2013 it is worth pointing out that the model takes undesirable outputs into account and is able to recognize energy mix effect on energy congestion there are some discussions which based on the empirical results it indicates that energy congestion has led to almost 20 percent of energy waste in asia pacific economic cooperation countries the conclusions are as follows in general energy efficiency of developing countries is lower than that of developed countries besides energy congestion mainly comes from fossil energy use however the congestion of non fossil energy shows a rising trend in recent years in addition a multiple liner regression analysis indicates that energy consumption and industry value added per gdp have positive effects on energy congestion and gdp per capita has negative effect on energy congestion at last we promote several policy recommendations to improve energy efficiency

institutional investment patterns and corporate financial behavior in the united states and japan abstract this paper examines the agency problem between shareholders and debtholders of japanese and u s firms whereas u s institutional investors are restricted from doing so japanese financial institutions take large equity positions in firms to which they lend particularly in firms more susceptible to the agency problem debt ratios of u s firms are negatively related to the firm s potential to engage in risky suboptimal investments whereas japanese debt ratios show no such relation the evidence is consistent with the notion that the agency problem is mitigated to a greater degree in japan than in the u s

consumer support for corporate social responsibility csr the role of religion and values ethical behavior among businesses has gained significant prominence in recent years survey evidence shows that asian consumers demand for greater social responsibility among businesses thus a deeper understanding of the factors that contribute to such a demand is useful this study examines the influence of religiosity and values on corporate social responsibility csr support among consumers in hong kong and singapore primary data collected among consumers in these cities point to a significant direct relationship between religiosity and csr support in hong kong this attitude is due both to altruistic as well as for egotistical or face saving reasons in singapore this is mainly due to the latter the results imply that different motivations should guide csr strategies in these two cities

forecasting efficiency concepts and applications this article introduces the concept of forecast efficiency in which the forecast contains all information available at the time of the forecast empirical tests investigate weak efficiency where the information set is all past forecasts and where all forecast revisions and errors should be uncorrelated with past forecast revisions tests of macroeconomic energy consumption and oil price forecasts find a significant autocorrelation of forecast revisions with fifty of fifty one tests showing positive correlation of forecast revisions as opposed to zero correlation consistent with forecast efficiency copyright 1987 by mit press

environmental management under subnational institutional constraints this study uses the institutional perspective to examine the interaction effects between the subnational institutional context and firm level parameters on corporate environmental behaviors based on a unique cross sectional data set of private firms compiled from three different sources in china our results suggest that both enforcement stringency of environmental regulations at the provincial level and private firms foreign ownership negatively affect compensation fees which are levies charged for firms emissions enforcement stringency also moderates the firm level relationship between foreign ownership and compensation fees but such a cross level moderating effect holds only for private firms with non hmt hong kong macau or taiwan investments

stock market s reaction to disclosure of environmental violations evidence from china the stock market s reaction to information disclosure of environmental violation events eves is investigated multi dimensionally for chinese listed companies including variables such as pollution types information disclosure sources information disclosure levels modernization levels of the region where the company locates ultimate ownership of the company and ownership held by the largest shareholder using the method of event study daily abnormal return ar and accumulative abnormal return car are calculated under different event window for examining the extent to which the stock market responds to the eves furthermore statistical significance of the difference in stock market reaction is compared between event firms with different characteristics the relationship between car and its impact factors is examined by multivariate analysis the findings reveal that the average reduction in market value is estimated to be much lower than the estimated changes in market value for similar events in other countries demonstrating that the negative environmental events of chinese listed companies currently have weak impact on the stock market

the influence of fomc member characteristics on the monetary policy decision making process abstract this paper provides new empirical evidence on a monetary policy committee with heterogeneous members whose decisions affect the efficacy of monetary policy it thereby provides a link between the literature on monetary policy committees and central bank monetary policy implementation through monetary rules using a novel dataset of the idiosyncratic characteristics of fomc members over the period from august 1979 to february 2014 the empirical findings show that characteristics such as education age and to a lesser extent work experience are not important in understanding the fomc decision making process instead the results point to the importance of time spent within the federal reserve system tenure on the fomc itself and the influence of the chair in shaping the decision making process the results are expected to have implications for the capacity of economic agents as well as various markets in the economy to more readily interpret public monetary policy information that reaches them this makes the monetary policy decision process less noisy and thus enhances the capability of agents and markets to attach the correct weight to this information

corporate social responsibility ownership structure and political interference evidence from china prior research suggests that ownership structure is associated to corporate social responsibility csr in developed countries this article examines whether and how ownership structure affects csr in emerging markets using chinese firms social responsibility ranking our empirical evidences show that for non state owned firms corporate ownership dispersion is positively associated to csr however for state owned firms whose controlling shareholder is the state this relation is reversed we attribute the reversed relationship to political interferences and further test this hypothesis by demonstrating that regional economic development is negatively related to csr for state owned firms due to decreased political interference in more developed areas this study is the first to directly examine the relationship between the dispersion of corporate ownership and csr in emerging markets and our results depict that it is important to consider ownership type in assessing csr in emerging market where state ownership is still prevalent such as china the results also reveal that firm size profitability employee power leverage and growth opportunity affect csr in china

bias in federal reserve inflation forecasts is the federal reserve irrational or just cautious abstract inflation forecasts of the federal reserve seem to have systematically under predicted inflation from the fourth quarter of 1968 until volcker s appointment as chairman and to systematically over predict it afterwards until the second quarter of 1998 furthermore under quadratic loss commercial forecasts seem to have information not contained in those forecasts to investigate the cause of this apparent irrationality this paper recovers the loss function implied by federal reserve s inflation forecasts the results suggest that the cost of having inflation above an implicit time varying target was larger than the cost of having inflation below it for the period since volcker and that the opposite was true for the pre volcker era once these asymmetries are taken into account the federal reserve s inflation forecasts are found to be rational

what s different about banks abstract negotiable certificates of deposit cd s trade in the capital market in competition with other securities like commercial paper and bankers acceptances if cd s must pay lenders competitive monetary interest the reserve tax on cd s is borne by bank borrowers viability of the tax means there must be something special about bank loans that makes some borrowers willing to pay higher interest rates than those on other securities of equivalent risk moreover there must be something special about banks that prevents other intermediaries from competing to assure that it never pays to finance loans with cd s

financial incentives and endogenous enforcement in china s pollution levy system abstract using data from 3000 chinese factories we estimate an econometric model of endogenous enforcement in which factories levy rates and emissions are jointly determined by the interaction of local and national enforcement factors abatement costs and regulator manager negotiations that are sensitive to plant characteristics our results demonstrate the significant deterrent impact of a system that combines progressive financial penalties and self reporting with few options for contesting regulatory decisions despite the prevalence of state enterprises and developing country conditions in china despite central pressure for uniformity in enforcement we find great regional diversity that reflects local conditions we also find that pollution control through financial incentives has a much greater impact on production processes than on end of pipe abatement

financial markets forecasts revisited are they rational stubborn or jumpy this paper evaluates professional forecasters behavior using a panel data of individual forecasts we find that i professional forecasts are behavioral and ii there exists a stock bond dissonance the forecasting behavior seems to be stubborn in the stock market but jumpy in the bond market even in the same country forecasting behavior is quite different by market

ownership structure speculation and shareholder intervention an institution holding shares in a firm can use information about the firm both for trading speculation and for deciding whether to intervene to improve firm performance intervention increases the value of the institution s existing shareholdings but intervention only increases the institution s trading profits if it enhances the precision of the institution s information relative to that of uninformed traders thus the ability to speculate can increase or decrease institutional intervention we examine key factors that affect the intervention decision the usefulness of short swing provisions and restricted shares in encouraging institutional intervention and implications for ownership structure across different firms institutional investors hold an ever greater fraction of corporate america s equity traditionally these institutions were stock pickers who tried to beat the market through trading if a firm whose stock they held seemed headed for trouble these investors headed for the door the wall street rule more recently some of these institutions have been using the ownership rights attached to their shares to pressure firms to act in the shareholders interest some have even argued that there is a synergy between gathering information for use in trading shares speculation and intelligently pressuring firms to improve performance intervention we argue that these motives can also conflict analyzing these motives allows us to predict which firms are most likely to attract institutional intervention which in turn has crosssectional implications for firm ownership structure recent examples suggest that institutional investors with large stakes sometimes intervene and sometimes follow the wall street rule so that there is indeed a choice to be studied in the early 1990s there was a wave of activism by a variety of large institutional investors among them calpers the california public employees pension fund putnam management a mutual fund manager and j p morgan a bank holding company these institu

using survey data to correct the bias in policy expectations extracted from fed funds futures many studies estimate risk premiums on federal funds futures to extract monetary policy expectations by assuming that average forecast errors of the expectations are zero or that survey forecasts are good proxies for the expectations these assumptions however may fail due to an unanticipated declining trend in the federal funds rate and to survey respondents strategic behavior consequently the premiums estimated under these assumptions may be biased we propose a new method to estimate the premiums and find that the premiums have been often negative since 2000 which is generally consistent with the negative betas observed in the 2000s

loss function assumptions in rational expectations tests on financial analysts earnings forecasts abstract prior research concludes that financial analysts do not process public information efficiently in generating their earnings forecasts the ordinary least squares ols regression based tests used in prior studies assume implicitly that analysts face a quadratic loss function in contrast we argue that analysts likely face a linear loss function and hence try to minimize their absolute forecast errors we conduct and compare rational expectations tests using these two alternative loss functions we reproduce most prior findings of forecast inefficiency with ols regressions but find virtually no evidence of forecast inefficiency with least absolute deviation regressions where we explicitly assume a linear loss function

founders heirs and corporate opacity in the united states abstract we argue that information about firm activities can vary substantially in the presence of founder or heir ownership thereby influencing the risks borne by minority investors we explore two hypotheses with regard to these controlling shareholders and corporate transparency focusing on their role as monitor in place and their potential to exploit firm opacity to accrue private benefits of control to test these notions we create an opacity index that ranks the relative transparency of the two thousand largest industrial us firms and find founder and heir ownership in 22 and 25 of these firms respectively our analysis indicates that in large publicly traded companies both founder and heir firms are significantly more opaque than diffuse shareholder firms we also find that founder and heir controlled firms exhibit a negative relation to performance in all but the most transparent firms surprisingly additional tests reveal that concerns about divergences in ownership versus control management type dual class shares and board influence appear to be substantially less important than corporate opacity in explaining the performance impacts of founder and heir control finally we decompose corporate opacity into disclosure and market scrutiny components finding that the disclosure quality component appears to be of greater importance to investors however irrespective of whether these controlling shareholders create or stay in the firm because of corporate opacity our analysis suggests that founders and heirs in large publicly traded firms exploit opacity to extract private benefits at the expense of minority investors

factors that drive chinese listed companies in voluntary disclosure of environmental information based on the institutional theory this article attempts to examine two consecutive questions regarding the impact of various factors on corporate decision in environmental information disclosure eid 1 whether or not to disclose and 2 the level of disclosure the relevance of these factors is empirically tested using data collected from publicly listed manufacturing companies from 2006 to 2008 in china some interesting findings appear we find that firms that are state owned those that operate in environmentally sensitive industries those having more industrial peers engaged in eid and those with better reputation are more likely to disclose environmental information when it comes to the content of eid variables that attempt to capture external institutional pressures exhibit either no or weak explanatory power only the variable of organizational image and reputation is demonstrated to have a significant impact on both the act and the content of eid this study provides a snapshot of the dialogues between constituencies in the organizational field and eid development

financial analyst characteristics and herding behavior in forecasting this study classifies analysts earnings forecasts as herding or bold and finds that 1 boldness likelihood increases with the analyst s prior accuracy brokerage size and experience and declines with the number of industries the analyst follows consistent with theory linking boldness with career concerns and ability 2 bold forecasts are more accurate than herding forecasts and 3 herding forecast revisions are more strongly associated with analysts earnings forecast errors actual earnings forecast than are bold forecast revisions thus bold forecasts incorporate analysts private information more completely and provide more relevant information to investors than herding forecasts

ekc analysis for studying economic growth and environmental quality a case study in china compared with the extensive research on the relationship between economic growth and environmental quality in developed countries there is a paucity of an empirical research on studying the relation for developing countries based upon the environmental kuznets curve ekc theory this paper develops regression models for investigating the relationship between economic growth and environmental quality in china the ekc analysis based on six pollution indices is illustrated with a case study in jiaxing of zhejiang china

business ethics and finance in greater china synthesis and future directions in sustainability csr and fraud following the financial crisis and recent recession the center of gravity of global economic growth and competitiveness is shifting toward emerging economies as a leading and increasingly influential emerging economy china is currently attracting the attention of academics practitioners and policy makers there has been an increase in research interest in and publications on issues relating to china within high quality international academic journals we therefore organized a special issue conference in conjunction with the journal of business ethics jbe in lhasa tibet on may 19 20 2014 on business ethics in greater china past present and future the papers for the special issue focused on the intersection of ethics and finance and fit within one of the three themes environment and sustainability corporate social responsibility and fraud within these themes issues of intellectual capital protection gender equality political connections regional development investor protection corporate stewardship trust and corruption and corporate transparency each play a significant role in this paper we survey these studies and the related literature to provide a comprehensive coverage of business ethics and finance issues that affect china

dea congestion and returns to scale under an occurrence of multiple optimal projections abstract economic implications of congestion have been recently discussed in many dea data envelopment analysis studies in addition several previous research efforts have explored a theoretical linkage between returns to scale rts and the concept of congestion because the two economic concepts are closely connected to each other tone and sahoo tone k sahoo b k 2004 degree of scale economies and congestion a unified dea approach european journal of operational research 158 755 772 have published the theoretical linkage in this journal all of the previous studies including their research 2004 assume a unique optimal solution in the investigation on dea based congestion when multiple solutions occur in dea based congestion measurement the economic implications of congestion obtained from the previous research are all problematic from both theoretical and practical perspectives to deal with the issue this study explores how to deal with the occurrence of multiple solutions in the dea based congestion measurement this study proposes a new approach for the congestion measurement and theoretically compares the proposed approach with tone and sahoo 2004

political incentives to suppress negative information evidence from chinese listed firms this paper tests the proposition that politicians and their affiliated firms i e firms operating in their province temporarily suppress negative information in response to political incentives we examine the stock price behavior of chinese listed firms around two visible political events meetings of the national congress of the chinese communist party and promotions of high level provincial politicians that are expected to asymmetrically increase the costs of releasing bad news the costs create an incentive for local politicians and their affiliated firms to temporarily restrict the flow of negative information about the companies the result will be fewer stock price crashes for the affiliated firms during these event windows followed by an increase in crashes after the event consistent with these predictions we find that the affiliated firms experience a reduction an increase in negative stock return skewness before after the event these effects are strongest in the three month period directly preceding the event among firms that are more politically connected and when the province is dominated by faction politics and cronyism additional tests document a significant reduction in published newspaper articles about affected firms in advance of these political events suggestive of a link between our observed stock price behavior and temporary shifts in the listed firms information environment

blockholdings in europe an international comparison abstract we preview empirical work by the european corporate governance network on the size of block shareholdings in europe the most salient finding is the extraordinarily high degree of concentration of shareholder voting power in continental europe relative to the u s a and the u k thus the relationship between large controlling shareholders and weak minority shareholders is at least as important to understand as the more commonly studied interface between management and dispersed shareholders

federal reserve information and the behavior of interest rates this paper tests for the existence of asymmetric information between the federal reserve and the public by examining federal reserve and commercial inflation forecasts it demonstrates that the federal reserve has considerable information about inflation beyond what is known to commercial forecasters it also shows that monetary policy actions provide signals of the federal reserve s information and that commercial forecasters modify their forecasts in response to those signals these findings may explain why long term interest rates typically rise in response to shifts to tighter monetary policy jel e52 e43 d82 asymmetric information between the federal reserve and the public is a phenomenon that is often posited but rarely tested numerous models of central bank behavior for example show that the existence of asymmetric information has important implications for the effectiveness of policy and the consequences of dynamic inconsistency yet there

why are professional forecasters biased agency versus behavioral explanations professional forecasters may not simply aim to minimize expected squared forecast errors in models with repeated forecasts the pattern of forecasts reveals valuable information about the forecasters even before the outcome is realized rational forecasters will compromise between minimizing errors and mimicking prediction patterns typical of able forecasters simple models based on this argument imply that forecasts are biased in the direction of forecasts typical of able forecasters our models of strategic bias are rejected empirically as forecasts are biased in directions typical of forecasters with large mean squared forecast errors this observation is consistent with behavioral explanations of forecast bias

business ties and proxy voting by mutual funds abstract the magnitude of mutual funds business ties with their portfolio firms is documented and is linked to funds proxy votes at specific firms and to overall voting practices aggregate votes at the fund family level indicate a positive relation between business ties and the propensity to vote with management votes at specific firms however reveal that funds are no more likely to vote with management of client firms than of non clients because the votes took place when funds knew their votes would be publicly scrutinized fund families with a larger client base may have adopted voting policies that led to less frequent opposition to management at all firms

political connections and industrial pollution evidence based on state ownership and environmental levies in china we investigate how state involvement in the ownership of non listed entrepreneurial firms affects pollution fees levied by national and provincial governments in china environmental levies while the national government sets minimum environmental standards provincial governments can enact requirements that exceed these minimums and they are largely responsible for enforcing even the national standards so environmental levies can measure concessions that provinces make to encourage development and employment furthermore state ownership is a good proxy for a firm s political connections which can influence the relationship between the firm and the environmental authorities we find that firms with state ownership pay lower environmental levies which indicates that concessions are made for political or economic purposes however these concessions are conditional on the level of development of the province offering them with better developed provinces providing fewer concessions

do lenders value corporate social responsibility evidence from china drawing on risk mitigation theory this article examines whether the improvement of firms social performance reduces debt financing costs cdfs in china the world s largest emerging market employing both the ordinary least square ols and the two stage instrumental variable regression methods we find that improved corporate social responsibility csr reduces the cdf when firms csr investment is lower than an optimal level however this relationship is reversed after the csr investment exceeds the optimal level firms with extremely low or extremely high csr are subject to a higher cdf the results also suggest that the optimal csr level for small firms is higher than that for large firms this study is the first to document a u shaped relationship between csr and cdf and also the first to investigate this relationship within an emerging market context

impacts of corporate code of conduct on labor standards a case study of reebok s athletic footwear supplier factory in china this study examines the social impacts of labor related corporate social responsibility csr policies or corporate codes of conduct on upholding labor standards through a case study of csr discourses and codes implementation of reebok a leading branded company enjoying a high profiled image for its human rights achievement in a large taiwanese invested athletic footwear factory located in south china i find although implementation of reebok labor related codes has resulted in a race to ethical and legal minimum labor standards when notoriously inhumane and seriously illegal labor rights abuses were curbed chinese workers were forced to work harder and faster but earned less payment and the employee elected trade union installed through codes implementation operated more like a company union rather than an autonomous workers organization representing worker interests in order to explain the paradoxical effects of reebok labor related codes on labor standards i argue the result is determined by both structural forces and agency related factors embedded in industrial national and local contexts to put it shortly i find the effectiveness of reebok labor related codes is constrained not only by unsolved tension between reebok s impetus for profit maximization and commitment to workers human rights but also by hard nosed competition realities at marketplace and chinese government s insufficient protection of labor rights despite drawing merely from a single case study these findings illuminate key determinants inhibiting the effectiveness of labor related csr policies or codes in upholding labor standards and hence two possible way outs of the deadlock 1 sharing cost for improving labor standards among key players in global supply chain and 2 combining regulatory power of voluntary codes and compulsory state legislations

regulatory sanctions on independent directors and their consequences to the director labor market evidence from china we investigate the regulatory sanctions imposed on independent directors for their firms financial frauds in china these regulatory sanctions are prima facie evidence of significant lapses in business ethics during the period 2003 2010 302 person time independent directors were penalized by the regulator the china securities regulatory commission the csrc and the two stock exchanges we find that the independent directors with accounting experiences are more likely to be penalized by the csrc though they do not suffer more severe penalties than do the other sanctioned independent directors we also find that independent directors suffer less severe penalties than do the insider directors these results are consistent with the hypothesis that the sanctions on independent directors are tied to their assumed ethical and legal responsibilities following a regulatory sanction penalized independent directors experience a significant decline in the number of other board seats held however they can gain board seats in better quality firms we find that interlocked firms that share penalized independent directors with the fraud firm do not suffer from a valuation decline overall our results suggest that regulatory sanctions have not triggered further sanctions on the penalized directors in the labor market but they have instead created a disincentive for these directors to serve on the company boards of high risk firms

home bias foreign mutual fund holdings and the voluntary adoption of international accounting standards we test the assertion that a consequence of voluntarily adopting international accounting standards ias is the enhanced ability to attract foreign capital using a unique database that reports firm level holdings of over 25 000 mutual funds from around the world our multivariate tests find that average foreign mutual fund ownership is significantly higher among ias adopters we also find that ias adopters in poorer information environments and with lower visibility have higher levels of foreign investment consistent with firms using ias adoption to provide more information and or information in a more familiar form to foreign investors taken together our findings are consistent with voluntary las adoption reducing home bias among foreign investors and thereby improving capital allocation efficiency

globalization and the environment determinants of firm self regulation in china critics assert that globalization is detrimental to the environment because it encourages location of polluting industries in countries with low environmental regulations we suggest that globalization might also have positive environmental effects because global ties increase self regulation pressures on firms in low regulation countries using survey data from firms in china we find that multinational ownership multinational customers and exports to developed countries increase self regulation of environmental performance

market liberalization and firm performance during china s economic transition this paper examines the impact of market liberalization on firm performance through institutional changes during the economic reform in china the conceptualization focuses on the decentralization of control ownership restructuring and industrial policy as the primary institutional changes to implement market liberalization in china these institutional changes affect firm performance by shaping managerial incentives affecting transaction and agency costs and making selective resource allocations across and within industries using a large scale data set including 23 577 firms between 1992 and 1996 the study examines how market liberalization affects the profitability and productivity of chinese firms and the relationship between ownership change and the performance of state owned enterprises

congestion and returns to scale in data envelopment analysis congestion indicates an economic state where inputs are overly invested evidence of congestion occurs whenever reducing some inputs can increase outputs return to scale is another related important economic implication of dea efficiencies in this research we discuss together the problems of congestion constant return to scale increasing return to scale and decreasing return to scale by output oriented dea models c2r model bc2 model fg model st model and a modified model we identify the necessary and sufficient conditions for the evidence of congestion constant increasing and decreasing returns to scale we show the exclusive relationships between the concepts of congestion and returns to scale numerical examples are provided for illustration

the association between outside directors institutional investors and the properties of management earnings forecasts we investigate the relation of the board of directors and institutional ownership with the properties of management earnings forecasts we find that firms with more outside directors and greater institutional ownership are more likely to issue a forecast and are inclined to forecast more frequently in addition these forecasts tend to be more specific accurate and less optimistically biased these results are robust to changes specification granger causality tests and simultaneous equation analyses the results are similar in the pre and post regulation fair disclosure reg fd eras additional analysis suggests that concentrated institutional ownership is negatively associated with forecast properties this association is less negative in the post reg fd environment which is consistent with reg fd reducing the ability of firms to privately communicate information to select audiences

congestion measurement in nonparametric analysis under the weakly disposable technology abstract congestion is a widely observed economic phenomenon where outputs are reduced due to excessive amount of inputs the previous approaches to identify congestion in nonparametric analysis only consider desirable outputs in the production process undesirable outputs are usually jointly produced with desirable outputs in this paper we propose an approach for measuring congestion in the presence of desirable and undesirable outputs simultaneously the proposed approach can discriminate between the congested dmus and the truly efficient dmus which are all efficient according to the scores calculated by the directional distance function finally an empirical example is used to illustrate the approach

biases in macroeconomic forecasts irrationality or asymmetric loss empirical studies using survey data on expectations have frequently observed that forecasts are biased and have concluded that agents are not rational we establish that existing rationality tests are not robust to even small deviations from symmetric loss and hence have little ability to tell whether the forecaster is irrational or the loss function is asymmetric we quantify the exact trade off between forecast inefficiency and asymmetric loss leading to identical outcomes of standard rationality tests and explore new and more general methods for testing forecast rationality jointly with flexible families of loss functions that embed quadratic loss as a special case an empirical application to survey data on forecasts of nominal output growth demonstrates the empirical significance of our results and finds that rejections of rationality may largely have been driven by the assumption of symmetric loss

a note on input congestion abstract the notion of effective space is introduced and input congestion is explained by economic activities exhaustion of effective space in this setting i show that profit maximization is inconsistent with input congestion at the firm level but not necessarily with input congestion at the industry level when effective space is shared among producers

from voluntarism to regulation a study on ownership economic performance and corporate environmental information disclosure in china this article examines whether economic performance could affect eid and how the relationship is determined by the form of ownership from voluntarism to regulation under the current chinese context in this study our empirical results show that the relationship between firms performance and eid is complex and the interactive impact of ownership and economic performance on eid significantly varies from voluntary disclosure to mandatory disclosure this study provides a more comprehensive understanding of the motivations in corporate eid the performance impression theory can be used to explain the disclosure behaviors during the period of voluntary disclosure while the pressure legitimacy theory can be used during the period of mandatory disclosure the finding suggests that when evaluating corporate eid associated with economic performance in emerging economies such as china it needs to be cautious as which tends to vary with the form of ownership and whether there is any mandatory regulation in place

industrial ownership and environmental performance evidence from china the authors explore the differences in pollution control performance of industries with different types of ownership in china state owned soe collectively or community owned coe privately owned poe companies with foreign direct investment fdi and joint ventures about 1 000 industrial firms in three provinces of china were surveyed and detailed 1999 firm level information was obtained the authors analyzed the differences between firms in receiving and reacting to environmental regulatory enforcement community pressure environmental services as well as in the firm s internal environmental management among the different types of ownership the authors also conducted econometric analyses on the determinants of pollution discharge performance the results show that foreign direct investment and collectively owned enterprises have better environmental performances in terms of water pollution discharge intensity while state owned enterprises and privately owned enterprises in china are the worst performers the results also suggest that collectively owned enterprises in china do internalize environmental externalities

anchoring effects evidence from art auctions in order to separate anchoring where an irrelevant message has an effect on the outcome from rational learning where past prices are not irrelevant because they may be used to estimate unobservable quality we use the following strategy we first develop a hedonic prediction of price for both the current sale e g the 2006 sale and the previous sale these hedonic predic tions are based on observable characteristics of each painting and an index of overall prices we then regress actual sale price on our hedonic prediction on the difference between the actual price in the previous sale and our hedonic prediction this expression tests for anchoring and on the difference between the actual price in the previous sale and our hedonic prediction of price in the previous sale this expression controls for unobservable characteristics the test for anchor ing is the extent to which the actual price in the previous sale affects the current sale price we can identify anchoring from other effects because the demand for art which is captured by the average overall price index changes over time whereas the unobservable component of qual ity is assumed to remain constant between auctions this allows us to control for unobserved quality characteristics as long as something drastic has not happened between sales such as a painting has been deemed a fake which is a very rare occurrence the assumption of constant quality is a realistic one

how informed are actively trading institutional investors evidence from their trading behavior before a break in a string of consecutive earnings increases we examine whether transient institutional investors i e institutions that trade actively to maximize short term profits have information that allows them to predict a break in a string of consecutive quarterly earnings increases and thereby avoid the economically significant negative stock price response associated with the break announcement we show that transient institutions predict the break at least one quarter in advance of the break quarter we also provide evidence that is consistent with transient institutions obtaining information regarding the impending break from private communications with management

determinants of the informativeness of analyst research abstract we examine cross sectional determinants of the informativeness of analyst research i e their effect on security prices controlling for endogeneity among the factors affecting informativeness analyst reports are more informative when the potential brokerage profits are higher e g high trading volume high volatility and high institutional ownership and lower when information processing costs e g more business segments are high we also find that the informativeness of analyst research and informativeness of financial statements are complements

foreign exchange rate expectations micro survey data this paper analyzes the panel data of biweekly surveys on the yen dollar exchange rate expectations of forty four institutions for two years and contains four major findings first market participants are heterogeneous that is significant individual effects exist in their expectation formation second the individual effects have a characteristic of wishful expectations exporters expect yen depreciation and importers expect yen appreciation relative to others third many violate the rational expectations hypothesis fourth forecasts with long horizons show less yen appreciation than those with short horizons cross equation constraints implied by the consistency of the forecast term structure are strongly rejected in the data copyright 1990 by american economic association

do fomc members herd abstract we show that growth and unemployment forecasts submitted by individual fomc members do not exhibit herding behavior while the inflation forecasts show strong evidence of anti herding interestingly anti herding is more important for non voting members than for voters

corporate social responsibility and crony capitalism in taiwan corporate social responsibility csr has become increasingly popular in advanced economies in the west in contrast csr awareness in asia is rather low both on the corporate and state level however recent events have shown that the csr is receiving more attention by corporations in asia recent development in csr in taiwan is one example of such a trend a 2005 survey on the 700 publicly listed companies in taiwan on csr has highlighted the current csr situation concurrently the numbers of corporate scandals and corruption have dramatically increased over the past 6 years corporate csr activities co existing with pervasive corporate scandals create a phenomenon of contradictions this article aims to report via the survey findings the current development of business ethics in corporate taiwan and to interpret the findings in context of taiwan s business ethos especially its confucian familism and crony capitalism

player and referee roles held jointly the effect of state ownership on china s regulatory enforcement against fraud this article examines the impact of the prevailing state ownership in the chinese stock market on corporate governance and the financial regulatory system respectively as the internal and external monitoring mechanisms to deter corporate fraud and protect investors in line with the literature that state ownership exaggerates the agency problem we find that the retained state ownership in privatised firms increases the incidence of regulatory enforcements against fraud for the state owned enterprises soes however larger state ownership is associated with a lower incidence of enforcement actions this is attributed to the mutual political affiliation of the fraudulent soes and the regulatory commission a new regulation solutions for listed firm checks promulgated in march 2001 has mitigated this effect by empowering the regulatory commission to increase the severity of regulatory conditions our evidence confirms the improvement in the regulatory environment and investor protection in the chinese stock market brought about by the regulatory reform and development

do privatized banks in middle and low income countries perform better than rival banks an intra industry analysis of bank privatization abstract this paper presents a comprehensive analysis of the pre and post privatization operating performance and stock market performance of privatized banks and their rivals in middle and low income countries first we find that privatization announcements elicit negative abnormal returns for rival banks the effects are more pronounced for subsequent tranche sales where the proportion of government ownership in the privatized bank is reduced second we observe that the privatized banks underperformed the benchmark index in the long run investors who bought shares of the privatized banks on the first day of trading and held them for 5 years instead of investing in the market index lost 24 of their wealth the underperformance is consistent with the negative long run returns that have been documented for initial public offerings third we document marginal improvements in the post privatization operating performance of the privatized banks though the privatized banks in middle and low income countries are better capitalized than rival banks they carry higher problem loans and are overstaffed relative to other private banks in the post privatization period since most of the sample firms are partially privatized we submit that perhaps the continued government ownership of the privatized banks might have hindered managers ability to restructure the firms

herding among security analysts the paper shows that the buy or sell recommendations of security analysts have a signi cant positive in uence on the recommendations of the next two analysts this in uence can be traced to short lived information in the most recent revisions in contrast the in uence of the prevailing consensus is not stronger if the consensus accurately forecasts subsequent stock price movements this indicates consensus herding consistent with models in which analysts herd based on little information the consensus also has a stronger in uence when market conditions are favorable the resulting poorer information aggregation could cause bull markets to be intrinsically more fragilea e g bikhchandani et al j political economy 100 5 1992 992 1026 2000 elsevier science s a all rights reserved jel classixcation g11 g14 g24

strategic delay and the onset of investment cascades i study the phenomenon of herd behavior in a framework where agents can endogenously choose both the actions and the timing of their actions i assume that agents may have privately known quality and content of information a unique symmetric equilibrium in pure strategies is proved to exist and characterized in its closed form an investment cascade always occurs in the equilibrium and a strategic delay is shown to exist before the sudden onset of the investment cascade i also examine the loss of welfare from delay and information cascade

alternative treatments of congestion in dea a rejoinder to cooper gu and li abstract this paper is a response to cooper w w b gu and s li comparisons and evaluations of alternative approaches to the treatment of congestion in dea european journal of operational research this issue who claim that the standard fgl procedure by fare grosskopf and lovell for dealing with congestion in dea can i fail to identify congestion when it is present and ii identify congestion when it is not present we clarify the notion of congestion and its relationship to structural efficiency and free disposability respectively to point out that the fgl approach was originally intended for measuring structural efficiency i e the influence of congestion on the efficiency of a particular production unit not for identifying occurrence of congestion in any feasible production vector moreover we point out that the result of cooper et al partially arises from ignorance of some key maintained assumptions underlying the fgl approach further we present some counter examples which demonstrate that the alternative approach advocated by cooper et al can equally fail in identification of congestion finally some remarks on the influence of sampling error and errors in variables on the two stage dea approaches are presented

evaluating the efficiency of the fomc s new economic projections since 2007 fomc policymakers have been publishing detailed numerical projections of macroeconomic series over the next three years by testing whether the revisions to these projections are unpredictable i find that fomc s efficiency is generally accepted for inflation but often rejected for real economic variables notably for the unemployment rate the rejection is due to the strong autocorrelation of revisions which may reflect information rigidity of fomc s unemployment projections the joint efficiency of the entire projection is accepted in most cases

the effectiveness of public enforcement evidence from the resolution of tunneling in china this paper examines the effectiveness of public enforcement by studying the effects of regulatory intervention to curb tunneling through intercorporate loans in china specifically we explore whether public enforcement efforts in 2006 blacklisting and sanctions resulted in less tunneling and ultimately in increased performance for tunneling firms we show that tunneling is among the dominant factors increasing the likelihood of becoming blacklisted we also find that firms tunneling mechanisms decreased significantly after the regulatory shock and that their performance increased significantly compared to non tunneling firms after the regulatory shock finally we find a positive market reaction to the public announcement of tunneling both for firms that have been blacklisted and other tunneling firms that are not blacklisted collectively these results suggest that public enforcement in the presence of a credible threat succeeds in deterring the effect on tunneling behavior in china

mutual fund activism and market regulation during the pre ifrs period the case of earnings informativeness in china from an ethical perspective this paper investigates the emerging effect of mutual fund involvement on the agency problem between majority and minority shareholders during the pre ifrs period in china indicated by earnings informativeness from an ethical perspective we find that the presence of mutual fund hampers earnings informativeness implying that mutual funds in general at their early stage in china are not yet capable of serving as an effective monitor this finding is in sharp contrast to the role of institutional investors in mature markets as documented in the literature however mutual funds affiliated with banks have been found to be effective to improve earnings informativeness of chinese listed companies and the impact is more pronounced among those affiliated with joint equity banks compared to their counterparts affiliated with state owned banks

corporate real estate analysis evaluating telecom branch efficiency in greece this article proposes productivity analysis for evaluating the relative efficiency in corporate real estate usage across decision making units using data from the greek telecommunications organization gto we measure the productivity of 127 branches using the number of employees and the total area covered per building as inputs and the number of telephony access lines as outputs we apply three nonparametric data envelopment analysis dea models assuming constant returns to scale crs variable returns to scale vrs and slacks based measures sbm respectively we discuss how the proposed approach can provide real estate managers and analysts a multi informational tool that allows the quantification of targets and may serve as a guide tool for the efficient employment of real estate assets

how does environmental corporate social responsibility matter in a dysfunctional institutional environment evidence from china drawing on institutional and signaling theories this study examines how environmental corporate social responsibility ecsr affects firm performance in a dysfunctional institutional environment we extend the ecsr literature by suggesting that ecsr indirectly influences firm performance through the mediating effects of business and political legitimacy based on a dataset of 238 firms in china we find that ecsr affects business and political legitimacy followed by firm performance moreover legal incompleteness weakens and legal inefficiency strengthens the effects of ecsr on business and political legitimacy

comparisons and evaluations of alternative approaches to the treatment of congestion in dea abstract this paper examines the two approaches that are presently available in the data envelopment analysis dea literature for use in identifying and analyzing congestion the first approach due to fare et al fare r grosskopf s lovell c a k 1985 the measurement of efficiency of production kluwer nijhoff boston has been extensively employed to identify congestion in areas such as the provision of health services the latter approach due to cooper et al cooper w w thompson r g thrall r m 1996 annals of operations research 66 3 45 was subsequently extended by brockett et al brockett p l cooper w w shin h c wang y 1998 socio economic planning sciences 32 1 20 to treat tradeoff possibilities between employment and output in chinese production when congestion is present in contrast with cooper et al examples are provided in this paper which show that the fare et al approach can fail in both modes it can show congestion to be present when this is not consistent with the observed behavior it can also fail to exhibit congestion when the data show it to be present suggestions are offered both for i taking precautions before using the fgl approach and for ii overcoming these shortcomings

a new data set on monetary policy the economic forecasts of individual members of the fomc this paper describes a new data set of the forecasts of output growth inflation and unemployment prepared by individual members of the federal open market committee the paper discusses the scope of the data set possibilities for extending it and some potential uses it offers a preliminary examination of some of the cross sectional features of the data