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Volume 14, Issue No. 1, April 2007
- Ronald W. Jones, Who is Better Able to Get Protection?
- George Hooi, The Effects of Culture on International Banking Disclosures
- Waka Cheung and Yew-Kwang Ng, Specialization and Cooperation in Research
- Gianluca Laganà and Pasquale M Sgro, The Exchange Rate Disconnect Puzzle: A Resolution?
- Kuo-Ping Chang and Yu-Min Tang, Pricing Taiwan's Initial Public Offerings
Who is Better Able to Get Protection?
Ronald W. Jones
University of Rochester
Abstract
The title needs clarification because it suggests a broad theme concerning the relative ability of contending groups to obtain tariffs or quotas or other special devices serving to raise that industry or firm's domestic prices above their levels if trade were free. This note is intended to focus more narrowly on a particular model scenario, that of the specific factors type, in which two firms in different industries argue to the government that their firm (industry) should be the recipient of protection and / or is better able to lobby for such protection.
JEL Classification: F10 and F13
Keywords: relative labor intensity, relative labor demand elasticity
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The Effects of Culture on International Banking Disclosures
George Hooi
Griffith University, Australia
Abstract
This paper investigates the influence of national culture on banking disclosures. Seventeen developed and developing countries with a representative sample of 37 listed domestic commercial banks were examined in 2004. Long-term orientation is found to be a non-significant cultural value with banking disclosures. The explanatory power for banking disclosures is found to be similar to the findings in Gray and Vint (1995) with a cross-section of industries. More importantly, this study recommends that long-term orientation should not be used as part of the cultural framework for disclosures due to bias data. Hence, Gray's (1988) hypothesis on the secrecy / transparency dimension should be maintained with respect to the original four cultural values.
JEL Classification: G21, M41, O57
Keywords: Culture, banking disclosures, transparency
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Specialization and Cooperation in Research
Waka Cheunga and Yew-Kwang Nga
aMonash University, Australia
Abstract
An optimal decision model is developed to explore the impact of the structure of knowledge on specialization and cooperation in research. It shows that, (1) the degree of specialization in knowledge increases with the depth of knowledge and cooperation efficiency, and decreases with the average number of disciplines that are required for the solution of the problem; (2) the problem which requires the knowledge of more disciplines is likely to be solved by more cooperative researchers. Conclusion (2) and part of conclusion (1) are tested by empirical evidence in economic study, where the sample comes from the papers published in the Journal of Political Economy.
JEL Classification: D80, J24
Keywords: Specialization, cooperation, research, co-authorship, division of labor
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The Exchange Rate Disconnect Puzzle: A Resolution?
Gianluca Laganàa and Pasquale M Sgrob
aUniversità Roma Tre, Italy
bDeakin Business School, Deakin University, Australia
Abstract
Early empirical studies of exchange rate determinants demonstrated that fundamentals-based monetary models were unable to outperform the benchmark random walk model in out-of-sample forecasts while later papers found evidence in favor of long-run exchange rate predictability. More recent theoretical works have adopted a microeconomic structure; a utility-based new open economy macroeconomic framework and a rational expectations present value model. Some recent empirical work argues that if the models are adjusted for parameter instability, it is a good predictor of nominal exchange rates while others use aggregate idiosyncratic volatility to generate good predictions. This latest research supports the idea that fundamental economic variables are likely to influence exchange rates especially in the long run and further that the emphasis should change to the economic value or utility based value to assess these macroeconomic models.
JEL Classification: E40, E52, C32
Keywords: Exchange rate, economic fundamentals, macroeconomic and microeconomic models, nonlinear models, parameter instability
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Pricing Taiwan's Initial Public Offerings
Kuo-Ping Changa and Yu-Min Tanga
aNational Tsing Hua University, Taiwan
Abstract
This paper has employed the nonparametric minimum convex input requirement set (MCIRS) approach to measure the premarket underpricing and aftermarket inefficiency in Taiwan's initial public offerings (IPOs). The empirical results show that first, the average level of underpricing in Taiwan's IPO premarket is 15.66%, and underpricings in the hot- and nonhot-market periods are not different. Second, underpricing in the electronic IPOs (purchased by both (informed) institutional investors and (uninformed) individual investors) is not different from that in the non-electronic IPOs (purchased by (uninformed) individual investors). This result may not be consistent with Rock's (1986) winner's curse explanation for IPO underpricing. Third, in the nonhot-market period, premarket underpricing disappears one week after trading (i.e. there is no aftermarket inefficiency), and in the hot-market period, new issues are overpriced one week after trading (i.e. there is an aftermarket inefficiency). The paper also finds that the commonly used method of valuing IPOs with price earnings (P/E), market-to-book and price-to-sales multiples of comparable firms performs poorly in Taiwan's IPOs. The predictability of the comparable firms method improves when the market values-to-sales and enterprise value-to-sales multiples are used.
JEL classification: G11, G14, and G32
Keywords: comparable firm multiples, minimum convex input requirement set approach, premarket underpricing, aftermarket inefficiency, winner's curse
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