Studies on Binary Time Series Models with Applications to Empirical Macroeconomics and Finance

This thesis studies binary time series models and their applications in empirical macroeconomics and finance. In addition to previously suggested models, new dynamic extensions are proposed to the static probit model commonly used in the previous literature. In particular, we are interested in probit models with an autoregressive model structure. In Chapter 2, the main objective is to compare the predictive performance of the static and dynamic probit models in forecasting the U.S. and German business cycle recession periods. Financial variables, such as interest rates and stock market returns, are used as predictive variables. The empirical results suggest that the recession periods are predictable and dynamic probit models, especially models with the autoregressive structure, outperform the static model. Chapter 3 proposes a Lagrange Multiplier (LM) test for the usefulness of the autoregressive structure of the probit model. The finite sample properties of the LM test are considered with simulation experiments. Results indicate that the two alternative LM test statistics have reasonable size and power in large samples. In small samples, a parametric bootstrap method is suggested to obtain approximately correct size. In Chapter 4, the predictive power of dynamic probit models in predicting the direction of stock market returns are examined. The novel idea is to use recession forecast (see Chapter 2) as a predictor of the stock return sign. The evidence suggests that the signs of the U.S. excess stock returns over the risk-free return are predictable both in and out of sample. The new "error correction" probit model yields the best forecasts and it also outperforms other predictive models, such as ARMAX models, in terms of statistical and economic goodness-of-fit measures. Chapter 5 generalizes the analysis of univariate models considered in Chapters 2 4 to the case of a bivariate model. A new bivariate autoregressive probit model is applied to predict the current state of the U.S. business cycle and growth rate cycle periods. Evidence of predictability of both cycle indicators is obtained and the bivariate model is found to outperform the univariate models in terms of predictive power.

Brain oscillatory responses, working memory and cognitive developmental stages in 11- and 14-year-old children: an ERD/ERS study

Aim: So far, most of the cognitive neuroscience studies investigating the development of brain activity in childhood have made comparisons between different age groups and ignored the individual stage of cognitive development. Given the wide variation in the rate of cognitive development, this study argues that chronological age alone cannot explain the developmental changes in brain activity. This study demonstrates how Piaget s theory and information on child s individual stage of development can complement the age-related evaluations of brain oscillatory activity. In addition, the relationship between cognitive development and working memory is investigated. Method: A total of 33 children (17 11-year-olds, 16 14-year-olds) participated in this study. The study consisted of behavioural tests and an EEG experiment. Behavioral tests included two Piagetian tasks (the Volume and Density task, the Pendulum task) and Raven s Standard Progressive Matrices task. During EEG experiment, subjects performed a modified version of the Sternberg s memory search paradigm which consisted of an auditorily presented memory set of 4 words and a probe word following these. The EEG data was analyzed using the event-related desynchronization / synchronization (ERD/ERS) method. The Pendulum task was used to assess the cognitive developmental stage of each subject and to form four groups based on age (11- or 14-year-olds) and cognitive developmental stage (concrete or formal operational stage). Group comparisons between these four groups were performed for the EEG data. Results and conclusions: Both age- and cognitive stage-related differences in brain oscillatory activity were found between the four groups. Importantly, age-related changes similar to those reported by previous studies were found also in this study, but these changes were modified by developmental stage. In addition, the results support a strong link between working memory and cognitive development by demonstrating differences in memory task related brain activity and cognitive developmental stages. Based on these findings it is suggested that in the future, comparisons of development of brain activity should not be based only on age but also on the individual cognitive developmental stage.

Essays on the Costs and Benefits of Large Shareholders in Corporate Governance (summary section only)

“Corporate governance deals with the ways in which suppliers of finance to firms assure themselves of getting a return on their investment” (Shleifer and Vishny (1997, p. 737). According to La Porta et al. (1999), research in corporate finance relevant for most countries should focus on the incentives and capabilities of controlling shareholders to treat themselves preferentially at the expense of minority shareholders. Accordingly, this thesis sets out to answer a number of research questions regarding the role of large shareholders in public firms that have received little attention in the literature so far. A common theme in the essays stems from the costs and benefits of individual large-block owners and the role of control contestability from the perspective of outside minority shareholders. The first essay empirically examines whether there are systematic performance differences between family controlled and nonfamily controlled firms in Western Europe. In contrast to the widely held view that family control penalizes firm value, the essay shows that publicly traded family firms have higher performance than comparable firms. In the second essay, we present both theoretical and empirical analysis on the effects of control contestability on firm valuation. Consistent with the theoretical model, the empirical results show that minority shareholders benefit from a more contestable control structure. The third essay explores the effects of individual large-block owners on top management turnover and board appointments in Finnish listed firms. The results indicate that firm performance is an important determinant for management and board restructurings. For certain types of turnover decisions the corporate governance structure influences the performance / turnover sensitivity. In the fourth essay, we investigate the relation between the governance structure and dividend policy in Finnish listed firms. We find evidence in support of the outcome agency model of dividends stating that lower agency conflicts should be associated with higher dividend payouts.

Stories of Survival: Knowledge Intensive Organisations and the Finnish 1990s Recession

The recession that hit the Finnish economy at the beginning of the 1990s has been regarded as unusually severe. Organisations’ failure to survive the recession has been researched in their various aspects. However, the reasons for why and how organisations that survived did so have been explored to a somewhat lesser extent. This study concerns organisations that survived rather than those that failed to do so, as studying successful experiences is acknowledged as an important source for learning how to counteract future failure. The thesis examines four knowledge intensive organisations, with the focus on managerial and social aspects of the crisis handling processes. The study deals with managers’ and co-workers’ stories about organisational attempts to survive, rather than seeking to identify causal relationships. Drawing upon a narrative approach and a social constructionist perspective, the crisis handling processes are treated as reconstructions and rationalisations of what happened. A primary assumption of this thesis is that we make sense of experiences in retrospect, and the aim is to describe the handling of crisis situations and the hardships related to economic difficulties, by focusing on the interviewees’ explanations of how those difficulties were dealt with. The stories are about taking control despite the threats induced by an extremely severe economic recession, remaining active, how the managers and their co-workers dealt with the uncertainty experienced, and how the organisations subsequently survived. The analysis also interrogates such issues as trust, authenticity, legitimacy, identity and nostalgia in crisis contexts.

Offering Development in the Restaurant Sector. A Comparison Between Customer Perceptions and Management Beliefs

The present study concentrates on a small – but important – area of marketing: offering development within the service sector, more exactly the restaurant sector. The empirical part of the study has been carried out in the Helsinki metropolitan area using six successful restaurants. First, a conceptual offering development model is developed based on how the management perceives the offering development processes. Second, customer perceptions of offerings and management beliefs about how the customers perceive the offerings are analysed. Finally, an extended offering development model is created based on the management perceptions (the first model) as well as on observed gaps between customer perceptions of offerings and management beliefs about the customer perceptions. The study reveals that customer perceptions and management beliefs are rather similar but also that some differences exist. These differences are taken into account in the extended offering development model (the second model). The empirical data was collected through interviews and surveys. All together 393 customers and 14 managers participated in the study. The study suggests that successful offering development has to be closely connected with the general strategy of the company. A shared vision within the company in combination with a systematic strategic offering development process create a sound basis for the practical development work. The main contribution of the study is the extended offering development model forming a framework for further studies within the area.

Domännamnstvister och ond tro - En rättslig analys av UDRP, särskilt med tanke på begreppet ond tro i artikel 4.a.iii

Internets ökade betydelse gjorde att företagen började inse vilka problem som kan uppstå av att en webbsida med ett domännamn i form av deras varumärke olovligen handhas av en utomstående part. Konflikterna blev därför fler medan existerande tvistlösningsmekanismer ansågs dyra, tungrodda och ineffektiva. Ur detta behov föddes sedermera Uniform Domain Name Dispute Resolution Policy (UDRP). Detta internationella tvistlösningsförfarande skapades för att tillämpas på s.k. cybersquatting, dvs. situationer där domännamn, som inkräktar på andras varu- eller servicemärken, registreras i ond tro t.ex. för framtida försäljning. Jag granskar i denna avhandling huvudsakligen förutsättningarna för överföring eller upphävning av domännamnsregistreringar i enlighet med UDRP, varför jag fokuserar på artikel 4.a och då i synnerhet på innebörden av begreppet ”registrering och användning i ond tro”. Arbetet bygger huvudsakligen på en analys av de avgöranden som fattats inom ramen för UDRP. Syftet är att genom en systematisk undersökning av tillämpningen av begreppet ond tro beskriva och utvärdera rättstillämpningen inom UDRP. De granskade avgörandena är 396 st. till antalet och har meddelats under tidsperioden 14.1.2000-15.8.2001.

Publishing in the Networked World: Transforming the Nature of Communication, 14th International Conference on Electronic Publishing 16-18 June 2010, Helsinki, Finland

The title of the 14th International Conference on Electronic Publishing (ELPUB), “Publishing in the networked world: Transforming the nature of communication”, is a timely one. Scholarly communication and scientific publishing has recently been undergoing subtle changes. Published papers are no longer fixed physical objects, as they once were. The “convergence” of information, communication, publishing and web technologies along with the emergence of Web 2.0 and social networks has completely transformed scholarly communication and scientific papers turned to living and changing entities in the online world. The themes (electronic publishing and social networks; scholarly publishing models; and technological convergence) selected for the conference are meant to address the issues involved in this transformation process. We are pleased to present the proceedings book with more than 30 papers and short communications addressing these issues. What you hold in your hands is a by-product and the culmination of almost a Year long work of many people including conference organizers, authors, reviewers, editors and print and online publishers. The ELPUB 2010 conference was organized and hosted by the Hanken School of Economics in Helsinki, Finland. Professors Turid Hedlund of Hanken School of Economics and Yaşar Tonta of Hacettepe University Department of Information Management (Ankara, Turkey) served as General Chair and Program Chair, respectively. We received more than 50 submissions from several countries. All submissions were peer-reviewed by members of an international Program Committee whose contributions proved most valuable and appreciated. The 14th ELPUB conference carries on the tradition of previous conferences held in the United Kingdom (1997 and 2001), Hungary (1998), Sweden (1999), Russia (2000), the Czech Republic (2002), Portugal (2003), Brazil (2004), Belgium (2005), Bulgaria (2006), Austria (2007), Canada (2008) and Italy (2009). The ELPUB Digital Library, http://elpub.scix.net serves as archive for the papers presented at the ELPUB conferences through the years. The 15th ELPUB conference will be organized by the Department of Information Management of Hacettepe University and will take place in Ankara, Turkey, from 14-16 June 2011. (Details can be found at the ELPUB web site as the conference date nears by.) We thank Marcus Sandberg and Hannu Sääskilahti for copyediting, Library Director Tua Hindersson – Söderholm for accepting to publish the online as well as the print version of the proceedings. Thanks also to Patrik Welling for maintaining the conference web site and Tanja Dahlgren for administrative support. We warmly acknowledge the support in organizing the conference to colleagues at Hanken School of Economics and our sponsors.

Porsastuotannon tuottavuuskehitys sikatilinpäätöstiloilla vuosina 2003–2008

Tutkimuksessa mitataan porsastuotannon tuottavuuden kehitystä ProAgrian sikatilinpäätöstiloilla vuosina 2003–2008. Tuottavuutta mitataan Fisher-tuottavuusindeksillä, joka dekomponoidaan tekniseen, allokatiiviseen ja skaalatehokkuuteen sekä teknologiseen kehitykseen ja hintavaikutukseen. Koko aineistosta aggregoidulla tuottavuusindeksillä mitattuna tuottavuus kasvoi viidessä vuodessa yhteensä 14,3 % vuotuisen kasvun ollessa 2,7 %. Tuottajien keskimääräinen tuottavuusindeksi antaa lähes saman tuloksen: sen mukaan tuottavuus kasvaa yhteensä 14,7 %, mikä tekee 2,8 % vuodessa. Skaalatehokkuuden paraneminen havaitaan merkittävimmäksi tuottavuuskasvun lähteeksi. Skaalatehokkuus paranee aggregoidusti mitattuna 1,6 % vuodessa ja tiloilla keskimäärin 2,1 % vuodessa. Teknisen tehokkuuden koheneminen on toinen tuottavuuskasvua edistävä tekijä tutkimusjaksolla. Molemmilla mittaustavoilla nousu on keskimäärin 1,4 % vuodessa. Allokatiivinen tehokkuus laskee hieman: aggregoidusti mitattuna 0,1 % ja keskimäärin 0,4 % vuodessa. Teknologinen kehitys tutkimusjaksolla on lievästi negatiivista, keskimäärin -0,1 % vuodessa. Vuosittaiset vaihtelut ovat kuitenkin voimakkaita. Hintojen muutokset eivät juuri ole vaikuttaneet tuottavuuden tasoon, sillä hintavaikutuksen vuotuiset muutokset jäävät jokaisena vuonna alle puoleen prosenttiin ja keskimääräinen vuotuinen muutos on -0,1 %. Keskeinen tuottavuuskasvua edistänyt tekijä näyttää olleen tilakoon kasvu, joka on parantanut rakenteellista tehokkuutta. Teknologisen kehityksen jääminen negatiiviseksi kuitenkin tarkoittaa, että paras havaittu tuottavuuden taso ei ole noussut lainkaan.

Branding: The Past, Present, and Future: A Study of the Evolution and Future of Branding

Branding, as any other concept, has evolved over time: from the days when sheep of one herd started to be branded to distinguish them from another herd to the current era when everything, from water and flowers to clothes and food, is branded. Throughout these times, there have been numerous theories to describe and understand the underlying nuances. This paper finds the relationships in previous literature and reveals how these theories see branding from various perspectives and how they can be integrated to form a coherent view. It is also discussed how branding and society affect each other. Based on the knowledge of how branding theories have been developed as dependent variables of each other and the society, we are able to form a better understanding of the past, the present, and the future of branding.

Corporate Brand Repositioning with CSR as the Differentiating Factor: A Study on Consumer Perceptions

Purpose – This research paper studies how the strategy of repositioning enables marketers to communicate CSR as their brand’s differentiating factor. It aims at understanding how consumer perceptions can be managed to generate brand value through corporate brand repositioning when CSR is the differentiating factor. The purpose of this paper is to answer the following research question: How can consumer perceptions be managed to generate brand value through corporate brand repositioning when CSR is the differentiating factor? The two research objectives were: 1. to build a model, which describes the different components of consumer perceptions involved in generation of brand value through repositioning when CSR is the differentiating factor, 2. to identify the most critical components in the context of the case company, IKEA for generation of brand value during the process of corporate brand repositioning Design/methodology/approach – This paper is based on the literature review covering the logic of brand value generation, repositioning strategy and consumer perceptions connected to CSR activities. A key concept of the positioning theory, the brand’s differentiating factor, was explored. Previous studies have concluded that desirability of the differentiating factor largely determines the level of brand value-creation for the target customers. The criterion of desirability is based on three dimensions: relevance, distinctiveness and believability. A model was built in terms of these desirability dimensions. This paper takes a case study approach where the predefined theoretical framework is tested using IKEA as the case company. When developing insights on the multifaceted nature of brand perceptions, personal interviews and individual probing are vital. They enable the interviewees to reflect on their feelings and perceptions with their own words. This is why the data collection was based on means-end type of questioning. Qualitative interviews were conducted with 12 consumers. Findings – The paper highlights five critical components that may determine whether IKEA will fail in its repositioning efforts. The majority of the critical components involved believability perceptions. Hence, according to the findings, establishing credibility and trustworthiness for the brand in the context of CSR seems primary. The most critical components identified of the believability aspect were: providing proof of responsible codes of conduct via conducting specific and concrete CSR actions, connecting the company’s products and the social cause, and building a linkage between the initial and new positioning while also weakening the old positioning. Originality/value – Marketers’ obligation is to prepare the company for future demands. Companies all over the globe have recognized the durable trend of responsibility and sustainability. Consumer´s worry about the environmental and social impact of modern lifestyles is growing. This is why Corporate Social Responsibility (CSR) provides brands an important source of differentiation and strength in the future. The strategy of repositioning enables marketers to communicate CSR as their brand’s differentiating factor. This study aimed at understanding how consumer perceptions can be managed to generate brand value through corporate brand repositioning when CSR is the differentiating factor.