Executive remuneration, financial performance and corporate governance in UK and Spanish listed firms

This study examines the relationship between executive directors’ remuneration and the financial performance and corporate governance arrangements of the UK and Spanish listed firms. These countries’ corporate governance framework has been shaped by differences in legal origin, culture and backgrounds. For example, the UK legal arrangements can be defined as to be constituted in common-law, whereas for Spanish firms, the legal arrangement is based on civil law. We estimate both static and dynamic regression models to test our hypotheses and we estimate our regression using Ordinary Least Squares (OLS) and the Generalised Method of Moments (GMM). Estimated results for both countries show that directors’ remuneration levels are positively related with measures of firm value and financial performance. This means that remuneration levels do not lead to a point whereby firm value is reduced due to excessive remuneration. These results hold for our long-run estimates. That is, estimates based on panel cointegration and panel error correction. Measures of corporate governance also impacts on the level of executive pay. Our results have important implications for existing corporate governance arrangements and how the interests of stakeholders are protected. For example, long-run results suggest that directors’ remuneration adjusts in a way to capture variation in financial performance

Is a little sunshine all we need? On the impact of sunshine regulation on profits, productivity and prices in the Dutch drinking water sector

This paper analyzes the performance of Dutch drinking water utilities before and after the introduction of sunshine regulation, which involves publication of the performance of utilities but no formal price regulation. By decomposing profit change into its economic drivers, our results suggest that, in the Dutch political and institutional context, sunshine regulation was effective in improving the productivity of publicly organised services. Nevertheless, while sunshine regulation did bring about a moderate reduction in water prices, sustained and substantial economic profits suggest that it may not have the potential to fully align output prices with economic costs in the long run. In methodological terms, the DEA based profit decomposition is extended to robust and conditional non-parametric efficiency measures, so as to account better for both uncertainty and differences in operating environment between utilities.

Strategies for sustaining manufacturing competitiveness:case studies of Australian firms

This study investigates the strategies adopted by Australian manufacturing firms to sustain their local production and competitiveness, including during the period of the recent global financial crisis. Six Australian manufacturing organisations in different sectors were selected and analysed using the market-based and resource-based views, and components of the DRAMA framework. The findings highlight several factors and company efforts to sustain manufacturing operations. These organisations pursued a range of manufacturing strategies to enable distinctive offerings in the marketplace and used various ways to differentiate themselves. This was possible through the portfolio of capabilities that determine their continued production and business performance over the period. This study provides important lessons for managers in manufacturing organisations and demonstrates how differing capabilities and strategies of firms can impact the competitiveness of local production, not only in times of economic crisis but also in the long run to sustainable competitiveness in the future.

Effect of mixing sequence on the workability and performance of asphalt mixtures

In Sweden, during recent years, a new type of mixing protocol has been applied, in which the order of mixing is changed from the conventional method. Improved workability and diminished mixing and compaction energy needs have been important drivers for this. Considering that it is the mastic phase, which is modified by changing the mixing order, it provides an interesting case study for explaining the mechanisms of workability in connection with the mastic phase. To do so, an analytical viscosity framework was combined with a mixture morphology framework to upscale to the mixing level and tribology principles to explain the interaction between the mastic and the aggregates. From the mastic viscosity protocol, it was found that the mixing order significantly affects the resulting mastic viscosity. To analyse the effect of this on the workability and resulting mixture performance, X-ray computed tomography was used to analyse mixtures produced by the two different mixing sequences. Mechanical testing was utilised to determine the long-term mechanical performance. In this part of the study, mastic viscosity as a function of particle concentration and distribution was directly coupled to improved mixture workability and enhanced long-term performance.

Accommodating intraocular lenses:a review of design concepts, usage and assessment methods

The correction of presbyopia and restoration of true accommodative function to the ageing eye is the focus of much ongoing research and clinical work. A range of accommodating intraocular lenses (AIOLs) implanted during cataract surgery has been developed and they are designed to change either their position or shape in response to ciliary muscle contraction to generate an increase in dioptric power. Two main design concepts exist. First, axial shift concepts rely on anterior axial movement of one or two optics creating accommodative ability. Second, curvature change designs are designed to provide significant amplitudes of accommodation with little physical displacement. Single-optic devices have been used most widely, although the true accommodative ability provided by forward shift of the optic appears limited and recent findings indicate that alternative factors such as flexing of the optic to alter ocular aberrations may be responsible for the enhanced near vision reported in published studies. Techniques for analysing the performance of AIOLs have not been standardised and clinical studies have reported findings using a wide range of both subjective and objective methods, making it difficult to gauge the success of these implants. There is a need for longitudinal studies using objective methods to assess long-term performance of AIOLs and to determine if true accommodation is restored by the designs available. While dual-optic and curvature change IOLs are designed to provide greater amplitudes of accommodation than is possible with single-optic devices, several of these implants are in the early stages of development and require significant further work before human use is possible. A number of challenges remain and must be addressed before the ultimate goal of restoring youthful levels of accommodation to the presbyopic eye can be achieved.

Modelling foreign direct investment in China

This thesis consists of three empirical and one theoretical studies. While China has received an increasing amount of foreign direct investment (FDI) and become the second largest host country for FDI in recent years, the absence of comprehensive studies on FDI inflows into this country drives this research. In the first study, an econometric model is developed to analyse the economic, political, cultural and geographic determinants of both pledged and realised FDI in China. The results of this study suggest that China's relatively cheaper labour force, high degree of international integration with the outside world (represented by its exports and imports) and bilateral exchange rates are the important economic determinants of both pledged FDI and realised FDI in China. The second study analyses the regional distribution of both pledged and realised FDI within China. The econometric properties of the panel data set are examined using a standardised 't-bar' test. The empirical results indicate that provinces with higher level of international trade, lower wage rates, more R&D manpower, more preferential policies and closer ethnic links with overseas Chinese attract relatively more FDI. The third study constructs a dynamic equilibrium model to study the interactions among FDI, knowledge spillovers and long run economic growth in a developing country. The ideas of endogenous product cycles and trade-related international knowledge spillovers are modified and extended to FDI. The major conclusion is that, in the presence of FDI, economic growth is determined by the stock of human capital, the subjective discount rate and knowledge gap, while unskilled labour can not sustain growth. In the fourth study, the role of FDI in the growth process of the Chinese economy is investigated by using a panel of data for 27 provinces across China between 1986 and 1995. In addition to FDI, domestic R&D expenditure, international trade and human capital are added to the standard convergence regressions to control for different structural characteristics in each province. The empirical results support endogenous innovation growth theory in which regional per capita income can converge given technological diffusion, transfer and imitation.

Some further empirical evidence on the impact of oil price changes on petrol prices

This paper analyses the asymmetries in the response of petrol prices to oil price shocks. We show that previous work, based on the determination of asymmetric responses, can be improved upon by allowing for asymmetries in short term dynamics. The paper shows that a significant determinant of the response of petrol prices to oil price changes, is the extent to which petrol price can be seen to have departed from its long run equilibrium level.

Information and Communication Technology (ICT) international spillovers

As information and communications technology (ICT) involves both traditional capital and knowledge capital, potential spillovers through various mechanisms can occur. Having tried to confirm the existence of ICT spillovers across country borders as Park et al. (Inf. Syst. Res., vol. 18, pp. 86-102, 2007), we investigate the patterns and mechanisms of international ICT spillovers. We use panel data on 37 countries from 1996 to 2004. We find that developing countries could reap more benefits from ICT spillovers than developed countries. We also find that the higher the Internet penetration rate in recipient countries, the more international ICT spillovers there might exist. Our findings are important for policy decisions regarding national trade liberalization and economic integration. Developing economies that are more open to foreign trade may have an economic advantage and may develop knowledge-intensive activities, which will lead to economic development in the long run.

‘O convergence, where art thou?’ Regional growth and industrialization in Italy

This paper shows that the Italian economy has two long-run equilibria, which are due to the different level of industrialization between the centre-north and the south of the country. These equilibria converge until 1971 but diverge afterwards; the end of the convergence process coincides with the slowing down of Italy's industrialization policy in the South. In this paper we argue that to address this problem effectively, an economic policy completely different from that in place in needed. However, such a policy is unlikely to be implemented given the scarcity of resources and the short run nature of the political cycle.

Public capital and total factor productivity:new evidence from the Italian regions, 1970-98

This paper analyses the relationship between industrial total factor productivity and public capital across the 20 Italian administrative regions. It adds upon the existing literature in a number of ways: it analyses a longer period (1970-98); it allows for the role of human capital accumulation; it tests for the existence of a long-run relationship between total factor productivity and public capital (through previously suggested panel techniques) and for weak exogeneity of public capital; and it assesses the significance of public capital within a non-parametric set-up based on the Free Disposal Hull. The results confirm that public capital has a significant impact on the evolution of total factor productivity, particularly in the Southern regions. This impact is mainly ascribed to the core infrastructures (road and airports, harbours, railroads, water and electricity, telecommunications). Also, core infrastructures are weakly exogenous. © 2005 Regional Studies Association.

Profitability of a sample of Portuguese bank branches and its decomposition into technical and allocative components

The efficiency literature, both using parametric and non-parametric methods, has been focusing mainly on cost efficiency analysis rather than on profit efficiency. In for-profit organisations, however, the measurement of profit efficiency and its decomposition into technical and allocative efficiency is particularly relevant. In this paper a newly developed method is used to measure profit efficiency and to identify the sources of any shortfall in profitability (technical and/or allocative inefficiency). The method is applied to a set of Portuguese bank branches first assuming long run and then a short run profit maximisation objective. In the long run most of the scope for profit improvement of bank branches is by becoming more allocatively efficient. In the short run most of profit gain can be realised through higher technical efficiency. © 2003 Elsevier B.V. All rights reserved.

Trade balance and real exchange rate:new evidence from Mauritius-UK trade

In this study we investigate whether there exists a relationship between the exchange rate and the trade balance using bilateral data for the Mauritius/UK trade. We also investigate whether following depreciation or a devaluation the trade balance initially worsens due to contractual agreements and subsequently improves when new contracts for international trade are signed. Using a variety of econometric techniques we are able to establish that there exists a long-run relationship between the trade balance and the real exchange rate. The existence of such a relationship signifies that the authorities would be able to use the exchange rate to steer the trade balance. We also find following a depreciation or devaluation the trade balance initially worsens due to contractual agreements but the trade balance subsequently improves when new contracts are signed. This signifies that if the authorities want to devalue their currency to improve the trade balance, the desired effect does not occur immediately but it occurs with a lag, in this particular case after approximately a year.

Externality effects of information and communication technologies across country Borders

As information and communications technology (ICT) involves both traditional capital and knowledge capital, potential spillovers through various mechanisms can occur. We posit that ICT capital may boost productivity growth, not only in the home country, but also in other countries. In this paper, we provide empirical evidence of such spillovers using panel data on 37 countries from 1996 to 2004. Our results support the existence of ICT spillovers across country borders. Furthermore, we find that developing countries could reap more benefits from ICT spillovers than developed countries. This is particularly important for policy decisions regarding national trade liberalization and economic integration. Developing economies that are more open to foreign trade may have an economic advantage and may develop knowledge-intensive activities, which will lead to economic development in the long run.

Stabilisation of isocyanate cross linked polybutadiene binder

Isocyanate cross-linked hydroxy terminated polybutadiene is used as a binder for solid rocket propellant. Rocket motors containing this propellant require a storage life of at least 20 years. During storage it has been found that the important rubbery properties of the binder can be lost due to oxidative cross-linking of the polybutadiene chains. This could cause catastrophic failure when the rocket motor is required. At present the bis-hindered phenol Calco 2246 is used as a thermal oxidative stabiliser, but it's performance is only adequate. This has led to the search for a more efficient stabiliser system. To hasten the evaluation of new antioxidant systems the use of dynamic thermal analysis was investigated. Results showed that a tentative relationship existed between predictions by thermal analysis and the long term oven ageing for simple single antioxidant systems. But for more complex systems containing either autosynergistic or mixed antioxidants no relationship was observed suggesting that results for such an "accelerated" technique cannot be used for the purpose of extrapolation for long term performance. This was attributed to the short time and more aggressive condition used (hjgher temperature and oxygen rich atmosphere in thermal analysis) altering the mechanism of action of the antioxidants and not allowing time for co-operative effect of the combined antioxidant system to form. One potential problem for the binder system is the use of an diisocyanate as a cross-linking agent. This reacts with the hydroxyl hydrogen on the polymer as well as other active hydrogens such as those contained in a number of antioxidants, affecting both cross-linking and antioxidant effectiveness. Studies in this work showed that only antioxidants containing amine moieties have a significant affect on binder preparation, with the phenolic antioxidants not reacting. This is due to the greater nucleophilicity of the amines. Investigation of a range of antioxidant systems, including potentially homo, hetero and autosynergistic systems, has highlighted a number of systems which show considerably greater effectiveness than the currently used antioxidant Calco 2246. The only single antioxidant which showed improvement was the partially unhindered phenol y-Tocopherol. Of the mixed systems combinations of the sulphur containing antioxidants e.g. DLTP with higher levels of chain-breaking antioxidants, especially Calco 2246, were the most promising. Also the homosynergistic mix of an aromatic amine and a phenol was seen to be very effective but the results were inconsistent. This inconsistency could be explained by the method of sample preparation used. It was shown that the efficiency of a number of antioxidant.s could be dramatically improved by the use of ultrasound during the mixing stage of preparation. The reason for this increase in performance is unclear but in the case of the homosynergistic amine/phenol mix both more efficient mixing and/or the production of a novel mechanism of action are suggested

An econometric analysis of international tourism demand in Hong Kong : a cointegration and error correction approach

The purpose of this study is to develop econometric models to better understand the economic factors affecting inbound tourist flows from each of six origin countries that contribute to Hong Kong’s international tourism demand. To this end, we test alternative cointegration and error correction approaches to examine the economic determinants of tourist flows to Hong Kong, and to produce accurate econometric forecasts of inbound tourism demand. Our empirical findings show that permanent income is the most significant determinant of tourism demand in all models. The variables of own price, weighted substitute prices, trade volume, the share price index (as an indicator of changes in wealth in origin countries), and a dummy variable representing the Beijing incident (1989) are also found to be important determinants for some origin countries. The average long-run income and own price elasticity was measured at 2.66 and – 1.02, respectively. It was hypothesised that permanent income is a better explanatory variable of long-haul tourism demand than current income. A novel approach (grid search process) has been used to empirically derive the weights to be attached to the lagged income variable for estimating permanent income. The results indicate that permanent income, estimated with empirically determined relatively small weighting factors, was capable of producing better results than the current income variable in explaining long-haul tourism demand. This finding suggests that the use of current income in previous empirical tourism demand studies may have produced inaccurate results. The share price index, as a measure of wealth, was also found to be significant in two models. Studies of tourism demand rarely include wealth as an explanatory forecasting long-haul tourism demand. However, finding a satisfactory proxy for wealth common to different countries is problematic. This study indicates with the ECM (Error Correction Models) based on the Engle-Granger (1987) approach produce more accurate forecasts than ECM based on Pesaran and Shin (1998) and Johansen (1988, 1991, 1995) approaches for all of the long-haul markets and Japan. Overall, ECM produce better forecasts than the OLS, ARIMA and NAÏVE models, indicating the superiority of the application of a cointegration approach for tourism demand forecasting. The results show that permanent income is the most important explanatory variable for tourism demand from all countries but there are substantial variations between countries with the long-run elasticity ranging between 1.1 for the U.S. and 5.3 for U.K. Price is the next most important variable with the long-run elasticities ranging between -0.8 for Japan and -1.3 for Germany and short-run elasticities ranging between – 0.14 for Germany and -0.7 for Taiwan. The fastest growing market is Mainland China. The findings have implications for policies and strategies on investment, marketing promotion and pricing.