Comparing different explanations of the volatility trend

We analyze the puzzling behavior of the volatility of individual stock returns over the past few decades. The literature has provided many different explanations to the trend in volatility and this paper tests the viability of the different explanations. Virtually all current theoretical arguments that are provided for the trend in the average level of volatility over time lend themselves to explanations about the difference in volatility levels between firms in the cross-section. We therefore focus separately on the cross-sectional and time-series explanatory power of the different proxies. We fail to find a proxy that is able to explain both dimensions well. In particular, we find that Cao et al. [Cao, C., Simin, T.T., Zhao, J., 2008. Can growth options explain the trend in idiosyncratic risk? Review of Financial Studies 21, 2599–2633] market-to-book ratio tracks average volatility levels well, but has no cross-sectional explanatory power. On the other hand, the low-price proxy suggested by Brandt et al. [Brandt, M.W., Brav, A., Graham, J.R., Kumar, A., 2010. The idiosyncratic volatility puzzle: time trend or speculative episodes. Review of Financial Studies 23, 863–899] has much cross-sectional explanatory power, but has virtually no time-series explanatory power. We also find that the different proxies do not explain the trend in volatility in the period prior to 1995 (R-squared of virtually zero), but explain rather well the trend in volatility at the turn of the Millennium (1995–2005).

Towards testing the eclectic paradigm on multinational contracting: an approach to reviewing and analysing secondary data

In response to the need to leverage private finance and the lack of competition in some parts of the Australian public sector major infrastructure market, especially in very large economic infrastructure procured using Pubic Private Partnerships, the Australian Federal government has demonstrated its desire to attract new sources of in-bound foreign direct investment (FDI) into the Australian construction market. This paper aims to report on progress towards an investigation into the determinants of multinational contractors’ willingness to bid for Australian public sector major infrastructure projects and which is designed to give an improved understanding of matters surrounding FDI into the Australian construction sector. This research deploys Dunning’s eclectic theory for the first time in terms of in-bound FDI by multinational contractors and as head contractors bidding for Australian major infrastructure public sector projects. Elsewhere, the authors have developed Dunning’s principal hypothesis associated with his eclectic framework in order to suit the context of this research and to address a weakness arising in Dunning’s principal hypothesis that is based on a nominal approach to the factors in the eclectic framework and which fail to speak to the relative explanatory power of these factors. In this paper, an approach to reviewing and analysing secondary data, as part of the first stage investigation in this research, is developed and some illustrations given, vis-à-vis the selected sector (roads, bridges and tunnels) in Australia (as the host location) and using one of the selected home countries (Spain). In conclusion, some tentative thoughts are offered in anticipation of the completion of the first stage investigation - in terms of the extent to which this first stage based on secondary data only might suggest the relative importance of the factors in the eclectic framework. It is noted that more robust conclusions are expected following the future planned stages of the research and these stages including primary data are briefly outlined. Finally, and beyond theoretical contributions expected from the overall approach taken to developing and testing Dunning’s framework, other expected contributions concerning research method and practical implications are mentioned.

Information sharing with key suppliers : a contingency approach

This paper focuses on information sharing with key suppliers and seeks to explore the factors that might influence its extent and depth. We also investigate how information sharing affects a company’s performance with regards to resource usage, output, and flexibility. Drawing from transaction cost- and contingency theories, several factors, namely environmental uncertainty, demand uncertainty, dependency and, the product life cycle stage are proposed to explain the level of information shared with key suppliers. We develop a model where information sharing mediates the (contingent) factors and company performance. A mail survey was used to collect data from Finnish and Swedish companies. Partial Least Squares analysis was separately performed for each country (n=119, n=102). There was consistent evidence that environmental uncertainty, demand uncertainty and supplier/buyer dependency had explanatory power, whereas no significance was found for the product life cycle stage. The results also confirm previous studies by providing support for a positive relationship between information sharing and performance, where output performance was found to be the most strongly related

Determinants and effects of information sharing with key suppliers

This paper focuses on information sharing with key suppliers and seeks to explore the factors that might influence its extent and depth. We also investigate how information sharing affects a company’s performance with regards to resource usage, output, and flexibility. Drawing from transaction cost- and contingency theories, several factors, namely environmental uncertainty, demand uncertainty, dependency and, the product life cycle stage are proposed to explain the level of information shared with key suppliers. We develop a model where information sharing mediates the (contingent) factors and company performance. A mail survey was used to collect data from Finnish and Swedish companies. Partial Least Squares analysis was separately performed for each country (n=119, n=102). There was consistent evidence that environmental uncertainty, demand uncertainty and supplier/buyer dependency had explanatory power, whereas no significance was found for the relationship between product life cycle stage and information sharing. The results also confirm previous studies by providing support for a positive relationship between information sharing and performance, where output performance was found to be the most strongly related.

A first stage test of Dunning's framework on multinational contracting into Australia : reviewing secondary data.

In response to the need to leverage private finance and the lack of competition in some parts of the Australian public sector infrastructure market, especially in the very large economic infrastructure sector procured using Pubic Private Partnerships, the Australian Federal government has demonstrated its desire to attract new sources of in-bound foreign direct investment (FDI). This paper aims to report on progress towards an investigation into the determinants of multinational contractors’ willingness to bid for Australian public sector major infrastructure projects. This research deploys Dunning’s eclectic theory for the first time in terms of in-bound FDI by multinational contractors into Australia. Elsewhere, the authors have developed Dunning’s principal hypothesis to suit the context of this research and to address a weakness arising in this hypothesis that is based on a nominal approach to the factors in Dunning's eclectic framework and which fails to speak to the relative explanatory power of these factors. In this paper, a first stage test of the authors' development of Dunning's hypothesis is presented by way of an initial review of secondary data vis-à-vis the selected sector (roads and bridges) in Australia (as the host location) and with respect to four selected home countries (China; Japan; Spain; and US). In doing so, the next stage in the research method concerning sampling and case studies is also further developed and described in this paper. In conclusion, the extent to which the initial review of secondary data suggests the relative importance of the factors in the eclectic framework is considered. It is noted that more robust conclusions are expected following the future planned stages of the research including primary data from the case studies and a global survey of the world’s largest contractors and which is briefly previewed. Finally, and beyond theoretical contributions expected from the overall approach taken to developing and testing Dunning’s framework, other expected contributions concerning research method and practical implications are mentioned.

On the significance of omitted variables in intersection crash modeling

Advances in safety research—trying to improve the collective understanding of motor vehicle crash causes and contributing factors—rest upon the pursuit of numerous lines of research inquiry. The research community has focused considerable attention on analytical methods development (negative binomial models, simultaneous equations, etc.), on better experimental designs (before-after studies, comparison sites, etc.), on improving exposure measures, and on model specification improvements (additive terms, non-linear relations, etc.). One might logically seek to know which lines of inquiry might provide the most significant improvements in understanding crash causation and/or prediction. It is the contention of this paper that the exclusion of important variables (causal or surrogate measures of causal variables) cause omitted variable bias in model estimation and is an important and neglected line of inquiry in safety research. In particular, spatially related variables are often difficult to collect and omitted from crash models—but offer significant opportunities to better understand contributing factors and/or causes of crashes. This study examines the role of important variables (other than Average Annual Daily Traffic (AADT)) that are generally omitted from intersection crash prediction models. In addition to the geometric and traffic regulatory information of intersection, the proposed model includes many spatial factors such as local influences of weather, sun glare, proximity to drinking establishments, and proximity to schools—representing a mix of potential environmental and human factors that are theoretically important, but rarely used. Results suggest that these variables in addition to AADT have significant explanatory power, and their exclusion leads to omitted variable bias. Provided is evidence that variable exclusion overstates the effect of minor road AADT by as much as 40% and major road AADT by 14%.

Multinational contracting into Australia: Developing Dunning's theory and case study design

In response to the need to leverage private finance and the lack of competition in some parts of the Australian public sector infrastructure market, the Australian Federal government has demonstrated its desire to attract new sources of in-bound foreign direct investment (FDI) by multinational contractors. This study aims to update progress towards an investigation into the determinants of multinational contractors’ willingness to bid for Australian public sector major road and bridges. This research deploys Dunning’s eclectic theory for the first time in terms of in-bound FDI by multinational contractors into Australia. Elsewhere, the authors have developed Dunning’s principal hypothesis to suit the context of this research and to address a weakness arising in this hypothesis that is based on a nominal (yes or no) approach to the ownership, location and internalisation factors in Dunning's eclectic framework and which fails to speak to the relative explanatory power of these factors. The authors have completed a first stage test of this development of Dunning's hypothesis based on publically available secondary data, in which it was concluded tentatively that the location factor appears to have the greatest explanatory power. This paper aims to present, for the first time, a further and novel development of the operation of Dunning's eclectic paradigm within the context of multinational contracting, as well as a preview of the design and planned analysis of the next empirical stage in this research concerning case studies. Finally, and beyond the theoretical contributions expected, other expected contributions are mentioned concerning research method and practical implications.

The role of mindfulness in an extended TPB framework to understand drivers’ speeding intentions in school zones.

Many researchers have demonstrated the applicability of the Theory of Planned Behaviour (TPB) in predicting both intention to speed and actual speeding behaviour. However, there remain shortcomings in the explanatory power of the TPB, with research suggesting that even when drivers had reported an intention to not speed approximately 25% of drivers report behaviour that does not align with their intentions (i.e., they engaged in speeding, Elliott & Armitage, 2006). This research explores the role of a novel and promising construct, mindfulness, in enhancing the explanatory utility of the TPB for the understanding of drivers’ speeding behaviour in school zones. Mindfulness is a concept which has been widely used in studies of consciousness, but has recently been applied to the understanding of behaviour in other areas, including clinical psychology, physical activity, education and business. It has been suggested that mindfulness can also be applied to road safety, though its application within this context currently remains limited. This study was based on an e-survey of the general driving public (N=240). Overall, the results identified mindfulness as a construct which may aid understanding of the relationship between drivers’ intentions and behaviour. Theoretically, the findings may have implications in terms of identifying mindfulness as an additional explanatory construct within a TPB framework. In road safety practice, the findings suggest that efficacious countermeasures around school zones may be those that function to heighten drivers’ mindfulness, such as flashing lights and physical speed reduction measures.

Changes in profit as market conditions change : an historical study of a building firm

This paper analyses the profits from 221 construction projects undertaken by an Australian building firm in the period 1910–1938 and examines the factors that influence the firm's profit levels. This involves a series of multiple regression analyses with three dependent variables representing profit and 26 independent variables representing economic conditions and project characteristics. From these, 11 models are derived of which two are chosen as having the best explanatory power in explaining approximately 72% of the variability in profit levels movements. The results show that unemployment, interest rates, level of construction activity in the state, change of wage level, inflation rate of building material and project value significantly influenced the firm's profit level during the period.

Brand value of property in Bangkok Metropolitan Region (BMR), Thailand

This paper aims to evaluate the brand value of property in subdivision developments in the Bangkok Metropolitan Region (BMR), Thailand. The result has been determined by the application of a hedonic price model. The development of the model is developed based on a sample of 1,755 property sales during the period of 1992-2010 in eight zones of the BMR. The results indicate that the use of a semi-logarithmic model has stronger explanatory power and is more reliable. Property price increases 12.90% from the branding. Meanwhile, the price annually increases 2.96%; lot size and dwelling area have positive impacts on the price. In contrast, duplexes and townhouses have a negative impact on the price compared to single detached houses. Moreover, the price of properties which are located outside the Bangkok inner city area is reduced by 21.26% to 43.19%. These findings also contribute towards a new understanding of the positive impact of branding on the property price in the BMR. The result is useful for setting selling prices for branded and unbranded properties, and the model could provide a reference for setting property prices in subdivision developments in the BMR.

Conducting accelerometer-based activity assessments in field-based research

Purpose The purpose of this review is to address important methodological issues related to conducting accelerometer-based assessments of physical activity in free-living individuals. Methods We review the extant scientific literature for empirical information related to the following issues: product selection, number of accelerometers needed, placement of accelerometers, epoch length, and days of monitoring required to estimate habitual physical activity. We also discuss the various options related to distributing and collecting monitors and strategies to enhance compliance with the monitoring protocol. Results No definitive evidence exists currently to indicate that one make and model of accelerometer is more valid and reliable than another. Selection of accelerometer therefore remains primarily an issue of practicality, technical support, and comparability with other studies. Studies employing multiple accelerometers to estimate energy expenditure report only marginal improvements in explanatory power. Accelerometers are best placed on hip or the lower back. Although the issue of epoch length has not been studied in adults, the use of count cut points based on 1-min time intervals maybe inappropriate in children and may result in underestimation of physical activity. Among adults, 3–5 d of monitoring is required to reliably estimate habitual physical activity. Among children and adolescents, the number of monitoring days required ranges from 4 to 9 d, making it difficult to draw a definitive conclusion for this population. Face-to-face distribution and collection of accelerometers is probably the best option in field-based research, but delivery and return by express carrier or registered mail is a viable option. Conclusion Accelerometer-based activity assessments requires careful planning and the use of appropriate strategies to increase compliance.

Business model adaptation in new ventures: are technology-based firms different?

A firm’s business model (BM) is an important driver of its relative performance. Constructive adaptation to elements of the BM can therefore sustain the position in light of changing conditions. This study takes a configurational approach to understanding drivers of business model adaptation (BMA) in new ventures. We investigate the effect of human capital, social capital, and technological environment on BMA. We find that a universal, direct effects, analysis can provide useful information, but also risks painting a distorted picture. Contingent, two-way interactions add further explanatory power, but configurational models combining elements of all three (internal resource, external activities, environment) are superior.

Analysis of risk management disclosures by Australian publicly listed companies

In the aftermath of the global financial crisis, effective risk management (RM) and its communication to stakeholders are now considered essential components in corporate governance. However, despite the importance of RM communication, it is still unclear how and to what extent disclosures in financial reports can achieve effective communication of RM activities. The situation is hampered by the paucity of international RM Research that captures institution differences in corporate governance standards. The Australian setting provides an ideal environment in which to examine RM communication because the Australian Securities Exchange (ASX) has since 2007 recommended RM disclosures under its principle-based governance rules. The recommendations are contained in Principle 7 of the Corporate Governance Principles and recommendations (ASX CGPR). Accordingly, to assess the effectiveness of the AXS's RM governance principle, this study examines the nature and extent of RM disclosures reported by major ASX-listed firms. Using a mixed method approach (thematic content analysis and a series of regression analysis) we find widespread divergence in disclosure practices and low conformance with the Principle 7 recommendations. Certain corporate governance mechanisms appear to influence some categories of RM dislcosure but equity risk has surprisingly little explanatory power. These results suggest that the RM disclosures practices observed in the Australian setting may not be meeting the objectives of regulators and the needs of stakeholders.

Corporate governance and bankruptcy risk

We examine how firm characteristics, particularly the degree of firm complexity and the firm’s need for specialty knowledge, affect the relationship between corporate governance and the risk of bankruptcy. We find that having larger boards reduces the risk of bankruptcy only for complex firms. Our results also suggest that the proportion of inside directors on the board is inversely associated with the risk of bankruptcy in firms that require more specialist knowledge, and that the reverse is true in technically unsophisticated firms. The results further reveal that the additional explanatory power from corporate governance variables becomes stronger as the time to bankruptcy is increased, implying that although corporate governance variables are important predictors, governance changes are likely to be too late to save a firm on the verge of bankruptcy.

The empire of cancer: Gene patents and cancer voices

In his book, The Emperor of All Maladies, Siddhartha Mukherjee writes a history of cancer — "It is a chronicle of an ancient disease — once a clandestine, 'whispered-about' illness — that has metamorphosed into a lethal shape-shifting entity imbued with such penetrating metaphorical, medical, scientific, and political potency that cancer is often described as the defining plague of our generation." Increasingly, an important theme in the history of cancer is the role of law, particularly in the field of intellectual property law. It is striking that a number of contemporary policy debates over intellectual property and public health have concerned cancer research, diagnosis, and treatment. In the area of access to essential medicines, there has been much debate over Novartis’ patent application in respect of Glivec, a treatment for leukaemia. India’s Supreme Court held that the Swiss company’s patent application violated a safeguard provision in India’s patent law designed to stop evergreening. In the field of tobacco control, the Australian Government introduced plain packaging for tobacco products in order to address the health burdens associated with the tobacco epidemic. This regime was successfully defended in the High Court of Australia. In the area of intellectual property and biotechnology, there have been significant disputes over the Utah biotechnology company Myriad Genetics and its patents in respect of genetic testing for BRCA1 and BRCA2, which are related to breast cancer and ovarian cancer. The Federal Court of Australia handed down a decision on the validity of Myriad Genetics’ patent in respect of genetic testing for BRCA1 in February 2013. The Supreme Court of the United States heard a challenge to the validity of Myriad Genetics’ patents in this area in April 2013, and handed down a judgment in July 2013. Such disputes have involved tensions between intellectual property rights, and public health. This article focuses upon one of these important test cases involving intellectual property, public health, and cancer research. In June 2010, Cancer Voices Australia and Yvonne D’Arcy brought an action in the Federal Court of Australia against the validity of a BRCA1 patent — held by Myriad Genetics Inc, the Centre de Recherche du Chul, the Cancer Institute of Japan and Genetic Technologies Limited. Yvonne D’Arcy — a Brisbane woman who has had treatment for breast cancer — maintained: "I believe that what they are doing is morally and ethically corrupt and that big companies should not control any parts of the human body." She observed: "For my daughter, I've had her have [sic] mammograms, etc, because of me but I would still like her to be able to have the test to see if the mutation gene is in there from me." The applicants made the following arguments: "Genes and the information represented by human gene sequences are products of nature universally present in each individual, and the information content of a human gene sequence is fixed. Genetic variations or mutations are products of nature. The isolation of the BRCA1 gene mutation from the human body constitutes no more than a medical or scientific discovery of a naturally occurring phenomenon and does not give rise to a patentable invention." The applicants also argued that "the alleged invention is not a patentable invention in that, so far as claimed in claims 1–3, it is not a manner of manufacture within the meaning of s 6 of the Statute of Monopolies". The applicants suggested that "the alleged invention is a mere discovery". Moreover, the applicants contended that "the alleged invention of each of claims 1-3 is not a patentable invention because they are claims for biological processes for the generation of human beings". The applicants, though, later dropped the argument that the patent claims related to biological processes for the generation of human beings. In February 2013, Nicholas J of the Federal Court of Australia considered the case brought by Cancer Voices Australia and Yvonne D’Arcy against Myriad Genetics. The judge presented the issues in the case, as follows: "The issue that arises in this case is of considerable importance. It relates to the patentability of genes, or gene sequences, and the practice of 'gene patenting'. Briefly stated, the issue to be decided is whether under the Patents Act 1990 (Cth) a valid patent may be granted for a claim that covers naturally occurring nucleic acid — either deoxyribonucleic acid (DNA) or ribonucleic acid (RNA) — that has been 'isolated'". In this context, the word "isolated" implies that naturally occurring nucleic acid found in the cells of the human body, whether it be DNA or RNA, has been removed from the cellular environment in which it naturally exists and separated from other cellular components also found there. The genes found in the human body are made of nucleic acid. The particular gene with which the patent in suit is concerned (BRCA1) is a human breast and ovarian cancer disposing gene. Various mutations that may be present in this gene have been linked to various forms of cancer including breast cancer and ovarian cancer.' The judge held in this particular case that Myriad Genetics’ patent claims were a "manner of manufacture" under s 6 of the Statute of Monopolies and s 18(1)(a) of the Patents Act 1990 (Cth). The matter is currently under appeal in the Full Court of the Federal Court of Australia. This article interprets the dispute over Myriad Genetics in light of the scholarly work of Nobel Laureate Professor Joseph Stiglitz on inequality. Such work has significant explanatory power in the context of intellectual property and biotechnology. First, Stiglitz has contended that "societal inequality was a result not just of the laws of economics, but also of how we shape the economy — through politics, including through almost every aspect of our legal system". Stiglitz is concerned that "our intellectual property regime … contributes needlessly to the gravest form of inequality." He maintains: "The right to life should not be contingent on the ability to pay." Second, Stiglitz worries that "some of the most iniquitous aspects of inequality creation within our economic system are a result of 'rent-seeking': profits, and inequality, generated by manipulating social or political conditions to get a larger share of the economic pie, rather than increasing the size of that pie". He observes that "the most iniquitous aspect of this wealth appropriation arises when the wealth that goes to the top comes at the expense of the bottom." Third, Stiglitz comments: "When the legal regime governing intellectual property rights is designed poorly, it facilitates rent-seeking" and "the result is that there is actually less innovation and more inequality." He is concerned that intellectual property regimes "create monopoly rents that impede access to health both create inequality and hamper growth more generally." Finally, Stiglitz has recommended: "Government-financed research, foundations, and the prize system … are alternatives, with major advantages, and without the inequality-increasing disadvantages of the current intellectual property rights system.’" This article provides a critical analysis of the Australian litigation and debate surrounding Myriad Genetics’ patents in respect of genetic testing for BRCA1. First, it considers the ruling of Nicholas J in the Federal Court of Australia that Myriad Genetics’ patent was a manner of manufacture as it related to an artificially created state of affairs, and not mere products of nature. Second, it examines the policy debate over gene patents in Australia, and its relevance to the litigation involving Myriad Genetics. Third, it examines comparative law, and contrasts the ruling by Nicholas J in the Federal Court of Australia with developments in the United States, Canada, and the European Union. Fourth, this piece considers the reaction to the decision of Nicholas at first instance in Australia. Fifth, the article assesses the prospects of an appeal to the Full Federal Court of Australia over the Myriad Genetics’ patents. Finally, this article observes that, whatever happens in respect of litigation against Myriad Genetics, there remains controversy over Genetic Technologies Limited. The Melbourne firm has been aggressively licensing and enforcing its related patents on non-coding DNA and genomic mapping.