Institutional investors, political connections and analyst following in Malaysia

We examine the association between institutional ownership, political connections, and analyst following in Malaysia from 1999 to 2009. Based on 940 firm-year observations, we document a positive relation between institutional ownership, particularly by Employees Provident Fund (EPF), and analyst following, thus supporting the governance role that institutional investors play in promoting corporate transparency. However, there is no evidence that political connections matter to analyst following. The monitoring role of institutional investors, including EPF, does not appear to be any different between politically connected and non-connected firms.

Get a life? The impact of the European working time directive : the case of UK senior doctors

This paper seeks to identify the effect of the implementation of the European Working Time Directive (EWTD) on the working hours of UK doctors. The Labour Force Survey is used to compare the working hours of doctors with a variety of control groups before and after the implementation of the directive. The controls include those unconstrained by the directive and doctor counterparts working in Europe. We use differences-in-differences and matching methods to estimate the impact of this natural experiment, distinguishing between the anticipation and enactment of the EWTD. We find that the legislation reduced the hours of senior doctors by around 8 hours in total including the component attributable to anticipation effects and allowing for (exogenously set) rising wages.

The healthy immigrant effect: Patterns and evidence from four countries

The existence of a healthy immigrant effect—where immigrants are on average healthier than the native born—is a widely cited phenomenon across a multitude of literatures including epidemiology and the social sciences. There are many competing explanations. The goals of this paper are twofold: first, to provide further evidence on the presence of the healthy immigrant effect across source and destination country using a set of consistently defined measures of health; and second, to evaluate the role of selectivity as a potential explanation for the existence of the phenomenon. Utilizing data from four major immigrant recipient countries, USA, Canada, UK, and Australia allows us to compare the health of migrants from each with the respective native born who choose not to migrate. This represents a much more appropriate counterfactual than the native born of the immigrant recipient country and yields new insights into the importance of observable selection effects. The analysis finds strong support for the healthy immigrant effect across all four destination countries and that selectivity plays an important role in the observed better health of migrants vis a vis those who stay behind in their country of origin.

Simulation-based density estimation for time series using covariate data

This paper proposes a simulation-based density estimation technique for time series that exploits information found in covariate data. The method can be paired with a large range of parametric models used in time series estimation. We derive asymptotic properties of the estimator and illustrate attractive finite sample properties for a range of well-known econometric and financial applications.

Contracting for infrastructure projects as credence goods

Large infrastructure projects are a major responsibility of urban and regional governments, who usually lack expertise to fully specify the demanded projects. Contractors, typically experts on such projects due to experience with similar projects,advise of the needed design as well as the cost of construction in their bids. Producing the right design is costly. We model such infrastructure projects taking into account their credence goods feature and the costly design effort they require and examine the performance of commonly used contracting methods. We show that when building costs are homogeneous and public information, simultaneous bidding involving shortlisting of two contractors and contingent compensation of both contractors on design efforts outperforms sequential search. If building costs are private information of the contractors and are revealed to them after design cost is sunk,sequential search may be superior to simultaneous bidding.

A frontier functions approach to optimal scales of sustainable production

This paper translates the concepts of sustainable production to three dimensions of economic, environmental and ecological sustainability to analyze optimal production scales by solving optimizing problems. Economic optimization seeks input-output combinations to maximize profits. Environmental optimization searches for input-output combinations that minimize the polluting effects of materials balance on the surrounding environment. Ecological optimization looks for input-output combinations that minimize the cumulative destruction of the entire ecosystem. Using an aggregate space, the framework illustrates that these optimal scales are often not identical because markets fail to account for all negative externalities. Profit-maximizing firms normally operate at the scales which are larger than optimal scales from the viewpoints of environmental and ecological sustainability; hence policy interventions are favoured. The framework offers a useful tool for efficiency studies and policy implication analysis. The paper provides an empirical investigation using a data set of rice farms in South Korea.

Analysis of resource efficiency : a production frontier approach

This article integrates the material/energy flow analysis into a production frontier framework to quantify resource efficiency (RE). The emergy content of natural resources instead of their mass content is used to construct aggregate inputs. Using the production frontier approach, aggregate inputs will be optimised relative to given output quantities to derive RE measures. This framework is superior to existing RE indicators currently used in the literature. Using the exergy/emergy content in constructing aggregate material or energy flows overcomes a criticism that mass content cannot be used to capture different quality of differing types of resources. Derived RE measures are both ‘qualitative’ and ‘quantitative’, whereas existing RE indicators are only qualitative. An empirical examination into the RE of 116 economies was undertaken to illustrate the practical applicability of the new framework. The results showed that economies, on average, could reduce the consumption of resources by more than 30% without any reduction in per capita gross domestic product (GDP). This calculation occurred after adjustments for differences in the purchasing power of national currencies. The existence of high variations in RE across economies was found to be positively correlated with participation of people in labour force, population density, urbanisation, and GDP growth over the past five years. The results also showed that economies of a higher income group achieved higher RE, and those economies that are more dependent on imports and primary industries would have lower RE performance.

Economic Analysis and Policy moves forward

As Editor of Economic Analysis and Policy (EAP) I am delighted to announce that EAP is now published by Elsevier. EAP is the journal of the Economic Society of Australia (Queensland branch). As a result of this move, four issues of EAP will be published per year instead of the current three. This will include special issues. EAP will now receive wider coverage in the relevant abstracting and indexing services...

The value of tail risk hedging in defined contribution plans: What does history tell us

Hedging against tail events in equity markets has been forcefully advocated in the aftermath of recent global financial crisis. Whether this is beneficial to long horizon investors like employees enrolled in defined contribution (DC) plans, however, has been subject to criticism. We conduct historical simulation since 1928 to examine the effectiveness of active and passive tail risk hedging using out of money put options for hypothetical equity portfolios of DC plan participants with 20 years to retirement. Our findings show that the cost of tail hedging exceeds the benefits for a majority of the plan participants during the sample period. However, for a significant number of simulations, hedging result in superior outcomes relative to an unhedged position. Active tail hedging is more effective when employees confront several panic-driven periods characterized by short and sharp market swings in the equity markets over the investment horizon. Passive hedging, on the other hand, proves beneficial when they encounter an extremely rare event like the Great Depression as equity markets go into deep and prolonged decline.

Three essays on banks trading activities

With a fair share of the blame for the subprime crisis pointing to banks' extensive involvement in trading, this thesis examines three closely related issues. The first essay shows that regulatory capital arbitrage, insolvency risk, and non-interest income are all important motivations for banks to become involved in trading. The second essay support the widely held perception that trading activities such as off-balance sheet derivatives, securitization, and assets sales all are making banks more opaque. With banks' business model changing from ''originate and hold'' to ''originate, repackage, and sell'', the last essay show that trading channel exist and it has weakened the effectiveness of monetary policy transmission through banks' capital and lending channel.

Modeling conditional correlations of asset returns : a smooth transition approach

In this paper we propose a new multivariate GARCH model with time-varying conditional correlation structure. The time-varying conditional correlations change smoothly between two extreme states of constant correlations according to a predetermined or exogenous transition variable. An LM–test is derived to test the constancy of correlations and LM- and Wald tests to test the hypothesis of partially constant correlations. Analytical expressions for the test statistics and the required derivatives are provided to make computations feasible. An empirical example based on daily return series of five frequently traded stocks in the S&P 500 stock index completes the paper.

Subprime agriculture, and Australia?

Today, Australian agriculture is not where we hoped it would be. Despite being highly productive and the nation's only 'strongly competitive industry', it is struggling across the country. There are successes, as there always will be, but the bulk of our food and fibre production is from enterprises with minimal profitability and unstable or unsound finances. A debt-deflation spiral and subprime mortgage crisis are now being fuelled by property fire sales while leading bankers proclaim no problem and governments dance at the edges. However, it is not just the bush that has problems. National economic conditions are deteriorating with per capita incomes falling and real interest rates still high. Well-informed policy strategies and effective responses are needed quickly if Australians are to avoid needless losses of capacity and wealth destruction in the cities and the bush.

Alliances in the shadow of conflict

Victorious alliances often fight about the spoils of war. This article presents an experiment on the determinants of whether alliances break up and fight internally after having defeated a joint enemy. First, if peaceful sharing yields an asymmetric rent distribution, this increases the likelihood of fighting. In turn, anticipation of the higher likelihood of internal fight reduces the alliance’s ability to succeed against the outside enemy. Second, the option to make nonbinding nonaggression declarations between alliance members does not make peaceful settlement within the alliance more likely. Third, higher differences in the alliance players’ contributions to alliance effort lead to more internal conflict and more intense fighting.

Are empowered women more likely to deliver in facilities? An explorative study using the Nepal Demographic and Health Survey 2011

Development literature has argued that empowering women can effectively increase the utilisation of maternal health care. This study examines this hypothesis in the context of Nepal where only 28% of women delivered in facilities. The two-level random intercept logit models were fitted for data from the Nepal Demographic and Health Surveys 2011. Women‟s empowerment was quantified with a single index constructed from many variables. These variables captured different aspects of women‟s lives and decision-making in their households, and were combined using the principal component analysis method. The results confirmed a positive relationship between women‟s as an inevitable product of the economic development process.

Awards before and after the Nobel Prize : a Matthew effect and/or a ticket to one's own funeral?

The primary aim of this descriptive exploration of scientists’ life cycle award patterns is to evaluate whether awards breed further awards and identify researcher experiences after reception of the Nobel Prize. To achieve this goal, we collected data on the number of awards received each year for 50 years before and after Nobel Prize reception by all 1901–2000 Nobel laureates in physics, chemistry, and medicine or physiology. Our results indicate an increasing rate of awards before Nobel reception, reaching the summit precisely in the year of the Nobel Prize. After this pinnacle year, awards drop sharply. This result is confirmed by separate analyses of three different disciplines and by a random-effects negative binomial regression model. Such an effect, however, does not emerge for more recent Nobel laureates (1971–2000). In addition, Nobelists in medicine or physiology generate more awards shortly before and after prize reception, whereas laureates in chemistry attract more awards as time progresses.