An examination of Australian gold mining firms' exposure over the collapse of gold price in the late 1990s

Purpose – The purpose of this study is to examine the exposures of Australian gold mining firms in the highly volatile period from 1995 to 2000. This period has been characterized by significant changes in gold price due to bulk sale of gold by collective central banks. Specifically, the paper aims to investigate several firm-specific factors that are hypothesized to carry substantial influence on gold beta.

Design/methodology/approach – To estimate gold beta, we use the following multifactor model: R_g,_t = a+ß_gGPR_t + ß_xFXR_t + ß_mR_m,_t + _Et , where R_g,_t is the return on the gold stock Index at time t, GPR_t is the gold price return denominated in US dollar at time t, FXR_t is the foreign exchange return of Australian dollar in terms of US dollar at time t, R_m,t is the market return at time t, and _Et is the random error term at time t.

Findings – The paper finds that the values of gold beta are consistently greater than one, implying the sensitive nature of firms’ stock returns to gold price changes. This also suggests that investors holding gold mining stock would receive higher percentage increases in stock returns from a percentage increase in gold price returns, as opposed to investors holding gold bullion. Furthermore, these values have changed substantially over time with significant changes in gold price volatility. The most important and consistent relationship that we find is the impact of firms’ hedging behavior on their respective gold betas. This is consistent with Tufano’s study. It implies that firms, which hedge a greater proportion of their gold reserves, are less sensitive to movements in gold prices. The finding therefore supports the risk management theory that hedging increases shareholder’s wealth. However, cash operating costs, cash reserves and the level of gold production seem to influence very little on the firms’ exposure to gold price changes.

Originality/value – This study is of interest and important to the stock mining companies and investors because the extent of the effect of gold price movements on the stock returns of gold mining companies has significant impacts on returns for both firms and investors especially in their risk management and investment decisions, respectively.

Corporatism, crisis and contention in Sweden and Korea during the 1990s

Debate has long surrounded corporatism’s depictions of power and the state, and the rise of neoliberalism has raised even more doubts about corporatism as an analytical construct. Faltering growth and rising unemployment in Sweden and Korea after financial crises in the 1990s seemed to confirm neoliberal expectations that all varieties of corporatism (state/authoritarian and societal/democratic) are doomed to decline, and that corporatism will converge on liberalism. Closer examination of the 1990s crises suggests that Swedish and Korean institutions have transformed rather than collapsed. Corporatist institutions have been transformed by ideas about networks and governance, interaction between national and international institutions and shifting alliances among export-oriented and competition-shielded employers, private and public sector unions and citizen networks. This article argues that the ‘dynamics of contention’ can explain how these new ideas and alliances transformed regimes in Sweden and Korea and as such constitute an alternative to corporatism as an analytical construct.

From the capital surge to the financial crisis and beyond: the Mexican economy in the 1990s

Includes bibliography

Capital flows in Chile: changes and policies in the 1990s

Includes bibliography

A decade of light and shadow: Latin America and the Caribbean in the 1990s

Includes bibliography

Trade policy and wage inequality in Chile since the 1990s

Includes bibliography

Growth, poverty and income distribution in Latin America in the 1990s: an uncertain relationship

Includes bibliography