July 2016 (Journal of Business and Policy Research)

July 2016 (Journal of Business and Policy Research)

Total Articles - 8

Pages 1 – 15

Author: Eric Terry

We examine the problem of hedging a foreign exchange exposure using a futures contract on the value of the local currency in terms of the foreign currency. This process will be referred to as indirect currency futures hedging. A general formula for the minimum-variance indirect currency futures hedge ratio is derived and special cases of this formula are obtained for commonly made assumptions about the joint spot and futures price process. The performance of the indirect hedge is found not to depend heavily on specific assumptions about the joint spot and futures price process. Furthermore, it is confirmed that the indirect currency futures hedge is as effective at reducing foreign exchange risk as a corresponding direct hedge.


Pages 16 – 35

Author: George Chacko, Carolyn Evans and Nick Obradovich

Political scientists recognize that different types of democracies produce different policy outcomes. Relative to majoritarian polities, proportional systems provide more support for programs with broad-based benefits. We examine whether this holds true for critical goods. We provide a model showing why market forces may not ensure access to critical goods. Individuals “under-consume” when times are good. Their myopia leads to a shortage of the critical good when times are bad. Thus, protection of critical goods is the optimal policy. Empirically, we find that proportional countries are associated with more support for critical products, and the opposite for non-critical products.

Pages 36 – 48

Author: Charles W. DuVal, Will Quilliam, Quang Viet Vu and Noema “Amy” Santos

In an effort to gain access to United States capital markets, a “reverse merger” (RM) allows a private company to assume the exchange listing of a public company, without the additional time, risk, expense or SEC scrutiny associated with a traditional IPO. RMs initiated by Chinese firms represent the vast majority of foreign RM transactions. This paper studies these Chinese firms’ characteristics and relative operating performance prior to coming to the U.S. and after being listed on a U.S. stock exchange from 2004-2010 and find they are, on average, 8.4 years old, privately held, profitable, mid-cap and profitable. When compared to U.S. RMs over the same period, Chinese RMs are significantly larger, grow assets faster, hold more insider stock, have more institutional stock interest and enter the U.S. at higher level stock exchanges.

Pages 49 – 61

Author: Rajiv Bhar and Ramaprasad Bhar

The impact of export commodity prices, which are essentially exogenous, on the AUD/USD exchange rate is investigated. We use a Markov Regime Switching model to identify significant structural breaks endogenously. In this framework, the effect of four commodity sub-indices as generally favoured by the Reserve Bank of Australia is explored. These are Rural, Non-Rural, Base Metal and Bulk Commodities. The aim is to find, if any, state contingent explanatory power of these sub-indices on the changes in exchange rate. All the subindices have significant explanatory power during low volatility regime. But during high volatility regime only the first two subindices are significant. Further investigation reveals that a large jump in the Bulk Commodity sub index up or down may indeed be followed by a regime shift. The model also identifies the post GFC period as the high volatility state.

Pages 62 – 71

Author: Hong Long Chen

Few studies explore the relations between early stage project-management performance and the cost performance of capital projects at completion. This longitudinal study of 102 capital projects reveals that the relations between early project-management performance and project-cost performance are indeed significant. Our research findings suggest that when Communication, Team, Scope, and Innovation variables perform well in the initiation and planning phases of a project, the project is more likely to meet its goal of cost performance in the closing phase. Subsequent multivariate robust regression analyses with a maximum R-squared improvement procedure demonstrate that Team, Scope, Communication, and Innovation performance in the project initiation and planning phases explains 41.15% of the variation in the cost performance of capital projects in the closing phase. The results also show that Team provides the highest explanation of the variation in the project-cost data. Ultimately, our findings suggest that project-management performance in the initiation and planning phases possesses a critical impact on a project's cost at completion, making the initiation and planning phases the fountainhead of project cost performance.

Pages 72 – 85

Author: Amila Buddhika Sirisena

Despite the growth and importance of NPOs as international business actors, internationalization of the nonprofit sector has been rarely studied, and the concept remains relatively absent from the mainstream management literature. The study examined the impact of target country risk and institutional structure using over six thousand decision alternatives faced by 32 non-profit organizations in their international market selection efforts. The subsequent logistic regression analysis revealed that NPO country selection decisions are positively influenced by both risks and weaker institutions. The counter intuitive findings provided by the study, being one of the first covering large numbers of countries in the context, highlight the need for more studies in the area.

Pages 86 – 97

Author: Tatsuo Kimbara and Kazuma Murakami

This paper analyzes the relationship between the financial performance of multinational enterprises and the international transfer of environmental management practices. The data used are obtained from two sources: Nihon Keizai Shimbun’s NEEDS for financial data and transfer data from a questionnaire survey conducted in Vietnam. The ordinary least square method is used for analysis. We examine the hypothesis that higher performance of a firm is positively related to higher transfer of environmental management practices to the overseas subsidiary. We found that the environmental management system is significantly related to financial performance (ROS). The different results suggest meaningful implications.

Pages 98 – 107

Author: Silvia Bellini and Maria Grazia Cardinali

Total Articles- 8

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