|
on Corporate Finance |
| By: | Sujuan Xie (Groupe Sup de Co La Rochelle ( La Rochelle Business School ) - Groupe Sup de Co La Rochelle ( La Rochelle Business School )); Liang Guo (Groupe Sup de Co La Rochelle ( La Rochelle Business School ) - Groupe Sup de Co La Rochelle ( La Rochelle Business School )); Lawrence King (Groupe Sup de Co La Rochelle ( La Rochelle Business School ) - Groupe Sup de Co La Rochelle ( La Rochelle Business School )) |
| Abstract: | Since 1978, China gradually adopted a series of reform policies aiming to transform its former central planned economy to a socialist market economy. For the past three decades, the economic reform has brought China a flourishing private sector: it has grown at an annual rate of twenty percent, far above the economy's eight percent average growth for the same period (Tsai, 2002). Moreover, the non-state sector in China has accounted for two-thirds of total productivity and GDP (Welborn, 2003). The high-speed development of the private sector has been achieved primarily by decentralization of decision making power from the government to enterprises (McMillan & Woodruff, 2002; Siu & Liu, 2005). This decentralization process led to transformation of those large state-owned enterprises and spur of private small-and-medium enterprise (SMEs), such as the flourishing of township-and-village enterprises (TVEs). While most attention has been paid on how the transformation of large SOEs accelerated the development of private sectors, the creation and development of SMEs has had a significant influence on the development of the private economy, a fact that has been noted recently by sociologists. The rise of those small businesses raises several questions about the way in which China's SMEs has developed. One of these is whether there is a Chinese style of the development of SMEs which differs from that in capitalist economies. According to 3 resource-based theory, in capitalist economies the basis for a firm's competitive advantage lies primarily in its application of the valuable resources that are at the firm's disposal (Rumelt, 1984, p557-558; Wernerfelt, 1995, p172). However, developing in a transitional economy where the market is not the dominant mechanism for the allocation of resources, China's SMEs have developed different strategies to gain better financial performance. This paper, therefore, tries to explain both theoretically and empirically what is the China's style of development of SMEs, particularly focusing on the political connectivity and the financial performance of SMEs. For the rest sections of this paper we firstly deal with the theoretical debate on the development of firms in China's traditional economy.. Secondly, the methodology of this paper will be discussed. A multi-level modelling is used to describe the political connectivity and the financial performance of China's publically listed SMEs. Finally, research results will be presented and further discussed. |
| Date: | 2009–11–19 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-00496839_v1&r=cfn |
| By: | Weber, Enzo |
| Abstract: | This paper proposes a new approach to modelling financial transmission effects. In simultaneous systems of stock returns, fundamental shocks are identified through heteroscedasticity. The size of contemporaneous spillovers is determined in the fashion of smooth transition regression by the innovations' variances and (negative) signs, both representing typical crisis-related magnitudes. Thereby, contagion describes higher inward transmission in times of foreign crisis, whereas vulnerability is defined as increased susceptibility to foreign shocks in times of domestic turmoil. The application to major American stock indices confirms US dominance and demonstrates that volatility and sign of the equity returns significantly govern spillover size. |
| Keywords: | Contagion; Vulnerability; Identification; Smooth Transition Regression |
| JEL: | C32 G15 |
| Date: | 2009–07–10 |
| URL: | http://d.repec.org/n?u=RePEc:bay:rdwiwi:8573&r=cfn |
| By: | Pesaran, Hashem (University of Cambridge) |
| Abstract: | This paper is concerned with empirical and theoretical basis of the Efficient Market Hypothesis (EMH). The paper begins with an overview of the statistical properties of asset returns at different frequencies (daily, weekly and monthly), and considers the evidence on return predictability, risk aversion and market efficiency. The paper then focuses on the theoretical foundation of the EMH, and show that market efficiency could co-exit with heterogeneous beliefs and individual irrationality so long as individual errors are cross sectionally weakly dependent in the sense defined by Chudik, Pesaran, and Tosetti (2010). But at times of market euphoria or gloom these individual errors are likely to become cross sectionally strongly dependent and the collective outcome could display significant departures from market efficiency. Market efficiency could be the norm, but it is likely to be punctuated with episodes of bubbles and crashes. The paper also considers if market inefficiencies (assuming that they exist) can be exploited for profit. |
| Keywords: | market efficiency, predictability, heterogeneity of expectations, forecast averaging, equity premium puzzle |
| JEL: | G12 G14 |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5037&r=cfn |