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Article
Publication date: 16 April 2020

Chang Hoon Oh, Jennifer Oetzel, Jorge Rivera and Donald Lien

The purpose of this study is to examine how foreign firms consider natural disaster risk in subsequent investment decisions in a host country and whether different…

Abstract

Purpose

The purpose of this study is to examine how foreign firms consider natural disaster risk in subsequent investment decisions in a host country and whether different location portfolios can serve to mitigate investment risk.

Design/methodology/approach

The author sample includes data on 437 Fortune Global 500 firms and their initial entry into Chinese provinces between 1955 and 2008.

Findings

Using a fixed effects logit model of discrete time event history analysis, results show that geographic proximity to same multinational corporation (MNC) subsidiaries and different MNC subsidiaries from the same home country mitigates the negative effect of natural disasters on MNC entry into an affected province, while geographic proximity to other MNC subsidiaries from different home countries does not.

Originality/value

The knowledge needed to respond to severe disasters appears to be highly context-specific and shared only between firms with a high degree of commonality and trust.

Details

Multinational Business Review, vol. 28 no. 2
Type: Research Article
ISSN: 1525-383X

Keywords

Article
Publication date: 1 March 2010

Donald Lien and Pamela C. Smith

The U.S. government mandates taxpayers remit taxes through a "pay as you go" system. Research indicates employees continue to overpay interim taxes, despite the…

Abstract

The U.S. government mandates taxpayers remit taxes through a "pay as you go" system. Research indicates employees continue to overpay interim taxes, despite the inefficiencies of this form of forced savings. Theory holds that a rational individual would choose the minimum amount of withholdings prescribed by the tax code. We adopted Kahneman-Tversky (1979) prospect theory to show that, under reasonable conditions, individuals will continue to choose excessive withholdings. This paper is not an attempt to statistically justify prospect theory however; we argue that withholdings increase when the income tax rate increases and when beforetax income increases. Our model extends the income tax withholding literature by modeling a framework to determine an optimal withholding decision for taxpayers.

Details

Journal of Public Budgeting, Accounting & Financial Management, vol. 22 no. 3
Type: Research Article
ISSN: 1096-3367

Book part
Publication date: 4 March 2008

Donald Lien and Mei Zhang

A futures contract may rely upon physical delivery or cash settlement to liquidate open positions at the maturity date. Contract settlement specification has direct…

Abstract

A futures contract may rely upon physical delivery or cash settlement to liquidate open positions at the maturity date. Contract settlement specification has direct impacts on the behavior of the futures price, leading to different effects of liquidity risk on futures hedging. This chapter compares such effects under alternative settlement specifications with a simple analytical model of daily price change. Numerical simulation results demonstrate that capital constraint reduces hedging effectiveness and tends to produce a lower optimal hedge ratio. As the futures contract proceeds toward the maturity date, hedgers will take larger hedge position in order to achieve better hedging effectiveness. Finally, optimal hedge ratios are higher (resp. lower) under cash settlement for the bivariate normal (resp. lognormal) assumptions, whereas hedging effectiveness is almost always greater under cash settlement.

Details

Research in Finance
Type: Book
ISBN: 978-1-84950-549-9

Article
Publication date: 20 March 2007

John Cita, Soojong Kwak and Donald Lien

To evaluate various hedge programs designed to minimize the risk of an extreme monthly gas bill subject to a pre‐determined hedge program budget.Design/methodology/approach

Abstract

Purpose

To evaluate various hedge programs designed to minimize the risk of an extreme monthly gas bill subject to a pre‐determined hedge program budget.Design/methodology/approach – Historical data were collected on natural gas spot and futures prices. Also, theoretical options prices were calculated. These data were then applied to derive the risk associated with extreme bills under different hedge strategies.Findings – In every instance, having a price cap hedge program is better for core customers of a utility company than not having a hedge program.Research limitations/implications – The better hedge performance is based on historical data. It may not apply to future scenarios. Also, the theoretical options prices may need refinements.Practical implications – Any utility company should seriously consider a price cap hedge program to protect its core customers. The exact program design will likely change but the basic principles and methods described in this paper are directly applicable.Originality/value – This paper provide/guidelines for a utility company to design its hedge programs for the benefits of core customers. Currently, there is no such guideline available and there is no study evaluating these hedge programs. This paper provides a first attempt.

Details

Managerial Finance, vol. 33 no. 4
Type: Research Article
ISSN: 0307-4358

Keywords

Article
Publication date: 5 May 2006

David A. Hennessy and Donald Lien

Price‐dependent loan agreements at low interest rates have sometimes been included in North American hog sector long‐term marketing contracts. We show that a general form…

Abstract

Price‐dependent loan agreements at low interest rates have sometimes been included in North American hog sector long‐term marketing contracts. We show that a general form of this stipulation can be viewed as a hybrid between a forward rate agreement and a bundle of commodity spot options. In some cases, the provision amounts to a commodity swap. These observations provide an approach to valuing the provision. Historical data are used to estimate expected payouts to the producer under the contract feature.

Details

Agricultural Finance Review, vol. 66 no. 1
Type: Research Article
ISSN: 0002-1466

Keywords

Article
Publication date: 1 March 2010

1577

Abstract

Details

Journal of Public Budgeting, Accounting & Financial Management, vol. 22 no. 3
Type: Research Article
ISSN: 1096-3367

Book part
Publication date: 27 February 2009

Donald Lien

This chapter adopts value at risk (VaR) to analyze the hedge timing issue. Suppose that a producer, at a give time, recognizes the possible need of a futures contract for…

Abstract

This chapter adopts value at risk (VaR) to analyze the hedge timing issue. Suppose that a producer, at a give time, recognizes the possible need of a futures contract for risk reduction purpose. Should the producer trade in the futures market immediately or should he wait? Conditions are characterized under which delaying the hedge decision is preferred as it produces a smaller VaR. For an efficient futures market, it appears that the producer is better off delaying the hedge decision as long as possible. However, strong backwardation promotes early hedging.

Details

Research in Finance
Type: Book
ISBN: 978-1-84855-447-4

Article
Publication date: 1 August 2005

Donald Lien and Thomas Root

An investor saving for retirement attempts to allocate as sets in a manner that provides enough savings to produce a secure post retirement income. Falling short of the…

Abstract

An investor saving for retirement attempts to allocate as sets in a manner that provides enough savings to produce a secure post retirement income. Falling short of the desired saving level has a large negative impact on retirement income and is a major concern for the investor. We empirically investigate the allocation of assets between equities and less risky bonds constrained by a desire to minimize the size and occurrence of a short fall. Contrary to much of the theoretical finance literature, we find that the investor should decrease the portion of saving in equities as the retirement date approaches.

Details

Managerial Finance, vol. 31 no. 8
Type: Research Article
ISSN: 0307-4358

Keywords

Article
Publication date: 1 December 2004

David R. Shaffer and Andrea DeMaskey

This paper compares the hedging performance of the minimum‐extended Gini hedge ratio (MEGHR) and the minimum‐variance hedge ratio (MVHR) using three emerging market…

Abstract

This paper compares the hedging performance of the minimum‐extended Gini hedge ratio (MEGHR) and the minimum‐variance hedge ratio (MVHR) using three emerging market currencies. The MEGHR is consistent with the expected utility hypothesis under very general conditions, unlike the MVHR which requires special distributional assumptions. Our sample violates these conditions, and thus provides a context for contrasting the performance of the MEGHR and MVHR. Our results show that the MVHR and MEGHR are indeed different and in some cases the differences are substantial, both statistically and in order of magnitude. This indicates that the MEGHR should provide superior hedging performance given its theoretical robustness. Our hedging performance results support this conclusion for all currencies.

Details

Managerial Finance, vol. 30 no. 12
Type: Research Article
ISSN: 0307-4358

Keywords

Article
Publication date: 21 September 2012

Linda C. Isenhour, Diana L. Stone and Donald Lien

The purpose of this paper is to highlight the importance of advancing theory and research in China through identification of unique aspects of Chinese organizational…

1440

Abstract

Purpose

The purpose of this paper is to highlight the importance of advancing theory and research in China through identification of unique aspects of Chinese organizational behaviors, which can lead to expanded, robust organizational behavior and human resource management models and theories that transcend national boundaries.

Design/methodology/approach

This is a conceptual paper and does not employ research methods.

Findings

The results of studies included in this special issue suggest that researchers can identify elements unique to China in constructs such as psychological capital, work‐to‐family spillover, work‐family conflict, performance appraisal process, and expatriate interactions that further expand theory and research in organizational behavior.

Practical implications

The review of articles in the special issue suggests that managers in organizations in China may want to: develop individuals' psychological capital; train managers on the importance of eliminating abusive behaviors and developing employees' heartiness; adopt family friendly practices; employ performance appraisal process to encourage commitment and organizational citizenship behaviors; and train local country nationals on working with expatriates to enhance organizational effectiveness.

Originality/value

This review provides a unique perspective on employee behavior because it considers such behavior in a Chinese context.

Details

Journal of Managerial Psychology, vol. 27 no. 7
Type: Research Article
ISSN: 0268-3946

Keywords

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