Turnover Premium, Foreign Institutional Ownership, and Time-Varying Risk Premium in Taiwan Equity Markets
Pages 8-20
Ying-Jen Chen and Jen-Sin Lee

DOI: http://dx.doi.org/10.6000/1929-7092.2015.04.02

Published: 23 February 2015

Abstract: The low turnover premium found in U.S. equity markets is also found in Taiwan market, unlike the mixed evidence for other stylized effects such as size, book-to-market ratio and momentum. Consistent with investor overconfidence hypothesis proposed by Odean (1998, 1999), the percentage of foreign institutional shareholdings in a stock is found to vary inversely with turnover premium. This inverse relation is robust to the influence of other forces that may interact with turnover rate, such as market capitalization, book-to-market ratio and 6-month past returns, respectively. Time-varying risk premium, particularly in low turnover-low foreign institutional shareholdings percentage portfolio, provides partial explanation for the phenomenon, but the inverse relation persists after risk adjustment by models such as unconditional CAPM, Fama-French three factor model and conditional CAPM.

Corruption and Economic Growth:A South Korean Study
Pages 1-7
Chong-Uk Kim and Gieyoung Lim

DOI: http://dx.doi.org/10.6000/1929-7092.2015.04.01

Published: 06 February 2015

Abstract: Using a vector autoregressive model (VAR) with 42 years of South Korean annual data, we empirically investigate two possible links between corruption and economic growth. Even though we find negative correlations between corruption and other growth variables such as private investment, we do not find any strong empirical evidence supporting negative correlations between corruption and economic growth. Our results are similar to previous empirical findings and seem to be another empirical mismatch between micro and macro level data.

The Golden Age of the Company: (Three Colors of Company's Time)
Pages 21-42
Peter N. Brusov, Tatiana Filatova, Natali Orehova and Veniamin Kulik

DOI: http://dx.doi.org/10.6000/1929-7092.2015.04.03

Published: 23 February 2015

Abstract: In this paperwe investigate the dependence of attracting capital cost on the time of life of company n at various leverage levels, at various values of capital costs with the aim of define of minimum cost of attracting capital. All calculations have been done within modern theory of capital cost and capital structure by Brusov–Filatova–Orekhova (Brusov et al. 2011a,b,c,d,e; 2012 a,b; 2013 a,b,c; 2014 a,b; Filatova et al. 2008).

It is shown for the first time that valuation of WACC in the Modigliani – Miller theory (Modigliani et al. 1958; 1963; 1966) is not minimal and valuation of the company capitalization is not maximal, as all financiers supposed up to now: at some age of the company its WACC value turns out to be lower, than in Modigliani – Miller theory and company capitalization V turns out to be greater, than V in Modigliani – Miller theory.

It is shown that, from the point of view of cost of attracting capital there are two types of dependences of weighted average cost of capital, WACC, on the time of life of company n: monotonic descending with n and descending with passage through minimum, followed by a limited growth. The first type takes place for the companies with low capitalcosts of the company, characteristic for the western companies. The second type takes place for higher capital costsof the company, characteristic for the Russian companies as well as for companies from other developing countries. This means that latter companies, in contrast to the western ones, can take advantage of the benefits, given at a certain stage of development of company by discovered effect. Moreover, since the "golden age" of company depends on the company's capital costs, by controlling them (for example, by modifying the value of dividend payments, that reflect the equity cost), company may extend the "golden age" of the company, when the cost to attract capital becomes a minimal (less than perpetuity limit), and capitalization of companies becomes maximal (above than perpetuity assessment) up to a specified time interval.

Concluded that existed up to the present conclusions of the results of the theory of Modigliani-Miller (Modigliani et al. 1958; 1963; 1966) in these aspects are incorrect. We discuss the use of opened effects in developing economics (Brusov et al. 2015).

Contract Workers in Japan’s Nuclear Utility Industry: Can We Maintain Safety and Health Standards at Nuclear Power Plants?
Pages 401-414
Akikuni Matsumoto, Hisayuki Hara and Kazumitsu Nawata

DOI: http://dx.doi.org/10.6000/1929-7092.2014.03.31

Published: 05 December 2014

Abstract: Many small contracting firms are used to maintain nuclear power plants in Japan. The accident at the Fukushima nuclear plant raised the serious question as to whether safety standards can be upheld with this system. A review of regulations governing Japan’s nuclear utility industry derived two imperfect information models that implied opposing incentives for utility companies to use contract workers rather than hire employees. We then analyzed the dataset of nuclear plant worker’s exposure to radiation in the power generation industry. The results suggest that using contract workers enables the utility companies to implement lower standards than those imposed by regulations and to reduce costs by circumventing responsibilities legally imposed on employers.