WP-94-01 Title

Organization Development Practices in Hong Kong : Current State and Future Challenges Author(s)

Dr. Chung Ming LAU

This paper examines the current state of OD practices in Hong Kong. The results of two recent studies among major firms and large firm managers are reported. It is found that Hong Kong firms put more emphasis on human processual type of interventions, followed by strategic planning. Some firms are practising the state-of-the-art OD activities, though the majority are still using traditional OD interventions. Current state of OD practice is then reviewed and implications to future practices are discussed.

WP-94-02 Title

Housing Markets and Demand for Housing Attributes in Hong Kong Author(s)

Dr. W. L. CHOU and Dr. Y. C. SHIH

This paper presents an overview of housing markets and a cross-sectional analysis of housing demand in Hong Kong. Disturbances from political events have produced price upheavals in property prices; long-term inflation and low level of real interest rates provide strong stimulus to sustained price surge in the housing markets. Household income seems to have relatively little bearing on recent development in the market especially when demand for housing has become more investment oriented. With the data from the 1991 Population Census of Hong Kong we find with a cross-section study that permanent and transitory incomes, rather than current income provide better estimates in the tenure choice equation. The results also indicate that significant effects on ownership of family size and number of elderly persons. Renter expenditure and tenure choice decisions are linked by using the two-stage estimation procedure of Lee and Trost (1978). No correlation was found between the renter expenditure and tenure choice equations. Further, the two-stage approach does not seem to be superior to the OLS approach in the estimation of the rental expenditure equations.

WP-94-03 Title

The Antecedents and Consequences of Role Stress in a Salesforce Context : A Study on an Oriental Culture Author(s)

Dr. Leo SIN

Data from the salesforce of a life insurance company in Hong Kong were used to test relationship among organizational variables, role stress variables, job satisfaction, and propensity to leave. An integrative model of antecedents and consequences of role stress fitted the data well. The results suggest that an awareness of the antecedents and consequences of role stress among life insurance salespersons can be of value to both marketing academicians and professionals.

WP-94-04 Title

Family or Work : Work-Family Conflict of Executives in Hong Kong Author(s)

Dr. Hang Yue NGO and Dr. Chung Ming LAU

This paper examined two types of work-family conflicts : work interference with family and family interference with work. The antecedents of work-family conflicts were investigated. Survey data from male and female executives in Hong Kong confirmed that job-related factors were associated with work interference with family. Family-related factors have dominating effects on family interference with work, particularly for women executives. Recommendations to reduce work-family conflicts were proposed.

WP-94-05 Title

One Country Many Cultures : An Assessment of Organizational Cultures of Firms in Hong Kong Author(s)

Dr. Chung Ming LAU and Dr. Hang Yue NGO

This paper examines the organizational culture of firms in Hong Kong using the competing values framework. It is found that firms of different capital have different cultural emphases. Specific forms of culture of a firm are found to correlate with the commitment and satisfaction of employees.

WP-94-06 Title

Functional Form of Stock Return Model : Some International Evidence Author(s)

Dr. M. M. CHAUDHURY and Dr. C. F. LEE

A linear (loglinear) empirical return model is rejected for more than half (one-third) of an international sample of 425 stocks. When a generalized functional form is used, a global index becomes an essential part of such a model. Additionally, the inclusion of a lagged dependent variable seems desirable for many stocks to allow incomplete price response to domestic and global market variations.

WP-94-07 Title

The Behavior of the Intraday Market Return Series of the Hong Kong Stock Market Author(s)

Dr. Joseph W. CHENG and Dr. Dennis K. K. FAN

This paper investigates the behavior of the minute-by-minute return series of the Hong Kong Hang Seng Index for the period between March 10, 1989 and August 31, 1993. Evidence of differences in the return distributions over various intervals of a typical trading day is found. The mean return series shows a U-shaped pattern in the morning trading session and an increasing trend during the afternoon session. The standard deviations of the intraday index returns are characterized by two U-shaped curves - one in the morning and the other in the afternoon trading session. A lunch break effect is discernable for both mean returns and volatility. We discover higher volatility during the more recent periods and such a trend reverse when index options begin trading in March 1993. Evidence of higher volatility is also found during trading hours than during non-trading hours for all periods. Our results imply that private information is not produced at a constant rate during the trading period. In addition, they are consistent with the rational trading noise hypothesis and the hypothesis of the concentration of discretionary liquidity traders and informed traders.

WP-94-08 Title

Foreign Direct Investment in China : Lessons from Japanese Experience Author(s)

Dr. Kazuo (John) FUKUDA

In spite of continued economic weakness among the industralized countries, China's economy is growing even faster than anyone expected. To capitalize on the country's economic boom, a large number of foreign firms are investing heavily in China. Japanese firms, for one, have already shifted the focus of their foreign direct investment from U.S. to Asian countries, including China. This paper will examine major problems and lessons that they have learned from the operation and management of their ventures in China.

WP-94-09 Title

Accuracy of Financial Analysts' Forecasts of Earning Per Share : The Hong Kong Experience Author(s)

Dr. Dennis K. K. FAN and Dr. Robert H. Terpstra

This paper examines the accuracy of financial analysts' earning forecasts in Hong Kong. Compared to naive random walk (no change) forecasts, analysts' forecasts are generally superior. However, this superiority only emerges toward the end of the fiscal year for which the forecast is prepared. In addition, there appears to be a systematic bias in the analysts' forecasts. As would be expected, the analysts' forecasts become more accurate as the reporting date is approached. However, analysts' opinion neither converge or diverge as the reporting date approaches. An important implication of our findings is that, in general, financial analysts should be able to improve their initial forecasts of EPS for Hong Kong firms by incorporating information contained in prior years' EPS. Furthermore, until improvements occur, investors should exercise caution when using financial analysts' forecasts prior to the end of the third quarter of the fiscal year being forecast.

WP-94-10 Title

The Shadow Price of Foreign Exchange in a Dual Economy Author(s)

Dr. Chi Chur CHAO and Dr. Eden S. H. YU

This paper examines the shadow price of foreign exchange for a dual economy with tariffs, quotas, or VERs. We show that the shadow exchange rate is greater than the official rate in the presence of tariffs, whereas it is greater or smaller than the official rate in the presence of quotas, depending upon whether capital is sector-specific or perfectly mobile. Furthermore, the shadow exchange rate is unambiguously smaller than the official rate for the VER case when the capital is intersectorally mobile. The rate, however, may be larger than the official rate when capital is sector specific. The practical implications of the results are also discussed.

WP-94-11 Title

Dynamic Structure and Interdependence of China and Hong Kong's Stock Markets Author(s)

Dr. Henry M. K. MOK and Dr. Daniel W. W. CHEUNG

By VAR and Johansen's cointegration tests, the Shanghai and Shenzhen stock markets are found not to cointegrate and only very weak short-run Granger causalities from Shanghai to Shenzhen and from the A-share to the B-share market are detected. Typically, the responses to shocks are instantaneous, weak and no persistent effect is found. The A-shares and B-shares are poor substitutes since the two markets are artificially segmented. China and Hong Kong's stock markets exhibit no prima facie causal relation whatsoever. The emerging Chinese stock markets are independent that of Hong Kong and they differ greatly in maturity and in regulatory systems.

WP-94-12 Title

The International Transmission of U.S., Eurodollar and Asian Dollar Interest Rates : Some Empirical Evidence Author(s)

Dr. Daniel W. CHEUNG and Dr. Bill W. S. HUNG

The inter-relationship among U.S., Eurodollar and Asian dollar certificate of deposit (CD) rates for the period 1987-1993 is investigated using Johansen cointegration and vector autoregression techniques. Our results indicate that both in the long-run and short-run there exists feedback relationship among three rates. The implication of the strong relationship between domestic and external interest rate markets is that national economies would no longer to control their money stock in the floating exchange rate.

WP-94-13 Title

A Study Of Manufacturing Practices Of Joint Venture Manufacturing Firms In Southern China (Hong Kong and Guangdong) Author(s)

Dr. Seung Chul KIM

Chinese manufacturing industry grows by leaps and bounds as China continues its open door policy and economic reform process. International joint ventures (IJV) with foreign companies play an important role in modernization of the Chinese manufacturing industry as joint venture firms bring in new technology and advanced management techniques as well as capital. This paper investigates the manufacturing practices employed by three different groups of joint venture firms in the electronics industry in southern China, mainly Guangdong province, and attempts to establish a reference in the modernization efforts.

WP-94-14 Title

The Aftermarket Performance of IPOs in Shanghai, China Author(s)

Dr. Henry M. K. MOK

This study finds that the initial average price relatives of 101 A-share new issues in Shanghai is 300 to 500 percent of their offering pries for issues between 1990 and 1993. This finding supports the underpricing explanation. After excluding the effects of price limits and market comovements, the fad or speculative bubble explanation of aftermarket inefficiency is supported only for bear issues. The underpricing of B-share, however, is not supported. Although it is rational to take profit when the returns on unseasoned stocks in an emerging market are high, a very large percentage of outstanding shares changed hands on the first few days of listing suggests immediate profit-taking by "flippers". This gross underpricing of A-share IPOs resulted in an overheated primary market and misled the Chinese public to speculate and overlook risk during the period of the study.

WP-94-15 Title

Keeping the Technological Leadership: Comparative Technical Efficiency of Joint Ventures and Domestic Firms in Shanghai's Manufacturing Industries from 1989 to 1992 Author(s)

Dr. Clement K. CHOW and Dr. Michael K. Y. FUNG

This paper computes the estimates of time-invariant and time-varying technical efficiency in four manufacturing industries: textile, clothing, machinery and equipment, electronics and communication equipment. We have shown that joint ventures are in general more technically efficient than domestic firms. In addition, we have also shown that the efficiency gaps among joint ventures and domestic firms in the industries of textile, machinery and equipment and electronics and communication equipment are widening in the sample period although the industrial reforms and technology policy have improved the productivity of domestic firms. However, in the clothing industry, the technical efficiency of domestic firms, especially state-owned firms, is comparable to the efficiency leader, joint ventures.

WP-94-16 Title

Cigarette Advertising and Juvenile Smoking Behaviour : A Logit-Model Analysis Author(s)

Dr. Leo Y. M. SIN

This paper reports an empirical study on predicting cigarette smoking propensity among juveniles in Hong Kong. A total of 588 high school students, defined into two mutually exclusive groups -- smokers and nonsmokers -- provided data on attitudes towards cigarette advertisements, peer group / family members influences, amount of media exposure, attitudes towards smoking behaviour, and demographic characteristics. A logit model was used successfully to distinguish among the two groups using the above variables. Findings in this study provide insights for both academic research and policy making.