Table of Content

15 March 2012, Volume 0 Issue 03

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The Institutional Change Theory and Its Revision in China

HE Yi-ming

2012, 0(03):  1485. 

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In the field of economics, the researches on the issue of institutional change have attracted the attention of a large number of famous scholars both in China and abroad for a long time. However, most of the existing literatures on institutional change focus just on some partial aspects, having not formed a consistent paradigm under which the subject can be understood in all related aspects. Therefore, researchers should review and comb through the literature results concerning the evolution process of the general theory of the economics of institutional change and its application in China and relaxing of property right regulation, and put some relatively independent topics into a unified paradigm, so as to clarify the focus of debate and form a few clues as a clear theoretical framework and research program for further discussion. In particular, the three areas of research content, theoretical innovation and methodology should be further exploited.

Optimization of Industrial Structure and Employment Growth

LI Wen-xing

2012, 0(03):  1486. 

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There exists a significant positive correlation between the proportion of China’s tertiary industry in GDP and the gross employment; on the contrary, the share of secondary industry in GDP is correlated negatively with the gross employment. Therefore, to prompt the development of tertiary industry by loosening the regulations of industries and to let the labors switch smoothly between the industries through professional training are two important ways to improve the level of employment. Furthermore, the relationships between industrial structure and employment are different at different regions. In the developed regions, the relationship between the two is the same as that resulted from the regression of the full sample; while in the less developed regions, the industrial structure has no significant effect on employment, but both the average years of education and the population age structure are correlated positively with employment. Therefore, to improve the quality of labors and to optimize the age structure are more important than to adjust industrial structure in promoting the growth of employment in the less developed regions. In addition, the elasticity of employment with respect to GDP is significantly positive, so to keep a high speed of GDP growth also plays a key role in boosting China’s employment.

Public Crisis and the Reconstruction of Local Fiscal Operation Mechanism: from the Angle of Fiscal Opportunism

ZHOU Ke-qing

2012, 0(03):  1487. 

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In recent years, many big public crises happened frequently in China, which have seriously affected the life and property safety of the people and the sustainable development of the society and economy. The difficulty in the prevention and treatment of the public crisis should be attributed to the opportunism of the local finance, and the popularity of the latter was derided from the irrational incentive and restraint mechanism between the governments and the imperfect fiscal management system. In reality, the opportunism of the local finance not only leads to the formation of public crisis, but also increases the difficulty of governance of public crisis and magnifies the negative influence of the public crisis on the operation of society and economy. Therefore, it is necessary for China to reconstruct the local fiscal operation mechanism, establish an effective incentive and restraint mechanism, properly define the responsibilities of prevention and treatment of public crisis between the governments, allocate sufficient revenue to the local governments, and establish perfect local fiscal supervision mechanism.

On the Causes and Control of the Expansion of the Scale of China’s Local Public Expenditure

ZHU Jun1

2012, 0(03):  1488. 

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Nowadays, the attention of the people is more and more directed to the potential problems in the process of expanding public expenditure in the countries all over the world, especially in the context of fiscal crisis in some European countries. Therefore, it is very important to study the problem of how to decrease the public expenditure while adjusting the scale of social welfare. Based on the panel data studies of China’s provincial governments, the result of this paper shows that urbanization has positive effect on the expansion of local public expenditures while public needs of education have significant scale effect of economy. On the basis of the results of the empirical analysis, it is suggested that China’s local governments should optimize the structure of fiscal expenditure, strengthen the expenditure management, and carry out the reform in accordance with the policy of both increase and decrease public expenditures but more decrease than increase.

Financial Development and Total Factor Productivity Growth: Does Regional Disparity Matter?

YAO Yao-jun

2012, 0(03):  1489. 

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By making use of China’s provincial panel data from 1997 to 2008, this paper re-examines the linkages between total factor productivity (TFP) growth and financial development and the intermediate channels with the three samples of national level, coastal regions and inland areas. The result finds that the growth effects of TFP of China’s financial development is related with the regional factors; the intermediate channel through which financial development promotes TFP growth is technological progress rather than technical efficiency growth. It indicates that to boost the reform of China’s financial system so as to promote the financial development is of great importance in improving the quality of economic growth.

Lending Investment and Asset Price Bubbles: Theory and Empirical Analysis

HUANG Fei-ming

2012, 0(03):  1490. 

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In modern financial markets, the prevalence of information asymmetry and borrowing-lending investment behavior, as well as the problems of the resulting risk-benefit asymmetry and risk transfer, would lead to asset price inflation and thus the formation of foam. Based on the selection of representative borrowing-lending investment activities of the investors as the research subject, through the introduction of the loan to value ratio (LTV) for further expansion of the Allen-Gale model, this paper tries to illustrate the internal mechanism of the formation of asset price bubble and its impact on financial markets by applying the dynamic adjustment of LTV. Through simulative analysis, it is found that when interest rates stay unchanged, the greater the LTV, the bigger the asset price bubbles; while the LTV remains constant, the lower the interest rates, the greater the level of asset price bubbles. Therefore, the key to contain asset price bubbles is to lower the LTV and to raise interest rates.

A Study of Strategies to Enhance Service Brand Images: Evidence from the Restaurant Sector

FAN Xiu-cheng

2012, 0(03):  1491. 

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Due to the fact that most of services possess experience and credence attributes, thus the perceived risk in purchasing a service is higher than the purchasing of a kind of goods. As an extrinsic cue of “tangibilizing the intangible”, the role of service brand images in reducing customers’ searching costs and perceived purchase risks has become extremely salient. Taking 218 companies in the restaurant sector as the samples, this paper conducts an empirical study on such issues as whether the improvement of service brand image would enhance company performance and what kind of service strategies can improve brand image. The results indicate that service brand images have a positive effect on market performance which in turn positively affects financial performance; service positioning, brand managing, and service innovating have significant positive effect on brand image; customer participation, customer relationship management and service recovery management have no significant effect on brand image. Companies in the service sector should effectively manage service positioning, branding and innovating in order to improve their brand images.

Relational Contracts and Transition of Governance Mechanism

YUAN Zheng

2012, 0(03):  1492. 

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The traditional definition of contract emphasizes the law and commitment; while in reality, people are always trying to avoid a lawsuit, first through private settlement, and the legal mechanisms are always the last resort for help. McNeil believes that all contracts have no real meaning unless they are positioned in social relations; each contract must be a relational contract. The cost of rule-based governance is declining with the expansion of the size of transactions, while the cost of relational governance is on the contrary. Therefore, relational governance will eventually give way to rule-based governance.

Technical Progress, Structural Change and Productivity Growth of China’s Railway Transportation Industry: An Empirical Analysis Based on Hicks-Moorsteen Productivity Index

LIU Bing-lian1

2012, 0(03):  1493. 

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By making use of the non-paramatric Hicks-Moorsteen productivity index, this paper measures and decomposes the TFP of China’s railway transportation industry from 1997 to 2009, it also conducts an absolute convergence test of the productivity of the regional railway transportation industry. The findings show that the smooth and fast technical progress is the main reason for the TFP growth of China’s railway transportation industry during that period; the decrease of the input-output mixed efficiency is the important factor for the decrease of the TFPE in some regions; and there exists significant convergence in the statistics of productivity in the industry of nationwide and the three bigger regions. Moreover, by applying the panel data econometric model, this paper performs an empirical test of the relative effect of such factors as structural changes, capital deepening, derived demand, etc. on the TFP of the railway transportation, technical progress and efficiency changes. The findings also show that there exist significant positive and negative correlations between the industrial economic structure and the productivity of railway transportation and between the internal structure of railway transportation and the productivity; the degree of capital deepening shows a significant negative influence; all kinds of derived demands and the railway network density show a significant positive influence; the proportion of state-owned railways and other substitutive competitive factors as highway facilities have presented some negative influences of different degrees.

Compact Development Mode and Its Carbon Emission Reduction Prospect in Shanghai

PAN Hao-zhi1

2012, 0(03):  1494. 

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There is a close relation between the paths of the compact development mode and the urban carbon emission reduction. The compact development mode in Shanghai should focus on such aspects as improving the intensity of the existing construction land, meet the market housing demand by planning compacted communities, and so on. However, because the object of emission reduction in Shanghai’s compact development mode (mainly petroleum and diesel used in transportation) accounts for a comparatively small proportion in the total energy consumption and coal accounts for a large proportion in power generation, the potential emission reduction of the mode will be limited in short term and may have a better prospect in the long term. Anyway, the compact development mode can exert a boosting effect on the development of public transportation, which can control the increasing trend of private cars in the city in mid and long terms and alleviate the dependency on imported oil, thus it will be helpful to the improvement of energy security and the realization of the carbon reduction goal.

A Study of the Causes of Positive Earnings Surprise in China’s Listed Companies

WANG Jing-jing1

2012, 0(03):  1495. 

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This paper studies the causes of the positive earnings surprise in China’s listed companies. It is found that except the companies with better performance, none of the management of China’s listed companies has realized the positive earnings surprise through earnings management or expectation management. The other cause is that in order to establish or maintain a good relationship with the management of the listed companies so as to gain some private information, the financial analysts try to appeal to the management. It is thus clear that there exist interest conflicts between the listed companies and financial analysts, and the root of the interest conflicts is the selective disclosure of information by the listed companies. Thus, in order to standardize the development of the profession of financial analysts, it is necessary to improve the independence of financial analysts, perfect the fair information disclosure system, and increase the cost of violation of the fair information disclosure rules.

Social Capital of Entrepreneurs and Choice of Financing Instruments by New Ventures

HUANG Fu-guang

2012, 0(03):  1496. 

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On the basis of the theory of social capital, this paper constructs a model to analyze the influence of the social capital of entrepreneurs on the choice of the financing instrument between debt financing and venture capital equity financing under the condition of double moral risks. The study finds that when entrepreneurs have the ability to choose from the two kinds of financing instruments while at the same time the entrepreneurs have higher or lower level of social capital, the entrepreneurs tend to choose debt financing; while the social capital of entrepreneurs is in medium level, they tend to choose venture capital equity financing. The main contribution of the study is that the social capital of entrepreneurs is brought into the research framework of the choice of financing instruments by new ventures, which has extended the research results of new venture financing.

Review of the Theory of Service Modularization

WU Zhao-yun1

2012, 0(03):  1497. 

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The connotation of service modularization contains three levels: service system, service organization and service industry. The results of the relative studies are all focused around the four main lines of service system modularization, services product modularization, service industry modularization and service organization modularization. There are more qualitative empirical and conceptual researches，but less quantitative researches. Therefore，to analyze service modularization from the multidimensional perspective of both macro and micro industrial organization with both the qualitative and quantitative research methods will be the general direction of future researches.