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    Labour market friction effect on corporate performance : evidence in the global market : a dissertation submitted in fulfilment of the requirements for the degree of Doctor of Philosophy in Finance at Massey University, School of Economics and Finance, Massey University
    (Massey University, 2023-08-31) Bai, Hengyu
    This thesis represents the first academic endeavour to investigate the impact of labour market friction on corporate performance in a global context. In traditional neoclassical economic theory and relevant research, human capital was considered merely an input to generate economic value. Unemployed workers were assumed to fill vacant job positions perfectly, similar to interchangeable machine parts. However, as understanding has evolved, economists now recognise the complexities of filling a job vacancy, which needs to take into account the skills, geographic locations, labour preferences, and various objective factors of the labour force. Consequently, a mismatch often occurs between unemployed workers and vacant jobs, resulting in simultaneous unemployment and job vacancies. This phenomenon is termed labour market friction. This thesis comprises three subprojects, each contributing a distinct essay. The first essay examines the effect of labour market friction on expected stock returns in the Chinese stock market. Utilising the portfolio sorting approach and the Fama-MacBeth regression model, the findings indicate that firms with higher labour friction risk are likely to experience higher stock returns in the subsequent month. This suggests that labour friction risk serves as a significant risk factor in asset pricing. Additionally, the study reveals that the positive effect of labour friction on expected stock returns is more pronounced in firms with either high productivity or poor employee welfare. Furthermore, firms in regions with high levels of development are more likely affected by the labour friction risk. The second essay expands the scope from the Chinese stock market to global stock markets, including North America, Asia-Pacific, and Europe. The results reveal regional variations in the impact of labour market friction on expected stock returns. Specifically, labour friction risk has a negative association with expected stock returns in North American markets, whereas it is positively correlated in Asia-Pacific markets. The significant labour market friction effects are pronounced in different industries due to the varieties of labour market structures, where the North American markets contain a large partial of high technology companies, while the Asia-Pacific markets are dominated by numerous industrial companies. There is no significant relationship between labour friction risk and expected stock returns in European markets. The study also finds that the effect of labour friction is particularly pronounced in markets that are non-immigrant or non-English-speaking, providing higher external labour supply and mobility in such markets, which reduces firms’ recruitment pressures. The third essay centres on Corporate Social Responsibility (CSR) behaviours under the influence of labour market friction in a global setting. The results suggest that firms facing higher labour friction risks are more inclined to engage in CSR activities, even when controlling for year, industry, and region effects in the regression model. This CSR engagement is notably more prominent in markets with a higher demand for labour, characterised by a higher number of new businesses and job vacancies. These findings remain consistent across markets that encourage business creation and expansion through strong investor protection and low labour taxation policies. Markets with higher levels of advanced education have a more significant labour market friction effect on CSR decision-making as they have numerous labour-intensive firms which require a large labour force. Additionally, when labour unions have the strong bargaining power to protect the welfare of employees, firms are less inclined to conduct CSR activities due to the less function in controlling the labour market friction risk. In summary, this thesis contributes to the existing literature by providing empirical evidence of the effects of labour market friction on corporate performance and behaviours across different global markets. It demonstrates that the impact of labour market friction varies due to differing labour market policies and structures and is significantly influenced by the dynamics of labour supply and demand. The insights derived from examining labour market friction across diverse markets have critical implications for both corporate managers and policymakers seeking to mitigate the associated risks.
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    Ground leaseholders' perception of rent review risk : the impact of the availablilty heuristic : a thesis presented in partial fulfilment of the requirements for the degree of Doctor of Philosophy (Property) at Massey University, Albany, New Zealand
    (Massey University, 2019) Pope, Alan R.
    The aim of this thesis is to explore the adequacy of investor perception of market ground rent review risk, on ground leasehold value. Ground rent levels are a function of freehold value levels, so if at the time of review there have been freehold price increases, it follows that ground rents will increase. Increased ground rent at rent review time, will lead to lower ground leasehold value, as the cost obligations increase for the ground leasehold. Reports of ground leaseholder discontent with ground rents are therefore not surprising, however the literature to date does not appear to robustly explain how individuals anticipate and quantify this risk when making ground leasehold purchase decisions. Investigating if behavioural theory explains the relationship between a ground rent review and a ground leasehold purchase is undertaken. The objective is to determine if the ground leasehold tenure type is flawed by not being appropriately designed to account for ground leaseholder thinking. In order to form a hypothesis for testing, twenty-five semi-structured interviews with ground leaseholders were carried out. The semi-structured interviews pointed to ground leaseholders linking freehold and ground leasehold value increases together, not considering that the ground rent increases reduce the ground leasehold value, especially at rent review time. This incorrect correlation of freehold value growth to ground leasehold value growth, suggests that ground leaseholders are susceptible to the availability heuristic. In order to robustly test the application of the availability heuristic, experimental scenarios were put to forty property investors. The investors either completed a scenario with freehold growth as a manifestation of the availability heuristic (treatment), or not (control). The results showed that there was a statistical difference between the treatment and control groups, and in the posited direction, indicating that the availability heuristic explains the ground leasehold valuation behaviours of investors. These results are important because they show that knowledgeable market participants, in this case property investors, are not fully accounting for the ground leasehold rent review risk. Ground leaseholder concerns about ground rent review levels aired in the semi-structured interviews are genuine. The ground leasehold rent review procedures are not designed to account for ground leaseholders thinking and the tenure form accordingly requires revision where possible.
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    Ownership structure and firm risk : evidence from China : a thesis presented in fulfilment of the requirement for the degree of Doctor of Philosophy in Finance at Massey University, Manawatu campus, New Zealand
    (Massey University, 2018) Xie, Feng
    This thesis investigates the effects of ownership structure on firm risk in China. The first essay of this thesis provides an overview of the Chinese privatisation programmes that profoundly shapes the ownership structure of Chinese listed firms, and it reviews and discusses the corporate governance and firm outcomes resulting from the privatisation programmes in China. In particular, it presents a detailed survey of China’s privatisation programmes from its Share Issue Privatisation (SIP) to the Non-tradable Share (NTS) reform, Overall, it reveals that the SIP has achieved limited success in China, which is mainly due to the partial trading policy and partial privatisation characteristics, while the NTS reform yields greater improvements of governance mechanisms and outcomes. This thesis then, examines the impact of ownership structure on firm risk in privatised firms. Essay two examines the effect of residual state ownership on stock return volatility following the NTS reform. The empirical evidence shows that residual state ownership mitigates the stock return volatility. It indicates that state ownership retention in the aftermath of sudden privatisation reform can signal the government willingness to bear the firm risk. The mitigating effect is especially pronounced in firms controlled by the government agents. Furthermore, firms with higher government ownership reduce stock return volatility through implementing more conservative corporate policies. However, the volatility-mitigating effect appears to be temporary, lasting only for three years after state shares become fully tradable. Essay three investigates the relationship between the shareholdings of the Qualified Foreign Institutional Investors (QFIIs) and stock price crash risk. This essay adopts a governance mechanism, threat of exit, to examine the role of QFIIs on stock price crash risk. The evidence shows that long investment horizon and existence of multiple QFIIs exert credible exit threat to discipline management, and in turn, reduce stock price crash risk. Further, it shows that the corporate site visits of portfolio firms by QFIIs is a channel through which the credible exit threat works effectively.
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    The regulation of takeovers in New Zealand and returns to shareholders : a thesis presented in partial fulfilment of the requirements for a Master of Business Studies at Massey University
    (Massey University, 2001) Kittle, Andrew Gordon
    Between 1 January 1996 and 30 June 2001 takeovers in New Zealand were governed by a set of regulations that formed part of New Zealand Stock Exchange ("NZSE") listing rules. The NZSE rules were relatively light in their approach to governing takeovers and received much criticism throughout their tenure. Prior to 1 January 1996 takeovers had been regulated by the Companies Amendment Act 1963. We examine the returns to targets and bidders between 1 January 1990 and 30 June 2000 to determine how effective the rules were in promoting shareholder wealth. The change in regulations between 1995 and 1996 also presents an opportunity to examine the impact on returns from moving from a lightly regulated regime to one which is more regulated with a greater amount of required disclosure. We find that returns to both targets and bidders were lower under the NZSE regime than under the Companies Amendment Act 1963. This result is attributed to several specific aspects of the Companies Amendment Act 1963 such as the ability of the target to recover defense costs from bidder and a set period for which the offer must remain open.
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    Underpricing of IPOs in New Zealand : a thesis presented in partial fulfilment of the requirements for the degree of Master of Business Studies in Finance at Massey University
    (Massey University, 1997) Clegg, Michael Brian
    This study provides further evidence of 'underpricing' of initial public offerings ("IPOs") in New Zealand. IPOs are frequently issued at prices substantially less than the market price on the first day of listing. Recent literature has widely documented such IPO 'underpricing' and adequately established that IPOs of common stock are underpriced. This study examines the underpricing of 148 New Zealand IPOs between 1982 and 1997. The average market adjusted underpricing was 16.44% (median 10.05%), measured from offering date to list date, a level consistent with underpricing experienced in other markets,1 but lower than previous studies of the New Zealand market. This study makes two contributions to the existing IPO literature. First it performs a thorough univariate analysis of commonly cited reasons for underpricing with respect to the New Zealand market, and secondly it develops a multiple regression model. The model provides increased understanding of underpricing but due to a low R2, is not recommended to be used by market participants to predict future underpricing. This study finds that New Zealand IPO underpricing for issues between 1982 and 1997 vary in a manner consistent with the model of Rock (1986), and the extension of this by Beatty and Ritter (1986). It also finds evidence of the relationship between IPO underpricing and underwriter reputation consistent with Carter and Manaster (1990) and the relationship between IPO underpricing and issue market conditions consistent with Ritter (1984) and Ibbotson, Sindelar and Ritter (1988). The model accounts for underwriter reputation, the market conditions that prevail during the issue, ex ante uncertainty of the issuing firm, and a signalling effect consistent with Rock's (1986) "winners' curse."
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    Accounting for the elephant in the room : disclosure of intangible assets in New Zealand public companies : a thesis submitted to meet the requirements of Paper 152.800 (100 points) towards the degree of Master of Management, Department of Management, College of Business, Massey University
    (Massey University, 2006) Ambler, Ian
    Company market values often exceed the values that are published in company annual reports. One popular explanation for this discrepancy is that traditional company accounting and reporting practices ignore the potentially very large value creating impact of intangible assets, which are also often referred to as intellectual capital or knowledge resources. The theories for measuring intangible assets are reviewed, highlighting the many conceptual and definitional problems that have been encountered. These problems are traced to the resource-based static perspective of intangible assets, which sees them as balance sheet items analogous to tangible assets. A recent transition from this perspective is identified in the literature, towards recognising that the value of intangible assets arises more from their use than their possession. This is a dynamic or flow perspective of intangible assets, which views them as knowledge resources used strategically to create value. Adopting this perspective shifts the intangible asset issue away from being an accounting matter based on reporting historical transactions, to become a corporate governance and strategic management matter concerned with reporting future value creation performance and capability. The empirical research develops and tests a novel instrument for measuring intangible asset reporting in New Zealand public companies, building on recently introduced Danish intellectual capital reporting guidelines centred on this emerging dynamic perspective. Of a sample of 50 listed public companies, 84% are found to be voluntarily reporting their use of intellectual capital to create value, 16% extensively. The reporting differences between these companies are then explored. Nearly two thirds of the variation may be explained by a combination of differences in profitability, the capital market's perceptions of their future added value, industry differences of tangible asset intensity, company size and company expansion strategies. The empirical findings show a positive relationship between higher levels of disclosure and the future value placed on companies by the capital markets, which suggests capital markets reward companies that adopt a more open disclosure policy with a lower cost of capital and easier access to capital. These outcomes are compared with the inconclusive results found in a control survey of intellectual capital disclosure based on the earlier static perspective using a commonly used disclosure measurement methodology. This comparison reinforces the relevance of the emerging dynamic perspective of intangible assets, and the value to be gained from adapting disclosure research methodologies that reflect this approach. This research shows there is currently a very low level of performance outlook reporting by New Zealand companies, a finding consistent with international research. It may seem that the next logical step from disclosing how a company intends to use intangible assets to create value is for its management to report its view of forward-looking expected performance. However, the literature reports that companies with conflicting goals may undermine the confidence the capital markets are prepared to place on their projections. Capital markets prefer to make their own informed assessments of the future performance of companies based on their own external assessment of each company's business model. In the context of the principles-based reporting guidelines in New Zealand's corporate governance regulatory framework, the findings of this research indicate that a small group of exemplar companies are leading the way towards a more comprehensive voluntary disclosure of their future value creation strategies. This offers evidence that the principled-based regulatory approach is working to raise the average quality of annual report disclosures by New Zealand public companies, though the uniformity and instant results of a rules-based approach are missing.
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    An analysis of some computer assisted valuation procedures : a thesis ... for the degree of Master of Agricultural Business and Administration in Valuation at Massey University
    (Massey University, 1982) Hargreaves, Robert Vernon
    The objective of the thesis is to examine computer applications to the sales, income, and cost approaches to valuation. The author describes and evaluates computer programs suitable for the storage and retrieval of sales data, the analysis of 'net rate' information for houses, and the adjustment of land sales for size variations. The use of multiple regression analysis in the sales approach to valuation is reviewed, and this methodology is then applied to the valuation of a group of home units and single family homes. Variables were selected from the Valuation Department sales data base and multiple listing information. The inclusion of the existing rating valuation significantly improved the predictive ability of the regression equations. Several microcomputer applications to the income approach to valuation are discussed in the context of discounted cash flow. These include programs that compute residual land value for hypothetical developments and the optimum building for a site. A case study approach is used to demonstrate the application of net present value, internal rate of return, and financial management rate of return approaches to valuation. Two computer programs designed to estimate the replacement cost of buildings utilise costing information based on the New Zealand Institute of Valuers modal house. One of these programs calculates the replacement cost of a variety of farm sheds, and the other program calculates the replacement cost of houses. The author concludes that computer assistance offers considerable potential benefits to valuers for the storage and retrieval of sales information and for automating many aspects of the valuation process.
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    The valuation of subsistence use of tropical rainforest on the island of Choiseul, Solomon Islands : a comparison between subsistence values and logging royalties : a thesis presented in partial fulfilment of the requirements for the degree of Master of Philosophy in Development Studies, Massey University
    (Massey University, 1992) Cassells, Ross Macdonald
    This thesis values village subsistence use of tropical rainforest and examines the socio-economic impact of rainforest logging on the island of Choiseul in the Solomon Islands. The destruction of tropical rainforest has become a matter of major international concern. Despite strong opposition to it, tropical rainforest clearance continues at an alarming rate. Economically one of the reasons for this continued destruction is that the immediate financial benefits to be gained from the exploitation of the forest often appear to far outweigh the perhaps greater long term benefits to be gained by a lesser, but more sustainable, form of use. Considerable environmental and social costs are often incurred through forest destruction but these are not always borne by those who have profited from the destruction. Very little research has been undertaken in the Pacific to quantify the impact of tropical rainforest logging on rural village communities. In an attempt to redress this, some four and a half months were spent in the Solomon Islands during 1991 researching and then valuing the subsistence use of tropical rainforest. The field work was undertaken in the villages of Nukiki and Kuku on the island of Choiseul. The villagers were heavily reliant on the subsistence use of the rainforest for their livelihood. Values calculated for these uses were quite substantial at $10,512.15 per annum for the average sized (seven member) household. Using information from Nukiki and applying it to the village of Kuku, where a logging operation had trespassed on village land, it was clear that the villagers had been severely disadvantaged when their land was logged. For example, one area of 41 hectares near Kuku village, was calculated to have yielded 2,018 cubic metres in merchantable logs. The villagers were to be paid $9.00 per cubic metre which would give them a once-only royalty payment of $18,162.18. Subsistence losses from the same area were reported to be four garden sites, six nari and sulu nut trees, 21 betel nut trees, 346 sago palms and approximately 25 percent of the villagers' other useful trees such as those used for housebuilding, canoe making, medicine and food. This loss in subsistence production would be sustained over many years and was calculated to have a present value of $176,613.13. The net loss suffered by the village as a whole was therefore $158,450.95, or a substantial $7,545.28 for each of the 21 households.
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    Non market value of biodiversity on agricultural land by rural landowners : a case study : a thesis presented in partial fulfilment of the requirements for the degree of Master of Environmental Management at Massey University, Manawatu, New Zealand
    (Massey University, 2014) Piddock, James Nugent
    The loss of biodiversity on agricultural land is of increasing concern, both in New Zealand and globally. In New Zealand, historically, that loss is largely a result of the clearing of lowland forests and the draining of wetlands for increased agricultural production. Biodiversity is a critical component of our natural environment and necessary for sustainable development, particularly for the ecosystem services (such as, soil stability, nutrient retention, and flood protection) it provides. However, it has too long been under-valued. The aim of this research is to use a stated preference approach, choice modelling, to determine the non-market value rural landowners place on biodiversity on agricultural land. It employs different attributes for biodiversity, and a payment vehicle of an annual contribution, for a 10-year period, into a council designated fund to which farmers can apply for funding to take actions to enhance indigenous biodiversity on their land. The focus of this study is the Waikato Region, due to its diversity of native flora and fauna and the pressures placed on it from the region's strong agriculture based economy. An online survey was used to survey rural landowners in the region. Usable responses were obtained from 146 respondents, three-quarters of whom operate their own farm and two-thirds of whom have indigenous biodiversity present on their farm. A latent class model was used to estimate non-market values, since revealed attribute non-attendance (or avoidance) had taken place. The results highlight the importance to farmers of ecosystem services provided by indigenous biodiversity, as those attending to all attributes were willing to pay toward maintaining current actions ($43.90/year for 10 years) or, for increasing actions to enhance ecosystem services ($59.65/year for 10 years). In contrast, however, they were willing to accept an annual payment ($49.22/year for 10 years) toward controlling possums and other pests. Other results were not clear-cut, making recommendations difficult. Perhaps a future study could investigate whether society as a whole places value on indigenous biodiversity being present on agricultural land, and whether there is a willingness, by society, to pay for this. Keywords: choice modelling, biodiversity, non-market valuation, agriculture, latent class model, Waikato region, attribute non-attendance. .