North American Journal of Economics and Finance xxx (2016) xxxxxx

Contents lists available at ScienceDirect

North American Journal of Economics

and Finance
j o u r n a l h o m e p a g e : w w w . e l s e v i e r . c o m / l o c a t e / e c o fi n

Editorial

Business Finance and Enterprise Management in the Era of Big

Data: An introduction

On March 1011, 2016, National Taiwan Normal University, Beijing Tsinghua University, and National Chi Nan University
jointly hosted 2016 Global Economics and Management Conference at Taipei and Nantou, Taiwan. The theme of the confer-
ence is Business Finance and Enterprise Management in the Era of Big Data. Over recent years, big data has become a key
basis for competition. Business enterprises have been gathering data alongside the rise of social media and the Internet,
inviting collaboration among formerly walled-off functional units, and even seeking information from external suppliers
or customers to create real-time customization. Within the financial services sector, big data strategies have begun to make
some impacts in the areas of capital markets using sentiment analysis for trading, risk analytics, and market surveillance etc.
Both industry and academia call for the attention on the rising challenges and opportunities presented by big data initiatives.
This special issue comprises of ten papers investigating with various facets on the following aspects: utilization of market
aggregated information, agency/governance issues and trade facilitation across countries.
Information surrounding securities markets can be gathered to create a clear understanding of market sentiment in order
to derive front office trading strategies, as well as to determine the valuation of individual securities. Ke et al. investigate the
extent to which the frequency distribution of the final digit of stock prices is influenced by numerical superstitious beliefs.
Their study considers important factors involved with the superstition for numbers in Asia/Taiwan, after controlling for the
amount of information, change of tick size, Asia/Chinese festivals, and the role of institutional investors.
Wei et al. construct a market Aggregate News Sentiment Index (ANSI) based on financial news of firms listed on the
Taiwan Stock Exchange (TWSE). The authors analyze the correlation/causation between the ANSI and market responses such
as market performance, turnover, and volatility. Their Granger causality tests suggest that both weekly and monthly ANSIs
could be leading indicators of market returns. They also apply the monthly ANSI to portfolio management and find that the
value-weighted portfolios in the highest ANSI regime, together with the largest size, lowest P/B, or lower turnover ratios, will
earn higher returns.
Lin et al. investigate whether options trading convey information on futures prices. In particular, they examine whether
information is transmitted from options markets to futures markets. To examine whether the trading in the Taiwan stock
index options (TXO) can predict the future price movements of the Taiwan stock index futures (TX), they decompose the
total futures order imbalance (TOI) of the TX into two parts: one is option-induced order imbalance (OOI) and the other
is futures order imbalance (FOI). The authors further examine whether foreign institutions are better informed in the Taiwan
futures markets. Their empirical results show that option transactions conducted by foreign institutions have played the pri-
mary role in conveying the information inherent in the TXO market to the TX market, and foreign institutions are delta-
informed traders. On the other hand, retail investors, the major players in both the TXO and TX markets, have done almost
nothing of significance with regard to TXO information transmission into the TX market, with the exception of some near-
the-money and out-of-the-money options.
Several papers focus on the issue of market surveillance, agency and governance issues. Chan et al. investigate the market
practices associated with the family-fund strategy in target date funds (TDFs). They find that fund families often create TDFs
by bundling existing family mutual funds, and use TDFs to increase non-performance-related flows to constituent funds that
are not competitive. Such incremental non-performance-related flows exceed one percent of total net assets on a monthly
basis. They further investigate the potential monitoring effect of plan sponsors by examining the association between the
characteristics of constituent funds and their likelihood of staying in the TDFs. They find that constituent funds with lower
return performance or younger age exhibit a lower survival probability of continuing as part of a TDF. Therefore, the problem
of potential agency cost at the selection point of the constituent funds may be mitigated to some extent after entering TDFs.
On the corporate side, Chen et al. investigate the relationship between managerial discretion on R&D investments and the
incentive scheme of CEO compensations by using the simultaneous equation approach. Furthermore, they investigate

http://dx.doi.org/10.1016/j.najef.2016.10.002
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2 Editorial / North American Journal of Economics and Finance xxx (2016) xxxxxx

whether the directors and officers (D&O) liability insurance policies moderate the relationship between R&D investments
and CEO compensations. Their results indicate that corporate R&D investments and CEO compensations are simultaneously
determined. D&O liability insurance further intensifies the relationship between R&D and CEO compensations.
Weng and Chen examine the influence of the CEO reputation and the corporate reputation on the financial performance
of companies. Using Taiwans top 150 listed companies during 2003 and 2014, they find that both the corporate reputation
and the CEO reputation positively affect the financial performance of the company. Furthermore, the impact of the CEO rep-
utation is more persistent across different time periods and more comprehensive across different industries. The CEO rep-
utation can still exert a positive impact on the company performance when the corporate reputation is poor, indicating that
the CEO reputation is more important than corporate reputation to influence the company financial performance.
Enterprises and countries all around the world have called for the attention of engagement on corporate social respon-
sibility (CSR). Oftentimes, the most crucial questions asked by the shareholders and scholars may be whether a firms com-
mitment to CSR ultimately leads to better corporate financial performance (CFP). Most studies of CSR examine the
profitability of CSR firms and neglect the issue of the relationship between CSR performance and liquidity. Chan et al. exam-
ine whether different states of cash flow liquidity impact the extent of a firms CSR activities. The authors compute the ratio
of CSR strengths to concerns for each firm, and assign a specific CSR Focus for each sample firm. Based on the data from
MSCI ESG STATS ratings, all firms are divided into seven focuses: Environment Focus (ENV), Community (COM) Focus,
Employee (EMP) Focus, Diversity (DIV) Focus, Product (PRO) Focus, Governance (CGOV) Focus and Human Rights (HUM)
Focus. Their results confirm a significant negative association between CSR activities and the degree of financial con-
straints/distress. For the CSR focuses, they find that in general firms facing financial constraints do not engage in any CSR
activities.
Extending the same line of research in governance, Huang and Ho examine the causal relationship between governance
and economic growth in twelve Asian countries, classified as Free, Partly Free, and Not Free countries. Their gover-
nance variables include six dimensions of Worldwide Governance Indicators (WGIs) from World Bank and the growth rate
of real GDP per capita proxies for the economic growth. Their empirical results indicate that better governance leads to more
significant economic growth in Not Free countries as compared to Free and Partly Free countries in Asia.
In the era of Big Data, the transition of information flows is more quickly and instantly than ever. The study of Chou et al.
investigates the asymmetric effects and the determinants of appreciated and depreciated economic exposure of the U.S.
multinational corporations (MNCs). Their empirical results reveal several findings: (1) The influences of exchange rate fluc-
tuation on stock returns vary enormously for different currencies. (2) During the U.S. dollar appreciating period, MNCs ben-
efit very little from this appreciation against major trade partners currencies, but most MNCs see harmful impacts from a U.
S. dollar appreciation against the Brazilian real. (3) During the U.S. dollar depreciating period, most U.S. MNCs benefit from
this depreciation against the European Monetary Unions euro, Mexican new peso and Brazilian real; however, overall they
suffer losses against the Chinese yuan, Japanese yen, and British pound. (4) The level of foreign sales is the key determinant
of economic exposure.
Finally, Yehs paper aims to evaluate macroeconomic stability in a new Keynesian open economy in which agents expe-
rience cognitive limitations and asset market volatility. Using simulations, it is argued that a Taylor-type CPI inflation tar-
geting including an asset price target is the best choice. In contrast, the business cycles induced by animal spirits are
enhanced by strict inflation targeting. Also, a credible exchange rate pegging system can improve social welfare and stability
in an open economy with asset market volatility and cognitive limitations.

Donald Lien
Department of Economics, College of Business, University of Texas at San Antonio, One University Circle,
San Antonio, TX 78249, United States
E-mail address: Don.Lien@utsa.edu

Available online xxxx