Research articles for the 2021-08-06

Do Investors Learn to Be Optimistic from SARS Experiences? Stock Market Reactions during COVID-19 in OECD Countries
Sung, Hao-Chang,Ho, Shirley J.,Huang, Yun-Shiang,Chang, Hung-Wei
Various explanations have been proposed for the departure of the stock market prices from the economic realities during the COVID-19 outbreak. This paper conjectures that the SARS experiences can also have contributions to the quick recovery in stock markets. We first use an asset-pricing model to show that the stock price is affected by short-term fundamentals and the expectations about stock market. Then, we use two terms to describe "fear of missing out effect" and "resemblance effect" from the SARS experiences. Our results confirm that SARS experiences have positive contributions to the quick recovery of stock markets during the first wave of COVID-19. Both the FOMO effect and resemblance effect are positively related to stock market recovery. These positive contributions are reinforced if a country has actual experiences in treating SARS patients. We also find that the resemblance effects on stock market recovery are higher than the FOMO effects.

Risk Mitigation Strategies in Innovative Projects
Ahmed, Riaz
This chapter discusses the challenge imposed by the dispersed innovation that shifts toward replicating the positive traits of co-location and coupling it with the unique advantages of the global initiative. Key concepts in this chapter include project risk, risk pertinent to the innovative projects, importance of risk mitigation in innovative projects, different risk categorization involved in mitigating risk in innovative projects, risk mitigation planning, risk mitigation strategies in innovative projects, and risk evaluation and mitigation strategies (REMS) in various types of innovative projects including the lesson learnt from the innovative projects to handle project risk by adopting risk mitigation strategies.

The Theory and Practice of National Natural Disaster Insurance: Program Design Implications from an Australian Perspective
Worthington, Andrew C.
Many countries have adopted national natural disaster insurance to address the purported deficiencies of private insurance markets in coping with a range of natural disasters, including floods, storms, bushfires, hurricanes, cyclones, tsunamis, and earthquakes. Almost uniquely among developed countries, Australia lacks a national natural disaster insurance program. In response, and in light of several recent and particularly severe floods and cyclones in Australia, some have called for the establishment of a public sector insurance provider of some form to address concerns with the availability and affordability of property insurance in the context of natural disasters. The purpose of this paper is to inform this process in Australia and elsewhere by first discussing the underlying theory and practice of national disaster insurance programs by outlining specific roles for government in disaster insurance. It then reviews selected programs representative of these roles in Japan, Spain, France, the US, New Zealand and Turkey. Finally, the paper examines some of the program design considerations from an Australian perspective. We conclude that there is currently no convincing need for national natural disaster insurance in any of its possible forms in the Australian context.