Smile Curve Research Articles

Demystifying the Global Supply Chain - A Smiling Curve Perspective

This paper constructed a simple model to illustrate the global supply chain profit sharing and industrial upgrading mechanism, from which it was found that the average profitability distribution in the different supply chain stages was determined by two main factors: (1) the average product of the labor in the firms at each production stage; and (2) the ratio of the output elasticity of capital to the output elasticity of labor in each stage. This paper also proposed a new industrial upgrading mechanism, the ‘inter-supply chain upgrading’, for supply chain firms. Rises in production complexity and increased factor intensity in each production stage were found to be the two essential conditions for the inter-supply chain upgrading. The empirical study results were found to be broadly consistent with the proposed theories.

Option pricing under truncated Gram–Charlier expansion

This study develops a truncated Gram–Charlier expansion (TGCE) option pricing model, which simultaneously considers the skewness, kurtosis and essentially truncated (bounded) interval in the underlying asset return. In addition to TGCE, a truncated Black–Scholes model is proposed also. The two truncated models are compared to four prevalent option pricing models, including Black–Scholes (constant variance model), Hull–White (a mean-reverting variance model), GARCH (a time-varying volatility clustering model), and Gram–Charlier expansion (GCE) models. Using ARPE (absolute relative pricing error) as the criterion in Taiwan option market (TXO), the result demonstrates that TGCE model overall performs the best. Besides, truncated Black–Scholes model generally dominates Black–Scholes model, and GCE model generally dominates Black–Scholes, Hull–White and GARCH models. This result consists with the fact that stock return distributions are usually asymmetric and nonmesokurtic as well as essentially not unbounded. This finding implies that an accurate option pricing model should simultaneously consider skewness and kurtosis and truncated interval in the underlying asset return. Additionally, the ARPE against moneyness for all option pricing models forms a negative slope smile curve. Moreover, the pricing performance of TGCE model is so stable to moneyness.

Survey sentiment and interest rate option smile

This paper finds that the presence of interest rate smile can be fully explained neither by the model misspecification nor by the buying pressure. First, volatility smile obtained from alternative interest rate models is not flat and interest rate smile significantly relates to survey sentiment after controlling for fundamental and liquidity variables. Second, a dynamic relation between sentiment proxies and interest rate smiles meets the limit to arbitrage hypothesis, which is the focal point of market friction. Third, the relation between survey sentiment proxies and option smiles is more pronounced during the crisis period than the pre-crisis and post-crisis period. While investor sentiment drives the smile curve, interest rate models cannot fully capture the smile since these models are formulated in a frictionless environment.

Explorations on Competitive Power of Sporting Goods Industry Based on Global Value Chain Theory

With analysis of the current competitiveness of sporting goods industry in China by means of value chain theory, it can be concluded that even though China's sporting goods industry has reached a high level in production scale and capacity, it suffers severe weaknesses in marketing management and technology research and development and lies at the bottom of the "Smile Curve", with "strategic links" beyond its grasp. Finally relevant countermeasures and suggestions are proposed.

Dynamic Impacts of Global Value Chains Participation on Asian Developing Economies

This article aims to investigate the dynamic economic impacts of global value chains (hereafter GVCs) participation by examining value-added-trade patterns focusing on Asian developing countries. Our main findings were as follows. First, an economy’s participation in GVCs in manufacturing sectors has allowed an absolute domestic value added for exports to contribute to GDP growth. Second, the development paths of domestic value added contribution to exports in a GVCs participating economy have followed ‘smile curve’ with the bottom being 5,651 US dollars in per capita GDP. Third, the turning points of smile curves differed according to manufacturing sectors: the sectors of machinery, electrical and transport equipment reach the turning point at higher per capita GDP than those of food, textile and wood products. These observations imply the dynamic process of GVCs impacts, where the initial stage of GVCs participation has reduced domestic value added contribution to exports, but it has been recovered at a later stage of GVCs involvement with upgrading domestic productive capacities. In particular, this recovery has taken a longer time for such high-value sectors as machinery, electrical and transport equipment.

Assessment of the esthetic smile in a sample of Iraqi population

The aim of the present study is to evaluate the esthetic smile in sample of Iraqi adults and to assess the gender differences. Materials and Methods: 100 persons (50malesand 50 females had class I normal dental and skeletal selected for this study.Clinical examination and digital photograph with posed smile were performed for each individual. Six linear soft tissue parameters in each photograph using AutoCAD program 2011. Five visual and four quantitative evaluations of the smile were studied for eachsubject. The smile arch and index, buccal corridor spaces (BCSs) were studied.Descriptive statistics of the measurements were calculated. Independent student's ttestswere used to evaluate the gender differences. Statistics: Descriptive statistics and Standard error of each measurement was calculated. Independent sample t-tests were used to compare the measurements of male and female subjects. Chi square used for visual measurements. Results and conclusion: The average smile, parallelism of the upper incisal curve with the inner curvature of the lower lip, 1:1 ratio of the widths of nose and upper cuspid were higher in females than males while in smile curve arch line without touching the lower lip the opposed and 2nd premolars are the most common display in both groups.Females

Conditional expectation determination based on the J-process using Malliavin calculus applied to pricing American options

The aim of our paper is to elaborate a theoretical methodology based on the Malliavin calculus to calculate the following conditional expectation (Pt(Xt)|(Xs)) for s≤t where the only state variable follows a J-process [Jerbi Y. A new closed-form solution as an extension of the Black—Scholes formula allowing smile curve plotting. Quant Finance. 2013; Online First Article. doi:10.1080/14697688.2012.762458]. The theoretical results are applied to the American option pricing, consisting of an extension of the work of Bally et al. [Pricing and hedging American options by Monte Carlo methods using a Malliavin calculus approach. Monte Carlo Methods Appl. 2005;11-2:97–133], as well as the J-process (with additional parameters λ and θ) is an extension of the Wiener process. The introduction of the aforesaid parameters induces skewness and kurtosis effects, i.e. smile curve allowing to fit with the reality of financial market. In his work Jerbi [Jerbi Y. A new closed-form solution as an extension of the Black–-Scholes formula allowing smile curve plotting. Quant Finance. 2013; Online First Article. doi:10.1080/14697688.2012.762458] showed that the use of the J-process is equivalent to the use of a stochastic volatility model based on the Wiener process as in Heston's. The present work consists on extending this result to the American options. We studied the influence of the parameters λ and θ on the American option price and we find empirical results fitting with the options theory.

YC Company: decreasing profit margin in overseas market

Subject area Strategic management. Study level/applicability This case is suitable for graduate students, postgraduate students and MBAs. Case overview YC Company is a foreign trade SME operating in the lighting fixtures export business in Ningbo City, a major outdoor lighting products manufacturing base in mainland China. Established by Li Lele in 2008, the sales revenue and gross profit of YC Company have been increasing every year, reaching $ 4.06 million and ¥ 1.00 million, respectively, by the end of 2011. However, the growth rate of profit lagged far behind the growth of sales revenue. If this situation were not controlled, YC Company would hardly survive in this increasingly competitive market. Li Lele, the CEO of the company, was trying to find a way to enlarge the profit margin. Expected learning outcomes This case lets students learn more about strategic management. Students are expected to learn: how to precisely identify and map a problem; and how to select a better solution by analyzing the context and using some strategic analysis tools, such as Porter's Five Power, Smile Curve, SWOT. In the learning process, students are expected to acquire a better knowledge of some strategic management theory/method, international business, the condition of small and medium trading companies in China. Supplementary materials Teaching notes are available for educators only. Please contact your library to gain login details or email support@emeraldinsight.com to request teaching notes.

A new closed-form solution as an extension of the Black–Scholes formula allowing smile curve plotting

In this paper, as a generalization of the Black–Scholes (BS) model, we elaborate a new closed-form solution for a uni-dimensional European option pricing model called the J-model. This closed-form solution is based on a new stochastic process, called the J-process, which is an extension of the Wiener process satisfying the martingale property. The J-process is based on a new statistical law called the J-law, which is an extension of the normal law. The J-law relies on four parameters in its general form. It has interesting asymmetry and tail properties, allowing it to fit the reality of financial markets with good accuracy, which is not the case for the normal law. Despite the use of one state variable, we find results similar to those of Heston dealing with the bi-dimensional stochastic volatility problem for pricing European calls. Inverting the BS formula, we plot the smile curve related to this closed-form solution. The J-model can also serve to determine the implied volatility by inverting the J-formula and can be used to price other kinds of options such as American options.

“Smile – A Diagnostic Tool: Photographic analysis in Adult Gujarati Population”

Smile analysis forms an important component of the frontal facial assessment.Analysing the smile and obtaining averages for various smile components give an idea about a standard of normalcy to serve as a guideline for the creation of esthetic smile. Material &Methods :This cross-sectional study was undertaken to analyse smile in Gujarati population.Frontal view photographs of 100 subjects distributed equally in to 50 males and 50 females were taken from government dental college & hospital , Ahmedabad, Gujarat. Results :More percentage of females showed consonant smile arc and high anterior smile line than their counterparts in this study. No statistically significant correlation was found between anterior smile height , posterior smile height , smile curve &buccal corridor width in males and females. 13 Objective (admirable) beauty is based on consideration of the object itself, implying that the object possesses properties that make it undoubtedly praiseworthy. Subjective (enjoyable) beauty is a quality that is value-laden, relative to the tastes of the person contemplating it. 13, 14

Solution to the Humanity’s Age-old Problem “Sore Waist and Aching Back”: Using NON-Conventional Sleeping Positions and Bedding to Alleviate Back Pain and Regain Energy

For eons, human beings walked using their four limbs. It was not until relatively recently that human beings started to walk on their two feet. By standing on two feet, the waist takes the weight from the upper part of the body, which accounts for three-fifths of their total weight. If people stand, sit or walk too long, they will have a sore waist and an aching back. The frequency of the symptoms is similar to that of a cold. The back pain problem particularly occurs to laborers, athletes, those who physically challenge themselves, or those who have to stand and sit for a long time due to the requirements of their work, such as teachers, barbers or hairdressers, store sales clerks, dentists, nurses, long-distance drivers, or some assembly line operators. Those people easily get a sore waist and aching back. Thus, calling this problem “humanity’s age-old problem” is not an exaggeration. Numerous methods were developed to solve the problem. Much research has also been conducted to find out the factors of the problem. However, one crucial problem has been overlooked. It derives from existing kinds of beds that are made by misusing the ergonomic spines movement curve. So, when people lie on a bed, they still feel tension from moving or working. Therefore, NON-conventional sleeping positions and bedding are needed based on human’s natural smiling curve. In other words, to get a real relaxation, the spine needs to be in the shape of a smiling curve, like the shape of a bow, crescent moon, so that people can lie down and sleep with relaxation from head to toe, from inside to outside, from internal to external organs, and the ten body systems (integument system, skeletal system, muscular System, circulatory system, lymphatic system, nervous system, digestive system, respiratory system, urinary system, endocrine system, reproductive system). The compression in lumbar spine can also be alleviated. Then the body can be physically and mentally relaxed and get enough rest.

Esthetic Composition of Smile in Individuals with Cleft Lip, Alveolus, and Palate: Visibility of the Periodontium and the Esthetics of Smile

Objective. To evaluate characteristics of smile related to visibility in individuals with cleft lip, alveolus, and palate. Design. Cross-sectional. Setting. HRAC/USP, Brazil. Patients. Individuals with repaired complete unilateral cleft lip and palate (n = 45), aged 15–30 years. Interventions. Frontal facial photographs were obtained in natural and forced smiles (n = 135). Six specialists in periodontics evaluated the photographs as to the smile line, thickness, and curve of the upper lip. Main Outcome Measures. The cleft area was compared with the contralateral region. Results were expressed as percentages and means. The findings were compared between groups of periodontists. Results. Statistically significant relationship was observed in the smile line between examiners and between natural and forced smiles, regardless of the association with the cleft side. The lip was thicker at rest and thinner in the forced smile, as also evaluated by the group not experienced with cleft care. The curve of the upper lip in natural and forced smiles was considered as close to straight by both groups, regardless of the cleft. Conclusion. The smile in individuals with clefts was regarded as average for both cleft and noncleft sides. The thickness was characterized as average to thin, being thinner in forced smile and when analyzed by the group not experienced with cleft care. In the average, the curve of the upper lip was considered as straight. The present study elucidates some characteristics related to the smile in individuals with repaired unilateral cleft lip, alveolus, and palate.

Sustainable Management of a Korean Firm: Transformation of the Value Chain in Cheil Industries Inc.

By using a new conceptual model of ‘Smile Curve’, this research strives to examine how Cheil Industries Inc. (CI) has been transforming its value chain to create its competitive advantage. According to the results, CI’s value-added structure in the past (conventional industrialization economy) was heavily reliant on the manufacturing sector, and therefore, the profit graph shaped an ‘Upside-down Shape of U’ indicating that production and manufacturing are the most value-added fields. However, CI’s current (knowledge-based economy) graph shows a ‘U with Fluent Curve’ indicating that R&D, human resources, corporate culture, firm infrastructure, manufacturing, logistics and marketing are simultaneously creating value-added for the company. This implies that CI’s value-added source is more diversified to fit with knowledge-based economy.

Value Capture in the Global Electronics Industry: Empirical Evidence for the “Smiling Curve” Concept

This research asks who captures the greatest value in the global electronics industry by testing the concept of the “smiling curve”, which predicts that the greatest value is captured by upstream and downstream firms, and the lowest value is captured in the middle of the value chain. We test the concept using the Electronic Business 300 data-set for 2000–2005. We find that lead firms and component suppliers earn higher gross margins and net margins compared to contract manufacturers. However, the differences are minimal for return on assets (ROA) and return on equity (ROE). We also find that active component suppliers gain higher profits than passive component suppliers. These findings suggest that the smiling curve is right if value is defined in terms of gross margins, but the cost of sustaining a position on either end of the curve is so high that returns on investment are similar across the curve.

A Study on Patent Strategy of Enterprises in Wuhan Based on Smiling Curve Theory

Based on the analysis of patent protection and strategy of enterprises in Wuhan, this paper, adopting approaches like literature reviewing, diagrammatic presentation and logical reasoning as well as the Smiling Curve theory, reveals that patent strategy is a part of holistic enterprise strategy. This paper also indicates that patent, as the specific resource of enterprises, its strategical planning and implementing plays practical significance in leading enterprises moving to the high value-added sections. Thus, the patent strategies are put forward accordingly including self-owned core patent strategy, paid-transfer patent strategy, patent-purchasing strategy, cross licensing patent strategy,etc. This paper suggests that, driven by patent strategy, more values could be made through transforming to the two ends of the smiling curve, promoting the bottom and right part of the curve and the whole moving upwards so as to create high additional value.

Re-examining covariance risk dynamics in international stock markets using quantile regression analysis

This investigation is one of the first to adopt quantile regression (QR) technique to examine covariance risk dynamics in international stock markets. Feasibility of the proposed model is demonstrated in G7 stock markets. Additionally, two conventional random-coefficient frameworks, including time-varying betas derived from GARCH models and state-varying betas implied by Markov-switching models, are employed and subjected to comparative analysis. The empirical findings of this work are consistent with the following notions. First, the beta smile (beta skew) curve for the Italian, U.S. and U.K. (Canadian, French and German) markets. That is, covariance risk among global stock markets in extremely bull and/or bear market states is significantly higher than in stable periods. Additionally, the Japanese market provides a special case, and its beta estimate at extremely bust state is significantly lower, not higher than that at the middle region. Second, the quantile-varying betas are identified as possessing two key advantages. Specifically, the comparison of the system with quantile-varying betas against that with time-varying betas implied by GARCH models provides meaningful implications for correlation-volatility relationship among international stock markets. Furthermore, the quantile-varying beta design in this study relaxes a simple dual beta setting implied by Markov-switching models of Ramchand — Susmel (1998) and can identify dynamics of asymmetry in betas.

Corporate Networks, Value Chains, and Spatial Organization: A Study of the Computer Industry in China

Global economic restructuring and technological change are transforming the map of global production and the global division of labor. Based on the perspectives of global value chains and global production networks, this study analyzes the production networks, value chains, and spatial organization of the computer industry in China. It was found that the notion of a symmetric, bell-shaped smiling curve is a highly idealized conceptual framework, and for a developing country like China where leading firms have yet to become top-tier transnational corporations, the smiling curve more likely exhibits a flattened saucer shape. China is also increasingly being integrated into global production networks, and a new form of spatial organization, centered on emerging global cities and globalizing cities, is emerging. An investigation of the global-local networks of the computer industry showed that the embeddedness of transnational corporations (TNCs) is heavily influenced by industrial characteristics and geographical/institutional contexts.

Development of Computational Algorithms for Evaluating Option Prices Associated with Square-Root Volatility Processes

The stochastic volatility model of Heston (Rev Financ Stud 6:327–343, 1993) has been accepted by many practitioners for pricing various financial derivatives, because of its capability to explain the smile curve of the implied volatility. While analytical results are available for pricing plain Vanilla European options based on the Heston model, there hardly exist any closed form solutions for exotic options. The purpose of this paper is to develop computational algorithms for evaluating the prices of such exotic options based on a bivariate birth-death approximation approach. Given the underlying price process St , the logarithmic process Ut = logSt is first approximated by a birth-death process \(B^U_t \) via moment matching. A second birth-death process \(B^V_t \) is then constructed for approximating the stochastic volatility process Vt through infinitesimal generator matching. Efficient numerical procedures are developed for capturing the dynamic behavior of \(\{ B^U_t , B^V_t \} \). Consequently, the prices of any exotic options based on the Heston model can be computed as long as such prices are expressed in terms of the joint distribution of { St ,Vt } and the associated first passage times. As an example, the prices of down-and-out call options are evaluated explicitly, demonstrating speed and fair accuracy of the proposed algorithms.

Assessment of the esthetic smile in young Japanese women

Introduction The aim of the present study is to evaluate an esthetic smile in young Japanese women, which is not yet clear. Materials Thirty orthodontically treated female patients formed Group 1 and the same number of female models, Group 2. Methods All smile photos and slides were digitalized for analysis in an image-processing program. As the photos in Group 2 had a different size, the output image size was not considered. Five visual and four quantitative evaluations of a smile were studied for each subject. The smile arch and index, buccal corridor spaces (BCSs) and relationship between BCS and maxillary dental arch widths were studied. Statistics Standard errors of the measurements were calculated. Independent student's t-tests were used to compare statistically the measurements of Group 1 patients and Group 2 model samples, and also those of BCS and the widths of the upper dental arch (UAW). Mean and standard deviation were calculated and p < 0.05 was significant. Results and conclusion The average smile, smile curve arch line without touching the lower lip, parallelism of the upper incisal curve with the inner curvature of the lower lip, no display of the 1st molar, 1:1 ratio of the widths of nose and upper cuspid, a minimum buccal corridor with no significant relation in widths of the upper dental arch all corresponded to ideal smile.

Portfolio Selection in Stochastic Environments

In this article, I explicitly solve dynamic portfolio choice problems, up to the solution of an ordinary differential equation (ODE), when the asset returns are quadratic and the agent has a constant relative risk aversion (CRRA) coefficient. My solution includes as special cases many existing explicit solutions of dynamic portfolio choice problems. I also present three applications that are not in the literature. Application 1 is the bond portfolio selection problem when bond returns are described by ‘‘quadratic term structure models.’’ Application 2 is the stock portfolio selection problem when stock return volatility is stochastic as in Heston model. Application 3 is a bond and stock portfolio selection problem when the interest rate is stochastic and stock returns display stochastic volatility. (JEL G11) There is substantial evidence of time variation in interest rates, expected returns, and asset return volatilities. Interest rates change over time, and although expected stock returns are not directly observed, future stock returns seem to be predictable using term structure variables and scaled prices such as dividend yields. 1 Similarly, there is well-documented evidence of stochastic volatility, 2 whose existence is also supported by the ‘‘smile curve’’ of volatilities implied by option prices. Therefore, any serious study of dynamic portfolio choice must take account of stochastic variation in investment opportunities. The seminal work of Merton (1971) establishes the framework for dynamic portfolio choice with stochastic variation in investment opportunities. The portfolio weights in Merton’s framework are expressed in terms of the solution to a nonlinear partial differential equation (PDE), and because there is no closed-form solution of a nonlinear PDE in general, explicit portfolio weights are not available in general. There are approximate solutions to