The Effects of Management’s Preannouncement Strategies on Investors’ Judgments of the Trustworthiness of Management

This paper examines the role of management’s earnings preannouncements on judgments about its trustworthiness by nonprofessional investors. We predict that management’s preannouncement decision and the resulting direction (e.g., favorable vs. unfavorable) of the earnings surprise influence investors’ ethical judgments about management’s trustworthiness; these judgments, in turn, are associated with investors’ other investment related judgments. We test our predictions in an experiment in which MBA students make investment-related judgments under four different preannouncement strategies. Consistent with our predictions, the results of our study show that managers’ preannouncement decisions are significantly associated with investors’ evaluations of management’s trustworthiness. Specifically, holding the size of the earnings surprise constant, we find that judgments of management’s trustworthiness are damaged more following (a) a negative as opposed to a positive earnings surprise, and (b) the release of a preannouncement compared to when management does not issue a preannouncement. Also consistent with our predictions, we find that evaluations of management’s trustworthiness are significantly and positively associated with judgments of the attractiveness of the firm’s equity as an investment. Based on our findings, we encourage further research to explore whether managers understand the trust implications associated with their preannouncement decisions and the extent to which this understanding influences their disclosure decisions. Anna M. Cianci is an Assistant Professor in the Accounting Department at Drexel University. She received her Ph.D. from Duke University in Accounting. Her primary research interests are judgement and decision making issues in financial accounting and auditing. Steve Kaplan is a Professor of Accounting at Arizona State University, where he has been a member of the faculty since 1981. He received his Ph.D. from the University of Illinois. He␣has published widely in journals such as The Accounting Review, Journal of Accounting Research, Journal of Accounting and Public Policy, Business Ethics Quarterly and Journal of Business Ethics. He is the Previous editor of Behavioral Research in Accounting, a section journal of the American Accounting Association. His primary research interests are behavioral issues, judgment and decision making, and ethics     

‘Consumers’ Evaluation of Unethical Marketing Behaviors: The Role of Customer Commitment’

While there is a significant amount of research investigating managerial ethical judgments, a limited amount examines consumer judgments of unethical corporate behavior and its impact on the marketplace. This study examines how consumers’ commitment to a company impacts not only their ethical judgment of corporate behavior but also the outcomes of that judgment. The authors test hypotheses with data from 334 consumers and find that consumers’ level of commitment attenuates the level of perceived fairness. More specifically, highly committed consumers may forgive companies for behaviors when perceived harm is low, but become progressively dissatisfied as the level of perceived harm increases. Results of the study point to the importance of considering ethical behavior from a consumer perspective. If corporate actions are perceived as unethical, the company stands to lose favor with their most committed customers. Considering that more time, effort and investment is required to gain a new customer as to retain an old, this study shows that engaging in behavior perceived as unethical by consumers risks alienating the most committed customers.     

African Americans’ pursuit of self-employment

We examine causes of black/white gaps in self-employment entry rates in the United States by recognizing that industry context heavily shapes impacts of owner resource endowments on the likelihood of successful entry. Barriers to entry, briefly stated, are high in some lines of business and low in others. We therefore proceed by explaining self-employment entry into separate subgroups of high- and low-barrier industries. Higher entry rates typifying whites, relative to African Americans, are traditionally interpreted as reflections of the former group’s greater personal wealth and human-capital resources. This consensus view, however, is simplistic: personal wealth holdings have no positive explanatory power for predicting entry into low-barrier lines of business. Our findings demonstrate, furthermore, that high educational attainment is a strong, positive predictor of entry into high-barrier fields, but not into low-barrier industries. Because industry context indeed shapes entry patterns, “one-size-fits-all” econometric models commonly used to predict entry into self-employment fall short.     

The Shaping of a Society’s Economic Ethos: A Longitudinal Study of Individuals’ Morality of Profit-Making Worldview

This study investigates the processes involved in the shaping of a society’s economic ethos. The discussion of ethics and economics has a very long history across multiple disciplines. The founder of modern economics, Adam Smith, likewise had a keen interest in this topic. However, with the development of economic science, scholarly assessment has shifted toward positive analysis while normative analysis has been left mainly to philosophers. By utilizing the newly developed morality of profit-making scale (MPM), the authors sought to understand how respondents’ economic ethical worldview shifts over time. Specifically, we theorized that the news media’s copious negative coverage of the gasoline price crisis of 2006 would significantly impact individuals’ MPM worldview. The results show that respondents’ explicit attitudes toward MPM were significantly impacted. However, respondents’ more deeply held, implicit economic ethical worldview was only slightly impacted. The authors argue that only patient, long-term explanation and argumentation can permanently affect a society’s economic ethos. Implications and future research directions for business researchers are outlined.     

Disability users’ evaluation of the web accessibility of SNS

Social network service (SNS) is an effective communication tool for the community of disabled people. However, there is a general paucity of research on web accessibility of SNSs. This study investigates web accessibility of four SNSs that are most popular among disabled people: Facebook, Twitter, Me2day, and Yozm. Eight disabled individuals were selected according to the type of disability: two with total blindness, two with low vision, two with brain lesions, and two with an upper extremity disability. The subjects were asked to perform four navigation-related tasks and ten general tasks for each SNS. The success rate of their performances and user satisfaction levels were then measured. The four SNSs, on average, attained a task success rate of 73 % and a user satisfaction score of 3.1 points (max. = 5), indicating that the disabled participants found the websites generally inconvenient. As a pioneering evaluative study of the web accessibility of major SNS sites for the disabled, this research contributes to both theory and practice.     

The Strength of an Accounting Firm’s Ethical Environment and the Quality of Auditors’ Judgments

This study examines the impact of the strength of an accounting firm’s ethical environment (presence and reinforcement vis-à-vis the presence of a code of conduct) on the quality of auditor judgment, across different levels of audit expertise. Using a 2 × 2 full factorial ‹between subjects’ experimental design, with audit managers and audit seniors, the impact of different levels of strength of the ethical environment on auditor judgments was assessed with a realistic audit scenario, requiring participants to make judgments in respect of an inventory writedown. Based on prior research, and as hypothesized, participants possessing greater auditing experience made higher quality technical judgments. While there were no significant differences between the quality of audit judgments made by participants in the stronger ethical environment, over-all results indicate that managers are more sensitive to differences in the strength of the ethical environment than seniors. This is consistent with the hypothesis, and with prior research which suggests that the impact of the code will only be significant if it has been bilaterally internalized by individuals. This has important implications for accounting firms and regulators, given that the International Standard on Quality Control 1, requires the communication and reinforcement of ethical principles as part of firms' quality control processes. It suggests that firms will need to carefully consider the means by which they communicate and reinforce ethical principles, as it is possible to differentially impact auditors of different rank.     

Strategic Evaluation of Kenya’s Tourism

1. Introduction Currently, tourism plays a major role in the world economy and has become more important in some countries endowed a variety of tourism attractions. Kenya, which is an East African country, continu- ously outpaces its neighbour countries on tourism industry. In Kenya, tourism industry, as the largest single export earner, is one of vital     

Assessment of Yeats’s Drama Career

Yeats’s poetry, in spite of all its Irish imagery, myths, legends and symbolism, is as much a part of English poetry as of Irish. But his plays belong almost wholly to Ireland. This is mainly due to the fact that Yeats’s work as a dramatist has centered round the Abbey Theatre, a theatre mainly of his own creation. It is when one thinks of his connection with the Irish Dramatic Movement that one feels, as George Moore has said that all the Irish movement rose out of Yeats and returns t…     

The Economics of Japan’s Stagnation

The Japanese economy has been mired in subdued growth and deflation for more than two decades. This paper describes the key economic facts and features of Japan’s decades of stagnation. It discusses why long-term Japanese government bonds’ nominal yields have stayed very low in spite of elevated government debt ratios and chronic fiscal deficits. It also provides a brief overview of Abenomics and recent economic developments in Japan.     

Midea’s Re-adoption of M-form Structure

With a focus on the alignment between business strategies and organization design, this illustrative case study describes and analyzes the evolution and reform of Midea’s organizational structure when confronting both internal and external changes. As one of China’s biggest and fastest-growing household appliance enterprises, Midea adopted, discarded and readopted an M-form1 organizational structure within a five-year period from 1997. This case study first investigates the reasons behind Midea’s reform toward decentralization and the formation of governing rules to balance centralization and decentralization. Different decentralized structures are then contrasted basing on product segments, business streams or even key subsidiaries acting as second-tier group companies. After its trial transformation into an H-form company that holds majority shares in several incorporated subsidiaries, Midea chose to switch to a group company incorporated structure soon after its leadership transition in 2012. Preceding the shortening of the group’s ownership chain was the construction, refinement, and evolution of its 9+2+4 divisional structure. This case study is prepared to provoke discussion and thoughts on the (re)design of a properly decentralized structure suitable for large-sized companies with multiple businesses and the links with external and internal factors.     

Making codes of ethics ‘real’

This article outlines a training activity that can enable both business and governmental professionals to translate the principles in a code of ethics to a specific list of company-related behaviors ranging from highly ethical to highly unethical. It also explores how this list can become a concrete model to follow in making ethical decisions. The article begins with a discussion as to what will improve ethical decision making in business and government. This leads us to explore the factors that can most easily lead to improvement, namely a comprehensive code of conduct and employee training. From there we look at the Critical Incident Technique as a training strategy that has the potential for identifying those behaviors that distinguish really outstanding behaviors from those that go by the book, and can be used to encourage more independent thinking and to set expectations for future decisions. If employees are given the skills and examples that will enable them to make better decisions, they can apply them to any situation.Peter Dean has 20 years experience in business and academic arenas designing, implementing and evaluating programs in communication skills, leadership, team building, interpersonal ethics, decision making, train-the-trainer and organizational change. Peter conducts courses on applied ethics at Penn State University.     

Customers’ Perception of Fish Fast-Casual Restaurants

The objective of the research is to explore Italian customers’ perceptions of fish and seafood fast-casual foodservice restaurants, so to identify expected food, environmental, and organizational attributes’ importance. The sample includes 600 fish and seafood customers interviewed face to face. Data elaboration included an exploratory factor analysis on fast-casual food and restaurant attributes, followed by chi-square and ANOVA to profile customers’ perception towards the level of importance of the factors. Hygiene, personnel, and sensorial attributes are the three most important factors for all groups of customers. Gender and age are the most differentiating socio-economic characteristics. This study is a pioneering research on a restaurant format expanding in European countries and validated an attribute assessment scale for fast-casual restaurants. Results suggest the following managerial implications useful to define investment strategies: guaranteeing high hygiene standards, investing on personnel quality, offering tasty and good food, and targeting strategies focused on customers’ lifestyle.     

Influence of Language of Packaging Labels on Consumers’ Buying Preferences

Can packaging labels of three different foreign languages (Korean, Japanese, and English) affect consumers’ preferences? In a month of field experiment involving 203 Chinese undergraduate students, this study used coffee as an experimental product and created a fictitious brand “7 AM COFFEE.” Using analysis of variance (ANOVA) as a statistical tool, the results of the experiment show that the English language represents the strongest effect for (1) consumers’ attention, (2) trust, (3) perceived quality, (4) taste perception, and (5) purchase intention. Moreover, consumers with high or low frequencies of drinking a coffee do not have a specific preference in relations to their attitude. The findings and discussion of this research provide better direction for marketing managers of beverages in establishing market strategies to promote products and generating appeal among coffee drinker.     

Mill's ‘proof’ of Utility and the composition of causes

John Stuart Mill proposed that all policy precepts, be they in the areas of morality or prudence or aesthetics, are all subordinate to the precepts of the Art of Life. The value which he assumes in defining the Art of Life is the Principle of Utility. This principle, being normative rather than fact, can admit of no proof based solely on deductive inference. Yet Mill proposed considerations that he believed capable of rationally persuading one to accept his principle as the basic principle for the Art of Life. This paper aims to evaluate this argument. In particular, it tries to show that a crucial step, often thought to be a logical howler, is not to be so simply dismissed. It is shown that if one accepts certain theses from Mill's philosophy of science and of social science, concerning the composition of causes, then the crucial step is fully justified. It is also suggested that these theses of Mill's philosophy of science are mistaken. So Mill's proof of utility is, after all, unsound, but the reconstruction proposed shows it to be much more plausible and much more philosophically interesting than is often thought.     

The ‘amelioration’ of child labor, ‘a modest proposal’

More than 317 million children between the age of 5 and 17 are working in the world. Child labor is a persistent phenomenon, even though its incidence has subsided with economic development. In this paper, we conduct a panel study of 101 countries from 1980 to 2004 where child labor is proxied by the labor force participation of children aged 10–14. We look at the relationships between child labor and investments in human capital, foreign direct investments, countries’ openness to trade, and credit market constraints. We depart from the contributions of cross-country studies by employing a fixed effects instrumental variable (FE-IV) panel data model by employing a fixed effects instrumental variable (FE-IV) panel data model to account for unobserved heterogeneity and endogeneity of child labor and individual country-specific effects. We find support for the conclusions of the above-mentioned studies: countries that trade more and have a higher stock of foreign direct investment have less child labor. More generally, we find that trade openness, investments in human capital, and financial development are associated with a reduction of child labor. Child labor persists but tailored policies on trade, investment, and financial reform can lessen child labor along with economic growth, improvements in health, and rising standards of living.     

Customers’ everyday understanding of ‘value’ from a second-order cybernetic perspective

ABSTRACT

Value is in the centre of service and marketing. However, what does value mean to customers? The purpose of the paper is to contribute to an understanding of value from a customers’ perspective using a second-order cybernetics approach. We found that the word ‘value’ is recursively linked to 13 different ‘meanings’ indicating a variety of understandings of the term ‘value’. Furthermore, the findings support service-dominant logic where customers integrate their own resources (skills and knowledge) in the value co-creation process. Future research has to be aware of the different meanings, which are associated with value. Marketing managers need to understand, on the one hand, that value has a different meaning to their customer and on the other hand, what value means to their specific target groups.     

‘Psychopaths’ at Work? Implications of Lay Persons’ Use of Labels and Behavioural Criteria for Psychopathy

In attempting to explain or deal with negative workplace behaviours such as workplace bullying, the notion of ‘workplace psychopaths’ has recently received much attention. Focusing on individual aspects of negative workplace behaviour is at odds with more systemic approaches that recognise the contribution of individual, organisational and societal influences, without seeking to blame a person(s) for their behaviour or personality disorder. Regarding a coworker as a psychopath is highly stigmatising, and given the relatively low prevalence of psychopathy in the community, is likely to be incorrect. Sources promoting the notion of workplace psychopathy provide lists of diagnostic criteria and appear to encourage the perception that it is common. This research examines how lay persons use behavioural criteria consistent with psychopathy and the label ‘psychopath’ in relation to a coworker. 307 Australian workers completed an online survey concerning their experience of workplace bullying, which also asked them to rate a coworker’s behaviour on a range of scales to assess perceptions of psychopathy. Rates of psychopathy, when using labels and behavioural criteria, were found to be much higher than scientific estimates of prevalence, for both participants who had been bullied and those who had not. A higher proportion of non-bullied participants classified a coworker as a psychopath when using the label ‘psychopath’, compared to when using behavioural criteria. The notion that there are psychopaths in every workplace should be treated with caution to ensure that the potential for ‘misdiagnosis’ and stigmatisation do not cause further harm in situations of unacceptable workplace behaviours.     

The Winner’s Curse of Human Capital

We extend a model developed by Evans and Jovanovic (1989) to explain when start-ups are credit constrained. We show that the magnitude of the credit constraint is conditioned by the relative productivity of human capital in both wage work and self-employment. The effect of predicted household income on start-up capital is used to indicate the existence of financial constraint. Empirical analysis reveals that entrepreneurs with high human capital have both greater financial wealth and greater levels of start-up capital pointing to the endogenous nature of credit constraints. High human capital relaxes financial constraints, apparently due to greater productivity of human capital in wage work than in self-employment. Those who are the least likely to be credit constrained in self-employment are those that are least likely to switch into self-employment,and vice versa.     

Discrete choice models of firms’ strategic decisions

This paper outlines the methods and applications related to the nascent area of empirical discrete games in marketing. Many key strategic decisions firms make involve discrete choices such as deciding the location of a new store, determining where in product space to position a product, or what options to offer in a service contract. These decisions are fairly complex and typically involve the consideration of a number of demand, cost, and competitive factors. What makes these discrete choices particularly interesting (and challenging to analyze) is that they are interrelated with the choices of other firms because firms take into account the actions of their competitors when making their own decisions. We describe the basic problem of dealing with interrelated discrete choices in a game-theoretic framework and present the various estimation methods available. A discussion of the existing applications and future research opportunities concludes the article.