Is the Abnormal Post-IPO Underperformance Really Abnormal? The Evidence from CEE Emerging Markets

Using sorting procedures and cross-sectional tests, we investigate the long-run post-IPO performance and its sources in the Central and Eastern European (CEE) markets. We examine over 1100 stocks from 11 CEE countries for the period 2002–2014. We find that “old stocks” perform significantly better than “young stocks”, but only when the market beta is the sole risk factor considered. After accounting for the size and value effects, the IPO firms perform neither better nor worse than non-issuing companies. The sources of the initial low B/M ratios of debuting companies may lie in time-varying financial quality. The market newcomers are financially healthier than their older counterparts. However, over 2–5 years the fundamentals deteriorate and the financial standing regresses to the mean.     

A heuristic-systematic processing analysis of the effectiveness of product warning labels

In this article we present the heuristic-systematic model (Chaiken, 1980, 1987; Chaiken, Liberman, & Eagly, 1989) as a theoretical framework for research on product warning labels. The model proposes two fundamental information processing modes. When processing systematically, perceivers access, scrutinize, and integrate all useful information to reach their judgment. In contrast, heuristic processing involves the use of learned knowledge structures in the form of simple decision rules, or cognitive heuristics, to reach judgments. In addition to proposing when either or both of these processing modes will occur, and with what effect, the model also specifies three different underlying types of processing motivations, termed accuracy, defense, and impression, each with implications for information processing and judgments. This model is used to explain past findings on the effectiveness of product warning labels, and to suggest new areas for future research as well as practical guidelines for the design of warning labels. © 1998 John Wiley & Sons, Inc.     

What makes a good case study? A positivist review of qualitative case research published in Industrial Marketing Management, 1971-2006

Business-to-business marketing research has a long tradition of using qualitative case studies. Industrial Marketing Management (IMM) has actively encouraged the use of case methods, resulting in many important theoretical advances in the field. However, debate still rages over what constitutes “good case research”. This article addresses this issue from a positivist standpoint. We examine the how authors address issues of quality in the 105 qualitative case studies published in IMM between 1971 and 2006. Four periods were identified: 1971-1979, 1980-1989, 1990-1999, and 2000-2006. Findings demonstrate that, from a positivist viewpoint, there has been a steady improvement in how authors addressed issues of research quality in published qualitative case studies. Suggestions for changes in data presentation, reviewer expectations, the IMM reviewer feedback form, and the use of web-based appendices containing data pertinent to reader judgments of research quality are suggested.     

Capital expenditures,financial constraints,and the use of options

This paper analyzes why gold mining firms use options instead of linear strategies to hedge their gold price risk. Consistent with financial constraints based theories, the largest and least financially constrained firms are the most likely to hedge with insurance strategies (put options), while more constrained firms finance the purchase of puts by selling calls (collars). The most financially constrained firms use strategies that involve selling calls. Firms with large investment programs are also more likely to use insurance rather than linear strategies. Firms’ hedging instrument choices are also correlated with current market conditions, suggesting that managers’ market views partially drive hedging instrument choices.     

The jump component of S&P 500 volatility and the VIX index

Much research has investigated the differences between option implied volatilities and econometric model-based forecasts. Implied volatility is a market determined forecast, in contrast to model-based forecasts that employ some degree of smoothing of past volatility to generate forecasts. Implied volatility has the potential to reflect information that a model-based forecast could not. This paper considers two issues relating to the informational content of the S&P 500 VIX implied volatility index. First, whether it subsumes information on how historical jump activity contributed to the price volatility, followed by whether the VIX reflects any incremental information pertaining to future jump activity relative to model-based forecasts. It is found that the VIX index both subsumes information relating to past jump contributions to total volatility and reflects incremental information pertaining to future jump activity. This issue has not been examined previously and expands our understanding of how option markets form their volatility forecasts.     

Industrial Clusters and Corporate Social Responsibility in Developing Countries: What We Know,What We do not Know,and What We Need to Know

This article provides a review of what we know, what we do not know, and what we need to know about the relationship between industrial clusters and corporate social responsibility (CSR) in developing countries. In addition to the drivers of and barriers to the adoption of CSR initiatives, this study highlights key lessons learned from empirical studies of CSR initiatives that aimed to improve environmental management and work conditions and reduce poverty in local industrial districts. Academic work in this area remains embryonic, lacking in empirical evidence about the effects of CSR interventions on the profitability on local enterprises, workers, and the environment. Nor do theoretical frameworks offer clear explanations of the institutionalization and effects of CSR in local industrial districts in the developing world. Other key limitations in this research stream include an excessive focus on export-oriented industrial clusters, the risk that CSR becomes a form of economic and cultural imperialism, and the potential for joint-action CSR initiatives in clusters of small and medium-sized enterprises to offer a new form of greenwashing. From this review, the authors develop a theoretical model to explain why CSR has not become institutionalized in many developing country clusters, which in turn suggests that the vast majority of industrial clusters in developing countries are likely to engage in socially irresponsible behavior.     

Productivity Spillovers from FDI in Malaysian Manufacturing: Evidence from Micro‐panel Data*

Using an establishment‐level panel dataset for the Malaysian manufacturing industries for 2000–2004, we argue that differences in the proxies and degrees of foreign shareholdings in measuring foreign presence lead to opposite signs and/or significance of spillover effects. The results show significant evidence of positive productivity spillovers to local establishments in the same industry, based on a broad measure of foreign presence. However, there is no evidence of positive spillover when employment share is used as a proxy for foreign presence. Furthermore, significant negative spillover effects are related to higher employment shares of wholly foreign‐owned establishments. Although there is no significant difference in labor productivity between wholly foreign‐owned and locally‐owned establishments, both majority and minority foreign‐owned establishments have significantly lower levels of labor productivity than locally‐owned establishments in Malaysia.     

Place,space, and foreign direct investment into peripheral cities

Perspectives drawn from the economic geography literature are increasingly used to generate insights into locational issues in international business. In this paper, we seek to integrate these literatures further by investigating the locational determinants of foreign direct investment (FDI) into peripheral cities within an emerging economy. Peripheral cities in emerging economies are attracting a growing proportion of global FDI flows, but the international business literature lacks a framework for understanding subnational determinants of FDI, particularly into non-core locations. We draw on the core-periphery model to build and test theory on how spatial interdependencies between subnational locations impact on the distribution of FDI inflows into a large and heterogeneous country China. Our results show that whilst peripheral cities tend to have a negative effect on FDI, this effect is positively moderated by proximity to core cities. The results highlight the importance of considering interactions between place and space when investigating locational issues in international business.     

China's New Role in the International Financial Architecture

The rise of China is challenging the international financial architecture in a number of ways. This paper highlights three that are of critical importance: the challenge of absorbing massive Chinese savings; the incorporation of China into a cohesive global financial safety net; and the organisation of China's participation in funding the demand for international investment projects. The global financial architecture needs to be reformed. But what role should China play? The paper defines the options open to China and the opportunities and barriers it will face. We argue that China can work with the established economic powers in reforming the existing architecture. At the same time, China seeks cooperation in building new institutions and organisations that fill gaps in the existing arrangements. But no matter how international financial diplomacy plays out in the near term, deep financial and economic reform at home will alone deliver China a central role in the international financial architecture. Domestic reform could also attend to some of the challenges that currently plague China's impact on the system. The success or failure of these domestic reforms will be at the crux of the strength or fragility of the international financial architecture in the years ahead.