Defining market boundaries

This study shows how spatial information about product supply and demand can be used to determine the geographic extent of markets. It demonstrates that markets thus defined allow finer-grained measurement of competitive conditions than is possible using conventional approaches. Two procedures are developed and contrasted: one, called a natural market approach, is drawn from the Industrial Organization economics literature; the second, called an enactment approach, is associated with the open systems perspective on organizations. Applied to a set of hospitals in the San Francisco Bay area, geographic market boundaries established in these ways are shown to lead to finely defined markets, and to reveal strong variation in competitive conditions across the area—variation not detectable if conventional approaches to market definition are used. It is shown that these approaches have applications beyond geographic market definition, and can also be applied to define markets in term of product or service types.     

Cross‐border Mergers and Acquisitions and Financial Development: Evidence from Emerging Asia

This paper examines the relationship between cross‐border mergers and acquisitions (M&A) and financial development in emerging Asian economies. Bilateral cross‐border M&A data for nine emerging Asian economies covering 2000–2009 are analyzed with a sample selection model and a panel data model. The estimation results show that although the banking sector still plays a crucial role in facilitating cross‐border M&A, the role of equity markets has increased in importance because, in addition to cash, the issuance of common stock and the exchange of stocks have become popular forms of payment for M&A deals. Because of the relatively thin market, the primary corporate bond market plays a limited role in supporting cross‐border M&A, which is in contrast to the primary public bond market. However, for the secondary market, the corporate bond market is more effective in facilitating cross‐border M&A. The results also show that financial development in terms of stock and bond markets in their home countries tends to become more important when the target firms reside in more developed countries. In addition to financial development, the paper shows that most cross‐border M&A are invested in technology‐related and resource‐based industries while cheap labor industries are relatively less attractive.     

The underpricing of IPOs on the Stock Exchange of Mauritius

This paper investigates the underpricing of IPOs on the Stock Exchange of Mauritius (SEM). Taking into account the whole population of firms which went public since the inception of the SEM until 2010, the results show an average degree of underpricing within the range 10–20%. Using a regression approach, we demonstrate that the aftermarket risk level and auditor's reputation both have a significant positive impact on initial returns. We propose the use of the Z-score as a composite measure of a firm's ex ante financial strength, and find that it has a significant negative effect on the degree of short-run underpricing.     

Effects of In-Game Virtual Direct Experience (VDE) on Reactions to Real-World Brands

As brand placement into video games becomes an increasingly popular marketing strategy, little research has examined the role that in-game virtual direct experience (VDE) with branded products plays in affecting recall of and attitudes toward the real-world brands. The current experiment employed the manipulation of performance features of the integral brand needed to play an auto-racing game (a Volkswagen car) to determine if players' VDE would translate into differences in real-world, brand-related outcomes. Results indicate that players who had an easier VDE exhibited greater recall of and attitudes toward the brand than did players who had a more difficult VDE. Effects generally were unique to the integral brand; peripheral brands were unaffected. Results are interpreted via the LC4MP model of memory, VDE and affect-transfer theory, and brand-placement prominence. Practical implications are discussed.     

Does giving make us prosperous?

Nonprofit economists have always assumed that income is a precursor to giving. In contrast, many philosophical and religious teachings have asserted that it is giving that leads to prosperity. This article seeks to test the non-economic hypothesis, using data from the 2000 Social Capital Community Benchmark Survey. It identifies strong evidence that money giving does, in fact, influence income. This is consistent with extant psychology research which clearly shows that volunteering leads to positive mental and physical health outcomes. The implication of these findings for researchers and managers is that the value of charity is not limited to those who receive the services that giving makes possible. On the contrary, charity unleashes substantial benefits to the givers themselves.     

The roles of news and volatility in stock market correlations during the global financial crisis

The global financial crisis has again brought the interdependencies of international financial markets to the fore, particularly during times of financial crises. This paper explores the relative roles of news and volatility in explaining the changes in correlations between national stock markets during the global financial crisis. Our results show that the majority of the correlations are more strongly explained by volatility rather than news. However as the global financial crisis evolves the relative role of news grows in importance.     

The stock performance of America's 100 Best Corporate Citizens

We consider the stock performance of America's 100 Best Corporate Citizens following the annual survey by Business Ethics. We examine both possible short-term announcement effects around the time of the survey's publication, and whether longer-term returns are higher for firms that are listed as good citizens. We find some evidence of a positive market reaction to a firm's presence in the Top 100 firms that are made public, and that holders of the stock of such firms earn small abnormal returns during an announcement window. Over the year following the announcement, companies in the Top 100 yield negative abnormal returns of around 3%. However, such companies tend to be large and with stocks exhibiting a growth style, which existing studies suggest will tend to perform poorly. Once we allow for these firm characteristics, the poor performance of the highly rated firms declines. We also find companies that are newly listed as good citizens and companies in the Top 100 but outside the S&P 500 can provide considerable positive abnormal returns to investors, even after allowing for their market capitalization, price-to-book ratios, and sectoral classification.