Ex-dividend day abnormal returns for special dividends

Past research shows that the difference between dividend amount and ex-dividend day price drop reflects the transaction costs and the differential in the tax rates on dividends and capital gains. Moreover, it is also documented that the higher the dividend yield, the lower is the ex-dividend day return. This paper focuses on large special dividends and tests the two competing hypothesis, tax hypothesis and short term trading hypothesis. Our focus on large special dividends is motivated by the following three considerations. First, special dividends have experienced a surge in recent years. Second, special dividends are important for dividend capture by institutions, corporations and arbitragers. Third, using a sample of large special dividends allows us to reduce the market microstructure effects and focus more directly on the two competing hypotheses. Based on a sample of large special dividends, we find that price drop on ex-dividend day is significantly less than the dividend amount. Furthermore, we show that ex-dividend day returns are positive and hence, are not fully arbitraged away. Our tests indicate that tax hypothesis explains some portion of ex-dividend day abnormal returns even for large special dividends, whereas the support for the short-term trading hypothesis is weak.     

Development of Trust Scores in Social Media (TSM) Algorithm and Application to Advertising Practice and Research

Trust is an important factor, particularly in viral/social advertising, and computing trust scores for individual users of a social network is crucial for several applications in the advertising research and practice. However, research on trust in the advertising field has been limited, and the application of computational trust to advertising research using big data is rare. Addressing the gap in the research literature, this study proposed and empirically tested a new social media analytics method, the Trust Scores in Social Media (TSM) algorithm, for measuring individual users' trust levels in a social network. TSM proposes the concept of negatively reinforced trust scores and introduces two complementary measures of trust, trustingness, and trustworthiness. Another unique and important element in the TSM algorithm is the incorporation of trust-decision involvement to adjust trust scores depending on the level of trust-decision involvement of different networks. Using small survey data and big data from social networks, this study demonstrated the effectiveness of the TSM algorithm. Various applications of the TSM algorithm to viral/social advertising research and practice are also discussed.     

Toward a continuum of measurement scales in Just-in-Time (JIT) research – an examination of the predictive validity of single-item and multiple-item measures

We compare the predictive validity of single-item and multiple-item measures utilized in Just-in-Time (JIT) research. The study examines if single-item measures could be used for some of the JIT practices, especially if the object of inquiry is concrete singular and if the attribute to be researched is concrete. Arguments are developed for the concrete nature of the JIT practice of “set-up time reduction” and we examine the ability of a single-item measure of this variable to predict the criterion variable (delivery performance). In addition, the study also examines the efficacy of using multiple-item measures for variables that are abstract in nature, and thereby attempts to develop a continuum of JIT constructs ranging from concrete to abstract. The results obtained by analyzing two sets of survey data show that multiple-item measures are not necessarily more valid than single-item measures for all constructs. The findings provide evidence that multiple-item measures and single-item measures for scale development should be contingent upon the nature of constructs. For concrete constructs, single-item measures are as valid as multi-item measures. Meanwhile, for abstract constructs it is important to ensure that multiple items are considered to capture the multi-dimensional nature of these constructs. Results also reveal that JIT practices display significant differences in terms of abstract/concrete perceptions. The paper presents theoretical and practical implications of the findings, and offers directions for future research.     

Vertical divestitures through equity carve-outs and spin-offs: A product markets perspective

Using a product markets perspective to investigate the decision to vertically disintegrate, we find that vertical divestitures are more likely in response to positive industry demand shocks, favorable industry financing conditions, and lower parent firm relative productivity and are less likely when the potential for contracting problems is high. Conditional on vertical divestitures, equity carve-outs are more likely in environments in which relationship-specific investments are more prevalent and when the need for external funds is high, while spin-offs are more likely in larger industries and in industries that experience positive demand shocks. Our examinations of announcement-period wealth effects and changes in operating performance indicate that vertical divestitures are motivated by efficiency considerations.     

Inflation and the Financing of Government Expenditure: an Introductory Analysis with an Application to Turkey

This article presents a simple framework to assess the consistencyof appropriately defined fiscal deficits with other macroeconomictargets, such as inflation. It also considers the relation offiscal deficits to output growth, real exchange rate developments,and management of internal and external debt. Finally, it considersthe implications of relying on interest-bearing government debtto postpone the adjustment necessary to restore consistencywith inflation targets. It demonstrates how the intertemporalbudget constraint of the government creates a tradeoff betweencurrent and future adjustment. Real interest rates and outputgrowth rates are shown to determine the terms at which thistradeoff takes place. The usefulness of this framework is demonstratedthrough an analysis of fiscal policy options in Turkey in 1985.     

When vagueness induces indirect competition: strategic incompleteness of contracts

Summary. A class of employment contracts entailing production targets and consequent rewards is studied. In a nondiscriminatory environment, a principal hiring many agents faces the problem of writing a common contract which induces the highest possible effort from each one of his agents. While a very high target may get the best out of highly skilled agents, low skilled ones tend to shirk. On the other hand, although low targets make every agent put positive effort, there are efficiency losses from the high skilled agents. Also, in such environments the principal often has better information regarding the skills of all his agents than what each agent has regarding the rest of the agents at work. We show that if skills of agents are sufficiently close, the informed principal earns strictly higher profits by offering incomplete contracts as against being specific, as incomplete contracts reduce flow of information and induce indirect competition amongst agents. Received: May 19, 2000; revised version: August 28, 2001     

THE WEALTH EFFECTS OF TRACKING STOCK RESTRUCTURINGS

We provide a comprehensive examination of the post‐issue wealth effects of 29 completed tracking stock restructurings. We document that for the parent stock and for the combined firm, tracking stock restructurings lead to insignificant long‐term excess returns. However, we find that shareholders of tracking stocks realize significant post‐issue wealth losses. Unlike spin‐offs and carve‐outs, announcements of tracking stock restructurings are preceded by negative one‐year excess returns, and unlike the positive post‐issue long‐term excess returns to spin‐off stocks and the insignificant long‐term excess returns to carve‐out stocks, tracking stocks experience negative long‐term excess returns.     

Disentangling the performance effects of efficiency and bargaining power in horizontal growth strategies: An empirical investigation in the global retail industry

Mergers and acquisitions (M&A) and organic growth are two common strategies to achieve horizontal growth. In this study, we disentangle two distinct sources of firm performance corresponding to different theoretical perspectives on firm size: firms' bargaining power with respect to suppliers and customers, and operating efficiency arising from scale economies. We conceptually argue and empirically show that relatively, M&A enhance bargaining power in the short term while organic growth enhances operating efficiency over the long term. In order to disaggregate these effects, we use accounting rather than financial or managerial data and test our predictions in the global retail industry over a 20‐year period. We examine implications of these results for sustainability of size‐based competitive advantages. Copyright © 2014 John Wiley & Sons, Ltd.     

Gadget lovers

Marketers in firms that routinely produce high-tech innovations want rapid adoption of their products. Many believe the consumer segment that is targeted initially should consist of people who adopt innovative technology relatively early and are influential sources of information that others use as references for their own behavior. A set of adopters who might meet these requirements, but have not been the focus of prior scholarly research, are gadget lovers. This article provides insights into this segment, proposes a scale to measure its key characteristics, and reports the results of a group interview and four additional studies that support the validity of the scale (n ₁ = 1,655, n ₂ = 789, n ₃ = 1,366, and n ₄ = 188). The gadget lover scale explains adoption-related behaviors beyond the variance accounted for by technological innovativeness and key demographic variables.

The Impact of Price Disclosure on Dynamic Shopping Decisions

A potentially powerful way to assist consumers in making dynamic shopping decisions is to disclose price information to them before they shop, for example by posting prices on the Internet. This paper addresses the differential impact of disclosing either only current, or both current and future prices, on consumer shopping decisions in multi-period tasks involving multiple product purchases. In the context of an Internet-based experiment, we find that consumer expenditure deviates more strongly from that of a normative model when both current and future prices are disclosed than if only current prices are disclosed. We investigate the behavioral effects underlying this finding by estimating a model that allows for variations in consumer discounting, strength of store price format preferences, as well as choice consistency between different price disclosure conditions.