Wage Effects of Trade Reform with Endogenous Worker Mobility

In this paper, we use a linked employer–employee database from Brazil to evaluate the wage effects of trade reform. With an aggregate (firm-level) analysis of this question, we find that a decline in trade protection is associated with an increase in average wages in exporting firms relative to domestic firms, consistent with earlier studies. However, using disaggregated, employer–employee level data, and allowing for the endogenous assignment of workers to firms due to match-specific productivity, we find that the premium paid to workers at exporting firms is economically and statistically insignificant, as is the differential impact of trade openness on the wages of workers at exporting firms relative to otherwise identical workers at domestic firms. We also find that workforce composition improves systematically in exporting firms, in terms of the combination of worker ability and the quality of worker–firm matches, post-liberalization. These results stand in stark contrast to the findings reported in many earlier studies and underscore the importance of endogenous matching and, more generally, non-random labor market allocation mechanisms, in determining the effects of trade policy changes on wages.     

Product resource–capability complementarity,integration mechanisms,and first product advantage

The current study extends work on resource-based theory (RBT) by exploring resource—capability complementarity in a new context—that of new technology ventures' (NTVs) first product (FP) commercialization in India. This study examines the influence of marketing and technology resource–capability complementarity on FP positional advantages (differentiation and cost-efficiency) and their influence on first product performance (FPP). Furthermore, this study incorporates the influence of supplier integration (SI) mechanisms (in terms of knowledge sharing and co-commercialization) in the process of FP commercialization. The findings suggest that asset complementarities have a positive relation with FP positional advantages, in that both differentiation and cost-efficiency enhance an NTV's FPP, and that SI moderates the relationships between both marketing and technology R–C complementarity and FP positional advantages.     

Consumer participation in the design and realization stages of production: How self-production shapes consumer evaluations and relationships to products

Psychological responses of consumers to specific stages of self-production activities are investigated in four studies. Findings reveal that consumer participation in the realization stage (physical production) enhances affective commitment to the product. However, physical production without opportunity to express choice or creativity during the production process does not change the symbolic meaning of the product (how self-expressive it is) and, therefore, does not result in identification with the product. Participation during the design stage (input-specification) enhances identification, leading to affective commitment, which in turn enhances evaluation of the self-made product. Finally, engaging consumers in both the realization and design stages of the production process does not create value for consumers over and above the main effects created by a high level of participation in either stage.     

Psychometric vs. C-OAR-SE measures of brand love: A reply to Rossiter

Rossiter (Marketing Lett 23: 905–916, 2012) provides a critique of the brand love measure from Batra et al. (J Marketing 76: 1–16, 2012) and offers a new measure of brand love to be used in its stead. In this reply, we argue that our measure is more consistent with the best available understanding on love and brand love. We also note several serious problems in the underlying definition of love used by Rossiter and problems in the way his definition is operationalized in his measure.     

Portfolio Selection and Optimization with Higher Moments: Evidence from the Indian Stock Market

The Markowitz portfolio optimization model, popularly known as the Mean-Variance model, assumes that stockreturns follow normal distribution. But when stock returns do not follow normal distribution, this model wouldbe inadequate as it would prescribe sub-optimal portfolios. Stock market literature often deliberates that stock returns are non-normal. In such context the Markowitz model would not be sufficient to estimate the portfolio risks. The purpose of this paper is to expand the original Markowitz portfolio theory (mean-variance) via adding the higher order moments like skewness (third moment about the mean) and kurtosis (fourth moment about the mean) in the return characteristics. The research paper investigates the impact of including higher moments using multi-objective programming model for portfolio stock selection and optimization. The empirical results indicate that the inclusion of higher moments had a considerable impact in estimating the returns behavior of portfolios. The portfolios optimized using all the four moments, generated higher returns for the given level of risk in comparison to the returns of the Markowitz model during the study period 2000–2011. The results of this study would be immensely useful to fund managers, portfolio managers and investors as it would help them in understanding the Indian stock market behavior better and also in selecting alternative portfolio selection models.     

Convergence of accounting standards and foreign direct investment

Since the development of the eclectic paradigm by Dunning (1977, 1988, 1993), many studies have investigated different forms of location advantages that attract foreign direct investment (FDI). In this study, we consider accounting standards as a component of the institutional infrastructure of a location and hypothesize that the convergence of domestic and International Financial Reporting Standards (IFRS) promotes FDI as it reduces information processing costs for foreign investors.² We also hypothesize that the effect of reduced information costs is stronger for partner countries whose accounting systems showed greater pre-convergence differences because they magnify the facilitating role of accounting standard convergence for FDI. Using bilateral FDI data from 30 OECD countries between 2000 and 2005, we find evidence generally consistent with these hypotheses.     

Uninvited U.S. Investors? Economic Consequences of Involuntary Cross‐Listings

We study the economic consequences of a recent Securities and Exchange Commission securities regulation change that grants foreign firms trading on the U.S. over‐the‐counter (OTC) market an automatic exemption from the reporting requirements of the 1934 Securities Act. We document that the number of voluntary (sponsored) OTC cross‐listings did not increase following the regulation change, suggesting that it did not achieve its intended purpose of increasing voluntary OTC cross‐listings through a reduction in compliance costs. We do find that the design of the regulation allowed financial intermediaries to create an unprecedented number of involuntary (unsponsored) OTC ADRs: 1,700 unsponsored ADR programs for 920 firms were created for companies that had previously chosen not to cross‐list in the United States. Our difference‐in‐differences analysis based on a matched sample approach documents that foreign firms forced into the U.S. capital markets experience a significant decrease in firm value, and we further show that the decrease in firm value is related to an increase in U.S. litigation risk. We also find that depositary banks’ propensity to involuntarily cross‐list firms is positively related to banks’ expected fee revenue, and that banks chose firms that incur high costs when involuntarily cross‐listed. Our results provide evidence that securities regulation can be exploited for private gain and result in costly unintended consequences.     

The Effect of Demand for Shares on the Timing and Underpricing of Seasoned Equity Offers

Despite high levels of asymmetry of information, firms that issue seasoned equity offerings (SEOs) within a year of their initial public offering (IPO) (follow‐on SEOs) are able to offer shares at a lower discount as compared to more mature firms. We provide evidence that this seeming contradiction can be explained by a very high degree of demand for the follow‐on offering. We find that the likelihood of issuing a follow‐on SEO is significantly related to the level of institutional demand and that discounts are lower for follow‐on SEOs in which institutional demand is high. We also consider the joint effect of cash holdings and follow‐on SEOs on discounts since firms that have recently gone public tend to hold high levels of cash. Underpricing is higher for firms with elevated preoffer levels of cash, which is consistent with market timing predictions. However, this relation is mitigated for both follow‐on SEOs and issues that also have high share demand.     

Comovement and investment banking networks

We test the hypothesis that investment banking networks affect stock prices and trading behavior. Consistent with the notion that investment banks serve as information hubs for segmented groups of investors, the stock prices of firms that use the same lead underwriter during their equity offerings tend to move together. We also find that when firms switch underwriters between their initial public offering (IPO) and a seasoned equity offering (SEO), they comove less with the stocks associated with the old bank and more with the stocks associated with the new bank. This change in comovement is greater for stocks completing their first SEO and for those experiencing large changes in institutional ownership.