How far can brands go to defend themselves? The extent of negative publicity impact on proactive consumer behaviors and brand equity

Negative publicity, defined as the public disclosure of a problematic incident associated with a brand, is a critical issue for fashion brands, as it vitiates the image of targeted brands and drives consumers’ voice and exit behaviors. Despite the impact of negative publicity, few studies have compared the impact of product‐related versus personnel‐related negative publicity, or explored the extent to which brands’ coping strategies can prevent consumers’ anti‐brand behavioral intentions and recover brand equity. This study used multivariate analyses of variance to analyze responses from 594 American consumers, which revealed that when negative publicity is about a product‐related issue, none of the brand's different recovery efforts are effective in decreasing consumers’ voice and exit intentions and protecting brand equity. However, for a personnel‐related issue, functional and informational recovery strategies were effective in decreasing consumer voice and exit intentions, and affective, functional, and informational recovery strategies positively impacted most domains of brand equity (brand judgement, brand feelings, and brand resonance). The following analysis of variance and post hoc analyses revealed the comparative effectiveness of specific recovery types. Discussions and implications of the findings are provided.     

When and Why Do Takeovers Lead to Fraud?

This paper develops a model explaining how acquisitions of controlling block ownership can facilitate post‐takeover fraud by new managers when investor protection is poor. Based on disclosures of embezzlement or breach of fiduciary duty in Korean firms, we find that the probability of explicit looting in takeover targets is 13%, almost five times as large as a matched sample of non‐targets. Post‐takeover frauds are primarily driven by transfers of minority blocks, while the corresponding probability in majority acquisitions is statistically indistinguishable from the non‐targets. These findings may explain why minority acquisitions of controlling blocks are popular under poor investor protection.     

Factors contributing to business actions in response to climate change in Korea

Climate change is a growing problem and has been highlighted as a global issue. Empirical evidence increasingly indicates its obvious potential risks to humans and society. As members of this society, business organizations face greatly diverse climate change-related risks that they must recognize and respond to. However, gaps exist between scientific evidence and the actions of business organizations. Few empirical studies have examined the business organizations’ actions taken in response to climate change in Korea. This paper addresses this critical gap in the climate change literature by examining business organizations’ behaviors and identifying the factors influencing their actions. We employ statistical models to compare corporate climate change actions, and we explain their variations using survey data. The results indicate that despite increasing concerns about climate change, businesses have implemented very limited precautionary mitigation and adaptation actions. In addition, the concerns of the businesses about future climate change impact, organizational capacity (leadership, staff capacity, existence of a relevant division or department), and business size are significant factors with respect to the implementation of climate change actions.     

Cultural attributes and risk perception: the moderating role of different types of research and development

Drawing on the grid–group culture theory, this study examines hypotheses to explain how the cultural attributes of an organization influence professionals’ perceptions of risk in the context of research and development (R&D) activities. Specifically, we explore whether two dimensions of cultural attributes – the grid dimension and the group dimension – affect organizational commitment and risk perception. We also investigate whether the impact of the cultural attributes on risk perception is mediated by organizational commitment and whether different types of R&D activities – applied research and developmental research – serve as a moderating variable on the relationships among cultural attributes, organizational commitment, and risk perception. The partial least squares method was used to analyze data collected from full-time senior researchers with over five years of experience at a large technology institute. Our findings indicate that cultural attributes influence the risk perception of R&D professionals through the mediating function of organizational commitment. Further, we found that different types of R&D activities have moderating effects on the relationship between organizational commitment and risk perception.     

Population Structure and Housing Prices: Evidence from Chinese Provincial Panel Data

This study analyzes the relationship between the proportion of the economically active population aged 15–64 to total population and housing prices. A panel of 31 provinces in China from 2002 to 2014 is used in our analysis. We find empirical evidence that the impact of the population structure on housing-price growth increases as the population growth rates rise. This observation suggests that, to understand provincial housing price movements in China, one should consider the ratio of working-age population to total population in a province. The main policy implication is that Chinese policymakers need to ensure a moderated population growth to effectively promote stability in housing prices and the economy.     

Corporate Hedging Policy and Equity Mispricing

We show that firms’ use of derivatives is negatively associated with stock mispricing. This result is consistent with the notion that hedging improves the transparency and predictability of firms’ cash flows resulting in less misvaluation. Furthermore, we show that the negative relationship between mispricing and hedging is particularly strong when market value is below fundamental value, which is consistent with prior evidence that hedging has a positive impact on firm valuation. Finally, we provide evidence that a “spread‐out” hedging policy that entails the use of a variety of derivative contracts can be more effective in reducing mispricing.     

An empirical analysis of audit fee price competition after the Korean 1999 Omnibus Cartel Repeal Act

This study examines the audit service market in Korea after the 1999 Omnibus Cartel Repeal Act to determine if increased competition has led to audit fee discounting. Until 19 December 2001, when the Korean government enacted The Financial Supervisory Regulations, researchers could not address questions related to price competition in the Korean audit market due to data limitations. The new regulations allow researchers to examine audit effort for the first time because both audit hours and audit fees are now recommended disclosures. We use audit fee data of Korean companies for the 6-year period 1999–2004, and find evidence that total audit fees paid have been increasing but audit fees per hour have been decreasing. We also find that Big 5 auditing firms’ fees per hour are significantly lower than non-Big 5 auditing firms and are decreasing across time. These price pressures should be of concern to regulators and investors because prior research has demonstrated that price competition leads to discounting, which can result in unrealistically low audit fees and poor audit quality. Finally, as in previous research, we also find discounting of initial audit engagements in the Korean market.     

Factors affecting attitudes and behavioural intention towards social networking advertising: a case of Facebook users in South Korea

This study examined factors (e.g., ad values and social networking advertising characteristics) influencing consumers' attitudes and behavioural intention towards three types of social networking advertising (SNA) on Facebook – home page ad, social impression ad, and organic impression ad. Findings demonstrate that peer influence had the most significant impacts on attitude and behavioural intention across all types of SNA. The significant interaction term of invasiveness and privacy concern indicates that both attitude and behavioural intention were diminished, particularly when perceived invasiveness and privacy concern were high simultaneously. In addition, results suggest that attitudes towards the ad played a mediating role between SNA characteristics and behavioural intention. Lastly, among the types of SNA, consumers preferred organic impression ads that featured friends' names on their newsfeed more than paid ads located on the sidebar of their Facebook pages.     

Perceived trade-off between education and sports career: evidence from professional football

To explore the attitudes towards risky career choices of young people in highly competitive environments, we surveyed almost 1000 football players in the youth academies of German professional clubs (Bundesliga), who must generally decide early in their careers whether or not to risk quitting school to focus solely on a professional football career. Based on the survey responses, we empirically analysed which factors influence these youths’ tendencies to choose a high-risk career option over a lower risk one. Our results seem to indicate that such risk taking in competitive environments can be explained by potential benefits expected from this decision, as well as judgments about the likelihood of achieving the desired career. Risk attitudes towards career choices vary by differences in individuals’ estimates of the potential benefits and in particular, in their own assessments of the likelihood of success, which is an important driver of risk acceptance. We also found that opportunity cost considerations influence risk acceptance: the better the low-risk option, the less willing the individual to give it up for a high-risk alternative. In addition, both national origin and level of cultural integration play a role in attitudes towards risky career choices, with reductions in the latter increasing the risk premium of quitting school.     

Gender Discrimination and Worker Selectivity: A Comparison of the Self-employed and Wage Earners

This study compares the size and nature of the gender earnings differentials for the self-employed and wage earners in Korea, taking into account the workers’ self-selection of each employment type. The two-stage estimates of the earnings equation, corrected for worker selectivity, are used to decompose the gender earnings differentials into productivity-related and discriminatory factors. Our results suggest that the size of the gender earnings gap is larger in the wage sector than in the self-employment sector, but not by large margin, and so is the discrimination effect when not controlled for worker selectivity. With worker selectivity controlled, the discrimination effect is greatly intensified in the wage sector, while it becomes not significant in the self-employment sector. These findings imply that the observed gender earnings gap in the wage sector is largely ascribed to discrimination against women, while the gender earnings gap in the self-employment sector is mostly due to productivity difference that, in part, is caused by worker selectivity.