Comparative performances of measures of consumer and economic sentiment in forecasting consumption: a multi-country analysis

ABSTRACT

This paper seeks to compare the capabilities of assorted measures of consumer and economic sentiment in predicting the growth of household expenditure. An analysis of quarterly data on five European countries shows that for none of these can the model which incorporates the EU’s headline consumer confidence indicator be deemed to be significantly inferior to any of its seven rivals. However, the rankings of the sentiment variables are seen to be influenced by: the proportion of total spending by households that is devoted to durable goods; and the nature of the behaviour of consumption over the forecast interval.     

Understanding homophily of service failure within the hotel guest cycle: Applying NLP-aspect-based sentiment analysis to the hospitality industry

Online complaints have become increasingly influential on the purchasing behavior of customers in recent years. In an effort analyze large quantities of textual complaints and detail the various aspects of them, Aspect-Based Sentiment Analysis was looked to as an ideal framework to take on the task. This study set out to synthesize specific service failure items and categorize them into the groupings related to the hotel guest cycle and the corresponding operations, then compare the patterns of expression used by Asian and Non-Asian guests as the related their hotel experiences. A total of 390,236 online complaint terms posted about 353 hotels in the UK by hotel guests from 63 nations were manually derived from TripAdvisor for analysis. With consideration given to the homophily theory, we posited that Asian and non-Asian guests would exhibit similarities and differences with respect to the service failures they encountered when presented with various items of service. The results confirmed this as Asian guests were shown to encounter more service failures with respect to the engineering segment of operations (e.g. hotel room equipment issues), while non-Asian guests encountered more service failures on the housekeeping end of operations (e.g. toilets, public areas, cleanliness, and bedding). By organizing the failures according the four stages of the guest cycle, it was observed that approximately 80% of the service failures occurred during the occupancy period. This study contributes to the existing literature on hotel guest satisfaction both with respect to the methodology it uses and the new findings it presents on differences in perceptions of service failures members among different cultures.     

Social media bots and stock markets

This study examines the link between information spread by social media bots and stock trading. Based on a large sample of tweets mentioning 55 companies in the FTSE 100 composites, we find significant relations between bot tweets and stock returns, volatility, and trading volume at both daily and intraday levels. These results are also confirmed by an event study of stock response following abnormal increases in the volume of tweets. The findings are robust to various specifications, including controlling for traditional news channel, alternative measures of volatility, information flows in pretrading hours, and different measures of sentiment.     

Does Investor Sentiment Affect the Value Relevance of Accounting Information?

We investigate whether investor sentiment affects the relationships between accounting variables and contemporaneous stock returns. Using price-relevant accounting variables identified by Chen and Zhang (2007) and the investor sentiment index constructed by Baker and Wurgler (2006), we find that the value relevance of accounting variables is collectively lower in high sentiment periods than in low sentiment periods. More importantly, earnings yield appears to be more related to contemporaneous stock returns in high sentiment periods, while other accounting variables are more related to stock returns in low sentiment periods. The effect of investor sentiment on the value relevance of accounting information is stronger for firms that are more difficult to value and to arbitrage.     

Modelling with flexibility through the business cycle: using a panel smooth transition model to test for the lipstick effect

ABSTRACT

Consumer spending typically declines during periods of economic distress, but observers have noted that lipstick purchases appear to increase during recessions, which is often referred to as the lipstick effect. However, the existence of such effect has remained empirically unconfirmed. Using weekly retail scanner data on lipstick sales from 2006 to 2016 in the United States, we applied a Panel Smooth Transition Regression (PSTR) demand model to test the relationship between economic distress and lipstick sales. This flexible demand specification allows regression coefficients to vary as a function of an exogenous macroeconomic variables and fluctuate asymmetrically, non-linearly, and time-varyingly across an unlimited number of regimes. Empirical results show the income elasticity of demand for lipstick decreased rapidly from 0.31 to 0.05 during the 2007–2009 recession, then slowly rebounded to 0.31 by the second quarter of 2014, thus first empirically confirming the existence of the lipstick effect.     

Does local political support influence financial markets? A study on the impact of job approval ratings of political representatives on local stock returns

Using data on job approval ratings of governors, U.S. senators, and the president, we find that firms located in states with high approval ratings outperform firms located in states with low approval ratings by .64% per month. Furthermore, this relationship is stronger when investors are actively involved in politics, when local politicians are closer to the center of political power, for small firms that have a larger proportion of local investors, and for financially strong areas where investors are ready to execute investments in local stocks. Overall, our study shows that investors’ political sentiment is important in determining stock returns.     

Determinants of consumer demand for circular economy products. A case for reuse and remanufacturing for sustainable development

We investigate determinants of consumer demand for circular (reused and remanufactured) products. Based on exploratory choice-based conjoint experiments with a sample of 800 adults in the United Kingdom, we examine two types of premium segment electronic appliances: a mobile phone and a robot vacuum cleaner. We find that consumers prefer partly circulated products over fully or not at all circulated products and that circular products can likely successfully enter the existing market at the retail price of a new product. Interestingly, circular products compete for market share primarily with new products, leaving the market share of second-hand options less affected. The results show a promising path for firms considering a transition to circular business models.     

Remanufacturing for the Circular Economy: An Examination of Consumer Switching Behavior

For the circular economy to be tenable, consumers need to not only return products after use, but also purchase products that are remanufactured. However, research finds that consumers have a poor opinion of remanufactured products and are typically not prepared to adopt them. Thus, development of the circular economy is dependent upon deeper understanding of consumers’ attitudes and behaviors. Research typically considers either micro‐level or macro‐level factors when assessing consumer perceptions of remanufactured products. The current research incorporates macro‐level factors of price, government incentives and environmental benefits with the moderating influence of micro‐level consumer attitudes to examine consumers’ intention to switch from purchasing new products to remanufactured products. The findings suggest that a consumer's attitude toward remanufactured products is an important moderating factor predicting consumer switching behavior to remanufactured products. Copyright © 2016 John Wiley & Sons, Ltd and ERP Environment     

Cross-Cultural Consumer Behavior: Use of Local Language for Market Communication—A Study in Region Friuli Venetia Giulia (Italy)

Cross-cultural consumer behavior is of market interest due to globalization of marketplaces, migration, multicultural marketplaces, and diffusion in the EU of many languages. The objective of this study is to check whether the local language used in a marketing communication could affect the consumers’ preferences for food products. The theoretical foundation is the consumer motivational approach that goes deeper into motivations interfering with the consumers’ preference order. The multivariate conjoint analysis is used to evaluate the preferences for attributes described in different languages. A number of students from the University of Udine (located in the northeastern part of Italy) have been submitted to interviews to examine their preferences for a simulated sandwich package reporting information in different languages, distributed by vendor machine. The results suggest that the consumer’s reaction to local language depends on sociodemographic profile, cultural background, language knowledge, and family education, and the local language could actually be used as a market tool for market segmentation. These results are of interest to many EU countries with bilingual communities such as Spain, Belgium, the UK, Switzerland, and most of the Italian regions where local languages are still alive.     

Flagship stores for FMCG national brands: Do they improve brand cognitions and create favorable consumer reactions?

National brands have begun to engage in direct distribution, displaying the brand in its own biotope. Such operation of flagship stores is one means of forward verticalization. From samples of visitors to two flagship stores of fast-moving consumer goods brands, this study analyzes the effects of the flagship store visit on brand experience, brand equity, brand attachment, and loyalty. In the low-involvement FMCG context, flagship stores are useful for reinforcing brand experience. However, flagship store-fueled brand experience does not necessarily lead to favorable consumer reactions; its effect on future purchases is mediated by both brand equity and brand attachment.