The Perils of Pollyanna: Development of the Over-Trust Construct

Management scholars and practitioners often believe that individuals and organizations benefit by trusting their work contacts. (Husted, 1998; Sonnenberg, 1994) Trust is generally viewed as “good” and imperative to a modern functioning economy (Blau, 1964; Hosmer, 1995; Zucker, 1986) Consequently, scholars and practitioners have given scant attention to the “downside” of trust, despite the fact that trust involves taking risk under conditions of uncertainty (Rousseau et al., 1998) Recent corporate scandals show that people suffer when they misplace trust in untrustworthy organizations and individuals. This paper develops a model of the causes and consequences of “over-trust,” which we define as a state where a trustor’s trust exceeds that which is warranted given the conditions. The antecedents of overtrust related to characteristics of the trustee, the trustor, and situational characteristics. We examine the role played by self-monitoring and perceived power base of the trustee as two key trustee characteristics. Among trustor characteristics, we examine the role (played by trustor’s core evaluation, core values). based on cultural affiliation), prior experiences with trustees, and use of habitual thinking behavior. Under characteristics of the situation, we examine the role played by uncertainty inherent in the situation, perceived threat from the context, degree of task interdependence, and organizational systems and routines. Next, we examine three consequences of over-trust – leniency in judging the trustee, delay in perceiving exploitation, and increased risk-taking. We conclude our paper by developing a set of guidelines that organizational members may employ to avoid over-trust.     

Customers’ perspectives regarding e-banking in an emerging economy

Determining factors affecting customer perception and attitude towards and satisfaction with e-banking is an essential part of a bank's strategy formulation process in an emerging economy like India. To gain this understanding in respect of Indian customers, the study was conducted on respondents taken from the northern part of India. The major findings depict that customers are influenced in their usage of e-banking services by the kind of account they hold, their age and profession, attach highest degree of usefulness to balance enquiry service among e-banking services, consider security & trust most important in affecting their satisfaction level and find slow transaction speed the most frequently faced problem while using e-banking.     

Pathways of stakeholder influence in the Canadian forestry industry

We draw on the stakeholder influence literature to propose and empirically test hypotheses regarding the direct and indirect pathways of perceived influence that stakeholders exercise within the domain of corporate sustainability. Our results allow us to examine the interaction between different types of stakeholder pressure and different types of stakeholder influence strategy. We show that stakeholders who do not control resources critical to the focal firm's operations are able to pressure a firm indirectly via other stakeholders on whose resources the firm is dependent. We contribute to the stakeholder perspective by showing how stakeholders who are affected by the focal firm's operations can enhance their salience via stakeholders who can affect the firm. Copyright © 2005 John Wiley & Sons, Ltd and ERP Environment.     

The impact of inflationary news on money market yields and volatilities

This study investigates the impact of surprises in hourly wages, non-farm payroll, unemployment rate, and producer price index on the yields and volatilities of money market securities. The methodology is conducted in a framework that preserves the strong substitutability among the instruments. We find first the short-term interest rate nexus is inherently a steady state long-run phenomenon. Second, yield variability is fundamentally linked to the release of macroeconomic news that conveys important information on inflation. Third, results from the equality of variance tests suggest that volatilities on announcement days are significantly higher than non-announcement day volatilities across all securities.     

An Improved Approach to Computing Implied Volatility

A well‐known problem in finance is the absence of a closed form solution for volatility in common option pricing models. Several approaches have been developed to provide closed form approximations to volatility. This paper examines Chance's (1993, 1996) model, Corrado and Miller's (1996) model and Bharadia, Christofides and Salkin's (1996) model for approximating implied volatility. We develop a simplified extension of Chance's model that has greater accuracy than previous models. Our tests indicate dramatically improved results.     

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Return distributions and volatility forecasting in metal futures markets: Evidence from gold,silver, and copper

The characterization of return distributions and forecast of asset‐price variability play a critical role in the study of financial markets. This study estimates four measures of integrated volatility—daily absolute returns, realized volatility, realized bipower volatility, and integrated volatility via Fourier transformation (IVFT)—for gold, silver, and copper by using high‐frequency data for the period 1999 through 2008. The distributional properties are investigated by applying recently developed jump detection procedures and by constructing financial‐time return series. The predictive ability of a GARCH (1,1) forecasting model that uses various volatility measures is also examined. Three important findings are reported. First, the magnitude of the IVFT volatility estimate is the greatest among the four volatility measures. Second, the return distributions of the three markets are not normal. However, when returns are standardized by IVFT and realized volatility, the corresponding return distributions bear closer resemblance to a normal distribution. Notably, the application of financial‐time sampling technique is helpful in obtaining a normal distribution. Finally, the IVFT and realized volatility proxies produce the smallest forecasting errors, and increasing the time frequency of estimating integrated volatility does not necessarily improve forecast accuracy. © 2010 Wiley Periodicals, Inc. Jrl Fut Mark 31:55–80, 2011     

The Association Between Investment Opportunity Set Proxies and Realized Growth

Realized growth can be viewed as a proxy for the unobservable investment opportunity set (IOS) of the firm, and provides a benchmark against which IOS proxy variables can be compared. Results from such a comparison indicate that many of the variables from earlier studies, including book-to-market measures and capital expenditure to assets ratios are consistently correlated with subsequently realized growth. However, R&D intensity and E/P ratios do not exhibit any consistent association with subsequent growth indicating that they may not be valid IOS proxies.