Shadow costs of incomplete information and short sales in the valuation of the firm and its assets

This paper presents a simple framework for the valuation of compound options within shadow costs of incomplete information and short sales. The shadow cost includes two components. The first component is the product of pure information cost due to imperfect knowledge and heterogeneous expectations. The second component represents the additional cost caused by the short-selling constraint. Information costs are linked to Merton's (1987. Journal of Finance 42, 510) model of capital market equilibrium with incomplete information, CAPMI. This model is extended by Wu et al. (1996. Review of Quantitative Finance and Accounting, 7, 136) who propose an incomplete-information capital market equilibrium with heterogeneous expectations and short sale restrictions, GCAPM. This model is used in our paper to provide for the first time in the literature analytic solutions for derivatives in the presence of both shadow costs of incomplete information and short sales.When deriving the compound call option formula, we consider a call option on a stock, which is itself an option on the assets of the firm. Our methodology incorporates shadow costs of incomplete information and short sales on the firm's assets as well as the effects of leverage in the capital structure. The formula can be useful in the valuation of several corporate liabilities in the presence of information uncertainty and short sales constraints about the firm and its cash flows. Our analysis can be used for the valuation of several real options.     

Advertising a second-price auction

This study examines a symmetric private-value second-price auction model in which the seller solicits bidders at a cost, sets a reserve price, and receives a payoff which is a convex combination of revenue and welfare. The bidder’s valuations are drawn from a distribution with a decreasing hazard rate and non-decreasing virtual valuations. We find that at equilibrium the seller adopts an advertising policy which minimizes the uncertainty over the number of participants, and sets a reserve price which only depends on the distribution of valuations and the weight on revenue in the objective function. A welfare-maximizing seller is shown to advertise more than a revenue-maximizing seller, and a ceteris paribus increase in the advertising level is proved to increase the expected winner’s rent.     

The fortunes of air transport gateways

The paper explores the idea that the fortunes of some gateway cities are changing as airlines use modern aircraft to respond to new market opportunities. It uses data on inter-city journeys between Australia and Asia to identify a hierarchy of gateway cities, and then shows how the connections between them has changed over the 2000–2013 period. Results show that secondary, and smaller, gateways in both Australia and Asia have played more important roles in passenger movements over this time. In Melbourne in particular, stronger growth in the demand for international travel in that city along with more use made of the smaller long-haul aircraft by airlines, has strengthened its role as a gateway city relative to Sydney. These results confirm that the geography of inter-continental air networks are changing which may have important implications for the air transport roles of some cities in the immediate future.     

A dialectical theory of the decision to go to work: Bringing together absenteeism and presenteeism

The decision to not attend work (absenteeism) has been the focus of a great deal of inquiry; however, research is emerging on the importance of the decision to attend work when ill (presenteeism). Interestingly, despite being the outcome of the same decision, these constructs have developed relatively independently. We argue that absenteeism and presenteeism are strategies employees use to navigate the dialectical tensions in the supervisor–subordinate relationship. Thus, understanding the nature of those tensions, their context, and the strategies employed to manage the tensions can inform employees' decision to attend work.     

Implications of domestic price insulation for global food price behavior

Rapid changes in global food prices in recent years are widely viewed as a serious threat to global development. While various sources of price instability in agriculture have been identified, little attention appears to have been given to the importance of changes in trade policies that insulate domestic prices from world markets as a source of volatility in world prices. A contribution of this paper is to show that these interventions are dynamically more complex than simple proportional insulation. Insulation against an initial price increase in world prices increases the magnitude of that increase, while subsequent adjustments to the level of protection change the fundamental nature of price volatility. We find such policies are widespread and increase the volatility of world prices while not reducing the volatility of domestic prices because of the collective action problem involved in this form of policy intervention.     

A strategic approach to improve sustainability in transportation service procurement

This paper focuses on the procurement of full truck-load transportation service with the view to ensuring sustainability in transport logistics. The carrier assignment problem (CAP) involved in truck load contract auction is studied using a complete enumeration method and heuristic approach. Performance of both methods is compared in terms of solution quality and computational time based on the results of sample problems considered. Also, the impact of combinatorial bidding on reducing empty haul in real world case is analyzed and environmental sustainability is achieved through reduction in carbon foot print.     

Consumption-Leisure Preference Structure: A New Explanation of the Evans-Jovanovic Results for Entrepreneurial Choice

This paper extends Evans and Jovanovic’s (1989) (EJ) model to explicitly consider the latent entrepreneur’s consumption-leisure preference structure, and shows that an increase in his or her assets encourages entrepreneurial activity. This result indicates that EJ’s finding may hold without the assumption of liquidity constraints.     

Pick a card: Price ranges and gift card choice

Gift cards are wildly popular with consumers. Vast assortments of gift cards are available at many regional and national retail stores (e.g., grocery, convenience, home improvement). The present research examines consumer reactions to price range amounts displayed on gift cards (e.g., $20-$100; $25-$250). Commonly affixed to gift cards to convey possible purchase loads, price ranges appear to serve as contextual information for a desired purchase load as a gift that can affect beliefs about the recipient's views of the gift card i.e., metaperceptions. Specifically, these metaperceptions tend to be more negative for a gift card displaying a price range when the desired purchase load is the lower bound rather than the upper bound. These beliefs can, in turn, affect gift card choice, but only when social risk is applicable. Four studies provide support for the theory.     

Unveiling ways to reach organic purchase: Green perceived value,perceived knowledge,attitude, subjective norm,and trust

This paper aims to investigate organic food consumption based on the perspectives of an extended research model by integrating the theory of consumption value (TCV) and the theory of reasoned action (TRA). First, we tried to find out how five consumption values of functional, social, emotional, conditional, and epistemic in classic TCV influence consumption choice especially in the sustainable consumption domain of organic food, interpreted as green perceived value (GPV) in the reflective-reflective second-order latent. Second, as an attempt to extend the classic TRA, this study included trust and perceived knowledge in the research model in addition to the subjective norm, attitude, and behavioral intention. A partial least square structural equation method (PLS-SEM) was adopted to examine our research model with 251 samples. Our results revealed that GPV significantly affects consumer attitudes. Consumer attitudes and subjective norms also have a significantly positive effect on purchase intention. As an extended TRA, GPV has a significantly positive effect on trust while trust significantly impacts purchase intention. Further, perceived knowledge positively influences attitude and trust. By jointly considering TCV and TRA, this study proposes several implications emphasizing how GPV and perceived knowledge affects consumers’ organic food consumption choice based on the role of increased trust.     

Value versus growth stocks in Singapore

This study examines value and growth stocks in Singapore. Specifically, we examine the value premium up to 5 years after the value and growth portfolio formation. We also examine if growth (value) stocks really indicate higher (lower) company profits in the later years, whether analysts’ forecasts are overly optimistic/pessimistic, and if earnings and earnings growth exhibit mean reversion. Our findings are, first, there is a value premium for Singapore stocks, but the premium is concentrated in the first 2 years after the portfolio formation. Second, value (growth) stocks do indicate low (high) earnings growth rates and low (high) return on equity (ROE) in the following years. Third, earnings growth is significantly overestimated for growth stocks but it is not underestimated for value stocks, indicating a one-way over-reaction. Finally, there is some evidence of mean reversion for excess ROE but not for excess earnings growth rates.