A comprehensive model of information search and processing behaviour of mutual fund investors

Understanding the investment behaviour, specifically information search and processing behaviour of mutual fund (MF) investors is a key to the effective marketing of MF schemes, and yet we have only limited understanding of it. This study proposes and validates a model of information search and processing of MF investors. The proposed model is arrived at by combining the limited insights from the existing studies dispersed across multiple domains of literature, viz., Traditional Finance, Behavioural Finance and Consumer Behaviour. The model suggests that: (i) MF investors’ subjective knowledge (SK) negatively impacts their perceived purchase risk (PPR); (ii) MF investors’ SK positively impacts their purchase decision involvement (PDI); (iii) PPR negatively impacts their PDI; (iv) PDI positively impacts their depth of information search (DIS) and information processing behaviour (DIP); and (v) DIS positively impacts their DIP. The model is empirically validated through structural equation modelling of data collected from a survey of 268 MF investors. The implications of the model, as are relevant for the MF marketers and the policymakers, are also discussed.     

Tourism and rural settlements Nepal’s Annapurna region

Functional and humanist perspectives relevant to counterurbanization studies are applied to examine the processes of growth and development of rural settlements affected by tourism. Based on a survey of tourism lodges located in several settlements in the Annapurna region of Nepal, this paper analyzes tourism-induced growth in such accommodations and its implications on changing characteristics. Results suggest the emergence of a hierarchical structure of rural settlements with core and peripheral traits. A normative classification of induced patterns defined by their development stage, size, and function is proposed. Historical, social, and economic influences on the transformation of rural settlements are discussed.     

How psychic distance and opportunity perceptions affect entrepreneurial firm internationalization

Psychic distance, now established as an individual perceptual construct, is so far a partial explanation of internationalization processes of entrepreneurial firms. Opportunity in foreign markets, although considered important, has hitherto been an assumption rather than explored as an explanatory factor in internationalization theories. Through qualitative data from technology entrepreneurs from New Zealand this study considers opportunity, like psychic distance, as an individual perceptual construct and posits that a combination of opportunity and psychic distance perceptions better explains entrepreneurial internationalization action/intention decisions. The explicit combination proposed is “opportunity‐distance quotient” and signifies a shift from psychic distance obstacles based explanations to an opportunity‐psychic distance interaction based exploration of entrepreneurial internationalization. Limitations of the study and further research are discussed. Copyright © 2018 ASAC. Published by John Wiley & Sons, Ltd.     

Analyst information precision and small earnings surprises

This study proposes and tests an alternative to the extant earnings management explanation for zero and small positive earnings surprises (i.e., analyst forecast errors). We argue that analysts’ ability to strategically induce slight pessimism in earnings forecasts varies with the precision of their information. Accordingly, we predict that the probability that a firm reports a small positive instead of a small negative earnings surprise is negatively related to earnings forecast uncertainty, and we present evidence consistent with this prediction. Our findings have important implications for the earnings management interpretation of the asymmetry around zero in the frequency distribution of earnings surprises. We demonstrate how empirically controlling for earnings forecast uncertainty can materially change inferences in studies that employ the incidence of zero and small positive earnings surprises to categorize firms as suspected of managing earnings.     

When loyalties clash purchase behavior when a preferred brand is stocked out: The tradeoff between brand and store loyalty

The interplay between brand and store loyalty is investigated in the situation of stockout of a preferred brand at a preferred store through three studies. A four-item scale for measuring store loyalty is developed and tested. While brand loyalty influences between-store substitution and within-store substitution in a stockout, store loyalty does not have any influence, suggesting the dominance of brand loyalty over store loyalty in a stockout. Relevance and implications of the results are discussed.     

Costly external finance and labor market dynamics

We study the role of agency frictions and costly external finance in cyclical labor market dynamics, with a focus on how credit-market frictions may amplify aggregate TFP shocks. The main result is that aggregate TFP shocks lead to large fluctuations of labor market quantities if the model is calibrated to the empirically observed countercyclicality of the finance premium. A financial accelerator mechanism thus amplifies labor market fluctuations by rendering rigidity in real wage dynamics. In contrast, if the finance premium is procyclical, which the model can be parameterized to accommodate, amplification is absent, and labor-market fluctuations display the Shimer (2005) puzzle.     

Toward a theory of managing context in Six Sigma process-improvement projects: An action research investigation

In this paper, field studies, extant literature, and domain knowledge are used to develop a theory of managing context in Six Sigma process-improvement projects. By means of a participatory action research investigation involving ten projects in manufacturing and service firms, this paper examines the interrelationship among project context, elements, and success. Rich text-based information for each project was analyzed for the underlying patterns and relationships using the NVIVO 8 qualitative data analysis software package. The insights gained from this in-depth field investigation are presented in the form of 12 inductively derived research propositions that, when taken together, uniquely contribute to context-based theory-building in this area.     

The economic profitability of pre-IPO earnings management and IPO underperformance

The purpose of this paper is to test the market performance of a zero-investment trading strategy based on the knowledge of IPO underperformance and estimates of pre-IPO earnings management. This trading strategy is implemented by forming two-firm portfolios that take short positions in the IPOs and long positions in control firms matched by industry and market capitalization. The first test shows that significant positive abnormal returns can be earned trading on the knowledge of IPO underperformance. However, the relationship between the level of abnormal returns and the level of pre-IPO earnings management is not found to be significant. Overall, our results suggest that existent pre-IPO earnings management plays important roles although investors may not sophisticated enough to measure the level of earnings management.     

Optimal fiscal and monetary policy with sticky wages and sticky prices

We determine the optimal degree of price inflation volatility when nominal wages are sticky and the government uses state-contingent inflation to finance government spending. We address this question in a well-understood Ramsey model of fiscal and monetary policy, in which the benevolent planner has access to labor income taxes, nominally risk-free debt, and money creation. Our main result is that sticky wages alone make price stability optimal in the face of shocks to the government budget, to a degree quantitatively similar as sticky prices alone. Key for our results is an equilibrium restriction between nominal price inflation and nominal wage inflation that holds trivially in a Ramsey model featuring only sticky prices. Our results thus show that when nominal wages are sticky, setting real wages as close as possible to their efficient path is a more important goal of optimal monetary policy than is financing innovations in the government budget via state-contingent inflation. A second important result is that the nominal interest rate can be used to indirectly tax the rents of monopolistic labor suppliers. Taken together, our results uncover features of Ramsey fiscal and monetary policy in the presence of a type of labor market imperfection that is widely-believed to be important.     

Universal Banking Under Bilateral Information Asymmetry

The Gramm–Leach–Bliley (GLB) Act of 1999 repealed many provisions of the Glass–Steagall Act that curtailed competition between banks and commercial firms. Significantly, however, the GLB Act did not repeal the constraint on banks from owning equity in commercial firms (“universal banking”). Should banks be allowed to hold equity in corporate borrowers? If allowed, would banks optimally choose to do so? Despite its relevance from a policy perspective, there are surprisingly few theoretical analyses of this issue of “universal banking”. We develop a model in which the bank's advisory role as an “inside” shareholder hinges on its equity stake. The optimal capital structure and the bank's and entrepreneur's equity stakes are endogenously determined in a world with potential double-sided moral hazard. In certain scenarios, the bank may prefer not to hold any equity. Our analysis indicates that allowing optimal bank equity participation may foster improved corporate performance. This benefit of universal banking should be considered in policy debates.