Getting the most out of advertising and promotion

Until recently, believing in the effectiveness of advertising and promotion was largely a matter of faith. Despite all the data collected by marketing departments, none measured what was really important: the incremental sales of a product over and above those that would happen without the advertising and promotion. Thanks to a qualitatively new kind of marketing data, that situation is changing. "Single source" data correlate information on actual consumer purchases (available from universal-product-code scanners used in supermarkets and drug-stores) with information on the corresponding television advertising those consumers receive or on the promotion events they see. This allows managers to measure the incremental impact of advertising and promotion and to improve marketing productivity. To take advantage of the new single-source data, however, managers have to throw out much of the conventional wisdom about advertising and promotion that has grown up over the years. They must learn how to evaluate marketing differently by continually examining the appropriate balance between advertising and promotion. They must also train their sales force to do a different and extremely important job: to demonstrate to retailers the consumer pull of the company's advertising and promotion programs, as well as the effect of these programs on retailer profitability.     

Collusive tax evasion and social norms

Although collusive tax evasion by buyers and sellers of commodities and also by employers and employees is widespread all over the world, it has rarely been analyzed in the tax evasion literature. To fill this gap and to compare collusive tax evasion with independent tax evasion, this paper develops a simple noncooperative game-theoretic model and confirms the model’s predictions in a laboratory experiment. Because collusive tax evasion involves social interaction, this paper focuses on the effect of social norms and theoretically and empirically demonstrates that the tax compliance norm has a stronger negative effect on the magnitude of collusive tax evasion than on independent tax evasion. The reason for this result is that in a collusive tax evasion game with multiple equilibria social norms affect the range of equilibria and act as an equilibrium selection device, whereas social norms need to be strongly internalized to change the behavior of taxpayers who evade taxes unobservedly.     

Unearthing the Integral Determinants of Foreign Ownership Prevalence of Companies in Africa: Role of Country-level Governance

ABSTRACT

This study seeks to deepen our understanding on how country-level governance structures influence prevalence of foreign ownership of firms in Africa. This study reinforces the new institutional economics perspective by empirically highlighting that governance structures influence the prevalence of foreign ownership of companies in an economy. Using archival data from 39 African economies, we found that there is a significant positive association between regulatory quality and foreign ownership prevalence. Also, foreign ownership is prevalent in African countries that are politically stable and embrace rule of law. However, we found that countries with high voice and accountability structures are associated with low foreign ownership prevalence.     

Moving toward stakeholder-based HRM: a perspective of Italian HR managers

HR practices that look beyond focusing mainly on shareholders' interests to include a wider group of stakeholders are likely to result in a more effective HR system. This work examines Italian HR managers' perspectives of stakeholders and their perceived salience, based on data collected from 30 HR managers from the highest capitalization companies in the Milan Stock Exchange. The Mitchell, Agle and Wood model of stakeholder salience is applied to classify the stakeholders of the HR system into four clusters: definitive, dependent, discretionary and non-stakeholders. The results are discussed with reference to the body of knowledge on strategic HRM, putting forward specific managerial implications and proposing avenues for further research.     

State-owned enterprises' political capital,city administrative rank and economic resources acquisition: Empirical evidence from Chinese capital markets

This paper examines the impact of Chinese State-Owned Enterprises' (SOE) corporate political capital and the administrative rank of the city where the firm is located on their ability to acquire economic resources. The study found that the stronger the political capital owned by SOEs and the higher the administrative rank of the cities in which SOEs were located, the easier it was for them to obtain more loans and subsidies. We also found that as the city administrative rank increased, the positive effect of SOEs' political capital on economic resources acquisition also increased. When SOEs were divided into commercial competitive versus specific functional enterprises, the administrative rank of the city in which the enterprise was located played a significant positive role in obtaining economic resources for commercial competitive enterprises, while the role of their political capital played a limited role. For specific functional enterprises, their own political capital played the more significant positive role. This paper expands the research scope of corporate political connections with a new perspective.     

Is Belgium ready for EMU? A look at national, sectoral and regional developments

In EMU the question arises how countries will respond to adverse economic shocks. A statistical decomposition of output shocks in Belgium identifies the sectoral level as the main source of turbulence. This sectoral focus reduces the need for monetary, exchange rate and budgetary policies as macro-economic adjustment mechanisms but raises the issue of labour market flexibility. We show that wages fail to respond to sectoral and regional shocks. Similarly to the other EU countries, this absence of wage adjustments tends to amplify the regional divergence in production and employment performance, and can thus threaten political cohesion.     

Bernoulli speculator and trading strategy risk

In a continuous‐time model of a complete information economy, we examine the case of a “pure” speculator who chooses to trade only on forward or futures contracts written on interest‐rate‐sensitive instruments. Assuming logarithmic utility, we assess whether his strategy exhibits the same structure as when he uses primitive assets only. It turns out that when interest rates follow stochastic processes, as in the model of Heath, Jarrow, and Morton (1992), where the instantaneous forward rate is driven by an arbitrary number of factors, the speculative trading strategy involving forwards exhibits an extra term vis‐a‐vis the one using futures or primitive assets. This extra term, different from a Merton–Breeden dynamic hedge, is novel and can be interpreted as a hedge against an “endogenous risk,” namely the interest‐rate risk brought about by the optimal trading strategy itself. Thus, only the strategy using futures (or the cash assets themselves) involves a single speculative term, even for the Bernoulli speculator. This result illustrates another major aspect of the marking to market feature that differentiates futures and forwards, and thus has some bearing on the issue of the optimal design of financial contracts. Real financial markets being, in fact, incomplete, the additional “endogenous” risk associated with forwards cannot be hedged perfectly. Since using futures eliminates the latter, risk‐averse agents will find them attractive in relation to forward contracts, other things being equal. © 2000 John Wiley & Sons, Inc. Jrl Fut Mark 20: 507–523, 2000     

Mean‐variance efficiency of the market portfolio and futures trading

We derived an intertemporal capital asset pricing model in which the mean‐variance efficiency of the market portfolio is neither a necessary nor a sufficient condition. We obtained this result by modeling a frictionless, continuously open financial market in which nonredundant futures contracts are available for trade, in addition to cash assets. Introducing such contracts modifies the way investors optimally allocate their wealth. Their portfolios then comprise the riskless asset, a perturbed mean‐variance‐efficient portfolio of cash assets, and a perturbed mean‐variance‐efficient portfolio of futures contracts. Furthermore, a (3 + K) mutual fund separation is obtained, with K being the number of economic state variables, in lieu of the usual (2 + K) fund separation. Mean‐variance efficiency of the market portfolio is a necessary condition only when cash assets are the sole traded assets. © 2001 John Wiley & Sons, Inc. Jrl Fut Mark 21:329–346, 2001