A Comparison of Cost of Equity Estimates of Local and Global CAPMs

Cost of equity estimates are compared for three pricing models: the traditional local CAPM, the single (market) factor global CAPM, and the two‐factor global CAPM, with both market and currency index factors. For 2989 US stocks, the average difference in the cost of equity estimates is about 48 basis points between the local CAPM and the single‐factor global CAPM, and is about 61 basis points between the two global models. For 70 developed‐market ADRs, the corresponding average differences are 76 and 47 basis points, respectively. For 48 emerging‐market ADRs, the corresponding average differences are 57 and 70 basis points.     

Resilience of sustainability‐oriented and financially‐driven organizations

To answer key questions concerning how negative and positive financial performance gaps motivate organizations to build more resilient systems, we develop a conceptual process model to reveal the process by which financially and sustainability‐driven organizations can translate these negative and positive financial performance gaps into organizational resilience. We specify the different modes of search behaviors that these organizations pursue when encountering negative and positive financial performance gaps. We then expand on group engagement model to theorize that vicarious search is likely to encourage limiting behaviors, whereas internal search is likely to foster promotion behaviors. Finally, we explain how both promoting and limiting behaviors can be helpful in improving organizational resilience. In this way, we hope to advance research that connects and integrates relatively disparate realms and, more specifically, to contribute to the sustainability, resilience, and performance feedback literatures.     

The 7th Asia-Pacific CHRIE Conference

Despite the increase in use of user-generated electronic content as an information source by tourists, its influence in destination image formation is not yet fully understood. This research aimed to explore the communicated destination image held by tourists to Zanzibar Island (Tanzania) by utilizing communications in Lonely Planet. Content analysis of 214 posts using TextSTAT yielded 13 destination attributes. Comparatively, functional attributes were dominant in potential tourists whereas post-travel image perception was dominated by psychological attributes. Those who have visited tended to have a positive image of the island compared with those who are planning to visit the island. The results necessitate the differential use of the functional- and psychological-based information in communicating with tourists at different information-search stages. Studies to capture communications in another language are recommended as well as the employment of methodologies that might reveal hidden images held by tourists.     

Local attendees' perceptions of festival impacts: A factor-cluster analysis approach to the Zanzibar International Film Festival

Appraising residents' perceptions of the impacts of festivals is imperative to festival success. Such residents can rightly claim ownership of the place where the festival is staged and the cultural aspects the festival showcases. This study aimed at elucidating local attendees' perceived festival impacts at the annual Zanzibar International Film Festival. Data for this study were collected using a structured questionnaire that yielded 263 responses conveniently drawn from festival-goers, which were then subjected to factor-cluster analysis. The results reveal the presence of three clusters (advocates, ambivalents, and cautious-advocates) that differ significantly on their perceived impacts of the festival with respect to its environmental, socio-cultural, and economic contributions. These results have both managerial and policy implications on the inclusion of the locals in planning and managing festivals.     

Political connections and the cost of equity capital

Motivated by recent research on the costs and benefits of political connection, we examine the cost of equity capital of politically connected firms. Using propensity score matching models, we find that politically connected firms enjoy a lower cost of equity capital than their non-connected peers. We find further that political connections are more valuable for firms with stronger ties to political power. In additional analyses, we find that the effect of political connection on firms' equity financing costs is influenced by the prevailing country-level institutional and political environment, and by firm characteristics. Taken together, our findings provide strong evidence that investors require a lower cost of capital for politically connected firms, which suggests that politically connected firms are generally considered less risky than non-connected firms.     

Fostering entrepreneurship: impact of specialization and diversity in education

The present research aims to enhance our understanding of how prospective entrepreneurs benefit from specialized entrepreneurship education combined with a diversified educational experience. We find intriguing evidence that depth or specialization of entrepreneurship education is not enough for wealth creation from future entrepreneurial activities. Instead, it is breadth or diversity of educational experiences that positively influences future wealth creation, in terms of both the entrepreneur’s personal income as well as personal net worth. The results of the study have important implications for entrepreneurship educators and their students, researchers, policy makers, as well as nascent entrepreneurs.     

Government Public Policy, Regulatory Intervention, and Their Impact on IPO Underpricing: The Case of Malaysian IPOs

This study examines the impact of government initial public offering (IPO) regulation intending on promoting public policy. The study examines the results of the implementation of a Malaysian government policy in 1976, which mandated that at least 30 percent of any new shares on an IPO offer be sold to the indigenous Bumiputera population or to mutual funds owned by them. The study examined the short-run and long-run underpricing of Malaysian IPOs and found that Malaysian IPOs are highly underpriced compared to IPOs in developing countries, creating a market microstructure effect. It also confirmed that the Malaysian government's regulatory intervention in spite of noble public policy intentions appeared to be the significant factor for the emergence of an average first-day underpricing increase of Malaysian IPOs by 61 percent during the period after the regulatory economic policy was instituted. Furthermore, the study found that this high underpricing persists even for the long run, in contrast to the long-run performance of IPOs in the United States.     

Query Titles in Travel Forums: Nature and Impacts on Responses

Despite travel forums being an influential source of electronic word of mouth in the tourism context, the nature of interaction between information inquirers and contributors is yet to be appraised. This study attempts to fill the knowledge gap by exploring the inquiry titles in a travel forum in terms of its nature and influence on viewers’ responses. For empirical examination, thread titles for queries on South Korea and Japan that were posted in the Lonely Planet Thorn tree forum between March 2009 and February 2010 were collected (n?=?220) and analyzed. The results reveal that search by location is prevalent when potential tourists post a query in a travel forum. Search by interest is more likely at the city or regional level, while search by general (SBG) topic is prevalent in national-level search. The nature of inquiry title also reflects the intended length of stay at a destination. SBG in title significantly outweighs other categories in terms of the number of views and replies. Implication of findings and directions for future study are discussed.     

The Role of Ownership in Managing Interfirm Opportunism: A Dyadic Study

We extend research on transaction cost theory that shows that vertical integration enables firms to protect their investments in exchange relationships better than market mechanisms. However, extant research finds ownership to exacerbate, rather than limit, exchange partner opportunism. Hence, the purpose of this study is to investigate conditions under which ownership can be effective for constraining an exchange partner's opportunism. Using matched dyadic data for 296 hotel brands, we conduct multi-level hierarchical linear modeling and identify conditions under which common ownership limits hotel opportunism. Findings indicate that ownership can limit hotel opportunism when brand headquarters can easily monitor the hotel's activities.     

Excess Control, Corporate Governance and Implied Cost of Equity: International Evidence

We investigate whether the separation between ownership and control rights can be costly to controlling shareholders and firms in terms of capital-raising costs. Using estimates of the cost of equity capital implied by analyst earnings forecasts and growth rate for a sample of 1,207 firms from nine Asian and 13 Western European countries, we find strong, robust evidence that the cost of equity is increasing in excess control, while controlling for other firm-level characteristics. This core finding persists after controlling for legal institutions variables.