Shaping of Moral Intensity Regarding Software Piracy: A Comparison Between Thailand and U.S. Students

Software piracy is a major global concern forbusinesses that generate their revenues throughsoftware products. Moral intensity regardingsoftware piracy has been argued to be relatedto the extent of software piracy. Anunderstanding of the development of moralintensity regarding software piracy inindividuals would aid businesses in developingand implementing policies that may help themreduce software piracy. In this research westudied the similarities and differences indevelopment of moral intensity regardingsoftware piracy among university students intwo different cultures, the U.S. and Thailand. In particular, we studied the influence of theimmediate community of individuals, such asother students, faculty, and other universityemployees, on the development of moralintensity regarding software piracy of the twogroups of students. Results indicate that, ingeneral, there are significant differences inmoral intensity regarding software piracybetween students from the US and Thailand, andthat gender differences also exist. Though theeffect of the immediate community on theself-perception of moral intensity regardingsoftware piracy of students was significant,there appears to be very little significantdifferences in this effect between the studentsin the two different countries studied. Thefindings have implications for teachingbusiness ethics, and for developing andimplementing policies to curb global softwarepiracy.     

BID-ASK SPREAD AND OWNERSHIP STRUCTURE

In this paper we examine the relation between bid-ask spread and ownership structure variables based on 1985 data for 1,063 NYSE firms. We document a nonpositive relation between bid-ask spread and insider ownership and conclude that spread is unrelated to insider trading. We also find a robust significantly negative relation between spread and institutional ownership. Finally, we find a positive but generally insignificant relation between spread and blockholdings. Overall, our evidence does not support the predictions of asymmetric information models in markets with anonymous trading.     

THE ROBUSTNESS OF ABNORMAL RETURNS FROM THE EARNINGS YIELD CONTRARIAN INVESTMENT STRATEGY

We examine the sensitivity of the abnormal profitability of the earnings' yield (E/P)‐based contrarian investment strategy to the following two risk measurement issues: (a) return‐measurement interval over which systematic risk is estimated and (b) time variation in systematic risk. We conduct our analysis using the capital asset pricing model to parameterize risk. We find that the estimates of systematic risk of E/P‐ranked portfolios are not sensitive to the return‐measurement interval. Consequently the abnormal profits to the E/P‐based contrarian investment strategy observed in prior studies are not artifacts of the return‐measurement interval. Furthermore, although both the raw and abnormal returns to E/P‐ranked portfolios exhibit mean reversion, time variation in systematic risk ensuing from this mean‐reverting behavior does not substantially affect abnormal profits to E/P‐ranked portfolios. JEL classification: G11, G12, G14     

EQUITY ISSUES AND TOBIN'S Q: NEW EVIDENCE REGARDING ALTERNATIVE INFORMATION RELEASE HYPOTHESES

Announcements of seasoned equity offerings are associated with a statistically significant negative market reaction. This finding is consistent with both the cash flow signaling and the free cash flow hypotheses. We test these hypotheses by examining whether revisions in analyst earnings forecasts and abnormal stock returns associated with equity offering announcements are related to the issuing firm's q-ratio. We find an inverse relation between revisions in analysts' earnings forecasts and q-ratios, and no relation between announcement-period abnormal returns and q-ratios. These findings provide direct evidence of the cash flow signaling hypothesis and, at best, indirect evidence of the free cash flow hypothesis.     

The path-to-profitability of Internet IPO firms

Extant empirical evidence indicates that the proportion of firms going public prior to achieving profitability has been increasing over time. This phenomenon is largely driven by an increase in the proportion of technology firms going public. Since there is considerable uncertainty regarding the long-term economic viability of these firms at the time of going public, identifying factors that influence their ability to attain key post-IPO milestones such as achieving profitability represents an important area of research. We employ a theoretical framework built around agency and signaling considerations to identify factors that influence the probability and timing of post-IPO profitability of Internet IPO firms. We estimate Cox Proportional Hazards models to test whether factors identified by our theoretical framework significantly impact the probability of post-IPO profitability as a function of time. We find that the probability of post-IPO profitability increases with pre-IPO investor demand and change in ownership at the IPO of the top officers and directors. On the other hand, the probability of post-IPO profitability decreases with the venture capital participation, proportion of outsiders on the board, and pre-market valuation uncertainty.     

Venture capitalist participation and the post-issue operating performance of IPO firms

Previous studies have identified the value-added potential of venture capitalist monitoring in the initial public offering (IPO) market. We test this proposition by comparing the post-issue operating performance of venture capitalist-backed IPOs with a matched sample of non-venture capitalist-backed IPOs. We find that venture capitalist-backed IPO firms exhibit relatively superior post-issue operating performance compared to non-venture capital-backed IPO firms. Further, the market appears to recognize the value of monitoring by venture capitalists as reflected in the higher valuations at the time of the IPO. Finally, we find that proxies for the quality of venture capitalist monitoring are positively related to post-issue operating performance.     

Conditional Heteroskedasticity and Global Stock Return Distributions

This paper investigates conditional return distribution characteristics for seven developed markets (DMs) and eight emerging markets (EMs). With the exception of Germany and Japan, the behavior of monthly returns of DM sample countries is similar to that of the U.S. In contrast, EM returns exhibit a substantially greater degree of serial correlation and a higher incidence of autoregressive conditional heteroskedasticity (ARCH) in monthly data. Aggregation of returns into two- and three-month holding periods decreases the significance of the ARCH effects. However, there are cross-sectional differences in the rate at which ARCH effects become insignificant. The findings of ARCH in monthly returns sample data is attributed to differences in the rate at which information arrives and is transmitted into prices in each market.     

Industry clustering of initial public offerings

Extant empirical evidence has documented both a temporal variation in the number of initial public offerings (IPOs) and an industry clustering effect in these offerings. This article attempts to provide insights into this phenomenon by: (i) identifying industry conditions that influence IPO clustering, (ii) analyzing differences in characteristics of clustered versus non‐clustered IPOs, and (iii) studying the impact of IPO clustering on long‐run operating performance. We find that IPO clustering is more likely to occur in high‐growth fragmented industries that are characterized by strong investment opportunities, favorable investor sentiment, and which require high levels of investments in R&D. Further, we document a negative relation between post‐IPO operating performance and whether the IPO firm goes public in its industry cluster period. We conclude that the relatively poor post‐IPO operating performance of firms that go public in industry cluster periods likely reflects industry overinvestment arising from too many firms within that industry chasing the same investment opportunities. Copyright © 2005 John Wiley & Sons, Ltd.     

Portfolio management using a factor-analytic stock selection strategy

This study takes an integrated look at six widely documented price-related CAPM anomaly variables. Using maximum likelihood factor analysis, we extract factors common to these variables. We find that portfolios formed according to the first extracted factor alone exhibit abnormal performance. Further, the performance of firms ranked on the basis of extracted factor scores for this factor is superior to that of firms selected on the basis of any one of the six variables. Our results have implications for (1) isolating missing factors in the CAPM specification and (2) designing dynamic portfolio strategies aimed at jointly exploiting more than one anomaly.     

The Impact of Strategic Investment Choices on Post-Issue Operating Performance and Survival of US IPO Firms

Abstract:  We examine the impact of strategic investment choices at the time of the IPO on: (i) the post-issue operating performance and (ii) the likelihood of failure and time-to-failure of newly public US firms. Our post-issue operating performance analysis uses various performance metrics, benchmarks, and expectation models. Overall, our evidence indicates that the extent of diversification and industry-adjusted capital expenditures intensity are generally positively related to changes in operating performance. We do not, however, document a consistent relation between industry-adjusted R&D expenditures and changes in operating performance. The results from our survival analysis suggest that pre-issue managerial commitment to R&D spending and developing diversified product lines enhance the ability of IPO issuing firms to remain viable for longer periods of time. Our study highlights the impact of various managerial investment decisions on the subsequent performance of newly public firms.