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.     

Engaged,but with what? Objects of engagement in technology-aided B2B customer interactions

ABSTRACT

Using new technologies in customer interactions is a popular way of trying to increase customer engagement. It is, however, unknown how such efforts by marketers’ affect engagement, and particularly to what that engagement relates to. By analysing interview and observation data, the engagement manifestations of customers of a B2B company using virtual-reality technology were studied. The results show that customer engagement can be targeted at not only brands or firms but also the service the firm offers or the technology that enables the service. It is argued that the different objects of engagement can coexist and support each other but engagement with the firm is less susceptible to fluctuations. Marketers should be aware of what triggers customer engagement and what it is targeted at.     

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.     

BAYESIAN MODEL SELECTION AND FORECASTING IN NONCAUSAL AUTOREGRESSIVE MODELS

In this paper, we propose a Bayesian estimation and forecasting procedure for noncausal autoregressive (AR) models. Specifically, we derive the joint posterior density of the past and future errors and the parameters, yielding predictive densities as a by‐product. We show that the posterior model probabilities provide a convenient model selection criterion in discriminating between alternative causal and noncausal specifications. As an empirical application, we consider US inflation. The posterior probability of noncausality is found to be high—over 98%. Furthermore, the purely noncausal specifications yield more accurate inflation forecasts than alternative causal and noncausal AR models. Copyright © 2010 John Wiley & Sons, Ltd.     

Acquiring financial resources from foreign equity capital markets: An examination of factors influencing foreign initial public offerings

An increasing number of firms are making initial public offerings in foreign markets to circumvent constraints in the availability of capital and to provide an exit for their investors. However, previous research on foreign initial public offerings and their determinants is very limited. In this paper, we contribute to this literature by demonstrating that international experience of the management team and pre-IPO ownership by foreign investors are positively related to foreign initial public offerings. We test our hypotheses using data on initial public offerings of European companies from 1991–2001. The results support our hypotheses. The findings have important implications for entrepreneurs, investors, and public policy.     

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.