The impact of vertical integration on inventory turnover and operating performance

This paper investigates how vertical integration may influence inventory turnover and firm operating performance. A causal model is developed to investigate the effects of vertical integration on three types of inventory, namely raw materials inventory (RMI), work in progress inventory (WIPI) and finished goods inventory (FGI). The model tests the interactions between inventory types and the consequences of inventory turnover performance on various aspects of firm performance including costs and profitability. In particular, path analysis supports systematic differences with respect to how vertical integration affects RMI, WIPI and FGI. Vertical integration has a positive effect on RMI and FGI turnover but no significant effect on WIPI turnover. FGI contributes to a reduction in supporting processes costs which causes an improvement in return on sales (ROSs). Vertical integration impacts ROS directly.     

Quality,Satisfaction and Customers’ Future Intention: The Case of Hotels’ Fitness Centers in Cyprus

In an era of fierce competition, financial hardship, and volatile customer expectations the hospitality industry is seeking out new revenue centers that can both enrich the customer experience, and contribute to financial success. Capturing the attention of the industry, fitness centers have become a fundamental component of the contemporary hospitality experience with numerous strategic, operational and tactical implications. Responding to the need for further empirical investigation, the study, by adopting a quantitative methodology, holistically investigates quality, satisfaction, and behavioral intention in fitness centers currently operating in upscale hospitality establishments in Cyprus. Findings suggest that satisfaction with the provision of fitness services in hotels is primarily associated with the dimensions of employee behavior and workout facilities. Moreover, workout facilities was the only quality dimension which was significantly associated with the respondents’ intention to renew their membership, whereas a strong relationship between satisfaction and future intention was substantiated.     

Personnel Decisions,Wage Profiles and Investment in Firms

An investment model where firms mitigate adverse hold‐up effects using hiring and personnel policies is theoretically investigated and empirically scrutinized. While no evidence for the prediction of differing worker characteristics, other than gender, across firms is found, demand (firm) side factors are evident in the hiring process. Evidence on other personnel policies is consistent with theory, which predicts firms with high‐investment expenditures resist unions, utilize more temporary and shift‐time workers and conduct more multitask training. Wages in high‐investment firms are higher, more sensitive to unemployment and experience variables that exhibit greater effects than in low‐investment firms.     

Capital Structure, Macroeconomic Variables & Stock Returns. Evidence from Greece

This paper aims to investigate the impact that the capital structure of a firm has on its stock price performance. We apply regression analysis at a sample consisting of Greek listed non-financial companies over the period 1998-2009, both at the full sample level and at four leverage deciles. In doing so, we test if leverage is priced as a risk factor by constructing a leverage factor. The main contribution of our work is that we diversify capital structure studies by broadening the limited work that has been accomplished on the base of leverage as an explanatory variable of returns. Our findings show that the leverage risk factor contains significant information content and that it adds a considerable portion in the explanation of stock returns.     

Valuation effects of mergers and acquisitions in freight transportation

This study investigates valuation effects of mergers and acquisitions in the freight transportation industry. It is found that mergers and acquisitions create synergistic gains, especially tender offers, consistent with the view that freight transportation mergers and acquisitions occur for synergistic reasons rather than management’s desire for empire building or perk consumption. Both target’s and bidder’s shareholders are better-off, but most of the synergistic gains accrue to the target’s shareholders. Targets’ valuation effects are greater for vertical rather than horizontal mergers, indicating a positive valuation for firms that control and manage a more extensive supply chain. The bidders’ wealth effects are greater for friendly mergers. Overall, the findings have important implications for professional practice and the development of the theoretical literature.     

Generalized parameter functions for option pricing

We extend the benchmark nonlinear deterministic volatility regression functions of Dumas et al. (1998) to provide a semi-parametric method where an enhancement of the implied parameter values is used in the parametric option pricing models. Besides volatility, skewness and kurtosis of the asset return distribution can also be enhanced. Empirical results, using closing prices of the S&P 500 index call options (in one day ahead out-of-sample pricing tests), strongly support our method that compares favorably with a model that admits stochastic volatility and random jumps. Moreover, it is found to be superior in various robustness tests. Our semi-parametric approach is an effective remedy to the curse of dimensionality presented in nonparametric estimation and its main advantage is that it delivers theoretically consistent option prices and hedging parameters. The economic significance of the approach is tested in terms of hedging, where the evaluation and estimation loss functions are aligned.     

Robust estimation with flexible parametric distributions: estimation of utility stock betas

The distributions of stock returns and capital asset pricing model (CAPM) regression residuals are typically characterized by skewness and kurtosis. We apply four flexible probability density functions (pdfs) to model possible skewness and kurtosis in estimating the parameters of the CAPM and compare the corresponding estimates with ordinary least squares (OLS) and other symmetric distribution estimates. Estimation using the flexible pdfs provides more efficient results than OLS when the errors are non-normal and similar results when the errors are normal. Large estimation differences correspond to clear departures from normality. Our results show that OLS is not the best estimator of betas using this type of data. Our results suggest that the use of OLS CAPM betas may lead to erroneous estimates of the cost of capital for public utility stocks.     

Employer-Provided Training and Tenure-Earnings

This article examines the tenure-earnings profiles and suggests that the more training is provided to the individual by the employer, the steeper is the tenure profile of earnings. The provision of training by the employer is modelled as endogenous and subject to choice decisions using an ordered probit model corresponding to three levels of training. The earnings equations of three groups of employees are then adjusted for potential effects of bias due to selectivity by using Lee's procedure, and heterogeneity bias using the Altonji and Shakotko instrumental variable procedure.