Does New Information Technology Lower Media Quality? The Paradox of Commercial Public Goods

We define commercial public goods as goods that are broadcast via television, radio, newsprint, or websites for which consumption is non-rival and non-exclusive, and revenue is generated mainly through advertising alongside a product in a two-sided market. With new information technology the fixed cost of entry in these markets has substantially declined. We demonstrate that as fixed costs of entry decline in a competitive media market, lower industry concentration results in lower resources to each firm for the production of commercial public goods. The counterintuitive result of new information technology is that it may result in lower quality news reporting and a less-informed population. The result may hold even when consumers exhibit preferences for diversity in media outlets.     

Advertising and Economic Development

In this article it is argued that West Germany has developed into the largest advertising market with the highest productivity per employee in Western Europe. We observe a continuous increase of net advertising turnover during the 1970s. Some extraordinary characteristics of the German advertising market (such as the structure of the TV advertising market and the printed media industry), which set it into sharp contrast to other European advertising markets, are discussed. Furthermore, we analyse the relationship between advertising and the business cycle movement (procyclical v. anticyclical advertising strategies) and we find that the majority of German business firms still pursue a procyclical advertising strategy although evidence seems to prove that an anticyclical advertising policy adopted during recessions will result in higher market shares and strengthened market positions of advertised brands.     

Changes in Concentration of Advertising Expenditures Among the Leading National Advertisers in the United States 1970–1988: A Note

This paper investigates the change of advertising concentration between 1970 and 1988. Using six measures of concentration and based on the advertising expenditures of the one hundred leading advertisers in the US reported by Advertising Age, this paper finds that the level of advertising concentration varies in the 1970s and has been steadily increasing since the early 1980s. However, the change of advertising concentration between all of the two-year periods examined is not significant. The findings also suggest that the nature of industry and the country of origin of advertisers do not exhibit significant impact on the level of advertising concentration.     

Corporate ventures into industrial markets: Dynamics of aggressive entry

This article reports a study of the effect of aggressive entry by firms venturing into new industrial markets. There are three main sets of results:First, there is a significant correlation between the competitive attractiveness of the target industry and the initial share objective set by the corporation venturing into that industry.Second, the downstream share objective, set at the launch of the venture is significantly correlated with several key marketing strategy and investment strategy options made by the firm at the start of operations.Third, if most of these key strategy decisions are made under the assumption that a high share position will rapidly be achieved, their resulting performance, in terms of both market share and ROI, is superior to firms which enter with less aggressive share aspirations.These results are particularly appealing to the large established firm which has the resources and thus can both afford to absorb the cost of failure and afford to make significant front-end investments in aggressive initial marketing expenses and investments in initial plant capacity. For such firms a feasible strategy for a new venture into an industrial market could be to: if possible (but not essential) seek industries/markets to enter which are less likely to provoke rivalrous responses; set aggressive market share targets; invest aggressively in initial plant capacity; develop aggressive sales force, sales promotion, advertising, service quality, and/or pricing programs relative to competitors, as appropriate to the particular industry being entered.The reason we suggest that the programs be aggressive as appropriate is that different strategic options are likely to be more effective in one industry than another. For instance, aggressive advertising and sales promotions could be more effective for consumables, while aggressive sales calling programs and superior service delivery could be the more effective route for capital goods businesses.     

The capital market spillover effect of product market advertising: Evidence from stock price synchronicity

We analyze whether product market advertising has a spillover effect on stock price synchronicity by transmitting firm-specific information to the capital market and attracting more investor attention. Using a sample of Chinese listed firms from 2009 to 2017, we find that firms with greater advertising expenditures have lower stock price synchronicity. The results are robust after we address endogeneity concerns. In accord with our hypothesis that product market advertising increases the amount of firm-level information capitalized into stock prices through the information channel, we find that the impact of advertising on synchronicity is more pronounced for firms with a higher degree of information asymmetry and firms in the consumer-product industry. Further tests show that product market advertising enhances the ability of current period returns to reflect future earnings, and thus rules out that the negative relationship between advertising and synchronicity is driven by noise trading. Our results imply that product market advertising plays an informative role and improves information efficiency in a capital market.     

Advertising budgets in competitive environments

Firms can approach advertising competition either by setting advertising budgets (as in the percentage of sales method) or target sales levels (as in the objective and task approach). We study firms’ incentives to adopt one or the other posture using a two-stage model of duopolistic competition. In the first stage, each firm chooses to commit either to an advertising budget, letting its sales follow from the market response function, or to a desired sales level, promising to adjust its advertising spending accordingly. In the second stage, firms choose the actual levels of their advertising budget or sales target. When prices are exogenous, we show that, due to strategic effects, if a firm benefits from its rival’s advertising (as when advertising increases awareness of the product category) then setting an advertising budget dominates setting a sales target. On the other hand, if a firm is harmed by its rival’s advertising (as when advertising increases the firm’s share of a fixed market), then committing to a sales level dominates. We extend these results in several directions and show that when firms engage in price competition as well as advertising the nature of advertising and product-market competition interact to determine whether setting an advertising budget or sales target dominates.

Happy hour followed by hangover: financing the UK brewery industry, 1880–1913

ABSTRACT

In the last 15 years of the nineteenth century c.300 British brewers incorporated and floated securities on the stock market. Subsequently, in the 1900s, the industry suffered a long-lived hangover. In this article, we establish the stylised facts of this transformation and estimate the gains enjoyed by brewery investors during the boom as well as the losses suffered by investors during the bust of the 1900s. However, not all brewery equity shares suffered alike. We find that post-1900 performance correlates positively with capital-market discipline and good corporate governance and negatively with family control, but does not correlate with indebtedness.     

An Examination of the Structure of Executive Compensation and Corporate Social Responsibility: A Canadian Investigation

We explore the extent to which Boards use executive compensation to incite firms to act in accordance with social and environmental objectives (e.g., Johnson, R. and D. Greening: 1999, Academy of Management Journal 42(5), 564–578 ; Kane, E. J.: 2002, Journal of Banking and Finance 26, 1919–1933.). We examine the association between executive compensation and corporate social responsibility (CSR) for 77 Canadian firms using three key components of executives’ compensation structure: salary, bonus, and stock options. Similar to prior research (McGuire, J., S. Dow and K. Argheyd: 2003, Journal of Business Ethics 45(4), 341–359), we measure three different aspects of CSR, which include Total CSR as well as CSR Strengths and CSR Weaknesses. CSR Strengths and CSR Weaknesses capture the positive and negative aspects of CSR, respectively. We find significant positive relationships between: (1) Salary and CSR Weaknesses, (2) Bonus and CSR Strengths, (3) Stock Options and Total CSR; and (4) Stock Options and CSR Strengths. Our findings suggest the importance of the structure of executive compensation in encouraging socially responsible actions, particularly for larger Canadian firms. This in turn suggests that executive compensation can be an effective tool in aligning executives’ welfare with that of the “common good”, which results in more socially responsible firms (Bebchuk, L., J. Fried and D. Walker: 2002, The University of Chicago Law Review 69, 751–846; Zalewski, D.: 2003, Journal of Economic Issues 37(2), 503–509). In addition, our findings suggest the importance of institutional context in influencing the association between executive compensation and CSR. Further implications for practice and research are discussed.Lois. Mahoney is an Assistant Professor at Eastern Michigan University. Her research is focused in the areas of ethics and accounting information systems. She has published in ethics and accounting journals including Journal of Business Ethics, Business Ethics Quarterly, Research on Professional Responsibility and Ethics in Accounting, Information and Organization. Dr. Mahoney has received several research awards, including Best Paper award at the Seventh Symposium on Ethics Research in Accounting. Dr. Mahoney is also actively involved in the American Accounting Association.Linda Thorn is an Associate Professor at York University in Toronto Ontario. Her research focuses on ethical decision making, the ethics of accountants and accounting students and ethical aspects of accounting information. She has published in ethics and accounting journal including among others, Business Ethics Quarterly, Journal of Business Ethics, Contemporary Accounting Research, Behavioral Research in Accounting and Audit: A Journal of Practice in Theory.     

Firm and Industry Effects of Advertising Accountancy Services

This article takes up the theme of the growing importance of the need to market financial and professional services by an examination of the case of accountancy services. Recent relaxations on the advertising of accountancy service call for an examitration of the appropriate marketing strategy for accounting firms. Discussion in the article indicates that firm size will have an important influence on the appropriateness of advertising and the form that it fakes. Advertising should form part of an integrated marketing strategy and not be seduced by the relaxation of the controls into focusing attention solely on this one aspect of marketing. As regards industry effects, advertising may be seen to reinforce concentration in the provision of both audit and particrtlarly non-audit services. There are benefits to smaller firms, however, through the use of advertising to emphasise specialist skills. In terms of conduct, advertising may help build up a barrier to entry into the provision of certain services, but is unlikely to replace price competition for the capture of audit clients as a key to the provision of non-audit services.     

Optimal Timing of Advertising with Demand Spillovers

We construct a model of a horizontally differentiated duopoly with demand spillovers in which advertising influences the willingness-to-pay of consumers for products and thereby affects not only market share, but also the level of market demand. Furthermore, firms decide the timing as well as the level of advertising. We first derive a subgame perfect Nash equilibrium and Stackelberg equilibria in the advertising competition. Then, using the framework of an endogenous timing decision game with an observable delay (i.e., Hamilton and Slutsky, Games Econ Behavior 2: 29–46, 1990), we consider the optimal timing of advertising. We demonstrate that the optimal timing depends on the degree of demand spillovers and the product substitutability. In particular, if there are sufficient asymmetric demand spillovers between firms, there is a unique Stackelberg equilibrium in the advertising competition, in which the firm providing the product with small (large) demand spillovers chooses to invest in advertising early (late), regardless of the mode of competition.     

公司特征、行业特征和并购战略类型的实证研究

This paper studies 148 related and 169 unrelated acquisition cases conducted by Chinese listed firms from 2001 to 2004 and explores firm and industry characteristics of these firms prior to their acquisition. Results show that there are significant pre-acquisition differences between firms pursuing related acquisition and firms pursuing unrelated acquisition in terms of firm performance, business risk, firm size, proportion of state shares and degree of diversification profile. Except for differences in internal capital as represented by undistributed profit per share, there is no significant difference in other aspects of available resources and industry performance. Translated and revised from Guanli Shijie 管理世界 (Management World), 2007, (3): 130–137     

Are Stock Options Grants to CEOs of Stagnant Firms Fair and Justified?

Prior research has examined several ethical questions related to executive compensation. The issues that have received most attention are whether executives’ pay is fair and justified by performance. Since more recent studies show that stock options grants constitute the single largest component in executive compensation, we examine the relations of these grants to economic determinants and corporate governance for firms in the stagnant stage of their lifecycle. We find that, on average, stock options grants comprise a significant portion of annual CEO compensation (26.4%) for stagnant firms. We also find that economic (corporate governance) factors explain less (or more) of the cross-sectional variation in stock options grants for stagnant firms than for growth firms. Furthermore, we document lower pay-performance sensitivity (i.e., weaker incentive alignment) and no improvement in future firm performance from past stock options grants to CEOs of stagnant firms. In particular, our study provides empirical evidence on some inefficiencies associated with stock options grants to CEOs of low potential (stagnant) firms, a long-standing concern of business ethics researchers (Moriarty, 2005; Nichols and Subramaniam, 2001; Perel, 2003). Our results also provide support for the corporate governance reforms discussed in Matsumura and Shin (2005), especially those proposed provisions that curtail the power of CEOs in the governance of firms.     

On the Determinants of Corporate Social Responsibility: International Evidence on the Financial Industry

This article sets out to undertake a thorough, point-by-point examination of the theory postulated by Campbell (2007), in which an attempt is made to specify the conditions under which corporations may or may not act in socially responsible ways. In order to ensure the overall reliability of our study, and to attempt to provide a new understanding of, and greater insights into, whether corporate social responsibility (CSR) is affected by financial and institutional variables, we empirically investigate a total of 520 financial firms in 34 countries, between the years 2003 and 2005. Our empirical findings are: (i) firms with larger size are more CSR minded, and the financial performance and CSR are not related; (ii) firms would actually act in more socially responsible ways to enhance their competitive advantages when the market competitiveness is more intense; (iii) financial firms in countries with stronger levels of legal enforcement tend to engage in more CSR activities; however, interestingly and rather strikingly, those firms in countries with stronger shareholder rights tend to engage in less CSR activities; and (iv) self-regulation within the financial industry has a significantly positive effect on CSR, with firms being found to act in more socially responsible ways in those countries which have more cooperative employer–employee relations, higher quality management schools, and a better macroeconomic environment.     

Multi-item models for evaluating managerial and organizational resources in service firms

Services are the primary source of wealth in almost every nation around the world. Domestic competitiveness increasingly depends on the health of its service firms. Then understanding the source of competitive advantage for the case of service industry is a challenge that cannot be deferred. Resource-Based View literature gives sound evidences that intangible assets like managerial and organizational resources are the primary source of competitive advantage, especially in the service industry. However, the development of managerial tools for measuring and managing these resources remains as an open gap. In the last few years, some academic work has been devoted to develop intangible assets measurement devices. Nevertheless, these scales are either oriented towards manufacturing industry or do not take specifically into account the distinctive features of service delivery. This study replies the multi-item model proposed by Camisón (Manag Res 3(1):27–48, 2004) over a sample of 152 medium and large services companies. We have taken different tests to demonstrate validity and reliability of the scales. Results show that these scales may also be suitable for being used in all the types of service companies. However, some partial modifications should be done in order to give more relevance to soft managerial competences and to organizational human capital. This study was carried out as part of research project (reference GV2007-075) which has been subsidized by the “Valencian Government Programme Scientific Research and Technological Development Projects”.     

Advertising Spending Efficiency of Beauty-Care Product Companies: Comparison Between Local Companies and Multinational Companies in the U.S. Market

ABSTRACT

In this study, the authors apply data envelopment analysis (DEA) to evaluate the financial efficiency of U.S. beauty-care companies and foreign companies based on their media advertising expenditures in eight key media outlets (i.e., magazines, newspapers, outdoor, network TV, spot TV, syndication TV, cable TV, and radio) and their revenues in the U.S. market. The analyses revealed that 47.4% of the companies examined advertised efficiently. Companies that advertised inefficiently could save, on average, 75% of their advertising spending. The results also indicated that although U.S. companies are more efficient overall than are non-U.S. companies in terms of advertising spending, the competitiveness of non-U.S. companies should not be underestimated because some of them advertised efficiently (e.g., Kao Corporation from Japan) or almost efficiently.     

The rise of super-elite law firms: towards global strategies

This paper reviews the pressures towards globalisation reshaping the corporate law sector. It uses Yip's [Yip, G.S. (1996). Total global strategy (2nd ed.). Englewood-Cliffs, NJ: Prentice-Hall] framework of global industry drivers. The dominant view has been that the globalisation potential of the legal industry is low since there are few global legal products and many regulatory differences between markets. However, within the corporate law sector, strong regulatory differences between countries are outweighed by the combined impact of market, competitive and cost drivers. Evidence from this research shows that the balance of industry drivers is towards there being benefits to the pursuit of global strategies within this sector. In practice, a small number of very large corporate law firms are implementing global strategies in pursuit of specific sources of future competitive advantage. Thus a small ‘super-elite’ of globalising firms is emerging.     

How advertising is covered in the Egyptian press: a longitudinal examination of content

The possibility of Egyptian attitudes towards advertising being affected by exposure to media portrayals of advertising is discussed in the context of cultivation effects. A census of all content related to advertising in Al-Ahram from 1978 through 1997 is conducted. Findings show that most columns, letters to the editor and editorials are negative in tone, and most news stories dealing with advertising are neutral. Domestic and international industry practices and social aspects of advertising are commonly covered. Outdoor and television advertising are most often criticised. The concerns expressed typically involve morality, culture and deception. Calls for increased government regulation and censorship of advertising are common. It appears that the coverage of advertising in Egypt is more negative than in the US. Future research examining links between media content and public attitudes towards advertising is suggested.     

Sectoral Analysis of Corporate Capital Structure Choice–Emerging Market Evidence from Sri Lanka

ABSTRACT

This paper empirically investigates the overall corporate capital structure of the Sri Lankan-listed companies, the determinants in general and the inter-industry differences in particular. The impact of ten determinants has been analyzed cross-sectionally, both for the market as a whole and for each individual industry, to observe any sectoral differences. Though the long-term debt utilization is relatively low in the financial structure of Sri Lankan firms, the variables of capital structure choice are not significantly different from those located in developed markets signaling a positive move towards a market-driven economy. Yet, variations could be seen across industry classes to some extent in terms of their capital structure decisions, confirming the evidences of literature.     

Impact of founder experience on exit intentions

Entrepreneurial exit—the process by which the founders of privately held firms leave the firm they helped to create (DeTienne, J Bus Venturing, 2010)—is an important component of the entrepreneurial process, yet researchers know very little about it. We examine entrepreneurs’ intentions to exit by a range of possible exit paths [acquisition, initial public offering (IPO), family succession, employee buyout, independent sale, liquidation], building on Gimeno et al.’s (Adm Sci Q 42:750–783, 1997) notion of thresholds as they apply to a simple survival/exit dichotomy, and expanding this to include different intended paths of exit. Our results indicate that entrepreneurs intend to pursue different exit paths based on previous entrepreneurial experience, industry experience, age, and education level. Our findings provide preliminary evidence that differences between intended exit and failure are underspecified in the literature, since exit consists of many unique paths. Also, in support of threshold theory, we find that the intended exit path is driven by factors other than firm performance.