Bargaining under Uncertainty and the Monotone Path Solutions

Uncertainty with respect to the feasible set of utility vectors is introduced in an axiomatic bargaining model. Given a criterion for nonprobabilistic decision-making under uncertainty, a natural efficiency requirement can be imposed on a bargaining solution. Using the maximin ordering, thestrictly monotone pathsolutions (generalizations of theegalitariansolution) to the bargaining problem are characterized as the only continuous solutions that satisfy this efficiency axiom. If the maximin criterion is replaced by the maximax ranking or a strict convex combination of the maximin and the maximax criterion, imposing our efficiency axiom and continuity leads to thedictatorialsolutions.Journal of Economic LiteratureClassification Number: C78.     

Measuring the Contributions of Brand to Shareholder Value (and How to Maintain or Increase Them)

Since 1993 Young & Rubicam has invested over $130 million in collecting and interpreting data on consumers' perceptions of some 44,000 product and service brands in over 50 countries. At the core of Y&R's research effort is the Brand‐Asset® Valuator (or “BAV”), a model that converts the firm's hoard of data on global consumer perceptions and behavior patterns into assessments of brand strength and value. When combined with the findings of independent research by academics in marketing and finance (using Compustat data on corporate operating and stock‐price performance), the BAV's assessments of brand values can be used to quantify the contributions of brands to both corporate earnings and market values. One of the main findings of this research is that brands contribute to the market value of companies by increasing not only current earnings, but the price‐to‐earnings (P/E) multiples that investors assign to current earnings. Such increases in P/E multiples in turn reflect investors' expectations for lower risk, higher growth or both. At the same time, more recent consumer surveys (conducted in 2005‐2007) provided indications of brand “erosion” even as the markets were pushing up share prices, presumably with the expectation that intangibles like brand would continue to drive operating earnings in the future. For the leaders of consumer‐related corporations, the resulting “disconnect” between stock prices and brand values points to a continuing challenge for brand management. Building brand value is important for both finance professionals trying to increase shareholder value and marketers trying to build brand strength and increase sales and margin. The aim of the authors' research is to bring these two groups—finance and marketing— closer together by demonstrating the role of marketing strategy and brand equity in driving shareholder value.     

Processing and Retrieval of Inferences and Descriptive Advertising Information: The Effects of Message Elaboration

Abstract

Two issues make advertising effectiveness difficult to assess: (1) advertising effects occur both during ad processing and when ad information is retrieved, and (2) the information that consumers derive from advertisements is likely to be some combination of explicit information and inferences. The study reported in this paper addresses these issues, examining the effects of encoding and time delay on advertising processing. Results indicate that while some types of inferences (product features) are more likely to be made under strong than weak encoding conditions, other types of inferences (consumption situation) are not affected by encoding. In addition, at the time of a decision (after a time delay), memory information use depends both upon individual brand accessibility and the relative accessibility of alternative brands in the memory set. Implications for both advertising researchers and managers are offered.     

Exploring the contextual and individual factors on ethical decision making of salespeople

This paper studies how salespeople make ethical decisions. For this purpose a structural model has been developed which configures how the organization's environment, the organizations's climate, and personality traits affect ethical decision making. Internal communication and the choice of a control system especially affect ethical decision making. Internal communication also affects the attraction of salespeople with unethical personality traits (Machiavellism), while the control system affects the ethical climate. Ethical climate and salespeople's personality traits also affect the ethical decision making. In fact the study shows that ethical decision making can be influenced by management.Willem Verbeke is assistant professor in marketing, School of Economics, Erasmus University, Rotterdam, The Netherlands. His research concentration is sales management.Cok Ouwerkerk is founder and director of the CSA, a consulting firm for statistical applications, in Mijnheerenland, The Netherlands. He has been involved in many research projects at different Dutch universities and firms.Ed Peelen is associate professor at the School of Economics, The University of Amsterdam, Amsterdam, The Netherlands. His research concentration is marketing management and logistics.     

The Capital Tax and Welfare Effects from Asymmetric Information on Equity Markets

This paper explores the implications of informational asymmetries between domestic and foreign investors for optimal capital tax rates and welfare. It adopts a model in which asymmetric information implies a home bias in equity. The paper finds that asymmetric information may raise capital tax rates by reducing the marginal cost of taxation. Furthermore, it shows that investors may gain from informational asymmetries. Although asymmetric information increases the uncertainty as perceived by investors, it may also increase tax rates and allow for a higher consumption of public goods. This reflects that asymmetric information may reduce the distortionary effects of competition among governments.     

Authentic leadership and intrapreneurial behavior: cross-level analysis of the mediator effect of organizational identification and empowerment

Intrapreneurial activity is positively associated with the organizational growth, and the factors that stimulate such behaviors need to be identified. The general goal of this work is to explore the relationship of authentic leadership with employees’ intrapreneurial behavior and the intervening processes. A correlational study was carried out with 212 employees of Spanish companies, in which two cross-level mediation hypotheses were tested. The results obtained indicate that employees’ organizational identification and organizational empowerment both mediate the relationship between authentic leadership and employees’ intrapreneurial behaviors. In this work, we note the importance of including authentic leadership as an antecedent of intrapreneurship.     

Reasserting Institutionalist Insights on the Good Society: 30 Years After Petr’s Call for a Mixed Economy

In this research note, I revisit the issues raised by Jerry Petr (1987) in “The Nature and Necessity of the Mixed Economy.” The institutionalist mixed economy is still a sound model for the good society. However, Western industrialized countries have been losing ground on the goals of the mixed economy. The struggle to defend pragmatism over ideological attachment to neoliberalism, has evolved into a distributional struggle that cannot be resolved without institutional change.     

Relative Effects of IFRS Adoption and IFRS Convergence on Financial Statement Comparability

One of the primary objectives of both adoption of IFRS and convergence between IFRS and U.S. GAAP is to increase financial statement comparability. Using a unique setting in Germany, we compare the effectiveness of these two approaches in achieving this desired outcome. Our empirical tests show that both adoption and convergence lead to an increase in comparability after the new enforcement regulation in 2005. However, difference‐in‐differences tests show that adoption does not lead to a significant incremental increase in comparability beyond convergence. The findings of this study should be of interest to regulators and standard setters as they assess alternative methods of aligning domestic standards with IFRS.     

Management reporting incentives and classification credibility: The effects of reporting discretion and reputation

In this study we investigate how the level of discretion in the reporting environment and management’s reporting reputation influence the extent to which management’s reporting incentives are important in determining the perceived credibility of management’s classification choices. Consistent with prior research, we show that users view incentive-inconsistent classifications as more credible than incentive-consistent classifications. We extend this finding by showing that the strength of this relationship (i.e., the extent to which users consider the consistency between the classification and management’s reporting incentives) depends on the level of discretion in the reporting environment and management’s reporting reputation. We find that users rely less (more) on the consistency between management’s reporting incentives and the classification in a mandated (discretionary) reporting environment and when managers have a good (poor) reporting reputation. We conclude by discussing the implications of our findings and potential future research.