Do Corporate Managers Know When Their Shares Are Undervalued? New Evidence Based on Actual (and Not Just Announced) Stock Buybacks

This article summarizes the findings of the authors' recent study, published in the Journal of Financial Economics, of whether public companies are able to repurchase their own shares at a discount to the market, thereby earning more than a market return on such “investments.” To the extent the answer is yes, it would suggest that management has an advantage in assessing the intrinsic value of the companies they manage. Using as their sample all 2,237 publicly traded U.S. companies that repurchased their own stock between 2004 and 2011, the authors compared the average price paid during the month to the average price at which the firm's shares traded during that month as well as three and six months after the repurchase. (All earlier studies had measured stock performance from the date of the repurchase announcements rather than from the date of the actual repurchases.) The authors' conclusion, which may come as more of a surprise to financial economists than practicing corporate executives, was that the majority of companies repurchasing their shares have in fact earned a positive return on their investment in their own stock. Perhaps the most important finding of the study, however, was that infrequent repurchasers—defined as companies that bought back their own stock four or fewer times a year—have been much more successful in buying undervalued shares than regular repurchasers. For example, when evaluated over a six‐month holding period, the annual “alpha” of infrequent repurchasers was 2.4% greater than that of frequent repurchasers—those that bought back their shares at least nine times a year. And this advantage was even more significant for companies that repurchased just once during the year—a group that recorded an alpha of 5.9%, as compared to 1.5% for monthly repurchasers. Moreover, the results were essentially the same when extended over considerably longer holding periods. For the entire sample of companies that repurchased their shares, the authors reported finding positive and significant alphas of 0.3% per month over windows ranging from three months to three years after the repurchase. But, as reported above, the infrequent repurchasers significantly outperformed frequent repurchasers over all time horizons, with differences in alpha that ranged from a low of 0.3% and to as high as 0.6% per month.     

Preventing Sexual Harassment: The Effect of Multiple Training Methods

Subjects were presented with multiple training methods to determine their effect on sensitivity to possible sexual harassment situations. The training methods used were case analyses, commercially produced videotape episodes, and an open-ended questionnaire. Subjects were found to be more sensitive to incidents of possible sexual harassment when videotape episodes were combined with case analysis. The pattern of gender differences supported previous research showing perceptual differences in ambiguous cases. Research-based suggestions for sexual harassment training programs are offered.     

Bargaining over an Uncertain Value: Arbitration Mechanisms Compared

This article explores the theoretical and behavioral impactof conventional arbitration and final-offer arbitration (FOA)when parties are bargaining over an uncertain value. In thiscontext, one player receives a fixed payment while the otherplayer receives the uncertain residual. Although both formsof arbitration have identically sized contract zones, we showtheoretically that in FOA the contract zone shifts in favorof the residual claimant. In addition, as the variance of thepossible values rises, the contract zone shifts further in favorof the residual claimant. In laboratory testing, the contractzone roughly reflects the central tendencies of behavior; however,both forms of arbitration increase conflict relative to a no-arbitrationbaseline. This is caused by residual claimants being more aggressivewhen arbitration is available while fixed-payment recipientsare not. However, both parties play a role in the conflict escalationdue to the increased proposal variation.     

Managing and modeling the price reduction effect in mobile telecommunications traffic

As needs for telecommunications services diversify, an increasingly wide range of services is becoming available in the market. Service price reduction is one strategy used by service providers to retain existing subscribers. A price reduction for one service, however, can affect the individual-level usage for other services. Price reductions can also be imposed on a service provider by regulation. For these reasons, understanding how price reductions affect service usage is of growing importance to the telecommunications industry for purposes of pricing and tariff development. In this paper, an individual-level usage model for telecommunications services is developed and the effects on usage of a price reduction are analyzed. The model is applied to age-stratified aggregate traffic data for a Korean mobile telecommunication service provider. Finally, a 0-1 integer programming model is proposed for choosing which market segment should be targeted with a price reduction to minimize revenue loss. These models can be applied to market segmentation and price reduction strategy.     

Environmentally related research in scholarly hospitality journals: Current status and future opportunities

This study presents a comprehensive review of recent developments in environmentally related research articles published in major hospitality journals in the period from 2000 to 2010. A total of 58 articles are classified into three hospitality areas: lodging, restaurant, and meeting and convention. The results are presented with the discussion of research articles by period, journal, research focus, research type, and key findings. Conclusions and recommendations for future research are offered.     

Frontline employee motivation to participate in service innovation implementation

Companies today face the challenge not only of designing innovative customer-focused service strategies to compete and grow but also of translating such strategies into results through successful execution. Experience and research demonstrate the difficulty of such an execution, but little research in marketing has focused on strategy implementation, particularly at the employee level. Prior research has suggested that frontline employee participation is critical to successful innovation implementation, especially in service contexts. We develop a theoretical model to investigate the complex role of motivation in engaging employee participation in service innovation implementation and test it with field data from a real-world context. The study contributes to motivation research in marketing by adapting and extending a hierarchical conceptualization from psychology that incorporates three levels of motivation: global, contextual, and situational. We also investigate the antecedents managers can control to increase employee motivation to participate in implementation efforts and subsequently to improve participation behaviors that are critical to the successful implementation of a customer service innovation.     

The Village Network™: Partnership and collaboration to alleviate poverty in subsistence marketplaces

The Village Network is a unique model of poverty alleviation involving the collaboration of a host subsistence market community and a nonprofit organization, typically a university, with a multidisciplinary academic module. All parties in this partnership stand to gain from collaboration. The subsistence market benefits from the skill set and labor provided by the university. The university benefits by placing their students in a position to apply theory guided by the social and economic development experience and insights of the indigenous village leadership. The coordinating organization improves relationships and fosters growth in developing communities. The discussion then focuses on insights about subsistence marketplaces that emerge from this initiative.