Clientele Effects and Condo Conversions

During an asset boom a property can develop a new usage. Appreciation investors emerge to change a property's occupant mix or letter grade. Rental investors not intending to change the mix or grade are outbid. Sellers receive a capitalized premium from the new type of bidder. For apartments in Miami-Fort Lauderdale during 2004–2006, there is an asset pricing premium from condo converters. The price of real estate depends on clienteles in addition to characteristics.     

Housing Vouchers,Tenant Quality,and Apartment Values

Landlords face unique concerns in maximizing profits when they accept subsidized as well as unsubsidized tenants. Subsidized tenants come with lower rental collection risk because part or all of the rent is paid by a public agency and accepting subsidized tenants may widen the potential tenant market. But subsidized tenants tend to reduce overall tenant quality and to impose higher operating costs. By accepting subsidies, landlords may also subject themselves to periodic site inspections that may increase capital costs. Further, subsidized tenants may eventually crowd out unsubsidized tenants, lowering the average quality of the resident mix. Tests from Washington, DC apartments on accepting and advertising for Section 8 tenants support these qualitative predictions. Accepting Section 8 tenants enhances revenues, but advertising for them lowers revenues. More aggressive solicitation of subsidized tenants leads to a crowding out or displacement risk that dominates over any diminished collection risk.     

Evaluation of a Truthful Revelation Auction in the Context of Energy Markets with Nonconcave Benefits

We describe a Vickrey-Clarke-Groves auction for supply and demand bidding in the face of market power and nonconcave benefits in which bidders are motivated to bid truthfully, and evaluate its use for power and gas pipeline capacity auctions. The auction efficiently allocate resources if firms maximize profit. Simulations, including an application to the PJM power market, illustrate the procedure. However, the auction has several undesirable properties. It risks being revenue deficient, can be gamed by cooperating suppliers and consumers, and is subject to the information revelation and bid-taker cheating concerns that make single item Vickrey auctions rare.     

Exit as governance: do blockholders affect corporate innovation in large US firms?

Using a sample of large US firms, this study shows that blockholders in combination with liquidity can contribute positively to innovation (R&D investments). We contribute to the literature on managerial myopia that has focused mainly on large owners and their type (short-term/long-term). Our results are in line with recent theoretical studies arguing that blockholders in combination with market liquidity can mitigate managerial myopia, as suggested by the exit model of governance. The results indicate that blockholders can be efficient in resolving agency problems and that they can enhance long-term prosperity, even when the individual blockholder investment horizon may not be long.     

Measuring Uncertainty for New Zealand Using Data‐Rich Approach

This paper develops two state‐of‐the‐art uncertainty indices for New Zealand by exploiting two separate data‐rich environments. The first index follows the methodology outlined in Jurado, Ludvigson and Ng (2015) to construct an estimate of uncertainty based on a large New Zealand macro dataset. The second index is constructed based on freely accessible and real time Google Trends data to provide a real‐time and freely‐accessible measure of uncertainty as in Castelnuovo and Tran (2017) and Shields and Tran (2018). Both indices do a reasonable job measuring uncertainty in New Zealand. VAR evidence documents significant impacts of uncertainty shocks on GDP in New Zealand.     

The influence of images on organizational attractiveness: comparing Chinese,Russian and US companies in Germany

In developed markets, Emerging Market Multinational Enterprises’ (EMNEs) organizational attractiveness may crucially depend on applicants’ country and corporate character images (CCIs). Applying image and signaling theory, this study compares the influence of these images on the organizational attractiveness of Chinese, Russian and US companies in Germany. Employing data from 287 German business students, findings show that applicants prefer US over Chinese and Russian companies as future employers, confirming the existence of the liability of emergingness. Moreover, findings indicate gender differences in applicants’ attraction toward EMNEs. In particular, female applicants are less attracted to EMNEs with a bad CCI than male applicants are.     

The ‘minimal’ state reconsidered: governance on the margin

Classical liberal scholars have defined a “minimal state” as performing certain basic functions that include the provision of policing, courts, and national defense. We argue that these functions need not be fully provided by the state. Private provision of all three of these functions exists. Thus a truly minimal state would provide these functions only on the margins where private provision fails. Thus, a truly minimal state is much more minimal than scholars have traditionally envisioned.

     

Passion for entrepreneurship or passion for the product? A conjoint analysis of angel and VC decision-making

Passion is important to venture investors, but what specifically do they want entrepreneurs to be passionate about? This study theorizes that angel investors and venture capitalists consider both entrepreneurs' passion for activities related to the product or service the venture provides (i.e., product passion) and passion for founding and developing new ventures (i.e., entrepreneurial passion). We demonstrate that both types of passion become more appealing when the investor perceives that the entrepreneur is highly open and receptive to feedback, suggesting that openness to feedback mitigates potential concerns associated with passion in its extremes. We further find that venture investors differ in their consideration of passion; angel investors and venture capitalists with more investing experience place greater emphasis on the combination of product passion and openness to feedback, whereas those with more entrepreneurial experience emphasize the combination of entrepreneurial passion and openness to feedback.     

Existence of a calibrated regime switching local volatility model

By Gyöngy's theorem, a local and stochastic volatility model is calibrated to the market prices of all European call options with positive maturities and strikes if its local volatility (LV) function is equal to the ratio of the Dupire LV function over the root conditional mean square of the stochastic volatility factor given the spot value. This leads to a stochastic differential equation (SDE) nonlinear in the sense of McKean. Particle methods based on a kernel approximation of the conditional expectation, as presented in Guyon and Henry‐Labordère [Risk Magazine, 25, 92–97], provide an efficient calibration procedure even if some calibration errors may appear when the range of the stochastic volatility factor is very large. But so far, no global existence result is available for the SDE nonlinear in the sense of McKean. When the stochastic volatility factor is a jump process taking finitely many values and with jump intensities depending on the spot level, we prove existence of a solution to the associated Fokker–Planck equation under the condition that the range of the squared stochastic volatility factor is not too large. We then deduce existence to the calibrated model by extending the results in Figalli [Journal of Functional Analysis, 254(1), 109–153].     

CSR for Happiness: Corporate determinants of societal happiness as social responsibility

Over the past decade, societal happiness has increasingly been considered important to public policy initiatives globally, supported by interdisciplinary scholarly efforts spanning the social sciences, economics, and public health. Curiously, despite for‐profit corporations being core social institutions of modern societies, scant attention has been given to the social role and responsibilities of corporations in relation to societal happiness. In this article, we review and integrate research from positive psychology and related disciplines to examine happiness as a social outcome of corporate activity. We propose that corporations have a social responsibility to respect, preserve, and advance people's right to, and experience of, happiness—which we term CSR for Happiness. Within the existing literature, stakeholder happiness has generally been narrowly conceptualized in hedonic terms and has failed to consider the broader impacts of corporate activities on societal happiness. Drawing on advances in psychological theory and research, we provide a holistic conceptualization of happiness, which includes objective, subjective, hedonic, and eudaimonic dimensions of happiness. We offer an integrative conceptual framework, which includes the macro‐to‐micro and micro‐to‐macro pathways through which corporations directly and indirectly impact upon societal happiness. Finally, we consider implications of happiness research for the intersections of business and society.