Quantitative Restrictions in the Presence of Cost-Based Informational Asymmetries

This study introduces a cost-based informational asymmetry into a two-period model where a domestic (incumbent) firm's behavior in the first period affects the entry decision of a foreign firm in the second period. The effects of import quota policy within this environment are examined and compared to the standard, full-information effects. When quota quantities are set exogenously, the standard effects of quota policy may be significantly altered depending on whether or not policy induces the domestic firm to signal cost structure. For example, higher quotas may discourage foreign entry because of the induced signaling effects of quota policy.     

Toward a theory of customer engagement marketing

Customer engagement marketing—defined as a firm’s deliberate effort to motivate, empower, and measure customer contributions to marketing functions—marks a shift in marketing research and business practice. After defining and differentiating engagement marketing, the authors present a typology of its two primary forms and offer tenets that link specific strategic elements to customer outcomes and thereby firm performance, theorizing that the effectiveness of engagement marketing arises from the establishment of psychological ownership and self-transformation. The authors provide evidence in support of the derived tenets through case illustrations, as well as a quasi-experimental field test of the central tenet of engagement marketing.     

Developing Accounting Regulations that Reflect Public Viewpoints: The Australian Solution to Differential Reporting

In this paper, we analyse the factors that have shaped the approach taken by the Australian Accounting Standards Board (AASB) in addressing the issue of differential reporting in Australia. In contrast to its early adoption of International Financial Reporting Standards in 2005, the AASB has signalled an independent approach to differential reporting. Still in progress at the time of writing, we show how the AASB's approach has been shaped by feedback from key stakeholder groups, as well as by influential individuals and key events. In the face of strongly held views on both sides of the debate, the Board has moved from reliance on discursive techniques to develop and justify proposed policies to embracing to a greater extent, the use of more objective research evidence to resolve the empirical questions presented in the public debate.     

How much does an Illegal Insider Trade?

This paper examines the choice of trade size by an illegal insider. Previous literature (i.e. Meulbroek 1992) tends to focus on the price impact of such a trader. Using a unique data set hand‐collected from the litigation reports of the Securities and Exchange Commission and court cases, we provide evidence, which suggests that the size of an illegal insider's trade is a function of the value of his private information, the probability of detection and the expected penalty if detected. Our results have important implication for security market regulators.     

The Economic Consequences of Professional Sports Strikes and Lockouts

The National Basketball Association (NBA) lockout of 1998-1999 resulted in the cancellation of a significant number of games. According to the claims made by proponents of sports-driven economic growth, cities with NBA franchises should experience significant negative economic losses from this work stoppage because of the lost spending in and around basketball arenas during this event. Although it will be several years before adequate data exist for a careful ex post evaluation of the effects of the lockout, an examination of the impact of past work stoppages in professional football and basketball can shed some light on the potential impact of the NBA lockout as well as the viability of professional sports as engines of economic growth in cities. The parameter estimates from a reduced-form empirical model of the determination of real per capita income in 37 Standard Metropolitan Statistical Areas (SMSAs) over the period 1969-1996 suggest that prior work stoppages in professional football and baseball had no impact on the economies of cities with franchises. Further, the departure of professional basketball from cities had no impact on their economies in the following years. These results refute the idea that attracting professional sports franchises represents a viable economic development strategy.     

Ratings Changes,Ratings Levels,and the Predictive Value of Analysts’ Recommendations

We show that abnormal returns to analysts’ recommendations stem from both the ratings levels assigned and the changes in those ratings. Conditional on the ratings change, buy and strong buy recommendations have greater returns than do holds, sells, and strong sells. Conditional on the ratings level, upgrades earn the highest returns and downgrades the lowest. We also find that both ratings levels and changes predict future unexpected earnings and the associated market reaction. Our results imply that 1) investment returns may be enhanced by conditioning on both recommendation levels and changes; 2) the predictive power of analysts’ recommendations reflects, at least partially, analysts’ ability to generate valuable private information; and 3) some inconsistency exists between analysts’ ratings and the formal ratings definitions issued by securities firms.