Closed-End Fund Expenses and Investment Selection

Investment returns on closed‐end funds are highly volatile. Because expenses have a definite negative impact on closed‐end fund returns, investors should include the expense ratio as a criterion for fund selection in addition to performance, investment objective, and risk of the fund. This paper constructs a model of the expense ratio of closed‐end funds to explain cross‐sectional differences in the expense ratios for the period between 1989–1996. We relate closed‐end fund expenses to fund characteristics and identify the factors that can help investors choose low expense closed‐end funds.     

The facilitating influence of consumer knowledge on the effectiveness of daily value reference information

As a means of enhancing consumer understanding of nutritional information, the Nutrition Labeling and Education Act of 1990 requires the provision of percentage daily values (%DVs) on food labels. Findings from existing research, however, vary in their support for the assumption that including %DVs will assist consumers in their efforts to comprehend nutritional information. To shed further light on this issue, the present study examines the moderating role of consumer knowledge about how to use %DVs in evaluating a product’s healthiness. The results indicate that the usefulness of providing %DVs on a nutritional label depends strongly on this form of knowledge. Implications for public policy and directions for future research efforts are presented. Fuan Li (Ph.D., Florida International University) is an assistant professor of marketing in the Walker School of Business at Mercyhurst College (Erie, Pennsylvania). He has been a faculty member at East China Normal University (Shanghai, China) and St. Olaf College (Northfield, Minnesota). His current research interests include consumer choice, consumer responses to trust advertising appeals, and relationship marketing. His work has been published both in English and in Chinese. Paul W. Miniard (Ph.D., University of Florida) is the BMI professor of marketing and the Ph.D. program director in the College of Business Administration at Florida International University (Miami, Florida). His research focuses on consumer behavior and advertising and has been published in a number of business and psychology journals. He is also a coauthor of a consumer behavior textbook. Michael J. Barone (Ph.D., University of South Carolina) is an associate professor of marketing in the College of Business Administration at Iowa State University (Ames, Iowa). His research, which primarily involves consumer responses to advertising and consumer choice, has been published in theJournal of Marketing Research, Journal of Consumer Psychology, Marketing Letters, Journal of the Academy of Marketing Science, Journal of Advertising, Journal of Advertising Research, Journal of Business Research, andJournal of Public Policy & Marketing, as well as in various conference proceedings.     

A SEQUENTIAL SIGNALING MODEL OF CONVERTIBLE DEBT ISSUE AND CALL POLICIES

This paper offers a new explanation for why some risk‐averse firms may prefer to issue callable convertible debt. Here, the convertible debt issue and call policies are integrated into a unified financing policy. It is then shown that for firms with relatively low unsystematic risk, convertible debt issuance followed by an appropriate in‐the‐money signaling call policy reduces more unsystematic equity risk than equity, callable straight debt, or their combination. The model is modified to incorporate asymmetric information at the issue stage to explain the stock price behavior at announcements of convertible debt sales.     

International subcontracting involving LDCs

An increasing number of LDCs for which international subcontracting has been an accepted practice can be seen to be progressively tied to the internationalization of production and marketing.     

Media allocation model using nonlinear benefit curves

An integral part of planning advertising campaigns involves the selection of those media vehicles that maximize the effectiveness of the advertising effort. This article describes a media allocation model designed to provide the media planner, responsible for a particular advertising campaign, with relevant information for use in selecting the most appropriate media vehicles and in determining the number of insertions in each vehicle. It is based on the derivation of nonlinear benefit curves for candidate media vehicles that can be derived from commercially available response data and from subjective estimates gathered from media planning experts. When tested in an actual advertising campaign, the results serve to provide relevant information that can make the media allocation decision a more objective one.     

Determinants of Underwriter Participation in Initial Public Offerings of Common Stock: An Empirical Study

This paper examines an optimal underwriter participation model and develops testable hypotheses regarding the influence of certain factors on the degree of underwriter participation in initial public offerings (IPOs) of common stock. The issue of underwriter participation is important primarily due to the tradeoff between foregone underwriter compensation and underwriting risk reduction. The results of this paper indicate that factors related to the issue, issuing firm, underwriter, and IPO market conditions all are important determinants of the participation decision. Interestingly, the results also show that the importance of these factors is not consistent across underwriter prestige groups. In particular, factors external to underwriters (e.g., the issuing firm and market characteristics) are more important for explaining nonprestigious underwriter participation, while factors related to underwriters themselves play a more important role for explaining prestigious underwriter participation.     

Corporate Sales, Equity Trading, and Risk

This paper proposes and investigates an explanation for a positive association between the signed value of common share returns and trading activity. The mixture of distributions model for stock returns and trading is applied with the added assumption that product sales for a firm is the directing process which generates the flow of information to equity markets. Because trading depends upon information arrival, sales and trading are positively related. Also, because contribution margin is positive, cash flows increase with sales. Dependence of both cash flows and trading on sales implies that returns and trading are also positively related. This explanation is tested in this paper.