Entrepreneurial marketing: a comparative study

This paper uses a comparative study to explore entrepreneurial marketing orientation in small software technology firms, in relation to firm growth. Entrepreneurial Marketing (EM) acknowledges the interface between entrepreneurship, marketing and innovation and, pursuance of customer value. Researchers acknowledge that firms adopting other strategic orientations combined with a market orientation are more likely to outperform their competitors. Currently, there are few comparative studies of knowledge-intensive technology firms and no comparative cross-country studies, which consider firm growth and orientation from the EM perspective. This paper addresses these issues by using an entrepreneurial marketing orientation qualitative framework that consists of 15 dimensions, which allow investigation of entrepreneur and employee activities, attitudes and behaviors in such firms. Using a UK and US sample of firms, this research enables assessment of how and why entrepreneurial marketing orientation may lead to sustainable growth for firms in challenging markets and provides a comparison in two different country contexts.     

Internal loss data collection implementation: evidence from a large UK financial institution

The paper conducts a critical analysis of internal loss data collection implementation in a UK financial institution. We use elite semi-structured interviews, with a sample of 15 operational risk consultants from a leading international financial institution. Using content analysis, the data covers a wide range of business areas, with particular attention drawn towards the development of internal loss collection and operational risk management. The results suggest that the development of operational risk management as a function stems from external compliance (Basel II) and the internal pressure to add value to the business portfolio. This need for compliance was augmented as a driver of internal loss data collection; however, participants also recognised that the function of loss data collection is a tool of solid internal risk management and enhances managerial decision-making. The research also highlights the problems in cleansing data in order to ensure that all information implemented in the capital allocation model is valid and reliable.     

The financial reporting of fair value based on managerial inputs versus market inputs: evidence from mortgage servicing rights

This research examines whether the fair value of mortgage servicing rights (MSRs) based on managerial inputs (Level 3) better reflects the cash flow and risk characteristics of the underlying assets than the fair value of MSRs based on market inputs (Level 2). Using mortgage servicing fees as a proxy for the underlying cash flows, we find that the valuation multiples for MSRs based on Level 3 inputs are more positively associated with the persistence of future servicing fees compared with the fair value of MSRs based on Level 2 inputs. We also document that only the valuation multiples based on Level 3 fair values are negatively associated with proxies for risk factors. Our results suggest that, although unobservable inputs are subject to managerial discretions, managers can generate higher quality fair value estimates than market inputs due to their information advantage, especially when the market for the underlying asset is inactive.     

Multi-scale variation,path risk and long-term portfolio management

Mean–variance analysis is constrained to weight the frequency bands in a return time series equally. A more flexible approach allows the user to assign preference weightings to short or longer run frequencies. Wavelet analysis provides further flexibility, removing the need to assume asset returns are stationary and encompassing alternative return concepts. The resulting portfolio choice methodology establishes a reward–energy efficient frontier that allows the user to trade off expected reward against path risk, reflecting preferences as between long or short run variation. The approach leads to dynamic analogues of mean–variance such as band pass portfolios that are more sensitive to variability at designated scales.     

The effect of constrained processing on auditors’ judgments

This study examines whether constraining experienced auditors’ processing by having them process evidence in a pre-established sequence (an experimental control technique used in previous studies) prevents them from using their usual processing strategies and thereby affects their judgments. We compare the relative attention to evidence and judgments of experienced and inexperienced auditors in a constrained versus an unconstrained processing condition. Consistent with expectations, experienced auditors’ going-concern judgments differed from inexperienced auditors’ judgments only when processing was unconstrained. This difference in judgments was the result of differential attention to evidence. These results demonstrate that the failure to consider how experienced auditors process evidence can result in inadvertently adopting control techniques that limit the generalizability of experimental findings. Although our study used a going-concern task, our conclusions are likely to apply to a variety of ill-structured audit tasks that require a goal-oriented, directed evaluation of evidence.     

Estimated Value of Increased Pricing Accuracy for Fed Cattle

To improve vertical market coordination beef packers have introduced fed cattle grid pricing systems that offer premiums or discounts for varying carcass quality and yield grades. This study calculates the value of cattle quality information for producers considering live, dressed, and grid pricing alternatives. The value of fed cattle quality and yield grade information is at least $15/head. When fed cattle are sold on a live weight basis, high-quality cattle subsidize low-quality cattle by an average of $30/head. Price signals that could improve beef market coordination are ignored when fed cattle are marketed using traditional live or dressed weight methods.     

When Is Bad News Really Bad News?

We examine whether the price response to bad and good earnings shocks changes as the relative level of the market changes. The study is based on a complete sample of annual earnings announcements during the period 1988 to 1998. The relative level of the market is based on the difference between the current market P/E and the average market P/E over the prior 12 months. We find that the stock price response to negative earnings surprises increases as the relative level of the market rises. Furthermore, the difference between bad news and good news earnings response coefficients rises with the market.     

Illustrating Adverse Selection in Health Insurance Markets with a Classroom Game

This paper describes a classroom game that illustrates the effects of asymmetric information and adverse selection in health insurance markets. The first part of this game simulates a market in which buyers can purchase insurance from sellers; in some periods, government regulation prevents sellers from using information about buyer type to determine premiums. The results demonstrate the classic prediction that asymmetric information will result in adverse selection. Here, low-risk buyers will forego the purchase of insurance at a measurable loss of potential earnings. In the second part of the game, sellers and buyers can trade two different types of health insurance policies, one moderate and another generous. Under government-mandated community rating and limits on premium increases, no buyers will purchase the generous plan. Questions are provided to stimulate discussion of the causes and consequences of adverse selection for consumers and insurers and possible solutions for employer- and government-sponsored programs.     

Cross-Subsidization in Nursing Homes: Explaining Rate Differentials Among Payer Types

Are Medicaid patients being subsidized by other residents in nursing homes? This article employs cross-sectional data on nursing homes and residents in a multiproduct empirical cost analysis to obtain the benchmark magnitudes of patient service costs needed to assess the issues. The estimated cost function provides evidence that Medicaid reimbursement rates are lower than the average incremental cost of care for Medicaid patients in approximately one quarter to one third of Florida nursing homes. One possible explanation for this apparent cross-subsidization, considered here, is that patients pay a premium in self-insured rates early in their residency to fairly cover the expected future losses if they later convert to Medicaid. Based on the empirical frequencies of patient transitions to different payer status over the length of the nursing home stay, it is shown that the apparent cross-subsidization is explained, to a large extent, by an intertemporal conversion surcharge.