New evidence on taxes and portfolio choice

Identifying the effect of differential taxation on portfolio allocation requires exogenous variation in marginal tax rates. Marginal tax rates vary with income, but income surely affects portfolio choice directly. In systems of individual taxation – like Canada's – couples with the same household income can face different effective tax rates on capital income when labor income is distributed differently within households. Using this source of variation we find portfolio responses to taxation among more affluent households. The estimated effects are statistically significant but economically modest. In a “placebo” test, using data from the U.S. (which has joint taxation), we find no effect of the intra-household distribution of labor income on portfolios.     

The Role of Effective Service Provider Communication Style in the Formation of Restaurant Patrons' Perceived Relational Benefits and Loyalty

The purposes of this study were to examine the optimal service provider communication style for maximizing patrons' perceived relational benefits, and to examine how perceived relational benefits influence relationship quality and loyalty within the luxury restaurant industry. A review of current communication literature was conducted, and three types of communication styles were derived. Based on the theoretical causal relationships between the proposed constructs in this study, 16 hypotheses were derived, thus creating a conceptual model. The proposed model was tested utilizing data collected from 527 luxury restaurant patrons. The results of data analysis revealed two major findings: (a) a task-orientation communication style enhances patrons' perceived confidence benefits and deepens relationship quality, thus creating patron loyalty; and (b) an interaction-orientation communication style induces rapport between service provider and patrons, thus helping to maximize patrons' perceived relational benefits. Finally, it leads to patron loyalty. Based on these findings, theoretical and managerial implications are discussed.     

An introspective examination of single-unit versus multi-unit franchisees

Multi-unit franchisees (MUFees; i.e., franchisees that operate more than one outlet within a franchise system) represent a pervasive and even dominant form of franchise ownership in many sectors. However, much of the franchising literature has been developed with a focus on single-unit franchisees (SUFees). The goals of this article are to introspectively compare MUFees and SUFees in terms of (1) the factors franchisees consider important when initially buying a franchise, (2) how these considerations change when SUFees become MUFees, and (3) how SUFees and MUFees characterize their relationships with their franchisors in terms of relational constructs. Our data reveal significant differences between these two groups in terms of purchase motivations as well as relational sentiments. Importantly, franchisor preferences for multi-unit franchising notwithstanding, it is the SUFees that characterize their dyadic relationships with their franchisors as more relational as compared to their MUFees counterparts.     

Conjoint and WTP analyses of future mobile phones for digital convergence

Digital convergence for mobile phones is a hot issue. This study considers future development of mobile phones with a view toward consumers' usage and the amount they are willing to pay. In order to select preferable convergence technology, we utilize convergence concepts such as absorption, blending, and combination. The result of conjoint analysis shows that a preference for convergence technology will involve computing, media, navigation, and imaging. However, only the computing attribute increases consumers' willingness to pay. Our study results contribute to product planning and commercialization of innovative mobile phones.     

Strategic implications of the open-market paradigm under digital convergence: the case of small business C2C

This article presents the open-market paradigm in the context of digital convergence and proposes strategic directions for open-market participants. Although not a new phenomenon, open market has become the most popular e-business model, linking millions of buyer and seller individuals (Customer to Customer: C2C). This article examines the drivers of digital convergence that enable the open-market paradigm and conducts industry and Blue Ocean analyses for open-market business. Finally, a real-world application—the Cyworld market of Korea—is presented as an illustrative example.     

Bank Exposure to Interest Rate Risks During Financial Liberalization: Evidence from South Korea

This study documents the changing impact of long and short term interest rate risks on the equity prices of banks in South Korea during the process of financial liberalization. Consistent with the presence of regulatory constraints, Korean bank equity returns are found to be sensitive to both anticipated and unanticipated changes in interest rates in the first period (1976-81) when banks were largely under government control. However, during our last period (1989-99) of liberalization, Korean bank equity returns were found to have a positive association only with unanticipated short-term interest rates. Consistent with the ability to manage other interest rate risks successfully, in this last liberalization period, Korean bank equity returns had no association with long-term or with anticipated short-term interest rates. In view of the continued interest in banking and financial market liberalization among many Asian, African, and formerly socialist countries including China, these results should be of much banking and policy interest. JEL Classifications: G21, G28, E44, L89     

The relationship between persistence of abnormal earnings and usefulness of accounting information in hotel companies

This study examines whether persistence of abnormal earnings affects book value of equity and earnings. According to Ohlson (Contemporary Accounting Res. (1995) 661–687) theoretical framework, a company's market value is a function of its book value of equity, earnings and other information. The persistence of abnormal earnings has a systematic relation with book value of equity and earnings. The persistence is measured using the first auto-correlation coefficient of abnormal earnings for two consecutive periods. This study intends to measure the persistence of abnormal earnings during 1993–2000 period for hotels and manufacturing companies. The results indicate that the persistence of abnormal earnings is higher for hotels than manufacturing companies and for hotels of first class than of other classes.     

The effects of emotional intelligence on service recovery and organizational loyalty: a case of flight attendants of South Korean airlines

Due to the paucity of empirical studies conducted thus far regarding the effects of flight attendants’ emotional intelligence on service recovery and organizational loyalty, this study examined the relationships among those three constructs. The results of this study demonstrated that emotional intelligence exerted positive effects on service recovery and organizational loyalty, respectively. Namely, flight attendants with a high level of emotional intelligence outperform in service recovery, and tended to be more loyal to an organization. The positive relationship between organizational loyalty and service recovery was also significant. Finally, there was a mediating effect of organizational loyalty between emotional intelligence and service recovery.     

The Efficient Mechanism for Downsizing the Public Sector

This article analyzes the efficient mechanism for downsizingthe public sector, focusing on adverse selection in productiveefficiency. Each worker is assumed to have two type-dependentreservation utilities: the status quo utility in the publicsector before downsizing and the utility that the worker expectsto obtain by entering the private sector. The efficient mechanismconsists of a menu of probability (of remaining in the publicsector) and transfer pairs that induces self-selection. A worker'sfull cost is defined by the sum of production cost in the publicsector and reservation utility in the private sector. It isoptimal to start by laying off the agents with higher full cost.When the public sector before downsizing is discriminating asthe differential of private information about productive efficiencysuggests, there are countervailing incentives. This makes thesize of downsizing smaller under asymmetric information thanunder complete information.