What is the Intrinsic Value of the Dow?

We model the time-series relation between price and intrinsic value as a cointegrated system, so that price and value are long-term convergent. In this framework, we compare the performance of alternative estimates of intrinsic value for the Dow 30 stocks. During 1963–1996, traditional market multiples (e.g., B/P, E/P, and D/P ratios) have little predictive power. However, a V/P ratio, where V is based on a residual income valuation model, has statistically reliable predictive power. Further analysis shows time-varying interest rates and analyst forecasts are important to the success of V. Alternative forecast horizons and risk premia are less important.     

Toward a continuum of measurement scales in Just-in-Time (JIT) research – an examination of the predictive validity of single-item and multiple-item measures

We compare the predictive validity of single-item and multiple-item measures utilized in Just-in-Time (JIT) research. The study examines if single-item measures could be used for some of the JIT practices, especially if the object of inquiry is concrete singular and if the attribute to be researched is concrete. Arguments are developed for the concrete nature of the JIT practice of “set-up time reduction” and we examine the ability of a single-item measure of this variable to predict the criterion variable (delivery performance). In addition, the study also examines the efficacy of using multiple-item measures for variables that are abstract in nature, and thereby attempts to develop a continuum of JIT constructs ranging from concrete to abstract. The results obtained by analyzing two sets of survey data show that multiple-item measures are not necessarily more valid than single-item measures for all constructs. The findings provide evidence that multiple-item measures and single-item measures for scale development should be contingent upon the nature of constructs. For concrete constructs, single-item measures are as valid as multi-item measures. Meanwhile, for abstract constructs it is important to ensure that multiple items are considered to capture the multi-dimensional nature of these constructs. Results also reveal that JIT practices display significant differences in terms of abstract/concrete perceptions. The paper presents theoretical and practical implications of the findings, and offers directions for future research.     

The Rise and Fall of National Allocative Planning in Australia

In 1979 the Australian Labor Party's supreme policy making body, Federal Conference, proposed that a future Labor government embark on an extensive program of economic planning. In addition to continuing Keynesian monetary and fiscal policy, the Conference argued in favour of the introduction of a more comprehensive form of stability planning, or incomes policy; partial allocative, or industry, planning; and a national allocative plan. Since coming to power in 1983, the Federal Government has introduced an incomes policy as well as a number of industry plans. However, it has rejected national allocative planning. In this article we discuss the differences between these forms of economic planning and analyse the reasons which might explain the Government's rejection of national allocative planning.     

Comparing predicted prices in auctions for online advertising

Online publishers sell opportunities to show ads. Some advertisers pay only if their ad elicits a user response. Publishers estimate response rates for ads in order to estimate expected revenues from showing the ads. Then publishers select ads that maximize estimated expected revenue.By taking a maximum among estimates, publishers inadvertently select ads based on a combination of actual expected revenue and inaccurate estimation of expected revenue. Publishers can increase actual expected revenue by selecting ads to maximize a combination of estimated expected revenue and estimation accuracy.     

THE WEALTH EFFECTS OF TRACKING STOCK RESTRUCTURINGS

We provide a comprehensive examination of the post‐issue wealth effects of 29 completed tracking stock restructurings. We document that for the parent stock and for the combined firm, tracking stock restructurings lead to insignificant long‐term excess returns. However, we find that shareholders of tracking stocks realize significant post‐issue wealth losses. Unlike spin‐offs and carve‐outs, announcements of tracking stock restructurings are preceded by negative one‐year excess returns, and unlike the positive post‐issue long‐term excess returns to spin‐off stocks and the insignificant long‐term excess returns to carve‐out stocks, tracking stocks experience negative long‐term excess returns.     

Differences in Customers’ Online Service Satisfaction Across Cultures: The Role of Thinking Style

ABSTRACT

Online retailers constantly strive to improve customer satisfaction. However, satisfaction levels can vary significantly across cultures when customers experience mixed quality services, that is, services with a mixture of high and low quality service attributes. Based on two studies, we find that Westerners (e.g., European Americans) react more negatively than East Asians (e.g., Chinese) toward mixed quality online services. Our findings show that due to differences in thinking style, Westerners (analytic thinkers) are more likely to focus on negative service attributes than East Asians (holistic thinkers), who tend to consider the amalgam of high and low quality service attributes as an integrated whole when forming their overall perceptions and levels of satisfaction. Moreover, the results suggest that for online retailers marketing across cultures, providing superior quality on each individual service attribute may be more important to achieving satisfaction for customers from Western rather than Eastern cultures.     

Why Do Insiders Hedge Their Ownership? An Empirical Examination

We examine different types of derivative instruments used by corporate insiders. These instruments are more likely to be used when there is greater insider ownership and greater capital market scrutiny. While these instruments may be allowed by boards to mitigate agency problems relating to overvalued equity and high equity‐based pay, our evidence regarding forwards and collars is more consistent with the strategic timing of transactions by insiders. Exchange funds appear to be primarily used for diversification and are associated with higher personal tax rates. Collectively, our results suggest that there is significant heterogeneity in the motivation to use these instruments.     

Re-visiting collaborative behavior in supply networks – structural embeddedness and the influence of contextual changes and sanctions

This study considers decision making beyond a dyadic buyer-supplier context to the network context. Decisions made by firms are shaped by behavioral norms within the supply network as perceived by the decision makers. Firms can perceive themselves to be part of a collaborative regime or one in which the potential for non-cooperation is high. Further, the ability to put sanctions on non-cooperating firms could shape the overall behavioral patterns in the network. To gain further insights into these aspects and their interactive effects on firm behavior, our study investigates decision-making in supply network by means of behavioral experiments. By organizing practicing managers in a supply network, the study investigates the role of structural embeddedness, incentive structure, and sanctioning mechanisms on the level of collaboration. The results of this study confirm that while sanctions are detrimental for collaborative behavior in a supply network, they play an important role when the underlying norms of governance of such a network are perturbed. The results show that structural embeddedness provides a context that aids adaptive collaborative behavior by firms that are part of the supply network. Once the incentive structure is altered such that there is a higher payoff from defection, the adaptive collaborative behavior is replaced by a behavior in which firms try to maximize their returns and forego collaborative decision-making behavior.