The Efficacy of Regulation Fair Disclosure

This paper examines the impact of Securities and Exchange Commission's Regulation Fair Disclosure (FD) on information leakage around voluntary management disclosures. We find a positive correlation between stock returns two days before and after the voluntary disclosure in the pre‐Regulation FD period, but not in the post‐Regulation FD period. After Regulation FD is implemented, pre‐announcement abnormal return as a percentage of total return decreases by 26.1% (21.4%) for large firms with good (bad) news, suggesting that the amount of information leakage reduces for these firms. These findings provide support for the premise and the intended purpose of the regulation for large firms.     

Hedging variance options on continuous semimartingales

We find robust model-free hedges and price bounds for options on the realized variance of [the returns on] an underlying price process. Assuming only that the underlying process is a positive continuous semimartingale, we superreplicate and subreplicate variance options and forward-starting variance options, by dynamically trading the underlying asset and statically holding European options. We thereby derive upper and lower bounds on values of variance options, in terms of Europeans.     

A Spatial Autocorrelation Approach for Examining the Effects of Urban Greenspace on Residential Property Values

This paper presents spatially explicit analyses of the greenspace contribution to residential property values in a hedonic model. The paper utilizes data from the housing market near downtown Los Angeles. We first used a standard hedonic model to estimate greenspace effects. Because the residuals were spatially autocorrelated, we implemented a spatial lag model as indicated by specification tests. Our results show that neighborhood greenspace at the immediate vicinity of houses has a significant impact on house prices even after controlling for spatial autocorrelation. The different estimation results from non-spatial and spatial models provide useful bounds for the greenspace effect. Greening of inner city areas may provide a valuable policy instrument for elevating depressed housing markets in those areas.     

Investor perceptions of CEO successor selection in the wake of integrity and competence failures: A policy capturing study

Research summary : Drawing on theory about signaling, sensemaking, and the romance of leadership, we extend inquiry on investors' perceptions of CEO succession following misconduct. Whereas past studies have treated misconduct monolithically, we examine failures of integrity and competence separately. Using a policy capturing methodology that isolates investors' decision making from potential confounds, we find that, following an integrity failure, investors perceive outside and interim successors positively but inside successors negatively. Following a competence failure, investors perceive outside successors positively but are ambivalent toward inside and interim successors. Our findings indicate that whether an act of misconduct was an integrity failure or a competence failure, and what type of successor the firm chooses, are important considerations when using CEO succession as a means to restore investor confidence. Managerial summary: Business headlines regularly feature episodes of organizational misconduct, such as product safety problems, environmental violations, employee mistreatment, and securities lawsuits, and their aftermath. In such scenarios, shareholders demand answers from the people at the top, even if those people were not directly responsible for the problem. As a result, companies often fire the CEO as a means to restore investor confidence. Does this work? It depends on the type of misconduct and who is the CEO's successor. Following a competence failure, investors welcome the appointment of an outsider, but they are indifferent to inside and interim successors. Following an integrity failure, shareholders greet outside and interim CEO successors favorably while frowning on the promotion of insiders. Copyright © 2015 John Wiley & Sons, Ltd.     

World Bank lending and regulation

Does World Bank lending promote deregulation with stronger incentives and critical resources or slow the process by blunting the impact of crises and indirectly promoting state control? This paper analyzes empirical links between aid flows and regulatory burden. Econometric estimates based on panel data for 83 aid receiving countries over 5 year periods from 1970 to 2000 find that World Bank lending, while not specifically targeting high or low regulatory states, is linked to lower subsequent regulation. This link holds for multilateral donors more broadly while bilateral donor funds apparently fail to influence the level of regulation.     

It is not just about paying your dues: Impact of generational cohort on active and passive union participation

The lack of a validated measure of active–passive union participation and a dearth of research into the relationship between generational cohort and union participation challenge union leaders to develop policies and practices to facilitate union renewal. We address these issues by (a) developing a multidimensional measure of union participation that captures both active and passive components, (b) using structural equation modelling to validate the measure within a nomological framework, and (c) investigating the impact of generational cohort on all paths in our framework. Data from members of a large American union confirm that generational cohort influences how union members participate in their union. The two‐factor measure developed in this study facilitates research into antecedents and outcomes of passive and active union participation. Our findings should also prove useful to unions seeking to increase participation within their membership, academics researching unions and generational cohort, and human resource practitioners operating in unionised environments.     

Marketing and development out of poverty: introduction to the special issue

• Reducing poverty by meeting the United Nations' Millennium Development Goals (MDGs) is an interdisciplinary undertaking, in which Marketing Science logically plays a role. The papers in this special issue cover a range of methods, from traditional consumer research experiments (on images of poverty, donation behaviour) and sample surveys on the credibility of celebrity marketing, to observational studies of community values and customs (on micro-finance or agricultural enterprise). Consumers of aid appeals, celebrity lobbying and financial services—these methods reveal—are behaviourally complex. They are infused with contradictory, competing and complementary tendencies. Underlying those different tendencies however is a common but often overlooked thread. For poverty to be significantly reduced by 2015, attention needs to be paid not only to goals, that is to task but also towards understanding the human relationships in the poverty reduction market. Marketing practise and research can contribute to poverty reduction by helping build (1) perspective-sharing, (2) accommodation to local needs and (3) appreciation of socio-economic and socio-cultural behavioural systems.

Copyright © 2008 John Wiley & Sons, Ltd.     

Military coups and the consequences of durable de facto power: the case of Pakistan

We analyze the role of the military as an independent interest group within the State, based on the two-player theoretical framework of Acemoglu and Robinson (Economic origins of dictatorship and democracy. Cambridge University Press, Cambridge 2006); we innovate by introducing the military as a third player, a specialist in violence. In particular, we study the conditions under which a democratic regime can prevent a transition to an authoritarian regime via a military coup, when a coup requires the support of both the military and the elite sections of the civilian population. We carry out an historical case study of Pakistan to motivate and illustrate our argument, and show that Pakistan’s three coups since independence are associated with parameter shifts in our model.