Cost analysis of water utilities: A goodness-of-fit approach

The behavior of privately owned and publicly owned water utilities is examined by calculating the percentage difference between the observed cost and the optimum cost consistent with the Weak Axiom of Cost Minimization for each individual water utility. It allows for a comprehensive analysis of nearly optimizing behavior of economic units as opposed to the conventional analysis of exact optimizing behavior. The empirical results provide evidence that private water utilities are more efficient than public water utilities.     

Correction to: The impact of a U.S.–U.K. free trade agreement on workers: a CGE model with worker displacement

Business Economics -     

Market anticipation of merger activities: An empirical test

This paper empirically examines the possibility that there is leakage of information regarding a merger prior to the announcement of the first bid for the target firm. The tests for the existence of market anticipation are based on the behavior of variances implied in the premia of call options listed on the target firms' stocks. We conclude that the evidence is consistent with the hypothesis that the market anticipates an acquisition prior to the first announcement.     

Stock authorizations: A sequential equilibrium analysis

We develop a sequential equilibrium model of the common stock authorization process. We provide conditions under which actions that increase the number of slack shares, such as stock authorizations, generate negative announcement effects.     

Transformative change towards sustainability: the interaction between organisational discourses and organisational practices

This paper adopts a case study approach to explore the complex process of organisational change towards greater social and environmental sustainability. The case study of a major global financial services organisation involved interviews and examination of company documents, and their website over the period 2000–2014. The rare longitudinal empirical evidence from different sources provides important insights to how companies are responding to increasing demands for sustainable development. Using Laughlin’s [1991. Environmental disturbances and organizational transitions and transformations: some alternative models. Organization Studies, 12 (2), 209–232] pathways of change model, the study investigates the interaction between organisational discourses (i.e. its interpretive schemes) and organisational practices (i.e. design archetypes). The findings demonstrate the centrality of organisational discourses, especially those relating to accounting calculative practices, to radical change towards sustainable development. The paper also contributes to the literature on institutional logics, particularly multiple institutional logics, and how these are implicated in change processes.     

An empirical analysis of individual level casino gambling behavior

Gambling and gaming is a very large industry in the United States with about one-third of all adults participating in it on a regular basis. Using novel and unique behavioral data from a panel of casino gamblers, this paper investigates three aspects of consumer behavior in this domain. The first is that consumers are addicted to gambling, the second that they act on “irrational” beliefs, and the third that they are influenced by marketing activity that attempts to influence their gambling behavior. We use the interrelated consumer decisions to play (gamble) and the amount bet in a casino setting to focus on addiction using the standard economic definition of addiction. We test for two irrational behaviors, the “gambler’s fallacy” and the “hot hand myth”—our research represents the first test for these behaviors using disaggregate data in a real (as opposed to a laboratory) setting. Finally, we look at the effect of marketing instruments on the both the decision to play and the amount bet. Using hierarchical Bayesian methods to pin down individual-level parameters, we find that about 8% of the consumers in our sample can be classified as addicted. We find support in our data for the gambler’s fallacy, but not for the hot hand myth. We find that marketing instruments positively affect gambling behavior, and that consumers who are more addicted are also affected by marketing to a greater extent. Specifically, the long-run marketing response is about twice as high for the more addicted consumers.     

ZETATM analysis A new model to identify bankruptcy risk of corporations

The paper explores the development of a bankruptcy classification model which incorporates comprehensive inputs with respect to discriminant analysis and utilizes a sample of bankrupt firms essentially covering the period 1969–1975. Financial statement data and market related measures are transformed along guidelines suggested by traditional security analysis to promote comparability of companies and to reflect the most recent reporting standards so as to make the model relevant to future analysis. The results of the study are compared with alternative bankruptcy classification strategies via the explicit introduction of prior probabilities of group membership, observed accuracies, and estimates of costs of errors in misclassification. The latter is based on cost estimates derived from commercial bank lending errors. The results of the study indicate potential significant application to credit worthiness assessment, portfolio management, and to external and internal performance analysis.