The effects of customer age and recovery strategies in a service failure setting

The aim of this article is to explore the relationship between the type of service failure, age and the customer's negative emotions after a service failure; as well as the relationship between these emotions, the recovery strategies executed and service recovery satisfaction. The proposed model is tested on a sample of financial services customers who suffered some type of failure. The results indicate that the customer's age has a negative impact on the intensity of the negative emotions experienced after a service failure. In addition, the type of service failure (process or outcome) interacts with the age variable on its effect on these negative emotions. Finally, results also show that recovery strategies offset the negative effect of negative emotions on customer satisfaction and that a compensation strategy is more efficient if offered quickly.     

Examining bank SEOs: Are offers made by undercapitalized banks different?

Despite extensive monitoring, banking operations are often considered opaque, and despite explicit capital adequacy regulation, banks may have substantial discretion in their financing. Both monitoring and capital regulation have changed substantially over time, with the adoption of FDICIA being one important breakpoint. This article empirically studies seasoned equity offerings (SEOs) by banks to understand how opacity and capital regulation interact to determine the timing of bank SEOs and their market valuation. SEOs both by banks that are undercapitalized relative to regulatory standards and also well-capitalized banks are fully discretionary when it comes to SEOs, even before FDICIA. Both undercapitalized and well-capitalized banks experience similar and significantly negative stock price reactions to SEO announcements, and also have similar prior patterns of insider trading and similar economic drivers of the issuance decision. Moreover, post-SEO abnormal stock returns are similar to benchmark returns for both types of issuers in the long run, suggesting that, contrary to the well-documented evidence for industrial SEOs, investors understand the value implications of bank SEOs upon announcement. The evidence implies that undercapitalized banks' SEOs are more discretionary and that all bank SEOs are less opaque than implied by earlier studies.     

Predicting credit spreads

Predictions of firm-level credit spreads based on the current spot and forward credit spreads can be significantly improved upon by using the information contained in the shape of the credit-spread curve. However, the current credit-spread curve is not a sufficient statistic for predicting future out-of-sample credit spreads; predictions can be significantly improved upon by exploiting the information contained in the shape of the riskless yield curve. In the presence of credit-spread and riskless factors, other macroeconomic, marketwide, and firm-specific risk variables do not significantly improve predictions of credit spreads. These results have important implications for credit-spreads modeling as well as for better understanding corporate capital structure and risk management policies.     

Corporate Political Contributions and Stock Returns

We develop a new and comprehensive database of firm‐level contributions to U.S. political campaigns from 1979 to 2004. We construct variables that measure the extent of firm support for candidates. We find that these measures are positively and significantly correlated with the cross‐section of future returns. The effect is strongest for firms that support a greater number of candidates that hold office in the same state that the firm is based. In addition, there are stronger effects for firms whose contributions are slanted toward House candidates and Democrats.     

Networking as a Barrier to Entry and the Competitive Supply of Venture Capital

We examine whether strong networks among incumbent venture capitalists (VCs) in local markets help restrict entry by outside VCs, thus improving incumbents' bargaining power over entrepreneurs. More densely networked markets experience less entry, with a one‐standard deviation increase in network ties among incumbents reducing entry by approximately one‐third. Entrants with established ties to target‐market incumbents appear able to overcome this barrier to entry; in turn, incumbents react strategically to an increased threat of entry by freezing out any incumbents who facilitate entry into their market. Incumbents appear to benefit from reduced entry by paying lower prices for their deals.     

Nonparametric estimation for a stochastic volatility model

Consider discrete-time observations (X _{? δ} )_1≤?≤n+1 of the process X satisfying $dX_{t}=\sqrt{V_{t}}dB_{t}Consider discrete-time observations (X _{ℓ δ} )_{1≤ℓ≤n+1} of the process X satisfying dX_t=?{V_t}dB_tdX_{t}=\sqrt{V_{t}}dB_{t} , with V a one-dimensional positive diffusion process independent of the Brownian motion B. For both the drift and the diffusion coefficient of the unobserved diffusion V, we propose nonparametric least square estimators, and provide bounds for their risk. Estimators are chosen among a collection of functions belonging to a finite-dimensional space whose dimension is selected by a data driven procedure. Implementation on simulated data illustrates how the method works.     

Inter-market competition for NYSE-listed securities under decimals

Blume and Goldstein (J Finance 52:221–244, 1997) suggest that quote competition between trading venues may diminish following tick size reductions. We test this suggestion by studying the competitive landscape in the NYSE-listed stocks before and after decimalization. We find that NBBO (National Best Bid and Offer) participation by non-NYSE venues declines following decimalization consistent with the prediction. At the same time, the importance of quote competitiveness in attracting order flow increases. In addition, although not as active in determining and maintaining the best quotes under decimals, non-NYSE venues become more active in price discovery. Finally, decimalization leads to lower trading costs and to smaller differences in trading costs across trading venues.     

Bank mergers and components of risk: An evaluation

The present study empirically examines the contribution of the acquired banks in only the nonconglomerate types of mergers (i.e., banks with banks), where the bulk of the payment is in the form of equity to the acquiring bank and finds overwhelmingly statistically significant evidence that nonconglomerate types of mergers definitely reduce the total as well as the unsystematic risk while having no statistically significant effect on systematic risk. Therefore, it seems that diversification may be a possible motive for bank mergers.     

Optimal solutions of multiplier DEA models

Journal of Productivity Analysis - Conventional models of data envelopment analysis (DEA) are based on the constant and variable returns-to-scale production technologies. Any optimal input and...