Some unresolved issues in the location theory of the firm

This paper presents a generalized location theory of the firm in linear space. Location outcomes are examined by utilizing a general as well as a particular transport rate structure for output and inputs and using a general concave production as well as a homogeneous production function, of the firm. The effect of a change in demand on the location is also investigated.     

A comprehensive examination of the compass rose pattern in futures markets

This article provides a comprehensive examination of the existence, or the lack thereof, of the compass rose pattern in futures markets. The results from 118 futures contracts traded on 31 futures exchanges in 15 countries show that the compass rose pattern exists only in some futures contracts, in contrast to the robust existence among stocks documented by Crack and Ledoit (1996) and Chen (1997). Not all contracts on the same exchange exhibit this pattern. However, the pattern appears to be concentrated in some sectors. Although this evidence suggests that effective tick sizes that are different among contracts may be the determining factor for the existence of the pattern, contradicting evidence also suggests that there are other yet-to-be-identified determinants at work. Furthermore, whereas the pattern is absent in the daily returns of primary stock index futures contracts such as the Major Market Index (MMI), it is very easily observable in the intraday returns of the same futures contract. The elusiveness of the pattern is further demonstrated in the returns on the cash S&P 500 Index, which does not exhibit the pattern until the focus is on returns that are within a 1% boundary. © 1999 John Wiley & Sons, Inc. Jrl Fut Mark 19: 541–564, 1999     

International industrial buyer behavior: An exploration and a proposed model

A large proportion of world’s trade revolves around a long list of industrial products which are pruchased by industrial buyers. Although it has been suggested that the impact of culture on international markets is more predominant in the consumer goods than industrial goods (Keegan 1984), little has been done in terms of understanding other variables besides culture that effect the international industrial buyer and his/her behavior.     

Activity‐Based Costing in a Challenging Business Environment: An Instructional Case

This cross‐disciplinary case study uses the concept of the Production Sharing Agreement (PSA) in the upstream petroleum industry to demonstrate the application of activity‐based costing in a challenging international business environment. The case is designed and implemented to encourage students to critically address and solve legal, operational, and accounting challenges from a global perspective. This case is intended to be an appropriate hands‐on, experiential tool for undergraduate degree‐level managerial accounting classes. The learning objectives of this case include (i) to develop an understanding of the PSAs and identify their potential related challenges; (ii) to apply activity‐based costing using a multiple‐step approach in a unique, international, realistic, and challenging environment; and (iii) to identify the gaps between the current case activity‐based costing application and IFRS.     

Using the Return on Sustainability Investment (ROSI) Framework to Value Accelerated Decarbonization

A major barrier to companies' more effective integration of sustainability into their corporate strategies is finding ways to estimate and communicate the full value of their business cases. In the authors' experience in working with or for companies, they find that most do not track the value sustainability delivers for an organization. And when companies do track and measure their returns on investments in sustainability, the estimates tend to be focused almost exclusively on those benefits that are most direct and tangible, and show up on the corporate P&L, as opposed to other benefits like employee commitment and regulatory forbearance, which are more likely to show up in a lower cost of capital. To help companies quantify the expected value of their sustainability programs, the authors have developed a Return on Sustainability Investment (ROSI?) framework. The study presented here describes the outcomes of a recent analysis in which the NYU Stern Center for Sustainable Business in collaboration with ALO Advisors worked with Capital Power Corporation, a North American power producer, to estimate the value likely to be created by accelerating its transition to clean energy. Through their work with the Chief Sustainability Officer, Chief Financial Officer, and senior managers from several key business functions, the authors identified seven major sources of benefits, and quantified the expected effects on value of four of them, to produce an estimated contribution to the value of the company of about $30 million. The ROSI? framework and methodology has since been incorporated into CPX's investment decision‐making process, and played an important role in management's decision to commit to the operating changes required to accelerate the company's transition away from coal‐generated electricity.     

Evidence on Value Creation in the Financial Services Industries through the Use of Joint Ventures and Strategic Alliances

While an extensive body of literature has examined merger, acquisition, and consolidation activity in commercial banks and other financial services firms, little attention has been paid to examining how these institutions use the cooperative activities of joint ventures and strategic alliances to accomplish their growth objectives. We analyze the effects of the use of joint ventures and strategic alliances by a sample of firms in the banking, investment services, and insurance industries. Our results show that commercial banks, investment services firms, and insurance companies experience significant abnormal returns of 0.66% on average when they announce their participation in a joint venture or strategic alliance. These abnormal returns are significantly positive across the four strategic motives of domestic, international, horizontal, and diversifying cooperative activities. Using a matched sample, we also show that our sample firms enjoy significant, positive, abnormal returns for holding periods of six, 12, and 18 months after the announcement of the cooperative activity.     

EXPANSION STRATEGIES OF U.S. MNCs IN LATIN AMERICA AND THE CARIBBEAN

Significant economic activities in the Latin American and Caribbean countries (LACs) since the debt crisis of the early to mid-1980s have created opportunities for U.S. firms to expand their business presence in the region. This study provides evidence on the shareholders' wealth effects of expansion by U.S. firms into the LACs. Three hundred twenty-two announcements of expansion to the LACs by U.S. firms during 1980 1996 are analyzed using event study methodology. Statistically significant excess returns of 0.52 percent are observed for the average expansion. Analysis of subsamples by mode of expansion shows that announcements of both FDI and non-FDI forms of expansion produce positive significant excess re turns. Significant positive reactions are observed for expansion to Brazil. Cross-sectional regression results provide additional insights into the determinants of wealth effects for these announcements.     

Stress,coping and consumer preferences: a two‐way transitional event history analysis

More than 20 years ago, Andreasen suggested the importance of studying life status changes for understanding a consumer’s likelihood of changing his or her preferences, attitudes and behaviours. The present study attempts to further advance this approach by providing a conceptual framework within which future research can be conducted. It also suggests the utilization of newly developed statistical techniques congenial to studying changes in behaviours and preferences over time. Cross‐sectional and longitudinal data are used to fill gaps in previous research and demonstrate the value of this approach. While Andreasen’s data revealed a significant negative relationship between stress due to life status changes and brand preference changes when subjected to conventional analysis, the two‐way transitional event history analysis of our data yielded a significant positive relationship between the two variables. The results suggest that when a consumer experiences high levels of stress, he or she is likely to engage in subsequent consumption‐coping behaviours which include changes in brand preferences.     

The Influence of Information Arrival on Market Microstructure: Evidence from Three Related Markets

This study examines the influence of information arrival on market microstructure for the MMI, NYSE, and S&P 500 stock index futures markets, with special emphasis on the effects of opening and closing of trading and expiration of contracts on price movements and trading activities. The results of the examination show that although the opening of the (MMI) futures market is associated with higher volatility, it is when the spot market opens that volatility reaches its highest level. Similarly, the closing of the futures markets, though more volatile, is not as volatile as the closing of the spot markets. Trading patterns, on the other hand, are distinct from volatility. For MMI, trading declines consistently after the close of the spot market. In contrast, the NYSE and S&P 500 continue to trade and reach a peak at the close of the futures markets. Expiration effects are evidenced by the increase in volatility and trading near the closing of the MMI and the spillover to the NYSE and S&P 500. In sharp contrast, the expirations of the NYSE and S&P 500 are only assooiated with decrease in trading, suggesting that efforts to dampen volatility by changing expiration days from Friday to Thursday and shifting settlement price from Friday close to Friday open, have been successful.     

Wealth Effects of International Acquisitions by US Banks

The wealth effects of international acquisitions by US banks (USBs) are examined in this study. The results show that shareholders of USBs experience significant negative excess returns when banks make international acquisition announcements. Excess returns are significantly negative when banks announce acquisitions in developed countries. The excess returns are not different for first time versus subsequent acquisition announcements. However, excess returns are significantly negative for USBs that are frequent acquirers overseas. Sampling by time periods, negative excess returns are observed during the fixed exchange rate regime (1965–1973) and during the post Tax Reform Act of 1986 era. Cross‐sectional regressions indicate that profitability and efficiency measures are positively associated with excess returns.