CDS contract initiations: REIT board monitoring and corporate decision outcomes

In this article, we investigate whether the negative creditor governance shock due to the initiation of credit default swap (CDS) contracts results in monitoring substitution effects between bondholders and shareholders. Using several mechanisms to test increased shareholder monitoring such as board structure, CEO–chair duality, and institutional ownership, we show that shareholder monitoring increases post-CDS contract initiation. We examine board decision outcomes and show that incentive compensation is higher for real estate investment trusts (REITs) post-CDS initiation. Furthermore, we find that post-CDS initiation, REITs undertake more acquisitions that are more likely to be paid for with stocks and take longer to complete than non-REITs. Finally, we find that REITs industry-adjusted cash holdings and dividend yield increases post-CDS initiation.     

Product-Line Length as a Competitive Tool

The increasing number of consumer goods and services offered in recent years suggests that product-line extensions have become a favored strategy of product managers. A larger assortment, it is often argued, keeps customers loyal and allows firms to charge higher prices. There is disagreement, however, about the extent to which a longer product line translates into higher profits. We develop an econometric model derived from a game-theoretic perspective that explicitly considers firms' use of product-line length as a competitive tool. On the demand side, we analytically establish the link between consumer choice and the length of the product line. Based on our derivations, we include a measure of line length in the utility function to investigate consumer preference for variety using a brand-level discrete-choice model. The supply side is characterized by price and line length competition between oligopolistic firms. For the empirical analysis we use market-level data for the yogurt category. We find that there are decreasing returns to product-line length. Based on a series of "what-if" experiments, we derive recommendations for effective product line decisions in a competitive environment.     

Project Assistance versus Budget Support: An Incentive-Theoretic Analysis of Aid Conditionality

Foreign aid is conveyed predominantly in the form of project assistance, rather than general budgetary support for the recipient government. Most theoretical explanations of this phenomenon center on the possibility of a divergence of preferences, or opinions, between donor and recipient. Projects or conditional transfers, rather than “cash”, may then be ways by which donors align the recipients’ incentives more closely with their own preferences. This paper proposes an alternative, complementary, explanation, based on information asymmetries between voters in donor nations, and their aid agency administrators. If voters are uncertain about the “type” of their administrator agent, who is better informed about the efficacy of alternative policies, then project assistance may be chosen, even when budget support provides a more efficient alternative. JEL no. F35, O19, D82     

Corporate Social Responsibility and Psychosocial Risk Management in Europe

Corporate social responsibility (CSR) is a comprehensive concept that aims at the promotion of responsible business practices closely linked to the strategy of enterprises. Although there is no single accepted definition of CSR, it remains an inspiring, challenging and strategic development that is becoming an increasingly important priority for companies of all sizes and types, particularly in Europe. Promotion of well-being at work is an essential component of CSR; however, the link between CSR, working conditions and work organisation is still found to be unfamiliar to stakeholders. As CSR is strategic and is regarded by many companies and corporate leaders as an important development, it offers opportunities for psychosocial risk management, an area that is currently among the top priorities in working environment and well-being at work debates. However, the link between CSR and psychosocial risk management has not been addressed clearly before. This paper aims to explore the potential role of CSR in promoting well-being at work through the development of a framework for the management of psychosocial risks. As part of the research, key stakeholders [including the World Health Organization (WHO), the International Labour Organization (ILO), the European Agency for Safety and Health at Work (EU-OSHA), the European Commission (EC), employers’ associations, trade unions and other policy experts] across Europe participated in a survey, interviews and focus groups to assess and clarify the link between CSR and psychosocial risk management. On the basis of the findings, a CSR-inspired approach to the management of psychosocial issues at work is proposed. Such an approach can be a useful tool in contexts where, up until now, expertise and tradition in dealing with psychosocial issues have been lacking.     

The performance implications of power–trust relationship: The moderating role of commitment in the supplier–retailer relationship

The current research examines how coercive power and non-coercive power affect trust and how these relationships are affected by affective and calculative commitment. It also expands the understanding of the role of an under-researched dimension of performance, i.e., strategic performance, and studies it as a mediating variable in the relationship between trust and financial performance. The proposed model is empirically tested using Partial Least Squares (PLS) in supplier–retailer channel in Taiwan. The findings reveal that affective commitment has a positive moderating effect on the negative relationship between coercive power and trust, while calculative commitment has a negative moderating effect on the positive relationship between non-coercive power and trust. The results also indicate that strategic performance partially mediates the effect of trust on financial performance. The research advances theoretical understanding on the complex power–trust relationship and provides insights into the role of commitment in both enabling and undermining channel relationships. The findings highlight the importance of building affective commitment in channel relationships and the critical role of strategic performance in the trust–financial performance relationship.     

Business travellers' connections to home: ICTs supporting work‐life balance

This paper examines the role of information communication technology in enabling connections to home for work‐related travellers. Although digital connectivity for work‐related tasks are well researched, the use of digital technology for home communication is under‐researched. The study draws on a qualitative study of UK‐based organisations and business travellers to explore how these travellers use ICTs for personal use while ‘on the move’. The findings reveal that organisations are supportive of work‐life balance for employees, but fail to consider specific needs of those whose work takes them away from home. For business travellers, insights are gained into practices around connecting to home and the value of this virtual presence for relationships with family while absent and work‐life balance. The study identifies and discusses practice occurring around three activities; checking in, maintaining relationships with home and sharing experiences.     

The Life Cycle of Initial Public Offering Firms

This study uses an integrated and comprehensive approach to study the evolution of IPO issuing firms to the three basic post-IPO states: survive as an independent firm, get acquired, or fail. We develop multinomial logit models that utilize information available at or prior to the IPO to predict the probability of subsequent transition to the three post-IPO states. We find that lower risk, larger firm size, higher investment banker prestige, higher pre-IPO operating performance, and higher industry R&D intensity increase the probability of survival relative to failure. We also find that higher firm size, higher industry R&D intensity, and industry concentration increase the probability of survival relative to being acquired. Finally, lower risk and higher investment banker prestige increase the probability of being acquired relative to failure. Overall, we identify several factors that influence the probability of subsequent transition to one of the three basic post-IPO states.     

Equity issues and changes in expectations of earnings by financial analysts

Evidence is provided on an implication of models by Myers andMajluf (1984) and Miller and Rock (1985), which predict thatequity issues convey information about firms' future earnings.Consistent with the prediction, the results show that earningsforecast revisions by financial analysts subsequent to the announcementof equity issues are significantly related to announcement periodabnormal returns.     

Positive and Negative Affectivity as Mediators of Volunteerism and Service‐Oriented Citizenship Behavior and Customer Loyalty

This study sought to examine the impact of volunteerism (motivation to help) on service‐oriented organizational citizenship behavior (S‐OCB) of salespeople as mediated by the positive and negative affectivity, and further how the involvement of salespeople in S‐OCB would affect the customer loyalty toward the company. The context chosen for empirical investigation was the Indian pharmaceutical sector and the sample consists of 125 medical sales representatives from four companies that are well‐established players, including three multinational firms and one Indian company, as well as their supervisors (n = 48) and doctors (n = 150). The data are analyzed through partial least squares approach to path modeling to estimate the measurement and structural parameters. All of the hypotheses are confirmed. The results of this study indicate that volunteerism exhibits a significant positive impact on S‐OCB and customer loyalty. In addition, this positive impact is partially mediated by positive and negative affectivity. In sum, the proposed model explains a large amount of variance in S‐OCB and customer loyalty, suggesting that it will serve as a useful tool for analyzing service‐oriented organizational sale persons’ behavior and customers’ reactions. The implications of these results include improving service OCB by promoting volunteerism in the service industry and emphasizing the important roles of service staff in enhancing the customer loyalty.