Delinquency and Default in Arms: The Effects of Protected Equity and Loss Aversion

This paper extends the extant literature in understanding the effects of equity and debt on delinquency and default by focusing on a variant of borrower equity where part of equity is “protected”. The CPF scheme in Singapore stipulates that the refund of borrower’s retirement funds utilized for property purchase prior to September 2002 takes priority over loan obligations. A decision to utilize CPF for property purchase actually increases ex post delinquency and default risk as it effectively reduces cash equity commitment. In particular, any erosion in house value that places protected equity at risk translates into potential wealth reduction or financial liability for the borrower. While loss aversion is evident for non-distressed sellers, the effect of equity losses for distressed borrowers is not as clear. Our research suggests that averting losses in committed equity may be a secondary consideration for borrower subject to income shocks, recognizing that delinquency and default are precursors to foreclosure. Interestingly, we find that the borrowers are strongly averse to incurring protected equity-induced wealth loss or financial liability. This study suggests that the first-lien “anomaly” associated with CPF refund may reduce delinquency and default risks for mortgage backed securities.

Effects of team inputs and intrateam processes on perceptions of team viability and member satisfaction in nascent ventures

A new venture team is a particular type of top management team neglected by the literature. This study investigated the effects of team inputs and processes on team members' perceptions of team viability and satisfaction in nascent ventures. These outcomes are important as they may be antecedents of team perseverance. The study of 51 new venture teams showed that the presence of a distinct leader was positively related to team satisfaction, while member diversity in educational backgrounds was positively related to perceived team viability. Intrateam processes of social integration and open communication were positively related to both perceived team viability and member satisfaction. Copyright © 2006 John Wiley & Sons, Ltd.     

Implied Volatility in the U.K. Commercial Property Market: Empirical Evidence Based on Transaction Data

The primary aim of this research is to compute implied volatility based on a stochastic contingent claim valuation model proposed by Dixit and Pindyck (1994). Over the sample period of 1984 to 1997, and with approximately 20,000 commercial property transactions in the United Kingdom, we find that implied volatility of rental returns is in the region of 24.83 percent. Over the same sample period, the historical and conditional standard deviations of the log returns of transaction-based rental series is estimated to be 15.60 percent and 35.64 percent, respectively. The tests of information content of these risk measures show that there is strong orthogonality in the information impounded in implied volatility estimates compared to that contained in historical standard deviations.     

Computer ownership and home usage: the case of Malaysia

The multi‐functionality of computers and the increased accessibility of the Internet have created a demand for computers at home which was previously concentrated in offices. Using the Heckman two‐step model and by combining socioeconomic factors and insights from Becker's theory on allocation of time in the household with information system theories, it was found that: (i) household allocation of resources; (ii) age and gender; and (iii) household social environment are significant in determining computer purchase decisions and its extent of usage in households in Malaysia, a developing information, communication and technology country. Responses collected from 500 computer users were used in the study. Unlike most household technologies, the results also suggested that despite the multi‐functionality of computers, it was perceived as a technology that facilitates the consumption process more than the production process.     

Entrepreneurship and well-being: Past,present, and future

Entrepreneurship research typically emphasizes firm-level outcomes such as growth and performance. However, people pursue entrepreneurship for deeply personal, idiosyncratic reasons. Therefore, as in other self-organized human pursuits, how entrepreneurship relates to fulfillment and well-being is of utmost importance. In this paper, we provide an overview of the well-being concept, related research, and its connection to entrepreneurship. We define entrepreneurial well-being as the experience of satisfaction, positive affect, infrequent negative affect, and psychological functioning in relation to developing, starting, growing, and running an entrepreneurial venture. We explain this definition of entrepreneurial well-being and review significant developments in our field and the broader field of well-being. Highlights of social, technological and institutional trends illustrate key areas for future research that can enhance our understanding of these phenomena. The eight papers in this special issue focus on entrepreneurial well-being each offering a specific perspective on how scholars can theorize and study the antecedents and consequences of entrepreneurship related to well-being.     

Entrepreneurial intentions: The influence of organizational and individual factors

An individual's intent to pursue an entrepreneurial career can result from the work environment and from personal factors. Drawing on the entrepreneurial intentions and the person-environment (P-E) fit literatures, and applying a multilevel perspective, we examine why individuals intend to leave their jobs to start business ventures. Findings, using a sample of 4192 IT professionals in Singapore, suggest that work environments with an unfavorable innovation climate and/or lack of technical excellence incentives influence entrepreneurial intentions, through low job satisfaction. Moderating effects suggest that an individual's innovation orientation strengthens the work-environment to job-satisfaction relationship; self-efficacy strengthens the job-satisfaction to entrepreneurial intentions relationship.     

Share Repurchase Reasons and the Market Reaction to Actual Share Repurchases: Evidence from Australia

Using repurchase reasons provided by Australian companies for their stock repurchase programs, we ask if the market's response is different across repurchase motivations by examining actual daily share repurchases. We find that firms with the undervaluation motive experience a more positive stock price reaction when they report their repurchases to the market. We show that undervaluation motive firms repurchase fewer shares and have a lower program completion rate than other motives firms. During the 1‐year period following the repurchases, undervaluation motive firms do better than their control sample firms whereas other motive firms do not perform better or worse than their control sample firms. Overall, our results suggest that the undervaluation motive is a stronger signal than other repurchase motives, and contrary to the predictions of the standard signaling theories, management statements carry some value for the market. We also present some evidence suggesting that a costly action may not be needed for a signal to be credible.     

Organization HRD and technology: towards a bureaucratic theory of strategic control

In this study, an investigation is conducted of the relationships between technology and training as attributes of strategic control. It is argued that, when the means of production become more technology oriented, smaller firms will be more ready to train and develop existing workers. Larger firms, by contrast, may tend to emphasize training but more of a generic type rather than ‘tailor made’.     

Unobservable Risks in Mortgage Contract Choice

This study proposes a lifetime utility maximization model where borrowers choose optimal mortgage bundles including mortgage type, loan‐to‐value and loan size to maximize their allocation of limited budgets between housing and nonhousing consumptions. The model predicts that the mortgage bundle choices by borrowers of different income and risk attributes explain significant variations in the ex post default risks of the borrowers. The empirical tests using sampled mortgages pooled in nonagency residential mortgage backed securities support the hypothesis that the optimal choice of mortgage bundles reveals hidden risk factors of borrowers, which, if ignored, could lead to misjudgment of ex post default of borrowers.     

Corporate Real Estate Ownership and Productivity Uncertainty

This article empirically tests the relationship between corporate real estate (CRE) holdings and productivity risks of firms. Using a large sample of public listed U.S. firms for the period from 1984 to 2011, we show that CRE ownership is significantly and negatively correlated with productivity risks of firms. Firms with high‐productivity risk own less CRE assets. When testing dynamic changes to CRE holdings, we estimate a significant and positive elasticity of CRE investments of 5.2% in response to cash flow shocks. If the adjustment cost is high, high‐risk firms are expected to hold less CRE assets, so that they could reduce potential losses associated with CRE holdings when negative productive shocks occur.