Electronic word-of-mouth (eWOM) generation in new media platforms: The role of regulatory focus and collective dissonance

In this research, we examine the role of two motivational forces associated with creation of electronic word-of-mouth (eWOM): regulatory focus and collective dissonance. Our studies show that generation of eWOM is enhanced by regulatory fit, while traditional WOM is dominated by the negativity effect. In study 1A, we show that prevention-focused consumers produce stronger intentions to post eWOM when they undergo a negative compared to a positive service experience. In study 1B, we find that promotion-focused consumers are more likely to post eWOM in reaction to a positive service experience when one's self-construal is independent. The final study shows that due to collective dissonance, consumers have greater intentions to create eWOM when their experiences are inconsistent with others' postings. We discuss the implications of these results for the development and management of eWOM communication in virtual communities.     

Delegation and dynamic incentives

Using an agency model, we show how delegation, by generating additional private information, improves dynamic incentives under limited commitment. It circumvents ratchet effects and facilitates the revelation of persistent private information through two effects: a play‐hardball effect, which mitigates an efficient agent's ratchet incentive, and a carrot effect which reduces an inefficient agent's take‐the‐money‐and‐run incentive. Although delegation entails a loss of control, it is optimal when uncertainty about operational efficiency is large. Moreover, delegation is more effective with production complementarity. We also consider different modes of commitment to yield insights into optimal organizational boundaries.     

Risk management with interdependent choice

Risks faced by traders from price movements are sometimes magnifiedby the actions of other traders. Risk-management systems whichneglect this feature may give a seriously misleading pictureof the true risks. The hazards arising from this potential blindspotare at their most dangerous when the prevailing conventionalwisdom lulls traders into a false sense of security on the attractivenessof a trading position. The efforts of one trader to reversehis trade makes more acute the need to follow suit on the partof others. For markets dominated by traders with short timehorizons, such interdependence leads to exaggerated price movements.Estimates of 'value at risk' which recognize such interdependenceof actions can diverge substantially from those given by conventionaltechniques.     

A multivariate analysis of DISC election decision

Conclusion This study found that the decision by management to establish a DISC unit may not be satisfactorily identified by the examination of the financial data on either anex ante orex post basis. However, examination of the responses to the questionnaires indicate differences in the perceptions of the management of the two groups are significantly different on a multivariate basis.A possible implication of this research effort is that the use of published financial data alone cannot adequately explain decisions made by management. Indeed, unless management's expectations are realized, use of published data alone may result in unwarranted conclusions.     

Do investors misprice components of net periodic pension cost?

We examine whether and how investors misprice the components of net periodic pension cost under SFAS No. 87 and 158. We find that investors appear to have difficulty in understanding the transitory feature of other net periodic pension cost (PPOPCC) and thus overestimate its persistence, which in turn leads to the mispricing of PPOPCC in the pre‐158 period. We also find that SFAS No. 158 appears to reduce the mispricing of PPOPCC, suggesting a positive effect of SFAS No. 158 on investors' valuation of pension items in the income statement. Additional analysis suggests that investors also overestimate the persistence of, and thus misprice, pension‐related cash flows and accruals in the pre‐158 period and that SFAS No. 158 reduces the mispricing of pension‐related cash flows and accruals.     

Full versus quasi MLE for ARMA-GARCH models with infinitely divisible innovations

We compare the backtesting performance of ARMA-GARCH models with the most common types of infinitely divisible innovations, fit with both full maximum likelihood estimation (MLE) and quasi maximum likelihood estimation (QMLE). The innovation types considered are the Gaussian, Student’s t, α-stable, classical tempered stable (CTS), normal tempered stable (NTS) and generalized hyperbolic (GH) distributions. In calm periods of decreasing volatility, MLE and QMLE produce near identical performance in forecasting value-at-risk (VaR) and conditional value-at-risk (CVaR). In more volatile periods, QMLE can actually produce superior performance for CTS, NTS and α-stable innovations. While the t-ARMA-GARCH model has the fewest number of VaR violations, rejections by the Kupeic and Berkowitz tests suggest excessively large forecasted losses. The α-stable, CTS and NTS innovations compare favourably, with the latter two also allowing for option pricing under a single market model.     

Recent developments of the autoregressive distributed lag modelling framework

We review the literature on the autoregressive distributed lag (ARDL) model, from its origins in the analysis of autocorrelated trend stationary processes to its subsequent applications in the analysis of cointegrated non-stationary time series. We then survey several recent extensions of the ARDL model, including asymmetric and non-linear generalisations of the ARDL model, the quantile ARDL model, the pooled mean group dynamic panel data model and the spatio-temporal ARDL model.     

Income inequality and economic growth

Despite the extensive existing literature on income inequality and economic growth, there remains considerable disagreement on the effect of inequality on economic growth. Existing literatures find either a positive or a negative relationship. In this paper, we attempt to theoretically examine that relationship with a stochastic optimal growth model. We make the disagreement clear within a single model. We conclude (i) that both are possible – that is, higher inequality can retard growth in the early stage of economic development, and can encourage growth in a near steady state, (ii) that income redistribution by high income tax does not always reduce income inequality. Income inequality can be reduced by higher income tax in a near steady state, but it cannot be reduced in the early stage of economic development, and (iii) that two government polices – rapid economic growth and low income inequality – can be achieved by low income tax in the early stage of economic development, but both cannot be achieved simultaneously in a near steady state.     

The privatization of Korea’s Incheon International Airport

This study looks at the possible effects of the planned privatization of Incheon International Airport, Korea. To accomplish this, it uses a Delphi analysis involving nearly 50 experts to assess six possible scenarios that, for example, look at airport strategy and planning, financial, operations and approach facilities, and fees.     

Impacts of household loan regulation on financial stability: evidence from Korea

The paper examines whether banking regulations and monetary policy contributed to controlling the fragility of household debt in Korea. The results show that housing loan regulations such as debt to income regulation contributed to a lower household debt delinquency ratio. Lowering the target interest rate provided additional stabilisation of the delinquency ratio. It is recommended that the government adopt an appropriate mix of regulation and monetary policy to control household financial fragility. The financial supervisory services need to be involved in managing debt to income regulation and minimising financial instability and financial market distortions. Further, the monetary authority has to adopt a more effective position in controlling the real lending interest rate and the delinquency ratio of household loans. Such a policy mix will improve effectiveness in controlling financial fragility, especially at a time of financial crisis.