Service climate, professional commitment and job performance of flight attendants in Taiwan

This study of airline managers and flight attendants uses survey information to look at relationships between service climate, professional commitment and job performance. It finds that service climate positively influences professional commitment, influences job performance while professional commitment positively influences job performance and smoothes the relationship between service climate and job performance.     

Analyst Earnings Forecasts for Publicly Traded Insurance Companies

Several trends in the insurance and financial services industry, including demutualizationconsolidation, and deregulation, have attracted increasing attention from investors and financial analysts. This paper investigates the accuracy of the earnings forecasts of financial analysts for insurance companies. Our empirical results indicate that analyst forecasts outperform random walk time-series forecasts. Furthermore, we find that both disagreement over earnings forecasts among analysts and the relative forecasting error in the mean forecasts is smaller for life insurers than for property-casualty insurers, whereas the relative errors for forecasts for multiple-line insurers are in between the two. Forecasting error is a negative function of firm size and the number of analysts who are following a company, and is a positive function of the disagreement among analysts.Analyst forecasts have a timing advantage over the random walk model. Our results also suggest that the fair value reporting requirement (SFAS 115), which has been in effect since 1994, has enhanced the accuracy of analyst forecasts. The SFAS 115 has improved the superiority of analyst forecasts over the random walk forecasts for life insurers, but not for property-casualty insurers, and there is a weak improvement for multiple-line insurers. JEL Classification: G15     

The Agency Problems Embedded in Firm’s Equity Investment

We find that agency problems are embedded in firm’s excess and abnormal equity investments that are mainly dictated by controlling shareholder’s motives and ethical choices manifested in ownership and board structure. The excess equity investment is gauged with respect to industry average. The abnormal equity investment is specifically referred to the number of nominal investment companies that are fully controlled by the controlling owners while subject to little governance. Our empirical evidences of 345 Taiwanese non-financial listed firms show that firm’s excess and abnormal equity investments are negatively correlated with controlling shareholder’s cash flow rights while are positively correlated with the control–cash flow deviation, and board affiliation. The results are supportive of the positive incentive hypothesis and the negative entrenchment hypothesis put forth by La Porta et al. (2002, Journal of Finance 57, 1147–1171) and Claessen et al. (2002, Journal of Finance 57, 2741–2742). The negative relation between equity investment and firm’s value further supports the agency postulation that corporate excess and abnormal equity investments represent a leeway for controlling shareholder to exploit wealth of minority shareholders. This study potentially contributes to the literature of business ethics by portraying an empirically testable linkage from controlling owner’s ethical choices to his actions and therefore firm’s value. Yin-Hua Yeh, Ph.D., is Professor and Director of the Graduate Institute of Finance at Fu-Jen Catholic University (FJU) in Taiwan. He is also the Director of the Center for Corporate Governance and Business Ethics at FJU. His main research and teaching areas are corporate governance, corporate finance, and merger and acquisition. Tsun-Siou Lee, Ph.D., is Professor of Finance at National Taiwan University. His main research and teaching areas are corporate governance, futures and options, and financial innovation. Pei-Gi Shu, Ph.D., is Professor of Business Administration at Fu-Jen Catholic University in Taiwan. He is also the Vice Dean of Management College at FJU. His main research and teaching areas are mutual funds and behavioral finance.     

Ethical purchasing perceptions and practices of Oklahoma restaurant managers

This study examined ethical business perceptions and practices in purchasing dealings between junior and senior managers in the U.S. restaurants. This study investigated the managerial style in the context of business ethics relative to employees’ loyalty, ethical working behavior, attitude, and decision‐making process of restaurant's food purchasing personnel. Additionally, organizational business ethics training for employees is a crucial component to enhance adherence to an ethical code of conduct. The findings revealed that the managers’ ethical purchasing perceptions and practices of their employees’ behaviors were not different in terms of gender, age, and years of experiences as a manager. Corporate ethical standards and managerial ethical practices can guide managers and employees as to how to behave when confronted with a dilemma with regard to ethics and personal interest. Consequently, the prime principle of management or purchasing personnel in terms of ethical dealings has tremendous impact on a firm's operational performance and employees’ morale.     

Capital structure and cost efficiency in the Taiwanese banking industry

By utilizing a sample of 44 Taiwanese banks, this study analyses whether banks can mitigate agency costs, to increase firm performance through optimization of capital structure. The stochastic frontier approach is adopted to determine cost efficiency as the firm performance indicator, an approach that is capable of controlling outside environmental factors. Furthermore, this study uses two-stage least squares to estimate two simultaneous equations that are then used to examine the relationship between capital structure and firm performance. This study includes indicators of ownership structure. The main results are: first, optimal capital structure is selected by the manager to combat the agency problem and thus improve performance, yielding results consistent with agency theory; and second, reducing managerial share ownership will decrease agency cost and increase firm performance, a finding that is consistent with the Entrenchment Hypothesis.