Land Tax Changes and Full Capitalisation

We use a unique data set to examine the extent to which changes in the Danish land tax are capitalised into house prices. The Danish local government reform in 2007, which caused tax increases in some municipalities and tax decreases in others, provides plenty of exogenous variation, thus eliminating endogeneity problems. The results imply full capitalisation of the present value of future taxes under reasonable assumptions about discount rates. Consequently, the paper gives an empirical confirmation of two striking consequences of a land tax. First, it does not distort economic decisions because it does not distort the user cost of land. Second, the full incidence of a permanent land tax change lies on the owner at the time of the (announcement of the) tax change; future owners, even though they officially pay the recurrent taxes, are not affected as they are fully compensated via a corresponding change in the acquisition price of the asset.     

Relating environmental attitudes and contingent values: how robust are methods for identifying preference heterogeneity?

We assess the importance and robustness of cluster analysis and latent class analysis as methods to account for unobserved heterogeneity. We provide a critique and comparison of both methods in the context of measuring environmental attitudes and a contingent valuation study involving endangered species. We find strong evidence of robustness for these methods: group characterization and assignment of individuals to groups are similar between methods, and willingness-to-pay estimates are consistent. In addition, there are significant differences in willingness-to-pay across environmental attitudinal groups, and we find that accounting for unobservable heterogeneity provides a significantly better fitting model.     

Engaging patients to improve the healthcare experience

Spectrum Health suggests five considerations for engaging patients and their family members in process improvement initiatives effectively to create a better patient experience: Recruit patients who will provide the type of feedback required to warrant inclusion on a patient advisory council. Create a strong infrastructure for the councils. Ensure the councils always enjoy fresh input from new patient participants. Set clearly defined goals and implementation plans for the councils. Measure the impact.     

Cash flows and leverage adjustments

Recent research has emphasized the impact of transaction costs on firm leverage adjustments. We recognize that cashflow realizations can provide opportunities to adjust leverage at relatively low marginal cost. We find that a firm's cashflow features affect not only the leverage target, but also the speed of adjustment toward that target. Heterogeneity in adjustment speeds is driven by an economically meaningful concept: adjustment costs. Accounting for this fact produces adjustment speeds that are significantly faster than previously estimated in the literature. We also analyze how both financial constraints and market timing variables affect adjustments toward a leverage target.     

Active investment manager portfolios and preferences for stock characteristics

The present study investigates the stock characteristic preferences of institutional Australian equity managers. In aggregate we find that active managers exhibit preferences for stocks exhibiting high‐price variance, large market capitalization, low transaction costs, value‐oriented characteristics, greater levels of analyst coverage and lower variability in analyst earnings forecasts. We observe stronger preferences for higher volatility, value stocks and wider analyst coverage among smaller stocks. We also find that smaller investment managers prefer securities with higher market capitalization and analyst coverage (including low variation in the forecasts of these analysts). We also document that industry effects play an important role in portfolio construction.     

Late Payments and Leery Applicants: Credit Checks as a Selection Test

The use of pre-employment credit checks has grown dramatically in the U.S. in recent years, but there has been almost no research on their validity from a selection standpoint and none on how applicants respond to them. We examine the use of credit checks as a selection test, reviewing evidence for their validity and legal considerations. The theoretical part of the article highlights how credit checks are distinct in key respects from more commonly studied selection tests and how they are likely to violate many applicants’ expectations of privacy and procedural justice. The empirical section presents the results of a study of business undergraduates. Consistent with hypotheses, results indicate negative reactions to the use of credit reports in hiring, moderated by job and individual characteristics, and substantial misunderstanding of what credit reports contain. Implications for practice are discussed.     

The Role of Alternative Methodology on the Relation Between Portfolio Size and Diversification

An important concern in portfolio management is the number of securities needed to create a well-diversified portfolio. The number of securities that constitute a welldiversified portfolio, however, varies widely among studies. It is demonstrated that past conclusions are highly sensitive to the methodology used in quantifying diversification. This finding motivates the development of alternative methods that reduce the effect of repeated replications on test results. The first approach exploits the power curves of statistical tests, whereas the second approach suggests the use of more robust statistics. Both approaches provide researchers with guidance in the design of future diversification studies.     

On the asymptotically uniform distribution modulo 1 of extreme order statistics

Let (X_m)∞₁ be a sequence of independent and identically distributed random variables. We give sufficient conditions for the fractional part of rnax (X₁., X_n) to converge in distribution, as n ←∞ to a random variable with a uniform distribution on [0, 1).     

Social Commerce: A Contingency Framework for Assessing Marketing Potential

A key issue for marketers resulting from the dramatic rise of social media is how it can be leveraged to generate value for firms. Whereas the importance of social media for brand management and customer relationship management is widely recognized, it is unclear whether social media can also help companies market and sell products. Extant discussions of social commerce present a variety of perspectives, but the core issue remains unresolved. This paper aims to make two contributions. First, to address the lack of clarity in the literature regarding the meaning and domain of social commerce, the paper offers a definition stemming from important research streams in marketing. This definition allows for both a broad (covering all steps of the consumer decision process) and a narrow (focusing on the purchase act itself) construal of social commerce. Second, we build on this definition and develop a contingency framework for assessing the marketing potential that social commerce has to offer to firms. Implications for researchers and managers, based on the proposed definition and framework, are also discussed.