Criminals,bankruptcy, and cost of debt

Review of Accounting Studies - We examine whether criminal records of CEOs and rank-and-file employees are associated with firms’ likelihood of bankruptcy, and whether lenders adjust their...     

Partner‐diversity effects on alliance termination in the early stage of green alliance formation: Empirical evidence from carbon‐emission reduction projects in Latin America

Partner diversity is a key influencer in interorganizational alliances, and several empirical studies have shown that its outcomes are contingent on alliance‐specific factors. We extend this research as well as the growing literature on green alliances, in which partner diversity is uniquely high. Specifically, we examine partner‐diversity effects on alliance termination in the early stage of green alliance formation. We hypothesize that in this context, size disparity increases termination likelihood, whereas organizational variety and cultural separation have the opposite effect. To test our hypotheses, we use a sample of 366 alliance projects located in Latin America and submitted to the Kyoto Protocol's Clean Development Mechanism for evaluation, validation, and registration from 2004 to 2014. Our findings contribute to several research streams and provide practical guidance for successful formation of alliances focused on environmental protection.     

The Aggregate Demand Curve and Its Proper Interpretation

Textbook authors, in their presentations of aggregate demand–aggregate supply, are admonished to set their houses in order. The writers suggest the continued usefulness of the traditional “Keynesian cross” model as a pedagogical device and present a version that they allege to be superior to the popular AD–AS models found in many contemporary texts.     

The Moderating Influence of Broad‐Scope Trust on Customer–Seller Relationships

Trust relates not only to customer trust in individual companies (i.e., narrow‐scope trust) but also to the broader business context in which customer–seller relationships may develop (i.e., broad‐scope trust [BST]). Based on two surveys comprising 1155 bank consumers and 817 insurance consumers, respectively, this study investigates the moderating influence of BST on relationships between satisfaction, narrow‐scope trust, and loyalty and also examines the direct influence of BST on these variables. The results indicate that whereas BST negatively moderates relationships between satisfaction and narrow‐scope trust and between narrow‐scope trust and loyalty, BST positively moderates the relationship between satisfaction and loyalty. In addition, it is demonstrated that BST positively influences customer satisfaction and narrow‐scope trust. © 2012 Wiley Periodicals, Inc.     

Modelling purchases as a function of advertising and promotion

This article describes the preliminary studies of the effect of advertising and promotion on purchases. The British single-source database Adlab has been the basis for this study of advertising and promotion effectiveness. The ST AS measure and logit modelling have been used to estimate the effect of advertising. The results from the two measures have been compared to determine the extent to which the two measures give occasion for the same conclusions. To indicate the accuracy of the two measures, their respective levels of significance have been studied. Two logit models have been estimated; one only includes the effect of TV exposure, while the other also includes the effect of promotions. The results from the two logit models are compared to determine which model gives the most accurate estimate of the effect of advertising. When comparing the results from the STAS measure with the parameter estimates from the second logit model, it is found that these two different measures largely lead to similar conclusions. Suggestions for further research and developments of the models are given.     

The innovation value chain

The challenges of coming up with fresh ideas and realizing profits from them are different for every company. One firm may excel at finding good ideas but may have weak systems for bringing them to market. Another organization may have a terrific process for funding and rolling out new products and services but a shortage of concepts to develop. In this article, Hansen and Birkinshaw caution executives against using the latest and greatest innovation approaches and tools without understanding the unique deficiencies in their companies' innovation systems. They offer a framework for evaluating innovation performance: the innovation value chain. It comprises the three main phases of innovation (idea generation, conversion, and diffusion) as well as the critical activities performed during those phases (looking for ideas inside your unit; looking for them in other units; looking for them externally; selecting ideas; funding them; and promoting and spreading ideas companywide). Using this framework, managers get an end-to-end view of their innovation efforts. They can pinpoint their weakest links and tailor innovation best practices appropriately to strengthen those links. Companies typically succumb to one of three broad "weakest-link" scenarios. They are idea poor, conversion poor, or diffusion poor. The article looks at the ways smart companies - including Intuit, P&G, Sara Lee, Shell, and Siemens- modify the best innovation practices and apply them to address those organizations' individual needs and flaws. The authors warn that adopting the chain-based view of innovation requires new measures of what can be delivered by each link in the chain. The approach also entails new roles for employees "external scouts" and "internal evangelists," for example. Indeed, in their search for new hires, companies should seek out those candidates who can help address particular weaknesses in the innovation value chain.     

Determining the cointegrating rank in nonstationary fractional systems by the exact local Whittle approach

We propose to extend the cointegration rank determination procedure of Robinson and Yajima [2002. Determination of cointegrating rank in fractional systems. Journal of Econometrics 106, 217–242] to accommodate both (asymptotically) stationary and nonstationary fractionally integrated processes as the common stochastic trends and cointegrating errors by applying the exact local Whittle analysis of Shimotsu and Phillips [2005. Exact local Whittle estimation of fractional integration. Annals of Statistics 33, 1890–1933]. The proposed method estimates the cointegrating rank by examining the rank of the spectral density matrix of the d$d$th differenced process around the origin, where the fractional integration order, d$d$, is estimated by the exact local Whittle estimator. Similar to other semiparametric methods, the approach advocated here only requires information about the behavior of the spectral density matrix around the origin, but it relies on a choice of (multiple) bandwidth(s) and threshold parameters. It does not require estimating the cointegrating vector(s) and is easier to implement than regression-based approaches, but it only provides a consistent estimate of the cointegration rank, and formal tests of the cointegration rank or levels of confidence are not available except for the special case of no cointegration. We apply the proposed methodology to the analysis of exchange rate dynamics among a system of seven exchange rates. Contrary to both fractional and integer-based parametric approaches, which indicate at most one cointegrating relation, our results suggest three or possibly four cointegrating relations in the data.     

Trying to complain: the impact of self‐referencing on complaining intentions

This paper introduces the Theory of Trying to complaining behaviour, and argues that complaining intentions can be explained by the model. Moreover, we model propensity to self‐reference (SR) as a moderating variable, and suggest that the effects of the causes to complaining intentions depend on the SR‐level held by consumers. A sample of undergraduate business students participated in the study, where the goal was to get a better understanding of complaining intentions. Our study provides new and additional insights in the drivers of complaining by also taking dispositional personality differences into consideration. The results demonstrate that boundary conditions for main‐effect models like the theory of trying can be fruitfully addressed through the notion of individual differences. The research documented that customers' propensity to complain systematically differed as a function of their level of self‐referencing. This is both good and bad news to managers. The good news is that a proportion of the customers rely less on their previous experiences in the complaining domain when they form intentions to complain. The bad news is that some others do. The obstacle is that managers cannot tell by the look if they are talking to an individual with high or low propensity to self‐reference. As the customer base contains both types case could be taken in designing marketing communication campaigns that target the groups differently.     

Natural Environment,Market Orientation,and Firm Innovativeness: An Organizational Life Cycle Perspective

Drawing upon the corporate social responsibility literature, we investigate the moderating effects of the natural environment and the stage of an organization's life cycle on the market orientation to firm innovativeness relationship. Through 229 owners or chief executive officer respondents, our results establish evidence of (1) a positive linkage between market orientation and firm innovativeness; (2) natural environmental policy positively moderating the market orientation to firm innovativeness relationship; and (3) organizational life cycle negatively moderating market orientation to innovativeness. Our findings suggest ventures characterized as being early in the organizational life cycle are more likely to have a positive environmental policy toward the natural environment leading to a competitive advantage through firm innovativeness.