Performance deviations and acquisition premiums: The impact of CEO celebrity on managerial risk‐taking

Research summary: This article draws on identity control theory and a study of acquisition premiums to explore how CEO celebrity status and financial performance relative to aspirations affect firm risk behavior. The study finds that celebrity CEOs tend to pay smaller premiums for target firms, but these tendencies change when prior firm performance deviates from the industry average returns, thereby leading these CEOs to pay higher premiums. The study also finds that the premiums tend to be even larger when celebrity CEOs have more recently attained celebrity status. Taken together, these findings contribute to identity control theory and CEO celebrity literatures by suggesting that celebrity status is a double‐edged sword and that the internalization of celebrity status by CEOs strongly influences the decision‐making of CEOs. Managerial summary: The purpose of this article is to examine how CEO celebrity status and financial performance relative to aspirations affect the size of acquisition premiums. The study finds that celebrity CEOs tend to pay smaller premiums for target firms. However, when celebrity CEOs' prior firm performance is either better or worse than the industry average, these CEOs pay higher premiums. This situation is exacerbated when the CEO has only recently been crowned a celebrity. In effect, these CEOs feel great pressure to match the inflated performance expectations that come with celebrity status. These findings suggest that being a celebrity is a double‐edged sword. The implication here is that CEOs who have recently been crowned a celebrity should be aware of these pressures and cope accordingly. Copyright © 2015 John Wiley & Sons, Ltd.     

Numerical and analytical results for the transportation problem of Monge-Kantorovich

The Monge-Kantorovich transportation problem has a long and interesting history and has found a great variety of applications (see Rachev and Rüschendorf (1998a,b)). Some interesting characterizations of optimal solutions to the transportation problem (resp. coupling problems) have been found recently. For the squared distance and discrete distributions they relate optimal solutions to generalized Voronoi diagrams. Numerically we investigate the dependence of optimal couplings on variations of the coupling function. Numerical results confirm also a conjecture on optimal couplings in the one-dimensional case for nonconvex coupling functions. A proof of this conjecture is given under some technical conditions. Received: November 1999     

Foreign direct investment and global sourcing choices of firms in the US

This paper investigates factors affecting the global sourcing choices of firms in the US: (1) US investment abroad; (2) foreign direct investment in the US; (3) wage–productivity ratio; and (4) transaction cost. I found that there is a statistically significant association between the country of sourcing choices and foreign direct investment. Both the wage–productivity ratios and transaction costs are not statistically significant at the conventional significance level, but their regression coefficients show proper signs. The paper also examines the patterns of foreign direct investment among countries and compares transaction costs by income group. Copyright © 2000 John Wiley & Sons, Ltd.     

Integration of the Kano and QFD model in health food development: using black beans as examples

This study applied the Kano two-dimensional quality model and quality function deployment (QFD) to develop the black bean’s reputation as a health food and identify quality attributes of consumers’ needs in order to effectively control the attributes. This study first conducted a literature review and summarized the product’s quality attributes and then carried out expert interviews to determine health food quality attributes and consumer need quality attributes. A questionnaire survey was conducted to discuss which quality attributes of black beans consumers perceived to be important when they were presented as a health food and classify their answers using the quality attributes in the Kano model in order to effectively control consumers’ needs. Consumers’ demand for quality attributes was transformed into a technique of product quality development. In a matrix of the two constructs, quality classification of health food in the Kano model and order of consumers’ satisfaction with eating types of health food products, quality factors were transformed into technical specifications of product development for QFD and the construction of the first-stage of the House of Quality matrix. The results serve as references for companies to effectively distribute resources and establish strategies of product development, enhance product quality and consumer satisfaction, reduce product development time, and increase the success rate of products in the market. The results contribute to the health food enterprises are not only can make profit of product but also meet customers’ need.     

Forecast-error-based estimation of forecast uncertainty when the horizon is increased

Past forecast errors are employed frequently in the estimation of the unconditional forecast uncertainty, and several institutions have increased their forecast horizons in recent times. This work addresses the question of how forecast-error-based estimation can be performed if there are very few errors available for the new forecast horizons. It extends the results of Knüppel (2014) in order to relax the condition on the data structure that is required for the SUR estimator to be independent of unknown quantities. It turns out that the SUR estimator of the forecast uncertainty, which estimates the forecast uncertainty for all horizons jointly, tends to deliver large efficiency gains relative to the OLS estimator (i.e., the sample mean of the squared forecast errors for each individual horizon) in the case of increased forecast horizons. The SUR estimator is applied to the forecast errors of the Bank of England, the US Survey of Professional Forecasters, and the FOMC.     

The history of business administration and management education in the two Germanies - a comparative approach

Most analyses of the evolution of pay strategies in the last decade emphasize the macro–level components of changes, e. g. government policies, the crisis of tripartite negotiation. Yet more than a ‘push’ from the centre, we are witnessing a ‘pull’ from the periphery, the world of companies and management. New pay policies, both collective and individual, seem especially geared towards increase–ing the effectiveness of wages as a means of fostering employee motivation hence leading to a greater relevance of the company level and more differentiation in pay in response to segmented company labour markets.     

A note on forecasting the prices of gold and silver: Asymmetric loss and forecast rationality

Given that the prices of gold and silver have witnessed large and substantial swings in recent years, policymakers and investors need readily available and reliable forecasts of the prices of these two precious metals. Survey data of forecasts of the prices of gold and silver provide a particularly rich data environment for policymakers and investors to study developments in the markets for gold and silver. Our research helps to develop a deeper understanding of the properties of survey data of the prices of gold and silver. We study the shape of forecasters’ loss function and the rationality of their forecasts. Assuming an asymmetric loss function weakens evidence against forecast rationality, but results depend on the empirical model being studied.