A Unified Model of Corporate Acquisitions and Divestitures: An Incentive Perspective

The purpose of this paper is to unify corporate acquisitions and divestitures (e.g., spin-offs, equity carve-outs and sell-offs) into a simple but comprehensive agency model where risk and managerial incentives interact to determine an optimal corporate governance and an incentive compensation scheme. Emphasizing human and nonhuman aspect of corporate assets, the model not only explains existing empirical evidence regarding contractual and organizational changes, but also suggests new perspective regarding firms' behavior around corporate acquisitions and divestitures. Thus, it attempts to reconcile between synergistic and agency viewpoints in the takeover literature and provides determining factors in choosing between spinoffs and equity carve-outs.     

Evaluating Industrial Relations Systems of OECD Countries from 1993 to 2005: A Two‐Dimensional Approach

This article uses both cross‐sectional and longitudinal methods to evaluate the national industrial relations systems of 30 Organisation for Economic Co‐operation and Development (OECD) countries from 1993 to 2005. We adopt a pluralistic view of industrial relations that gives equal weight to efficiency and equity, along with a general systems model consisting of input, process and output. We rank each country in terms of a combined score of efficiency and equity. We find that the 30 OECD countries can be separated into three distinct groups (high on both equity and efficiency; high on efficiency but low on equity; moderate on equity and low on efficiency), and that these groups exhibit considerable stability over time.     

Consumer participation in the design and realization stages of production: How self-production shapes consumer evaluations and relationships to products

Psychological responses of consumers to specific stages of self-production activities are investigated in four studies. Findings reveal that consumer participation in the realization stage (physical production) enhances affective commitment to the product. However, physical production without opportunity to express choice or creativity during the production process does not change the symbolic meaning of the product (how self-expressive it is) and, therefore, does not result in identification with the product. Participation during the design stage (input-specification) enhances identification, leading to affective commitment, which in turn enhances evaluation of the self-made product. Finally, engaging consumers in both the realization and design stages of the production process does not create value for consumers over and above the main effects created by a high level of participation in either stage.     

The Relationship of Cognitive Effort,Information Acquisition Preferences and Risk to Simulated Auditor–Client Negotiation Outcomes

The auditor–client relationship is a legally-mandated relationship in which one party, the auditor, is hired and paid by the auditee (client) to inform third party stakeholders as to whether the client firm’s financial statements are presented in conformity with national financial accounting standards. When these statements do not meet the criteria for acceptable financial statements, a negotiation situation may arise in which the auditor is presumed to act in the best interests of shareholders and creditors who have no independent knowledge of the auditor’s findings. The client management may then feel forced to defend its numbers. The result is a negotiation between the auditor and client (e.g., Salterio in Account Financ 52:233–286, 2012; Brown and Wright in Account Horiz 22(1):91–109, 2008). This study examines cognitive factors and risk preference factors that may impact the negotiation both in the setting of each side’s negotiation position and on the outcomes of that negotiation using simulated auditor–client negotiations. Questionnaire and simulated auditor–client negotiations were used to generate the data, with MBA and MS in Accounting students playing the role of client CEOs and auditor partners. We further explore the use of a tool, Structural Equation Modeling, to test the data, in the process highlighting its usefulness in auditor–client negotiation research. We find that the cognitive characteristic of need for cognition is significantly and positively related to achievement of the negotiator’s desired income objectives and reported willingness to argue strongly for his/her position. Actively open-minded thinking, a second cognitive variable studied, was not significantly related to success in the negotiations, nor to a reported willingness to argue strongly for his/her position. Finally, we find that perceived aggressive tactics by the other party to the negotiation had a negative impact on the counterpart negotiator’s success in the negotiation, and satisfaction with it. As expected, risk assessment-related variables were not related to outcomes of interest.     

Decision neuroscience and consumer decision making

This article proposes that neuroscience can shape future theory and models in consumer decision making and suggests ways that neuroscience methods can be used in decision-making research. The article argues that neuroscience facilitates better theory development and empirical testing by considering the physiological context and the role of constructs such as hunger, stress, and social influence on consumer choice and preferences. Neuroscience can also provide new explanations for different sources of heterogeneity within and across populations, suggest novel hypotheses with respect to choices and underlying mechanisms that accord with an understanding of biology, and allow for the use of neural data to make better predictions about consumer behavior. The article suggests that despite some challenges associated with incorporating neuroscience into research on consumer decision processes, the use of neuroscience paradigms will produce a deeper understanding of decision making that can lead to the development of more effective decision aids and interventions.     

Structural effects of cognitive and affective reponses to web advertisements,website and brand attitudes,and purchase intentions: The case of casual-dining restaurants

This study investigates the structural relationships among responses to website advertisements, website attitudes, brand attitudes, and purchase intentions in the case of web advertisements for casual-dining restaurants. Responses toward advertising (Rad) factors were categorized as cognitive responses and affective responses. The SEM model in LISREL was used to examine the interrelationships among the proposed hypothesized constructs. Several empirical results were obtained. First, Rad had a positive effect on website attitudes. Second, website attitudes had a positive effect on brand attitudes. Third, brand attitudes had a positive effect on purchase intentions. Finally, some discussion and implications of the study are provided.     

Understanding the Benefit Sought by Rural Tourists and Accommodation Preferences: A South Korea Case

Rural tourism has been widely acknowledged for its effectiveness in contributing to rural areas’ development. With strong government support, rural tourism has developed in many countries during the last several decades. This study aims to improve the understanding regarding tourism in Korean rural areas using a segmentation approach. The responses of 442 tourists in 23 rural villages were analyzed. Four segments of tourists were identified based on the different benefits they sought for their vacation in rural establishments. The estimation of a multinomial logit model determined the socio‐demographic characteristics and the preferred accommodations of a rural tourist. Discussions and implications of the detailed findings are provided in the last section. Copyright © 2012 John Wiley & Sons, Ltd.     

Earnings Management Vehicles for Korean Firms

We investigated the vehicles that Korean firms use when the firms manage earnings. We partitioned our sample into low, mid and high accrual sub‐samples based on discretionary accruals. Low accrual firms are defined as income‐decreasing firms whereas the high accrual firms are considered income increasing firms in this study. We decomposed accounting earnings into cash from operations and various components of accruals in a systematic way. Next we examined the types of accruals individual firms use when the respective firms increase reported earnings. The empirical results of the study indicate that there are clear discrepancies in the earnings management vehicles firm use when the firms manage earnings depending on the directions of earnings management. More specifically, income‐increasing firms frequently employ non‐cash revenues including asset‐disposal gains. Income‐decreasing firms employ non‐cash expenses including bad‐debt expenses and asset‐disposal losses. Firms also tend to use current accruals but to a limited extent as current accruals entail cash flow implications in the following years.     

Relative Performance Evaluation of Mutual Funds: A Non-Parametric Approach

We propose an alternative mutual fund performance index which addresses the benchmark problem and controls for economies of scale in managing mutual funds. We advance a new concept of 'return-cost' efficiency as another important element in evaluating portfolio management, in addition to the mean-variance efficiency concept. Our index based on a non-parametric estimation is shown to be similar to the Sharpe index with multiple slopes (or factors). We have shown that all fund categories, except income funds, have similar average efficiency scores after controlling for economies of scale. Most funds operate in increasing returns to scale and seem to be successful in holding mean-variance efficient portfolios, but unsuccessful in allocating transaction costs efficiently, evidenced by excessive turnovers and loads.     

Explosive U.S. budget deficit

In this study, we present new evidence that the postwar U.S. federal budget deficit was explosive in nature. Because of the government's inevitable attempts to reduce high or rapidly growing budget deficits, the deficit may contain a substantial component that periodically collapses, which renders the standard unit root tests biased toward stationarity. We apply a newly proposed recursive unit root test for explosiveness, which is known to be powerful to the periodically collapsing component. Although the evidence for explosiveness we found herein is not overwhelming, this study should at the very least serve as a warning against a blind application of standard unit root tests to budget deficits, which may harbor components that periodically collapse.