Small firm performance in online markets

Firms which enter the online marketplace do so for a variety of reasons. The effects of the motive for entry on the ultimate success of entry, for both online and ‘blended’ firms, are largely unknown. This study utilises a unique data set of small Australian firms and examines the relationship between the strategic motivation for entry and the actual results of entry. Utilising a trivariate probit model with exogenous ‘reason for entry’ dummy variables, estimates of aftermarket business performance are obtained. The study finds that the entry goal materially affects subsequent performance: firms entering to expand their market size ordinarily succeed, but those entering to reduce costs are often disappointed. Blended firms enjoy no strong advantages over pure online entrants.     

Optimal combination of pollution prevention and abatement policies: The case of agricultural drainage

The adoption of pollution prevention and abatement practices is examined in the context of a model of exhaustible resource use with a backstop technology. For the sake of concreteness, the paper focuses on the problem of water-logging caused by the subsurface accumulation of agricultural drainwater. In modelling this problem, a region's underground capacity to store drainwater is considered an exhaustible resource, while the installation of subsurface drainage is viewed as the corresponding backstop technology (or abatement practice). The exhaustible resource is typically over-exploited due to common access problems, which forces a suboptimally fast adoption of the abatement practice. Conservationist irrigation technologies, such as drip and sprinkler systems, tend to reduce drainwater generation, and their adoption could increase social welfare by delaying the abatement stage. Public policies are suggested to increase the adoption of such conservationist technologies. Data from California is used to illustrate the results and to demonstrate the efficacy of the model for policy purposes. While the setting used for the analysis in this paper is quite specific (i.e., water-logging), the same general modelling ideas may be applied to many other problems of environmental degradation.     

The Era of Cross‐Border M&A: How Current Market Dynamics are Changing the M&A Landscape

Rising equity volatility, surging energy prices, a weakening dollar, and widening credit spreads are influencing both tactical financing decisions and long‐term financial strategy. Amid this turbulence is a quickly changing global M&A landscape that portends long‐term opportunities to deliver value to shareholders. In this environment, the authors offer the following suggestions for U.S. multinationals: (1) continue looking overseas for well‐positioned targets, especially in emerging markets, even in the context of a weak U.S. dollar; (2) consider using their financial flexibility for opportunistic deals today now that asset values are contracting; and (3) critically evaluate non‐core assets at home or abroad that might be valuable to cross‐border acquirers. For multinationals in Europe and developing economies, the time may be right to consider transformational cross‐border “megadeals.” Emerging‐market companies have the opportunity to buy low and sell high by using high‐valued equity as an acquisition currency, particularly to gain access to developed markets. Companies in need of new capital should consider the financial and strategic benefits of selling minority stakes to a sovereign wealth fund or other foreign partner.     

Healthcare utilization and costs associated with treatment for opioid dependence

Objective: Opioid use disorder (OUD) can be managed with medication assisted therapy (MAT) (methadone [MET], buprenorphine [BUP], or extended-release naltrexone [XR-NTX]) or counseling alone (non-pharmacological therapy [NPT]). The objective of this study was to evaluate healthcare resource utilization and costs associated with XR-NTX compared with alternative treatments for opioid dependence.

Methods: Adults with a diagnosis of opioid dependence who initiated treatment with XR-NTX, BUP, MET, or NPT between January 1, 2011 and December 31, 2014 were identified in the Truven Health MarketScan Commercial administrative claims database. Healthcare resource utilization, costs (inpatient [IP], emergency department [ED], outpatient [OP], and pharmacy) and adherence were evaluated for each cohort during 12-month baseline and follow-up periods.

Results: A total of 29,235 patients were included in the analysis; 1,041, 20,566, 745, and 6,883 received XR-NTX, BUP, MET, and NPT, respectively. Patients in the XR-NTX cohort were significantly younger and had more comorbidities compared with the other cohorts. Patients in the XR-NTX group had the largest percentage decrease in IP and ED utilization and costs from baseline to follow-up. OP and pharmacy costs increased significantly from baseline to follow-up for all cohorts. Overall, there was no significant change in total healthcare costs for the XR-NTX group, whereas the costs increased significantly for other groups (BUP?=?+43%, MET?=?+47.7%, NPT?=?+38.8%).

Conclusions: Healthcare resource utilization and costs increased from baseline to follow-up in BUP, MET, and NPT patients, whereas patients receiving XR-NTX experienced no such increase. This analysis suggests there may be economic value in the use of XR-NTX for OUD.     

On the Natural and Economic Difficulties to Fulfilling the Human Right to Water Within a Neoclassical Economics Framework

We present a neoclassical economic model of the human right to water using a nonrenewable resource model inclusive of a backstop technology. The right is interpreted as a minimum consumption requirement the government is obligated to fulfill in the event that any one household cannot do so independently. Differing by income levels, households maximize utility by purchasing a composite consumption good and water from two distinct, government-owned sources. Facing physical and financial constraints, the government uses fiscal policy to address potential human rights violations. Reducing the analysis to two periods, we develop a novel approach to compare total welfare levels from a joint human rights and neoclassical economics perspective. We define a human rights welfare standard and discuss cases in which traditional social welfare measures would exceed, violate, or meet this standard. We thus offer a unique way to merge economic analysis with human rights research.     

Mutual Funds and Bubbles: The Surprising Role of Contractual Incentives

This article studies one of the potential causes of the financialmarket bubble of the late 1990s: the herding behavior of mutualfunds. We show that the incentives contained in the mutual funds'advisory contracts induce managers to overcome their tendencyto herd. We argue that investing in bubble stocks amounts toherding and contracts with high incentives induce managers todiverge from the herd, thus reducing their holding of bubblestocks. The differential exposure to bubble stocks significantlyimpacted the funds' performance both in the period prior toMarch 2000, as well as afterwards.     

Performance of Cross Listed Dual-Class Firms: Evidence from Chinese Firms Cross Listed on US Exchanges

We compare operating and market performance of Chinese single- and dual-class firms cross listed on US exchanges. We find evidence in line with researchers who argue that a dual-class structure allows insiders to invest in long-term value-enhancing projects. We find that dual-class firms underperform prior to their initial public offering (IPO) and then improve and have better operating performance than single-class firms in the second year after IPO. We find that dual-class firms also have better market performance than single-class firms beginning in the initial year, which is contrary to the finding in most other studies. The reason for this might be that firms that list on US exchanges show a credible commitment to shareholder rights.     

Disappearing and Reappearing Dividends in Emerging Markets: Evidence from Indian Companies

This article examines the empirical determinants of dividend payout policy for 947 sample firms listed on the Bombay Stock Exchange (BSE) in India from 1995 to 2013. The author identifies three distinct trends in the propensity to pay dividends between 1995 and 2013. The regression analysis suggests that most of the decline is due to the dividend payout policies of smaller, less profitable, younger firms and firms with comparatively more investment opportunities, high financial leverage, high business risk, and high dividend distribution tax. The author finds significant positive impact of catering incentives on the propensity to pay dividends, thus supporting catering theory of dividends.     

Impact of employees’ perceived threat of market competition on unethical marketing and selling practices: Moral disengagement and ethical leadership

This study draws on the social cognitive theory to examine the effect of perceived market competition on employees’ unethical marketing and selling practices. The boundary conditions associated with this relationship were examined, and we posit that perceived market competition is related to unethical marketing and selling practices through the mediating mechanism of moral disengagement. We further propose that ethical leadership moderates the relationship between the perceived threat of market competition, moral disengagement, and tendency toward unethical marketing and selling practices. We tested our hypotheses with a sample of 387 employees working in the banking sector in Pakistan. Our results suggest that moral disengagement had a full mediation effect between the perceived threat of market competition and tendency of employees toward unethical marketing and selling practices. Moreover, ethical leadership moderated the relationship between moral disengagement and the tendency of employees toward unethical marketing practices. The research findings indicate that when field employees encounter threat perceptions due to market competition, they have a propensity toward engaging in unethical marketing and selling practices when they can activate moral disengagement. This study also found that ethical leadership negatively moderates the relationship of moral disengagement with employees’ tendency toward unethical marketing and selling practices.