Research Joint Ventures

Abstract.  Inter-firm collaboration is not new. What is new is that such collaboration has exploded during the past couple of decades, in parallel to the intensification of international competition. Moreover, the nature of collaboration has changed, shifting from peripheral interests to the very core functions of the corporation, and from equity to non-equity forms of collaboration. Importantly, cooperation focusing on the generation, exchange, and/or adaptation of new technologies has risen at very fast rates. Research joint ventures, the focus of this paper, belong in the latter category.
The proliferation of RJVs has created extensive interest among economists, business analysts, and policy decision-makers and led to the profusion of literature on the topic. This paper critically reviews the literature in industrial economics and strategic management that deals with RJV partner motives and RJV outcomes. The paper categorizes the different streams of this literature and indicates the state-of-the-art, synthesizes important understandings, and suggests key nodes of a future research agenda.     

Fairness and reflexivity in the Cyprus bail-in

The Cyprus debt crisis provides some unique lessons. By the time an assistance program was agreed with the Troika of international lenders, the problem had become so complex that a depositor bail-in was implemented to safeguard financial stability. The bail-in was an ad hoc solution applied for the first time in the eurozone but is now the blueprint for dealing with future banking crises. This paper examines the events for the 18-month period before the two eurogroup meetings on Cyprus in March 2013, and the resolution and restructuring of the two systemic banks of the country with depositor bail-in. We show how delays in dealing with the crisis exacerbated the problem but also how the tools brought into solve the problem had significant unintended consequences that fit the reflexivity principle. Available evidence questions the validity of confidential studies guiding the policy decisions on depositor haircut and supports the argument that the bail-in, as implemented in Cyprus, violated international principles of fairness. We use the analysis to draw some lessons on the use of bail-in for future crises.     

The Worth of Fair Value Accounting: Dissonance between Users and Standard Setters

Investors and analysts are designated as the primary users of financial reports by standard setters, yet we know very little about their use of accounting information and about their relationship with standard setters. This paper explores how investors and analysts evaluate the usefulness of fair values to their work. Standard setters typically presume that investors and analysts view accounting as a practice of valuation and, therefore, favor the greater use of fair value measurement. However, using interview evidence, it is shown here that investors and analysts expect accounting to provide them with insights into the performance of a business, and are quite cautious about the limits of using fair values in financial reports. Overall, the paper contributes to a better understanding of the relationship between accounting and its users. It adds specifically to research which has analyzed the disconnect between users and standard setters in terms of standard setters ignoring user needs (Young 2006 ), and in terms of users being indifferent about, or uncritical of, outcomes of standard‐setting processes (Durocher, Fortin, and Cote 2007 ; Durocher and Gendron 2011 ). The paper suggests a re‐theorization of the disconnect between the two groups that involves thinking away from tension, or blame. Drawing on the work of David Stark ( 2009 ), the situation observed is conceptualized as one of “dissonance,” where the different ways of evaluating fair values coexist without being involved in a fierce contest. That is, even though the principles of valuation and performance differ, this difference does not lead to open disagreement and political lobbying from investors and analysts. Consequences of this dissonance to our understandings of the (absence of) worth of fair values in capital markets are discussed.     

Issues of creative communication tactics and positioning strategies in the UK plastic card services industry

This paper explores the positioning and creative communication tactics (approaches) employed in the UK plastic card service industry. Using content analysis, the findings provide considerable evidence to suggest that there is an appreciation of the use of creative communication tactics and positioning strategies. Furthermore, the study reveals that, whereas creative communication tactics have patchy attention given to some aspects of it, there is an even spread of the frequency of usage of positioning strategies. The study also provides some generalizations as to the applicability of generic positioning strategies in service industries. Discussion of the shortcomings of the study and future research directions are provided.     

The IASB standard-setting process: Participation and perceptions of financial statement users

The interests of users of financial statements are, in theory, paramount to accounting standard-setters. However, there is a dearth of research into users' participation in, and influence on, the process of setting accounting standards. The enhanced status now accorded to the International Accounting Standards Board (IASB) offers the opportunity to examine these issues in a new regulatory context. This study reports the results of a questionnaire survey of the perceptions of, and participation in, the IASB process of a sample of UK investment management firms. The findings suggest that these firms' participation is not as low as is often inferred from the public record of comment letters. In particular, a considerable number of firms participate through representative report user organisations such as the Investment Management Association. Other findings suggest that the major factor inhibiting investment firms from participating is the cost of lobbying, not complacency that the IASB is ‘on their side’ and will naturally safeguard their interests. Moreover, the respondents consider the accounting profession and the European and US accounting standard-setters to be the dominant interest groups in the IASB standard-setting process.     

Long‐term Performance of Greek IPOs

We analyse the long‐run performance of 254 Greek IPOs that were listed during the period 1994–2002, computing buy‐and‐hold abnormal returns (BHAR) and cumulative abnormal returns (CAR) over 36 months of secondary market performance. The empirical results differ from international evidence and reveal long‐term overperformance that continues for a substantial interval after listing. Measuring these returns in calendar time, we find statistical significance with several of the benchmarks employed. We also find that long‐term overperformance is a feature of the mass of IPOs conducted during a pronounced IPO wave. Cross‐sectional regressions of long‐run performance disclose several significant factors. The study demonstrates that although Greek IPOs overperform the market for a longer period, underperformance eventually emerges, in line with much international evidence. Our interpretation is that the persistence of overperformance over a significant interval is due to excessive supply of issues during the ‘hot IPO period’. Results associated with pricing during the ‘hot IPO period’ indicate positive short‐ (1‐year), medium‐ (2‐year) and negative long‐term (3‐year) performance.     

Foreign Currency Translation and FRS 1

The recently issued UK Financial Reporting Standard 1 (FRS 1) requires the replacement of the Statement of Source and Application of Funds by a Cash Flow Statement. A significant issue, disregarded in the past and specifically addressed by the new standard, is the reporting of foreign cash flows in a consolidated cash flow statement involving foreign subsidiaries. This paper evaluates the provisions of FRS 1 in relation to this issue. It is argued that the new requirements will not entirely resolve existing comparability problems and will not necessarily result in a cash flow statement which reflects the sterling equivalent of cash flows as they occur in a foreign currency.     

Buyer-seller relationships along channels of distribution

This paper uses a conceptualization of the IMP model of buyer-seller interactions in examining the stability of relationship-building constructs at different levels of a traditional distribution channel. It examines the relative importance of five constructs as determinants of upstream (i.e. with suppliers) and downstream (i.e. with customers) business relationships and tests for possible misalignment between channel intermediaries. The findings offer empirical support for the model structure and the functional perspective of channel structures is employed in explaining differences. In addition, this research provides considerable evidence to suggest that there is greater emphasis placed in the development of relationships with customers than suppliers.     

International market segmentation and Eurodebt issues

Implications of capital market segmentation for international capital structure (ICS)—capital structure consisting of equity issued in one country and debt issued in another—are examined. Necessary conditions for the emergence of ICS are analyzed under two options for debt issues (foreign debt and Eurodebt) and comparisons are made. It is shown that in cases where the project cannot support an ICS including foreign debt Eurobonds can be issued and would be profitable.