Do Analysts Strategically Employ Cash Flow Forecast Revisions to Offset Negative Earnings Forecast Revisions?

We investigate whether analysts use cash flow forecasts to reduce the impact of earnings forecast revisions (EFRs) on market participants. In particular, we focus on conflict between an analyst's concurrent cash flow and earnings forecast revisions. We hypothesize and find that analysts are more likely to issue a positive cash flow forecast revision when they issue a negative earnings forecast revision concurrently, but not the opposite, particularly for Fortune 500 firms. Furthermore, our supplementary analyses suggest that (1) some analysts optimistically bias cash flow forecasts when they issue negative earnings forecast revisions; (2) the market pays less attention to the historical accuracy of analyst cash flow forecasts, so analysts have some latitude to present their cash flow forecasts in an optimistic way; and (3) the market reacts mainly to the direction, not the magnitude, of cash flow forecast revisions. Overall, these findings suggest that analysts may strategically use cash flow forecasts in conjunction with earnings forecasts to maintain good management relationships.     

“How may I help you?” Politeness in computer-mediated and face-to-face library reference transactions

Drawing upon Wittgenstein’s theory of language games, we apply a pragmatic approach to organizational communication. The study extends current theories of computer-mediated communication, and explores how language actually gets used across media. We conduct a comparative study of face-to-face versus computer-mediated reference transactions in an academic library, and analyze people’s use of politeness strategies. The study observes that people use politeness strategies to play different language games across media, and that a dynamic interplay exists among the three constituents of language games: sense making, language use, and forms of life. In particular, we found that: First, people use significantly more negative politeness strategies and fewer positive politeness strategies online than face-to-face. Second, language use influences people’s understanding and precedes practical forms of life. Third, CMC is a different form of life than a face-to-face communication. The new online form of life shapes people’s sense making and the way they use language, resulting in emerging new grammars of CMC. Finally, our findings suggest the interplay among multiple forms of life. This study offers important theoretical and managerial implications for organizational communication and the production and delivery of services in the rapidly expanding digital economy.     

Hedonic shopping motivation and co-shopper influence on utilitarian grocery shopping in superstores

Much prior literature has focused on how hedonic shopping motivation operates in hedonic shopping environments such as shopping malls, but few empirical studies have assessed hedonic shopping motivation effects in utilitarian shopping environments. Combining a field survey (Study 1) with observation using video ethnography (Study 2), our research addresses this issue. Our results empirically reveal how, through both psychological and behavioral routes, hedonic shopper motivation affects purchases in a utilitarian shopping environment, specifically a section of a superstore selling predominantly utilitarian products. Hedonic shopping motivation is found to induce consumer impulsiveness (psychological route) while also encouraging shoppers to stay longer in a store (behavioral route), which when combined result in greater consumer purchases than either route alone. Additionally we observe a moderating effect of co-shopper influences on these two routes. Implications of these findings are discussed.     

Modeling the short-run costs of changes in water availability in a desert city: a modified input-output approach

This paper investigates the impact of change in sectoral water supply on employment, value-added output, and indirect business tax, in Maricopa County, Arizona using input–output model. We developed extended modified input–output approach that incorporates each source of water as a separate sector, and that allows for substitution between water sources, and estimated the economic impact of a change in surface water supplies under two scenarios. Scenario I assumes that total water supply/use decreases by 1%, but the reduction comes only from surface water use, holding groundwater use constant. Scenario II assumes that surface water supply/use in all industries decreases by 1%, and the reduction in surface water use is replaced by the exact amount of more expensive groundwater. We found that the magnitude of economic impact depends on consumer’s responsiveness to water price change. When price elasticity of water demand is relatively low (≤0.2), the economic impact of a 1% reduction in surface water supplies was smaller than under the first scenario. However, the more water users in all industries are responsive to a change in water price, the bigger are economic impacts in terms of reductions in jobs, value added, and indirect business taxes.     

Analysis of loan guarantees among the Korean Chaebol affiliates

This paper analyses corporate loan guarantees among the Korean chaebol affiliates. Loan guarantees are found to be efficiency‐neutral under a set of ideal conditions characterized by perfect and symmetric information, no agency problem, and no governmental interference in private financial contracts. In reality though, corporate loan guarantees have negative as well as positive effects. The negative effects of loan guarantees arise from the agency problem between the controlling minority shareholders and outside investors. Government's implicit support to financial institutions worsens the problem. Without such distortions, a loan guarantee by the guarantor firm may signal the quality of the investment project of the borrowing firm, if the guarantor firm has more information than the lending bank with regards to the type of the borrowing firm's investment project.     

The Moderating Effects of Resident Characteristics on Perceived Gaming Impacts and Gaming Industry Support: The Case of Macao

Based on a joint use of social exchange and social representation theories, this study examined the moderating effects of resident characteristics on the relationships between perceived gaming impacts, gaming benefits, and industry support. The findings demonstrated that the relationships changed when the resident characteristics (age, education, tourism industry dependence, and community attachment) were introduced to the structural model as moderators. The study provides a better understanding of which subgroup of people within a community are more or less disposed to certain impacts of gaming. The theoretical and practical implications were discussed.     

Error Reduction in Distributed DSS Through Coordination of Modeling Activities: Simulation Study

It is well known that the “lemon” problem can cause market failure. Because difficulties in quality discovery of nonstandardized and complex products will increase transaction costs, it was predicted that the “electronic market” would prevail only with less complex and more standardized goods. However, it has been observed that there are many successful electronic (auction) markets for seemingly typical “lemon” goods such as used cars, raw minerals, and agricultural products. It is argued that in such markets, the equilibrium price of electronic trading appeared higher than in the nonelectronic market. Many speculative explanations have been offered for this, but to the best of our knowledge, no analytical studies have been presented. This study is an attempt to fill this gap. In this paper, we look at the problem of quality discovery in the electronic trading of physical goods especially when the goods are not standardized. The information asymmetry between buyer and seller creates the possibility of a “lemon” in the nonstandardized market. To mitigate this problem, several auction markets have devised third party quality grading systems and limited auctions to only relatively higher quality products. Through analytical modeling, we rationalize these mechanisms; that is, the intervention of an impartial third party for quality inspection, market segmentation by quality measure, and the sellers' willingness to pay the cost of quality inspection.