Using Expectations to Test Asset Pricing Models

Asset pricing models generate predictions relating assets' expected rates of return and their risk attributes. Most tests of these models have employed realized rates of return as a proxy for expected return. We use analysts' expected rates of return to examine the relation between these expectations and firm attributes. By assuming that analysts' expectations are unbiased estimates of market-wide expected rates of return, we can circumvent the use of realized rates of return and provide evidence on the predictions emanating from traditional asset pricing models. We find a positive, robust relation between expected return and market beta and a negative relation between expected return and firm size, consistent with the notion that these are risk factors. We do not find that high book-to-market firms are expected to earn higher returns than low book-to-market firms, inconsistent with the notion that book-to-market is a risk factor.     

From hostile boundaries to tourist attractions

This study examines the transformation of hostile borders to inviting tourist attractions. It focuses on three cases: the ‘Island of Peace’ on the Israeli–Jordanian border, the ‘Golden Triangle’ of Southeast Asia and the Berlin Wall. All three are located on boundaries that were sites of conflict and instability, formerly closed and fortified but transformed into open and free borders for tourism. The geopolitical changes that have influenced the development of the sites account for the similarities between them. In all three cases, unique attractions have been developed, offering elements such as special demarcation, observation points and commemorations of the heritage of the closed border or a symbolic representation of cooperation and renewed political relations with the neighbouring country. The tourism development at these attractions may constitute an important contribution in terms of awareness and education that could help in strengthening relations of peace and cooperation in places that in the past suffered from a closed and hostile border. By examining the development of intensive tourism at selected border tourism sites, much can be learned about the development of border attractions elsewhere.     

Early Adoption of IFRS as a Strategic Response to Transnational and Local Influences

In recent years, International Financial Reporting Standards (IFRS) have been adopted by nations throughout the world. Proponents and standard setters assert that IFRS will produce a number of benefits including improved transparency, international comparability, market efficiency, and cross-national investment flow. In this study, we examine factors that contributed to the early national-level adoption that occurred prior to broad global acceptance of IFRS. Using a conceptual framework of institutional theory and resource dependence, we propose that the interplay of transnational pressures and local factors influenced the level of adoption. We predict differential adoption as a strategic response at three levels of either require IFRS, permit IFRS, or do not allow IFRS, using a sample of 71 countries. As predicted, countries with greater resource dependency, as evidenced by weak governance structures and weak economies, were the early adopters who were more likely to require the use of IFRS. Further, resource dependence also trumps nationalistic pressures against transnational conformity. Our findings raise concerns that required adoption may not always be accompanied by an appropriately supportive infrastructure; thus, there are implications not only for adoption of IFRS, but also for the diffusion of other transnational regulation that influences global business environment.     

Competing Theories of Financial Anomalies

We compare two competing theories of financial anomalies: "behavioral"theories built on investor irrationality, and "rational structuraluncertainty" theories built on incomplete information aboutthe structure of the economic environment. We find that althoughthe theories relax opposite assumptions of the rational expectationsideal, their mathematical and predictive similarities make themdifficult to distinguish. Even if irrationality generates financialanomalies, their disappearance still may hinge on rational learning—thatis, on the ability of rational arbitrageurs and their investorsto reject competing rational explanations for observed pricepatterns.     

Activist arbitrage: A study of open-ending attempts of closed-end funds

This paper documents frequent attempts by activist arbitrageurs to open-end discounted closed-end funds, particularly after the 1992 proxy reform which reduced the costs of communication among shareholders. Open-ending attempts have a substantial effect on discounts, reducing them, on average, to half of their original level. The size of the discount is a major determinant of whether a fund gets attacked. Other important factors include the costs of communication among shareholders and the governance structure of the targeted fund. Our study contributes to the understanding of the actions undertaken by arbitrageurs in financial markets beyond just pure trading.     

Business Cultural Intelligence Quotient: A Five‐Country Study

Cultural intelligence (CI) has often been linked to performance at the individual, team, and firm levels as a key factor in international business success. Using a new measure of CI, the business cultural intelligence quotient (BCIQ), our study provides empirical evidence on several key antecedents of CI using data on business professionals across five diverse countries (Austria, Colombia, Greece, Spain, and the United States). The findings suggest that the most important factors leading to cultural intelligence, in order of importance, are the number of countries that business practitioners have lived in for more than six months, their level of education, and the number of languages spoken. We find that cultural intelligence varies across countries, suggesting that some countries have a higher propensity for cross‐cultural business interactions. By teasing out the common antecedents of BCIQ among professionals, our findings may help with screening and training professionals for international assignments. Future research may examine the environmental (country‐specific) factors associated with a higher propensity for cultural intelligence (such as immigration, cultural diversity, languages spoken, and international trade) to explain the effect of country of origin on cultural intelligence in the professional community. © 2016 Wiley Periodicals, Inc.     

Dynamic Embeddedness in Chinese Firm Internationalization

This article presents a multilevel framework to analyze the motivations and location choices of Chinese OFDIs. We contribute to theory‐integration on Chinese OFDI flows and patterns by suggesting a framework that combines country‐, industry‐ and firm‐level analyses and by reflecting aspects from the resource‐based view (firm‐specific advantages), institutional‐based view (push/pull home‐ and host‐­country factors), and network‐based view (network relations). We also explicitly incorporate “time” as a variable into our framework by introducing and explaining the concept of dynamic embeddedness as an interaction dimension to reflect the inherent dynamics on all levels and actors. © 2017 Wiley Periodicals, Inc.     

Teaching International Business via Social Media Projects

The purpose of this study is to evaluate the outcomes of an experiential learning technique coupled with social media in an international marketing course. It was conducted among 155 students placed in groups that were assigned to develop a YouTube video for use as a country branding marketing tool. Measured evaluations of the students’ perceptions of the experience reveal that it was both beneficial and positive, and it helped to promote an understanding of the importance of teamwork and the uses of technology. Factor analysis grouped the perceptions and attitudes regarding the exercise into four categories.The differences in perception are evaluated based on gender, country of study, and level of education. The study highlights the importance of incorporating experiential learning pedagogies with social media to teach country branding.     

Real estate franchising: The case of Coldwell Banker expansion into China

This article discusses the Chinese real estate market, with special reference to Shanghai, and depicts an interview with Taiwan's largest real estate company, which bought the master international franchising rights of Coldwell Banker for China. As China's real estate market only recently opened to foreign investment, and since franchising in China is in its infancy, this article provides a unique examination of international franchising into a new product market area in the country. In addition, the article highlights some practices that could be adopted by professional service firms in their international expansion and discusses post-WTO implications to real estate franchising in China.