Risk Sharing and Asset Prices: Evidence from a Natural Experiment

When countries liberalize their stock markets, firms that become eligible for foreign purchase (investible), experience an average stock price revaluation of 15.1%. Since the historical covariance of the average investible firm's stock return with the local market is roughly 200 times larger than its historical covariance with the world market, liberalization reduces the systematic risk associated with holding investible securities. Consistent with this fact: (1) the average effect of the reduction in systematic risk is 6.8 percentage points, or roughly two fifths of the total revaluation; and (2) the firm-specific revaluations are directly proportional to the firm-specific changes in systematic risk.     

Bringing customers into the boardroom

Misguided marketing strategies have destroyed more shareholder value than shoddy accounting or shady fiscal practices. Yet marketing functions typically reside deep in the organization, far from the executive suite and boardroom, and they are often poorly aligned with corporate strategy. Boards of directors, it would seem, have compelling reasons to monitor their companies' marketing activities. The authors argue that boards lack a clear understanding of how their companies are meeting customers' needs and how their marketing strategies drive (or often fail to drive) top-line growth. To help remedy that problem, they've devised a "marketing dashboard," a series of management reports that could give the board this critical knowledge. The dashboard has three parts, each of which the board should review regularly. The first part tracks the company's main business drivers--those business conditions that, when manipulated or otherwise changed, will directly and predictably affect the company's performance. The second part describes the specific innovations in a pipeline of growth ideas that will allow the company to reach its short- and long-term revenue goals. And the third part provides an overview of the company's marketing skill set so the board can determine not only if the company has enough marketing talent but also if it has the right marketing talent. Unlike isolated measures of marketing performance that are often insufficient, irrelevant, or misleading, the dashboard allows the board to quickly and routinely assess the effectiveness of its company's marketing strategies. Armed with a clear understanding of marketing's role and performance, the board can expose inadequate marketing campaigns, direct management to address the problem, and monitor progress.     

Strategic Response to a Volatile Environment: The Case of Cross-Cultural Cooperative Ventures

Unlike free-standing companies, joint ventures involve more complex governance structures and organizational systems. Because of interpartner dependence in the managerial process, it is more difficult for joint ventures to configure their strategies with environmental dynamics. Without such configuration, however, joint ventures will suffer from operational instability and resource misallocation. This study assesses the strategic response of joint ventures to a dynamic environment. Based on a survey of top managers in international joint ventures (IJVs) in China, it is found that managerial perceptions of increased environmental complexity and hostility are positively related to an Analyzer strategy. Proactive and Defensive strategies are either negatively or non-significantly linked with perceived environmental dynamics. Further, the Analyzer strategy is associated with superior performance for IJVs in the context of an emerging economy.     

Professional conduct and professional misconduct: A framework and its application to the accounting profession

Recently there has been increased attention paid to the behaviour of those who call themselves professionals. The idea of acceptable professional conduct incorporates the expectations of a number of groups affected by the activities of professionals. The framework of professional behaviour considered acceptable at a point in time is an equilibrium among these groups' expectations. This paper argues that shifts in the expectations of any of these groups will disturb this equilibrium. This process of disequilibrium and change leads to altered views of professional behaviour. Professional misconduct or unprofessional behaviour, that is, the failure to meet expectations, is inherent in the underlying framework of a profession.The framework is applied to the public (chartered) accounting profession, where the interacting groups are accounting professionals, their clients and the general public. Current issues of debate about professional behaviour are identifiable as consequences of altered expectations about acceptable behaviour. Acceptable conduct has become misconduct (and vice versa) and written rules of conduct conflict with unwritten rules.The paper concludes with two interrelated issues for further research. A new equilibrium is considered; and permanent change in the framework of the professions, the groups in the professional structure and the mechanisms of their interaction, is addressed.Ann Neale is a lecturer at The University of Auckland. Her research interests include the accounting profession, gender issues in accounting, in particular the position of women in the accounting profession, and professional ethics.     

Functional compatibility risk and consumer preference for product bundles

The authors report the results of an experiment examining the effect of functional compatibility risk on consumer’ preference for product bundles vis-à-vis separate items. In a laboratory experiment, 90 undergraduate business students were asked to choose bundled or unbundled stereo equipment after reading product information that either did or did not prime fears of functional compatibility risk. The results indicate that heightening the salience of functional compatibility risk may be a practical way for marketers to increase consumer’ choice of bundled products, particularly among consumers who are more uncertain of their product knowledge. Judy Harris (jharris@bus.ucf.edu) is an assistant professor of marketing at the University of Central Florida. She received her doctorate from the University of Houston. Her work has been published in theJournal of Retailing, theJournal of Advertising Research, theJournal of Consumer Research, theJournal of Applied Social Psychology, Psychology & Marketing, and other publications. Edward A. Blair (blair@uh.edu) is a professor and chair in the Department of Marketing and Entrepreneurship at the Bauer College of Business, University of Houston. He is the author of several books, along with numerous research papers that have been published in journals such as theJournal of Marketing, theJournal of Marketing Research, theJournal of Consumer Research, Public Opinion Quarterly, and elsewhere. He has served on the editorial boards of theJournal of Marketing Research, theJournal of the Academy of Marketing Science, and theJournal of Business Research.     

The NCAA Cartel and Antitrust Policy

The National Collegiate Athletic Association (NCAA) was originally founded to protect student athletes from the brutality of college football. The NCAA has established a number of prominent athletic programs and achieved huge commercial success. In spite of this success, the NCAA has limited the compensation of student-athletes through collusive monopsonistic restraints. Ordinarily, these restraints would be vulnerable to antitrust attack, but the NCAA has enjoyed benign neglect by the U.S. Department of Justice and the Federal Trade Commission. The root of this is the Board of Regents [National Collegiate Athletic Association v. Board of Regents of the University of Oklahoma, 468 U.S. 85 (1984)] decision, which requires rule-of-reason treatment of the NCAA’s restraints. The essential role of amateurism of student athletes is used to justify the NCAA’s cartel behavior. In this paper, we demonstrate that amateurism is a myth. We suggest that the NCAA will be unable to provide an evidentiary foundation for its claim that amateurism is crucial to the success of college athletic programs. In addition, we reject the possibility of an efficiency defense for the NCAA’s cartel behavior.     

Cross‐Functional Influence and the Supplier Selection Decision in Competitive Environments: Who Makes the Call?

This paper presents the results of a multiple‐case study that examines how procurement and engineering personnel share priorities, have a common vision, and influence the supplier selection decision in competitive environments of varying risk and uncertainty. We interviewed 113 procurement and engineering respondents from 26 different companies/business units across up‐, mid‐, and downstream segments of the oil and gas industry. Following a middle‐range theorizing approach, we develop a series of working propositions and theoretical frameworks, utilizing goal congruence theory to sharpen proposition development and create suggested extensions for theory. In general, we find that engineering personnel tend to dominate cross‐functional decision making in higher risk environments and that more equal arrangements exist when both risk and uncertainty are low. When competitive environment risk is low but uncertainty is high, considerable disagreement arises over which function “leads” this decision. Higher risk environments drive higher goal congruence through shared vision and consensus on who makes supplier selection decisions.