Reputation management and the disclosure of earnings forecasts

In this paper, managers differ from each other in terms of the probability that they are ??forthcoming?? (and disclose all the earnings forecasts they receive) or ??strategic?? (and disclose the earnings forecasts they receive only when it is in their self-interest to do so). Strategic managers choose whether to disclose their forecasts based on both the disclosure??s effects on their firms?? stock price and on their reputation among investors for being forthcoming. Our findings include: strategic managers can build a reputation for being forthcoming by disclosing unfavorable forecasts; managers?? incentive to build a reputation for being forthcoming may be so strong that they disclose even the most negative forecasts; as managers become more concerned about their reputation: (a) the current price of the firm in the event the manager makes no forecast increases; (b) managers who have a high probability of behaving strategically (as forthcoming) in the future issue forecasts more (less) often in the present.     

The role of the media in a bubble

We examine the role of the news media during the British Railway Mania, arguably one of the largest financial bubbles in history. Our analysis suggests that the press responded to changes in the stock market, and its reporting of recent events may have influenced asset prices. However, we find no evidence that the sentiment of the media, or the attention which it gave to particular stocks, had any influence on exacerbating or ending the Mania. The main contribution of the media was to provide factual information which investors could use to inform their decisions.     

Explaining variation in reverse diffusion of HR practices: Evidence from the German and British subsidiaries of American multinationals

This paper examines the phenomenon of ‘reverse diffusion’ of HR practices in multinational companies, defined as the diffusion of practices from the foreign operations of MNCs to the home country. Drawing on research incorporating fieldwork in the British and German subsidiaries of US-based multinationals, we identify sources of variation in the incidence of reverse diffusion both between firms and between subsidiaries of the same firm.     

Impact of improved water services in informal neighbourhoods in Ouagadougou

This article examines the impact of a project to improve water services in underserved neighbourhoods in Ouagadougou on household water access conditions. We used the propensity-score matching method to analyse data from a survey carried out in 2011, and found that the improvement project cut the cost of water neighbourhood-wide by 94 CFA francs per cubic meter, reduced the portion of this expense by 1% of the average household budget, and cut the daily time to collect water by 10–13 min. The results that we obtained through the propensity-score matching method differ from those obtained by simply comparing the averages of the neighbourhoods participating in the project to those that did not participate. This indicates that the propensity-score matching method of impact evaluation is valuable in supplying decision makers with nonbiased estimates of the link between ease of access to water and poverty reduction.     

OVERLAPPING SETS OF PRIORS AND THE EXISTENCE OF EFFICIENT ALLOCATIONS AND EQUILIBRIA FOR RISK MEASURES

The overlapping expectations and the collective absence of arbitrage conditions introduced in the economic literature to insure existence of Pareto optima and equilibria with short‐selling when investors have a single belief about future returns, is reconsidered. Investors use measures of risk. The overlapping sets of priors and the Pareto equilibrium conditions introduced by Heath and Ku for coherent risk measures are respectively reinterpreted as a weak no‐arbitrage and a weak collective absence of arbitrage conditions and shown to imply existence of Pareto optima and Arrow–Debreu equilibria.     

Middle Manager Leadership and Frontline Employee Performance: Bypass,Cascading, and Moderating Effects

We investigated the relationship between middle managers' transformational leadership and the performance of frontline employees who are two levels below the middle managers. We identified two pathways through which this cross‐level influence occurs and tested two moderators operating on these two pathways. The first pathway is a direct effect from middle managers to employees, bypassing the influence of employees' immediate supervisor (the bypass effect). We further hypothesized that the bypass effect is moderated by the employees' collectivistic value. The second pathway is a cascading of leadership behaviours from middle managers to first‐line supervisors, whose transformational leadership then enhances employees' performance (the cascading effect). We further hypothesized that this cascading effect is moderated by the supervisors' power distance value. These hypotheses were tested with a sample of 491 frontline employees, 98 frontline supervisors, and 30 middle managers in three organizations in China. The three‐level hierarchical linear modelling results supported the four hypotheses.     

Foreign direct investment‐facilitated development: the case of the natural gas industry of Trinidad and Tobago

Since the last decade, governments in less‐developed countries have increasingly viewed foreign direct investment (FDI) as a catalyst for economic growth and transformation. The early literature argues that FDI‐facilitated development occurs when a less‐developed country assimilates, adapts and diffuses the positive externalities arising from the interaction of the multinational enterprise's (MNE) ownership advantage with its locational attributes. This paper, however, posits that FDI‐facilitated development is not an effortless process. It occurs only when host developing‐country governments implement intervention policies that are aimed at increasing indigenous technological capabilities. These policies enhance the absorptive capacity of host countries, allowing them to capture the spillovers arising from the MNE activities. The paper explores this for Trinidad and Tobago, a recipient of substantial FDI inflows in its natural gas industry for the last decade. It shows that FDI‐facilitated development only occurs when governments in less‐developed countries pursue credible intervention policies.     

Nonpoint-Source Pollution Reduction for an Iowa Watershed: An Application of Evolutionary Algorithms

We apply an integrated simulation-optimization framework to search for cost-efficient mix and location of agricultural conservation practices in a typical agricultural watershed for two types of nitrogen reduction targets: control of mean annual nitrogen loadings, and a “safety-first” type constraint, insisting that nitrogen targets be met in every weather realization (weather-resilient solutions). Evolutionary algorithms are developed for each of the appropriate water quality targets. Our approach allows for the derivation of a watershed-level total and marginal nitrogen abatement cost curve. Controlling for the probability of meeting water quality targets (looking for weather-resilient solutions) is found to be significantly more costly than controlling the average nitrogen loadings. Both types of solutions are assessed for robustness with respect to weather uncertainty: solutions selected to reduce average loadings do well under weather uncertainty, while the robustness of solutions selected to be resilient decreases with the stringency of the water quality goal. Nous avons appliqué un modèle intégré de simulation-optimisation pour trouver des combinaisons de pratiques agricoles de conservation efficaces en terme de coûts et les endroits où elles devraient être adoptées dans un bassin versant agricole typique pour deux types de cibles de réduction des charges d’azote : la surveillance des charges moyennes annuelles d’azote et une contrainte du type « sécurité d’abord », selon laquelle les cibles d’azote doivent être respectées peu importe les conditions météorologiques (solutions robustes aux changements météorologiques). Nous avons élaboré des algorithmes évolutifs pour chaque cible relative à la qualité de l’eau. Notre approche a permis de dériver la courbe de coût liéà la réduction marginale et totale de l’azote dans un bassin versant. L’ajustement de la probabilité que les cibles relatives à la qualité de l’eau soient respectées (solutions robustes aux changements météorologiques) s’est révélé significativement plus coûteux que de contrôler les charges moyennes d’azote. Nous avons évalué les deux types de solutions afin de vérifier leur performance dans des conditions météorologiques incertaines : les solutions retenues pour réduire les charges moyennes fonctionnent bien dans des conditions météorologiques incertaines, tandis que la performance des solutions robustes aux conditions météorologiques diminue avec le niveau visé de qualité de l’eau.     

Clothing Style,Music, and Media Influences on Adolescents’ Brand Consumption Behavior

This research focuses on the influence of clothing style identification on adolescents’ brand consumption behavior. The sample consisted of 1063 adolescents. The results indicated that the clothing brands adolescents prefer depend upon the clothing style with which they are identified. The role of media and music on Generation Y adolescents and on their clothing consumption was confirmed. Adolescents’ group identification and adolescents’ sensitivity to media and music vary according to their clothing styles. These data can be employed by firms to develop brands strategies.     

Taylor rules in the open economy

Taylor rules, which link short-term interest rates to fluctuations in inflation and output, have been shown to be a good guide (both positively and normatively) to the conduct of monetary policy. As a result they have been used extensively to model policy in the context of both closed and open economy models. Their determinacy properties have also been analysed in the context of closed and, to a more limited degree, in small open economy models. In this paper, we extend the analysis of the determinacy properties of Taylor rules to the case of a benchmark two-country model. When the rules are specified in terms of output-price inflation we confirm and extend the conventional results from the closed economy literature—satisfying the Taylor principle is the key to ensuring determinacy, although the presence of backward-looking price-setting can affect the determinacy properties of the two-country model. However, the conventional results do not hold when we replace output-price inflation with consumer price inflation in the specification of the rule. In this case, Taylor rules which satisfy the Taylor principle will be indeterminate, unless there is an unusually large home bias in consumption. Similar indeterminacy problems arise when one country targets CPI inflation and the other output-price inflation. In this case we show that, even if determinacy is achieved, large spillovers may occur between countries.