Effects of dissatisfaction in tourist services: The role of anger and regret

Dissatisfied customers due to a service failure probably will switch the provider, will complain and/or will spread negative word-of-mouth. However, to what extent some specific emotions triggered by dissatisfaction can mediate between the latter and the previous mentioned behaviours? A sample of 359 users of restaurants and 308 users of hotel services has shown that, whereas anger has a significant influence on the three behaviours under study, regret only affects switching and negative word-of-mouth. Furthermore, slight differences between hotels and restaurants have been found because, in the case of restaurants, anger is not an antecedent of switching whereas regret has an inverse effect on complaining.     

Economic capital for nonperforming loans

A portfolio of nonperforming loans requires economic capital. We present two models for forecasting the portfolio loss and its probability distribution. In the first model, the loss for each nonperforming loan entails a change in provision over the risk horizon. The risk determinants are the single-name concentration, measured by the Herfindahl–Hirschmann index, as well as a systematic factor and the idiosyncratic risk. Our second model allows for interportfolio diversification with a portfolio of performing loans because banks typically own both performing and nonperforming loans. In this model, the nonperforming loan is identified with its systematic risk. Both models allow for closed-form expressions of economic capital and for the capital charge of the single loan. We calibrate the macroeconomic model parameters statistically with a loss panel; the microeconomic parameters depend on the portfolio. The portfolio risk for nonperforming loans mainly depends on the volatility of the systematic economic factor. The dependence becomes more pronounced when interportfolio diversification is taken into account. The magnitude of interportfolio diversification is also marked. Finally, we calculate regulatory capital charges according to Basel II for past-due loans. The regulatory charges are on average smaller than our economic charges and, additionally, take the volatility of economic activity into account only implicitly.     

The attraction paradigm in dyadic exchange

Although the marketing literature alludes to the influence of interpersonal attraction in dyadic exchange, the composition of attraction, as well as its relationship to other elements in the exchange process, has not been given adequate attention. Since substantial empirical evidence supports the impact of attraction on a variety of human responses, this article examines how attraction impacts on marketing dyads and presents a model of interpersonal attraction as a framework for empirical testing. The implications of the model are discussed, and suggestions for further research are given.     

Management sub-advising in the mutual fund industry

This is a study of how contractual mechanisms can mitigate agency conflicts in sub-advised mutual funds. Sub-advising contracts allow fund families to expand their product offerings to include new investment styles and thereby gain market share. We show that costly contractual arrangements, such as co-branding, multi-advising, and performance-based compensation, can mitigate agency conflicts in outsourcing and protect investors from potential underperformance. Fund families will find it cost-effective to implement such incentive mechanisms only when investors are sophisticated in assessing manager skill. The findings help to explain why a large percentage of fund families outsource their funds to advisory firms.     

Trade law and trade flows

This paper develops and estimates a model to study the effect of improving the quality of commercial trade law on trade flows. We focus on improvements aimed to privately resolve disputes among trading partners: international commercial arbitration and conciliation. The main novelty of the model is to explicit the balance between the contractual quality of importer and exporter (contractual distance) in an environment with informational frictions (contractual noise). Using a structural gravity estimation with high-dimensional fixed effects, the main contribution of the empirical exercise is to confirm previous results and unravel new traits that align with our theoretical results. Arbitration has a moderate and positive effect on exports that increases (decreases) with the contractual quality of the exporter (importer) and the remoteness of markets. The effects of conciliation are similarly positive, but only for similar trading partners with high levels of income. Results also suggest both domestic trade law reform and international treaties have a positive effect on trade, with a stronger effect of the latter.     

EMU and trade: A PPML re-assessment with intra-national trade flows

This paper examines the EMU effect on trade for the eleven early joiners and Greece relying for the first time on data that include both international and intra-national trade flows, in line with all the microfoundations of the structural gravity model of trade. We find that the overall EMU impact on trade is positive between its members and, specially, for trade between members and non-members. Interestingly, we further show that the effect of the EMU on bilateral trade remarkably differs across countries. For Ireland, Belgium–Luxembourg, Spain, Portugal and Austria, we find robust evidence that EMU has boosted trade both with other members and with third countries, while for Finland, France, Germany, Italy and the Netherlands, the results suggest that only trade with third countries has been enhanced by the EMU. Greece is the only country that shows a negative impact in trade with other EMU members and no effect in trade with non-members. Finally, the results across countries according to the direction of the trade flows (exports versus imports) do not show significant differences in any case.     

A Production Model With Firm-Specific Temporal Variation in Technical Inefficiency: With Application to Spanish Dairy Farms

This paper introduces a stochastic frontier production model which accommodates firm-specific temporal variation in technical inefficiency. Unlike Cornwell, Schmidt and Sickles (1990), technical inefficiency is not modeled through the intercept of the production frontier, but through an error component model. The proposed model is a generalization of the Battese and Coelli (1992) model, which imposed a common temporal pattern upon all firms. In our application involving Spanish dairy farms, we find that the new model is preferred to the Battese and Coelli (1992) model on the basis of the likelihood ratio test. Results provide a new source of information on the different patterns of technical inefficiency change among the 82 farms in the sample.     

The gravity of financial development

The article empirically tests the link between financial constraints with the extensive (proportion of exporters) and the intensive (volume of exports) margins of international trade. The main contribution is the macroeconomic analysis of this relationship – i.e. the investigation of the effect of finance on trade of all economic sectors combined – which is further reaching than the manufactured-sector-based focus found in the current literature. The study is developed on the basis of a bilateral trade database on 104 countries between 1998 and 2007. The empirical section estimates a two-stage gravity equation using panel data and shows a positive impact of financial development on the marginal variation of the extensive margin. However, the estimate of the relationship between finance and the intensive margin shows an unexpected result. It finds inconsistent results demonstrating a relationship that is negative, positive or statistically null.     

The success of job applications: a new approach to program evaluation

This paper suggests a novel approach to program evaluation that allows identification of the causal effect of a training program on the likelihood of being invited to a job interview under weak assumptions, i.e., by measuring the program-effects by pre- and post-treatment data that are very close in time for the same individual.     

Asymmetric Demand Information and Foreign Direct Investment*

We examine the FDI versus exports decision of firms competing in an oligopolistic (quantity‐setting) market under demand uncertainty and asymmetric information. Compared to a firm that chooses to export, a firm that chooses to set up a plant in the host market has superior information about local market demand. In addition to the well‐known tension between the fixed set‐up costs of investment, the additional variable costs of exports and oligopoly sizes, the incentive to invest abroad is explained by the strategic learning effect. FDI may be observed even if trade costs are zero. The analysis is robust to price competition and to the possibility that a foreign firm can engage in both FDI and exports.