Conditional Conservatism and Debt versus Equity Financing

Extant research suggests that conditional conservatism reduces information asymmetry between a firm and its shareholders as well as its debtholders. However, there is little evidence on whether conditional conservatism reduces information asymmetry differentially for shareholders and debtholders. We use the setting of a firm's choice between equity versus debt when it seeks a significant amount of external financing to examine this research question. We find that when firms raise a significant amount of external financing, the use of equity (versus debt) increases with the level of conservatism. We also find that the reduction in cost of equity associated with conservatism is greater for equity issuers than for debt issuers, but find no such difference when we examine cost of debt. In addition, we find that the positive effect of conservatism on the choice of equity issuance (versus debt issuance) is accentuated when the information asymmetry between the firm and its shareholders is more severe. Overall, our results suggest that conservatism reduces information asymmetry more between firms and shareholders than between firms and debtholders.     

The links between job insecurity,financial well‐being and financial stress: A moderated mediation model

This study proposed a nuanced approach to the association between job insecurity and financial stress by examining whether financial well‐being mediates the established association. In addition, we examined whether the association between the job insecurity and financial stress, through financial well‐being, is moderated by income. For this study, we conducted a path analysis using 1,145 survey respondents. Results revealed a significant relationship between the job insecurity and financial stress and a partial mediation effect of financial well‐being. Moreover, the indirect effect of job insecurity on financial stress through financial well‐being was moderated by income. Although people who have higher financial well‐being were more likely to have lower financial stress, this relationship varied by income such that it was stronger for higher income groups than for lower income groups. Our findings provide insights into the way job insecurity and financial well‐being influence financial stress. This study will help the researchers and practitioners develop more effective and adaptive intervention programmes and resources for individuals and families. Implications for practice and directions for future research are discussed.     

The Intertemporal Risk-Return Relation in the Stock Market

We reexamine the intertemporal risk-return relation. We find a positive risk-return relation by measuring expected returns and conditional variance in a consistent manner using firm fundamentals. As measures of fundamentals, we use earnings and dividends. For the robustness of our results, we consider various sample periods and model specifications. Our finding of a positive relation is robust as long as we use firm fundamentals in measuring expected returns and conditional variances in a consistent manner.     

Brand familiarity as a moderating factor in the ad and brand attitude relationship and advertising appeals

Studies examining the effects of advertising appeals have yielded conflicting results. Some have found that an emotional appeal is more persuasive than an informational appeal, while others have demonstrated the opposite. The objective of the current study was to explore a theoretical explanation for the conflicting results in advertising appeal research. The findings of this study support the theory that brand familiarity determines the effectiveness of advertising appeal. The study results additionally support the theory that attitudes toward the ad predict the consumer’s attitude toward the brand. In addition, the study found that brand familiarity moderates the strength of the relationship between ad attitude and brand attitude. Other aspects and the implications of these findings are discussed in this paper.     

Corporate Tax Aggressiveness and Insider Trading

We examine the association between corporate tax aggressiveness and the profitability of insider trading under the assumption that insider trading profits reflect managerial opportunism. We document that insider purchase profitability, but not sales profitability, is significantly higher on average in more tax aggressive firms. We also find that the positive association between tax aggressiveness and insider purchase profitability is attenuated for firms with more effective monitoring and is accentuated for firms with a more opaque information environment. In addition, we provide empirical evidence that tax aggressiveness is significantly associated with greater insider sales volume in the fiscal year prior to a stock price crash. Finally, we find that the association between tax aggressiveness and insider purchase profitability weakens after the introduction of FIN 48, consistent with the increased transparency of tax positions under the new disclosure requirement reducing insiders' information advantage and hence their ability to profit from insider trading. To the extent that insider trading profits reflect managerial opportunism, our results are consistent with managers exploiting the opacity arising from tax aggressive activities to extract rent from shareholders, particularly those shareholders who sold their shares to the managers. Our findings are particularly important in light of the number of studies relying on the agency view of tax avoidance to develop arguments or to draw inferences.     

Integrating Behavioural and Branding Perspectives to Maximize Green Brand Equity: A Holistic Approach

The aim of this study is to expand the existing understanding of green consumers' behaviour by proposing and testing an integrated conceptual model that explores the influence of consumers' personal concerns for the environment and general attitudes towards green products on brand‐related knowledge structures (image and associations) and relationship preferences (trust and brand equity) for green brands. A questionnaire‐based survey method was used to collect data using convenience sampling. One hundred and ninety‐nine usable responses were obtained. A structural equation modelling procedure was used to test the proposed hypotheses. The results confirmed that a positive relationship exists between consumer concern for environmental values and general attitudes towards green products. Both these constructs influence consumers' knowledge structure of a green brand (image and associations). Furthermore, a strong relationship exists between consumers' knowledge structure (image and associations) and their relational preference (trust and brand equity) with green brands. These findings are important for business strategy formulation by providing empirical support for the idea that a firm should invest its resources not only to project its environmentally friendly brands but also to build consumers' concern for environmental values and their attitude towards green products. Copyright © 2016 John Wiley & Sons, Ltd and ERP Environment     

Predicting hospitality financial distress with ensemble models: the case of US hotels,restaurants, and amusement and recreation

The importance of industry-specific characteristics in financial distress is widely acknowledged, but often overlooked by researchers studying the hospitality industry. The primary objective of this paper is to investigate the key determinants of US hospitality firms’ financial distress between 1988 and 2010 using ensemble models. The data used in this study come from the Compustat database produced by Standard and Poor’s Institutional Market Services. The data were collected from three hospitality-related segments, 5812 eating Places, 7011 hotels and motels, 7990 amusement and recreation services not elsewhere classified according to Standard Industrial Classification. In the restaurant-stacking model, debt-to-equity ratio, growth in owners’ equity, net profit margin, and stock-price trend were chosen as financial distress predictors. In the hotel stacking model, debt-to-equity ratio, stock-price trend, and account receivable turnover were selected as financial distress predictors. In the amusement and recreation-stacking model, debt-to-equity ratio, growth in owners’ equity, net profit margin, and management practice were defined as significant financial distress predictors. Although many researchers have stressed that an ensemble method, which combines the characteristics and advantages of particular models, may improve the performance or interpretability of predictive methods, few hospitality financial distress prediction studies employed ensemble methods. This study demonstrates its originality in this perspective.     

An Analysis of the Financing Decisions of REITs: The Role of Market Timing and Target Leverage

This paper examines the role of capital market conditions and target leverage on the marginal financing decisions of Real Estate Investment Trusts (REITs), which include both capital raising and capital reduction activities. We investigate the relevance of a hybrid hypothesis whereby REITs have target leverage, but they also choose and time their marginal financing decisions according to the capital market conditions. The empirical results suggest that target leverage behavior plays a secondary role to market timing behavior in the financing decisions of REITs. In particular, we find strong and consistent evidence that REITs exhibit market timing behavior in terms of when and what type of capital to issue or reduce. Such market timing practices, motivated by attempts to take advantage of capital market conditions, may shift the firms away from their target leverage. However, we observe that in the long run, most REITs do move their capital structure towards the target debt level.     

Drivers of Sustainability and Consumer Well-Being: An Ethically-Based Examination of Religious and Cultural Values

Journal of Business Ethics - Prior research has examined value antecedents to sustainable consumption, including religious or cultural values. We bridge together these usually separated bodies of...