The role of consumers' network positions on information-seeking behavior of experts and novices: A power perspective

Results from two studies demonstrate that depending on consumers’ network positions (peripheral or central), experts and novices behave differently when seeking information about their networks or products related to those networks. Experts in central network positions (vs. peripheral) seek more network-related information, while novices in the same positions seek more product-related information. In contrast, experts in peripheral network positions (vs. central) seek more product-related information, while peripheral novices seek more network-related information. Findings also suggest that desire for power (social or personal) mediates these relationships. Given the importance of social networks in consumer decision making, this research demonstrates the influence and importance of consumer's network position on information-seeking behavior of experts and novices.     

A model of demand,productivity and foreign location decision among Taiwanese firms

We develop a theoretical framework to examine the relative importance of firm demand and productivity in firm decisions to export and where to locate foreign direct investments. The model shows that the equilibrium firm decision depends on product technology, consumer preference for product quality, fixed investment costs of establishing a foreign subsidiary, transportation costs and relative wages. Our empirical results confirm the predictions of the theoretical model. Firm-level demand and productivity components are important in explaining the decision to participate in foreign markets with their relative importance depending on the firm's organizational form (exports versus FDI) and the destination of the investments. In general, FDI firms are more productive than exporting firms regardless of FDI destinations. FDI firms also have a higher demand component than exporters and this demand component is stronger than productivity. Finally, among FDI firms, while those with a high demand index and productivity have a significantly higher propensity to invest in high-income countries, firm productivity is the sole determinant of firms undertaking FDI in low-income countries.     

An examination of restructuring charges surrounding the implementation of SFAS 146

This paper provides evidence on how the adoption of Statement of Financial Accounting Standards (SFAS) No. 146, Accounting for Costs Associated with Exit or Disposal Activities (SFAS 146), has changed (1) restructuring-related earnings management, (2) the effect of restructurings on future operating performance, and (3) stock price responses to restructuring announcements. I find that restructuring charges reported after SFAS 146 have a weaker association with smoothing behavior. More importantly, I document that an improvement in future earnings following a normal restructuring charge is attenuated under SFAS 146, consistent with the standard’s adoption resulting in smaller and more frequent (i.e., more persistent) restructuring charges. I further document that the market places a higher valuation multiple on restructuring charges in the post-SFAS 146 regime, compared to the pre-SFAS 146 regime. Therefore the overall results suggest that the market appears to understand the higher persistence of restructuring charges reported under SFAS 146 and values the charges accordingly.     

Are Multiple Directorships Beneficial in East Asia?

We posit that the benefits and costs of multiple directorships are conditional on firm characteristics. We find firm valuation is positively associated with multiple directorships in (i) firms with high advising needs and (ii) firms with high external financing needs. These beneficial effects of multiple directorships are generally stronger in countries with weak shareholder rights and in firms that are widely held. However, when controlling shareholder hold high voting‐rights to cash‐flow rights, multiple directorships reduce firm valuation, especially in countries with weak shareholder rights and in closely held firms. As multiple directorships increases, cash holdings (capital expenditures) contribute less to shareholder value. The negative association between value of cash (capital expenditure) and busy boards is mitigated in firms with (i) high advising needs, (ii) high external financing needs and (iii) less entrenched ownership structures.     

Contracts for dummies? The performance of investors in contracts for difference

Investors widely use contracts for difference (CFDs) to leverage and short sell underlying financial assets. We investigate the after cost performance of investors in Australian Securities Exchange listed share CFDs, and find that market order CFD trades earn small positive returns at the daily horizon, with negative returns reported for one month to one year horizons due to financing costs. Market orders also net sell positions, which suggests that investors use CFDs for shorting opportunities. Overall, we find that liquidity demanders in CFDs obtain favourable execution, which is inconsistent with the view that CFDs are used by naive individuals.     

Auditors' Fee Premiums and Low‐Quality Internal Controls*

We examine the relation between low‐quality internal controls and audit fee premiums. Using a novel data set of audit hours and audit fees we find, consistent with the audit risk model, that auditors increase their effort (hours) owing to low internal control quality. We find that auditors also charge a significant fee premium to clients with internal control weaknesses. This premium is observed for severe internal control weaknesses and companies with low‐quality alternative governance mechanisms. The results are robust to multiple methods to address endogeneity, including company fixed effects, difference‐in‐differences design, and a propensity score‐matched sample. Taken as a whole, low internal control quality leads to fee premiums, which are a deadweight loss to client companies.     

Moderating effects of the fit between service tangibilization and organizational performance

As the significance of service industry grows, its relationship to overall economic growth and organizational performance (OP) has also become an issue of prominence. Tangibilization is widely known as one of the means of overcoming the weaknesses of service intangibility and improving OP. This research explores the relationship between service tangibilization and OP. Furthermore, the moderating effect of the fit between service tangibilization and OP will also be discussed in the business context. Specifically, the Korean natural gas industry is selected to test the developed hypotheses. The managers who have experience with managing a service business in either the wholesale or retail sector of this industry were surveyed. The results imply that there exists a significant relationship between service tangibilization and OP, with the mental fit positively strengthening some of the relationships between these two constructs. It can be inferred from this that it is important for companies in the natural gas industry to attain the right fit of mental tangibilization in order to effectively deploy service tangibilization and maximize their OP.     

China׳s information security standardization: Analysis from the perspective of technical barriers to trade principles

There have been many attempts for ICT standardization in China. Among them, this paper deals with information security standards. Although information security is often mentioned regarding China?s ICT standardization, it has been rarely examined per se. While most studies on China?s ICT standardization focus on economic aspects (e.g. increased bargaining power) or the government?s role, this paper draws on legal aspects. We select WAPI and ZUC for case studies, and examine their legal aspects, particularly from the perspective of WTO?s TBT (technical barriers to trade) principles. We have found that China?s standardization strategy becomes international-bound and, in fact, the manner in which the Chinese government handles standardization projects has become refined, flexible, and communicative with foreign stakeholders. We see that the changes are responses to the trade concerns raised by foreign stakeholders in various TBT Committee meetings and bilateral meetings. In addition, the Chinese government appears to become market-oriented even in the field of information security where it previously maintained a rigid stance on the ground of national security. This paper points out that the changes are attributed to growing external pressure from foreign governments and firms as well as to internal efforts toward innovation based on indigenous technology.     

Interplay between internal investment and alliance specialization in R&D and marketing

A firm's efforts to build its technological and marketing capabilities are not limited to internal investments but can be extended to include external knowledge acquisitions. We examine the interaction between a firm's specialization in R&D or marketing through its internal investments and its alliances in two different industrial contexts. Our results, based on secondary data sources such as Compustat and SDC Platinum from 1985 to 2009, show that the interaction effects of internal specialization and alliance specialization are contingent on the types of tasks (i.e., R&D and marketing) and the industrial context (i.e., high- and low-tech industries). Our findings indicate that a firm in a high-tech industry is able to achieve greater gains by complementing its internal focus on R&D with its external focus on marketing or by focusing on R&D both internally and externally. In contrast, a firm in a low-tech industry is able to achieve greater performance when R&D and marketing complement each other, without regard for how they are aligned through internal investments and alliances. The firm is also able to improve its performance by focusing on marketing both internally and externally. These findings provide new insights into the complementarity between internal investments and alliances.     

The 21st Century Cures Act: pharmacoeconomic boon or bane?

Barriers to entry in healthcare markets constitute one of the overriding concerns of health economists. The recent enactment of the 21st Century Cures Act in the United States reduces statutory entry barriers to the discovery, development, testing, and licensing of drugs and medical devices. Drug and device makers also see the burdensome and time-consuming requirements of the Food and Drug Administration?s approval process as key barriers to lowering the costs of their products, considering it takes a decade of research amounting to $1 billion just to bring a single drug to the market. Along with novel opportunities for medical product innovation and faster treatment of diseases, the expedited approval process carries with it contentious challenges involving the safety, efficacy and value of drugs and devices. The ensuing trade-offs and unintended consequences of such a regulatory game-changer bring to the fore one of the most enduring debates between medicine and economics: Whether – or to what extent – cost and efficiency factors affect clinical inquiry into possible solutions to human illnesses. The practical and theoretical contributions of pharmacoeconomics should enlighten contemporary and future issues and discussions surrounding the implementation of this landmark legislation. After all, despite its undeniably good intent and far-reaching significance, no law can ever be perfect.