Distress cost and corporate financing policy: evidence from the equity options market

This study examines the link between distress cost and corporate financing policy through the lens of the equity options market. Four features stand out. First, the cost of distress is comparable to the tax shield from debt financing. Second, the results provide evidence that ordinary least-squares estimates understate the impact of market leverage on default risk. Third, consistent with the information models of debt maturity, firms with higher default probability use more long-term debt. Finally, more distressed firms rely on secured debt to a greater extent. Overall, the results support the trade-off theory of capital structure.     

Hierarchies of ambiguous beliefs

We present a theory of interactive beliefs analogous to Mertens and Zamir [Formulation of Bayesian analysis for games with incomplete information, Int. J. Game Theory 14 (1985) 1-29] and Brandenburger and Dekel [Hierarchies of beliefs and common knowledge, J. Econ. Theory 59 (1993) 189-198] that allows for hierarchies of ambiguity. Each agent is allowed a compact set of beliefs at each level, rather than just a single belief as in the standard model. We propose appropriate definitions of coherency and common knowledge for our types. Common knowledge of coherency closes the model, in the sense that each type homeomorphically encodes a compact set of beliefs over the others’ types. This space universally embeds every implicit type space of ambiguous beliefs in a beliefs-preserving manner. An extension to ambiguous conditional probability systems [P. Battigalli, M. Siniscalchi, Hierarchies of conditional beliefs and interactive epistemology in dynamic games, J. Econ. Theory 88 (1999) 188-230] is presented. The standard universal type space and the universal space of compact continuous possibility structures are epistemically identified as subsets.     

Research on target costing: past,present and future

Although target costing is an extensively studied topic in the management accounting literature, a holistic investigation into its methodological development is missing. Therefore, an extensive state-of-the-art analysis is conducted that focuses on articles in highly rated journals. We determine nine distinct research streams that encompass further developments of the traditional target costing methodology. By grouping these streams into three research scopes, we outline the achieved progress as well as remaining tasks for further enhancements. Due to the abundance of these tasks, we align them with six future themes of management accounting that we identified as being particularly influential to target costing. As a result, six promising topics for researchers to advance target costing are determined. Additionally, our findings reveal to managers of which issues they should be particularly aware with respect to the performance of their target costing processes.     

Influence of brand relationship on customer attitude toward integrated resort brands: a cognitive,affective, and conative perspective

ABSTRACT

Despite the significance of understanding customer behavior in the integrated resort setting, only limited research has been conducted on this topic. Thus, this study aims to identify and assess the antecedents of integrated resort brand loyalty from the perspective of Oliver’s cognitive, affective, and conative theory of attitudinal brand loyalty model. . A total of 443 respondents who had experienced integrated resorts participated and completed a survey questionnaire. A positive relationship was observed between two-way communication and brand attitude, emotional exchange and brand attitude, brand partner quality and brand attitude, and brand attitude and behavioral intention toward integrated resort brand. Results revealed the association between cognitive, affective, and conative dimensions and integrated resort brand value. This notion suggests that integrated resort brands carry a high awareness of relationship, and the brand will invoke an emotional value in customers. Therefore, integrated resorts should consider customer–brand relational aspects to achieve long-term success for the integrated resort brand.     

Leverage and investment in diversified firms

Within diversified firms, the negative impact of leverage on investment is significantly greater for high q than for low q segments and significantly greater for non-core than for core segments. This differs substantially from focused firms and is consistent with the view that diversified firms allocate a disproportionate share of their debt service burden to their higher q and non-core segments. We also find that, among low-growth firms, the positive relation between leverage and firm value is significantly weaker in diversified firms than in focused firms. We conclude that the disciplinary benefits of debt are partially offset by the additional managerial discretion in allocating debt service that is provided by the diversified organizational structure.     

Customer churn analysis: Churn determinants and mediation effects of partial defection in the Korean mobile telecommunications service industry

Retaining customers is one of the most critical challenges in the maturing mobile telecommunications service industry. Using customer transaction and billing data, this study investigates determinants of customer churn in the Korean mobile telecommunications service market. Results indicate that call quality-related factors influence customer churn; however, customers participating in membership card programs are also more likely to churn, which raises questions about program effectiveness. Furthermore, heavy users also tend to churn. In order to analyze partial and total defection, this study defines changes in a customer's status from active use (using the service on a regular basis) to non-use (deciding not to use it temporarily without having churned yet) or suspended (being suspended by the service provider) as partial defection and from active use to churn as total defection. Thus, mediating effects of a customer's partial defection on the relationship between the churn determinants and total defection are analyzed and their implications are discussed. Results indicate that some churn determinants influence customer churn, either directly or indirectly through a customer's status change, or both; therefore, a customer's status change explains the relationship between churn determinants and the probability of churn.     

Consequences of further opening of the Korean dairy market

This paper develops a simulation of Korean dairy policy that is tailored to the data, institutions, and policies in South Korea. It compares potential effects of changes in trade and domestic policy to baseline projections to 2015. Beverage milk continues to be supplied from domestic sources, implying imports compete in the manufacture of tradable products. We model manufactured dairy product supply, demand, and trade on a milk fat and non-fat-solid component basis reflecting product fungibility over the 10-year horizon used for our trade policy analysis. We find that if the domestic price support is removed with no change in trade policy, the market price of raw milk falls by about 2% and raw milk production declines by 4.5%. Under substantial tariff cuts of 30–40% with no effective change in domestic dairy policy, Korean fat and non-fat-solid prices fall by 7% and 11%, fat and non-fat-solid imports rise by 9% and 7% and Korea raw milk production falls by about 2% relative to the baseline. Prices of Korean farmer-owned dairy inputs, labor, and capital fall by about 1%.     

A dynamic multi-commodity model of the agricultural sector: A regional application in Brazil

This paper develops a dynamic model to analyze the development process in the agricultural sector. Formulated as a recursive linear programming model, it contains several commodities as outputs, farm and regional resource constraints on owned and purchased inputs-including working capital-and several farm sizes. The objective function is assumed to be separable for each farm size and additive for the region and measures for each year the net expected revenues from crop and livestock production less an investment charge. Prices are exogenous. The model is applied to a rapidly developing agricultural region in Southern Brazil and tested for its ability to trace regional farm sector development over a decade. It is then used to analyze the impact of alternative agricultural policies including price and credit subsidies.     

Word-Of-Mouth Communication and Community Enforcement

We study a repeated game where a seller, who has a short-term incentive to supply low quality, is periodically matched with a randomly selected buyer. Buyers observe only the outcomes of their neighbors' games and may receive signals from them. When the buyer population is large, the seller may sell high quality even when each buyer observes her action in any given period with an arbitrarily small probability. When networking among buyers is costly, low quality is always supplied with a positive probability. For this case, we characterize an equilibrium where the seller randomizes between high and low quality.