Advertising in China—Problems and Prospects

Economic reform in China has revived the importance of the market forces and of advertising. Although advertising has a less important role in the Chinese market than in Western countries, it is the fastest growing industry in China. Foreign participation in advertising is limited and contributes about 10 per cent of Chinese advertising revenues. This paper argues that there is ample opportunity for foreign advertisers. Nevertheless, because the Chinese market is different, foreign advertisers need to be patient when attempting to enter the market. The problems and prospects of advertising in China are pinpointed in this paper. Some precautionary measures for the advertisers are also discussed.     

Intelligent Order Matching Systems for Commodity Markets

Automatic order matching systems have emerged as an electronic alternative to traditional markets. In current automatic order matching systems, price and quantity are the only product dimensions used for the order matching. However, a single-commodity market is made up of many heterogeneous goods which are close to each other but different in qualities and delivery conditions. Price and quantity are important but represent only parts of product attributes that commodity traders want to take into account. This study aims to extend current automatic order matching systems by diversifying product dimensions. An intelligent order matching system not only maximizes the total transaction volume based on the price and quantity but also satisfies traders' qualitative preferences over attributes other than price and quantity. The intelligent order matching mechanism combines an economic model with a preference model to incorporate both quantitative and qualitative utility of market participants. Constraint logic programming is investigated as a new information technology to structure and implement the intelligent order matching system.     

Non-audit fees, institutional monitoring, and audit quality

We posit that the effect of non-audit fees on audit quality is conditional on the extent of institutional monitoring. We suggest that institutional investors have incentives and the ability to monitor financial reporting quality. Because of the reputation concerns and potential litigation exposure, auditors are likely to provide high audit quality, when they also provide non-audit services to clients, particularly when clients are subject to high institutional monitoring. We find evidence that, as non-audit fees increase, audit quality (measured by performance-adjusted discretionary current accruals and earnings-response coefficients) reduces only for clients with low institutional ownership but not for clients with high institutional ownership. Our results are robust after controlling for auditor industry specialization, firms’ operating volatility, size effect, and potential endogeneity between institutional ownership and audit quality.     

The Diversification Effects of Initial Public Offerings

Abstract:  A firm's stock becomes publicly tradable through an initial public offering (IPO). This study suggests a portfolio diversification perspective to explore IPOs. We examine whether investors can gain diversification benefits by adding an IPO portfolio to a set of benchmark portfolios sorted by firm size and book-to-market ratio. Using US IPOs from 1980-2002, we find that adding a value-weighted IPO portfolio does lead to a statistically and economically significant enlargement of the investment opportunity set for investors relative to investing solely in a set of benchmark portfolios. Specifically, the Sharpe ratio of the tangency portfolio increases by 5.50% on average after including IPO stocks. Furthermore, IPOs associated with prestigious lead underwriters are the main source of this augmentation of the mean-variance investment opportunity set. Finally, our study implies that issuing IPO exchange traded funds or similar products can provide diversification gains to investors.     

Managerial Altruism and Governance in Charitable Donations

We describe a double agency problem in firms' charitable donations. When managers have better knowledge about the effectiveness of donations and their altruistic preferences, it is difficult for shareholders to tell whether charitable donations are made for a strategic purpose or due to managerial altruism. We characterize the equilibrium donations in a heterogeneous competition model. We show that managerial altruism is a substitute for the effectiveness of donations, and excess donations cannot be prevented by a compensation scheme that reduces the interest conflicts between ownership and management. Under board authorization, the board will tolerate donations with high effectiveness and low altruism as well as donations corresponding to low effectiveness and high altruism. Under a penalty scheme, the altruistic manager will increase donations, in order to increase donation's strategic benefit to compensate for the loss from the penalty. Copyright © 2017 John Wiley & Sons, Ltd.     

ERM crisis in retrospect: What if a European central bank had been in existence before 1992?

This paper explores whether policy coordination or a single monetary policy implemented earlier would have kept the U.K. in the process of European monetary integration. On the basis of the pre-ERM crisis empirics by Douven and Plasmans (1996), a counterfactual game simulation approach is used, and five scenarios are established for comparison with the actual historical records. The final answer is negative.     

Ethical Decision Making in Marketing: A Synthesis and Evaluation of Scales Measuring the Various Components of Decision Making in Ethical Situations

The authors present a comprehensive synthesis and evaluation of the published scales measuring the components of the decision making process in ethical situations using the Hunt-Vitell (1993) theory of ethics as a framework to guide the research. Suggestions for future scale development are also provided.     

Daily outfit satisfaction: the effects of self and others' evaluation on satisfaction with what I wear today

This study investigated the satisfaction of the outfit which an individual chose to wear for the day by examining how self and others' evaluations influenced the outfit satisfaction and the intention to re‐wear. In addition, moderator variables (body satisfaction and body surveillance) that affected the effect of the evaluative factors upon satisfaction and behavioural intention were also examined. An online‐survey was conducted and the sample size used in the analysis was 349 in total. Using SPSS 18.0 and AMOS 18.0, structural equation modeling analysis and one‐way analysis of variance were implemented for hypothesis testing. The results showed that self‐evaluation as a perception of appropriateness of the outfit for that day and others' positive feedback increases outfit satisfaction. Appropriateness perception also had a significant impact on the intention to re‐wear. However, feedback from others on one's outfit did not have a significant direct effect on behavioural intention. Three‐way ANOVA was performed to verify the impact the feedback from others, body satisfaction, and body surveillance had on the respondent's intention to re‐wear, and a three‐way interaction effect was statistically significant. While individuals with high body satisfaction were likely to be confident about their appearance overall, the feedback from others did not impact their satisfaction. Individuals with low body satisfaction were influenced by others' feedback on their outfit. Individuals with high levels of body surveillance who sensitively monitored others' feedback especially displayed decreased intention to re‐wear when feedback from others on their outfit was negative. This research contributed to the deeper understanding of consumer's clothing behaviour at the post‐purchase stage. Enhanced understanding of lasting satisfaction and benefits pursued throughout the time while using the product would be essential in developing consumer‐centric marketing strategies.     

Social Capital or Ethnic Enclave Location? A Multilevel Explanation of Immigrant Business Growth

The rapid increase in migration into host countries and the growth of immigrant‐owned business enterprises has revitalized research on ethnic business. Does micro (individual)‐level social capital, or meso (group)‐level location within the ethnic enclave lead to immigrant business growth? Or do you need both? We analyze quantitative data collected from 110 Chinese restaurants in Australia, a major host country. At the micro level we find that coethnic (same ethnic group) networks are critical to the growth of an immigrant entrepreneur's business, particularly in the early years. But non‐coethnic (different ethnic group) social capital only has a positive impact on business growth for immigrant businesses outside the ethnic enclave. Our findings are relevant, not only to host‐country policymakers, but also for future immigrant business owners and ethnic community leaders trying to better understand how to promote healthy communities and sustainable economic growth. © 2015 Wiley Periodicals, Inc.     

CEO Overconfidence and Long‐Term Performance Following R&D Increases

We examine the relation between Chief Executive Officer (CEO) overconfidence and significant increases in research and development (R&D) expenditures. Although prior studies reveal a significantly positive market reaction to increases in R&D expenditures in both the long and short run, we find that long‐run stock performance is positive only for firms whose CEOs are not overconfident. Our findings, which may be attributable to overinvestment and the overestimation of future cash flows, imply that R&D resulting from overconfident behavior does not provide any value to firms.