Managerial ownership and corporate diversification: a longitudinal view

Strategy and finance research suggests that managerial ownership results in increased incentive alignment and therefore is negatively related to corporate diversification. Using a longitudinal approach, we develop arguments to examine whether managerial ownership is associated with subsequent changes in diversification and/or if diversification is associated with subsequent changes in ownership. The results indicate that levels of managerial ownership in one time period are not associated with subsequent changes in corporate diversification, which raises incentive alignment questions. We also find that higher levels of corporate diversification are associated with changes in managerial ownership, which suggests support for the employment risk‐reduction perspective. This study provides important reasons to reassess the longitudinal implications of the managerial ownership‐corporate diversification link from both theoretical and managerial perspectives. Copyright © 2007 John Wiley & Sons, Ltd.     

Consistency in Mixed Demand Systems: Contingent Valuation and Travel Cost Data

In contrast to previous literature, we propose a consistency test that does not impose any particular common functional form for the preference structure underlying the travel cost (TC) and contingent valuation (CV) models. We derive testable consistency conditions between TC and CV data in the context of mixed demand systems when valuing changes in environmental quality. These conditions are a subset of the rationality conditions. The proposed consistency tests are implemented combining TC and CV data. The empirical results show that it is possible to combine stated TC and CV, but not revealed TC and CV data.     

Ethical Behaviour of Tertiary Education Students in Cyprus

The purpose of this research was to investigate, for the first time, tertiary education students’ ethical judgements in the Republic of Cyprus academic environment. The authors developed and administered a quantitative questionnaire to a sample of 1,000 individuals currently pursuing accredited degrees at two tertiary institutions. Statistical analysis revealed four factors, named violation of school regulations, selfishness, cheating, and computer ethics that describe students’ ethical judgements in the academic environment. The results indicate that students exhibit the lowest tolerance with ethical issues relevant with selfishness and highest with issues relevant with computer ethics. In addition, a number of differences were revealed when the authors investigated the relationship between the four retained factors and variables such as gender, year of study, type of academic discipline, and religion. Finally, reflecting on the research findings, a number of practical recommendations are made mainly to educational institutions that wish to redefine their policies and procedures regarding ethics within their academic environment.     

Deposit guarantee evaluation and incentives analysis in a mutual guarantee system

This paper analyzes how the deposit guarantee value affects the risk incentives in a mutual guarantee system. We liken the guarantee’s value to that of a European-style contingent claims portfolio. The main feature emerging from our model is that a mutual guarantee system would give banks an adverse incentive to increase riskiness. To mitigate this incentive, we introduce a regulatory provision modelled using a path-dependent contingent claim. By comparing the mutual guarantee system with a non-mutual one, we show that the former is less expensive, but implies higher adverse incentives for the banks, especially for undercapitalized institutions.     

The economic effects of foreign bank presence: Evidence from the Philippines

This study examines the economic effects of the liberalization of foreign bank entry in the Philippines from 1990 to 2006. The findings provide strong evidence on the dominance of competition effects from foreign bank presence which lead to the reduction in the profitability and overhead costs of domestic commercial banks. These findings, which reveal that both the actual market penetration and mere presence of foreign banks seem to exert competitive pressure to domestic banks, imply that foreign banks may serve as an effective competitive force, reducing the excess profits earned by domestic banks and compelling domestic banks to update their production technologies and techniques to improve their cost efficiency.From a policy perspective, the findings on competition effects of foreign banks in the domestic banking system justify the liberalization of foreign bank entry in the Philippines. The main findings demonstrate that the goal of banking liberalization in transforming domestic banks to be more competitive and efficient works considerably well in the case of the Philippines. Aside from the policy of easing the entry of foreign banks, bank-specific conditions can have significant impact on the performance of domestic banks. Therefore, a sustained improvement in the efficiency of domestic commercial banks requires not only liberalizing the entry of foreign banks, but also on continued strengthening of domestic prudential regulation and supervision on the commercial banking system.     

Exploring governance of the new European Banking Authority—A case for harmonization?

In the context of the proposed EU financial supervisory reforms, this paper focuses on the governance of the network of national supervisory banking agencies and the newly established Community supervisor (European Banking Authority, EBA). We assess to what extent lack of governance convergence nationally and with EBA could undermine the incentives for cooperation among supervisors. Convergence should particularly focus on (i) the issue of the presence of politicians on decision-making bodies; (ii) the need for clearly defining dismissal procedures of heads of supervision; (iii) autonomy from government in regulatory matters; (iv) supervisory autonomy in matters of licensing and withdrawing licenses; (iv) mechanisms for judicial accountability; (v) legal protection for supervisors handling in good faith. In the absence of full centralization of prudential supervision, early harmonization of national governance arrangements towards best practice would better align supervisors’ incentive structures and, hence, be beneficial for the effectiveness of European supervision.     

Brand equity in the professional service context: Analyzing the impact of employee role behavior and customer-employee rapport

The study examines whether factors related to customers' perception of employees' behavior in terms of customer perceived role ambiguity, role overload and customer-employee rapport influence the development of brand equity in the professional service context. 632 customers of one of the Big Four auditing companies participated in the study. The results of structural equation modeling show negative effects of role ambiguity and role overload on brand associations, perceived quality and brand loyalty, which constitute brand equity. The findings indicate a positive effect of customer-employee rapport on the enhancement of B2B brand equity. However, the negative influences of role ambiguity and role overload on customer-employee rapport transfer detrimental indirect effects on brand equity. The study contributes to an understanding of how the real interaction between service providers and customers can influence brand equity in the professional service setting.     

Understanding the role of marketing-purchasing collaboration in industrial markets: The case of Russia

This study aims to investigate the role of interfunctional collaboration between marketing and purchasing functions in industrial companies. Interfunctional collaboration is considered as a measure of the internal alignment and partnership between departments in the firm, which in turn contributes to the creation of sustainable advantages via improved external partnerships and facilitating demand chain integration. We test the impact of customer orientation as well as the interactions between departments (specifically marketing and purchasing) as collaboration antecedents, and analyze the direct impact of marketing-purchasing collaboration on business performance. The model is tested on a sample of 148 industrial companies in Russia with two key respondents in each firm, incorporating the purchasing as well as the marketing perspective. The results show that marketing-purchasing collaboration mediates the effects of interfunctional interaction as well as customer orientation on business performance. Alternative model testing shows that the direct effects of these antecedent constructs on performance are non-significant in the context of Russian industrial companies.