Management earnings forecasts and bank loan contracting

We find that firms tend to issue management earnings forecasts and convey good news before bank loan initiation. Issuing firms enjoy more favorable contracting terms and attract more lenders. Management forecasts issuance within a nine‐month period prior to the loan activating quarter can lower the subsequent loan spread by 14.06 basis points. Moreover, firms with larger management forecast errors are charged harsher contracting terms and attract fewer lenders. Our study suggests that firms strategically issue management earnings forecasts before entering into debt contracts and lenders incorporate the information contained in management earnings forecasts into bank loan contracting.     

The magnet effect of price limits: A logit approach

We investigate the magnet effect of price limits using transaction data from the Taiwan Stock Exchange. A logit model incorporates explanatory variables from microstructure literature and reveals that the conditional probability of a price increase (decrease) increases significantly when the price approaches the upper (lower) price limit, in support of the magnet effect. Our approach recognizes when the magnet effect starts to emerge and identifies possible determinants of magnet effect. The probability of information-based trading has a significant impact on the magnet effect for lower price limits.     

Real Estate and the Arbitrage Pricing Theory: Macrovariables vs. Derived Factors

Two empirical models are used to implement the arbitrage pricing theory: the factor loading model (FLM) and the macrovariable model (MVM). This study compares the ability of these two models to explain real estate returns using equity REIT returns as a proxy. Two tests are performed: a comparison of crosssectional adjusted-R2's and the Davidson and Mackinnon test. The results show that while the two models perform equally well during the period 1974–1979, the MVM outperforms the FLM over the periods 1980–1985 and 1986–1991. In addition, both models suggest superior financial performance for EREITs relative to other investments in the market during the period 1980–1985.     

Understanding the influences of story elements in service businesses

With the advances of the roles of business stories in marketing, two issues remain unclear: How do consumers evaluate story elements on services? Do usefulness and affect mediate the relationships between business story elements and brand attitude in services? Therefore, to answer these questions, this study conducted between-subjects experiments to investigate the roles of business story elements, usefulness, and affect in financial and restaurants services. The results indicate that the elements of authenticity, reversal, and humor are generally useful in engaging consumers’ usefulness and affect; besides, conciseness is useful in engaging consumers’ usefulness but is not for affect and brand attitude; finally, usefulness and affect are mediators of the relationship between business story elements and brand attitude. These findings provide a framework to design business story and investigate the mediation of usefulness and affect on the relationship between business story elements and brand attitude for services and practitioners.     

Cross-border mergers and market concentration in a vertically related industry: theory and evidence

We present a tractable model of oligopoly to identify the linkages between local competition and cross-border mergers in a vertically related industry. We show that the incentives for cross-border mergers rise with vertical integration in an industry when the premerger concentration in that industry is sufficiently high relative to the concentration in the same industry in a foreign country. We also show that the incentives for a merger between a foreign firm and a vertically integrated home firm will be higher than that for a merger between a foreign firm and a disintegrated home firm, when the premerger concentration at home is low relative to the premerger concentration in the foreign country. We then analyze a firm-level panel of 90,614 M&A observations, between 1990 and 2012, from 86 countries. Logistic regressions confirm that market concentration is an important determinant of cross-border M&A. Our results support the conjectures of our theoretical model and are consistent with recent empirical findings and theoretical predictions.     

The effect of customer participation on service providers' job stress

There have been conflicting explanations of how customer participation affects service providers' job stress. This study explores the relationship between the two. Survey data from 293 customer-contact employees at 64 restaurants in Taiwan indicate that customer participation is positively related to perceived job stress and perceived workload, implying that it is inappropriate to explain job stress from the perspective of partial employees. Moreover, while customer participation increases the level of job stress, workload is only a superficial explanation for the relationship. The real explanation is role conflict, which is associated with changes in job characteristics. Implications of these findings for managing customer participation are subsequently discussed.     

Measuring user perceived service quality of online auction sites

This study proposes a measure for online auction sites' service quality (OA-SQ). The conceptualisation is based on a literature review of service quality research and an analysis of the unique characteristics of online auctions. A pilot study refined the initial scale. A second survey data set tests the final scale. Results of both exploratory and confirmatory factor analysis show high construct validity of the scale. The scale includes 24 items for seven dimensions: efficiency, system availability, privacy/security, compensation, personalisation, playfulness, and reputation.     

Maintaining a committed online customer: A study across search-experience-credence products

The goal of relationship marketing is to build and maintain a committed, loyal relationship between a customer and an organization. Although studies have discussed the types of relational bonds that enhance customer loyalty, empirical research that focuses on the application of relational bonds in a virtual environment is relatively sparse. In response, this study investigates the effects of various relational bonds on customer commitment across search-experience-credence goods/services on Internet. The results suggest that financial, social, and structural bonds have positive impacts on customer commitment. In addition, financial bonds are more successful in strengthening customer commitment for search goods/services than for experience or credence goods/services. Structural bonds are more important for credence and experience goods/services than for search goods, and social bonds are almost equally important for all three types of goods/service.     

Does office size matter in client acceptance decisions? Evidence from big 4 accounting firms

Review of Quantitative Finance and Accounting - This study examines whether audit firm office size affects auditors’ risk tolerance in making client acceptance decisions. Analyzing publicly...     

Pricing efficiency of the S&P 500 index market: Evidence from the Standard & Poor's Depositary Receipts

Standard & Poor's Depositary Receipts (SPDRs) are exchange traded securities representing a portfolio of S&P 500 stocks. They allow investors to track the spot portfolio and better engage in index arbitrage. We tested the impact of the introduction of SPDRs on the efficiency of the S&P 500 index market. Ex‐post pricing efficiency and ex‐ante arbitrage profit between SPDRs and futures were also examined. We found an improved efficiency in the S&P 500 index market after the start of SPDRs trading. Specifically, the frequency and length of lower boundary violations have declined since SPDRs began trading. This result is consistent with the hypothesis that SPDRs facilitate short arbitrage by simplifying the process of shorting the cash index against futures. Tests of pricing efficiency comparing SPDRs and futures suggested that index arbitrage using SPDRs as a substitute for program trading in general results in losses. Although short arbitrages earn a small profit on average, gains are statistically insignificant. A trade‐by‐trade investigation showed that prices are instantaneously corrected after the presence of mispricing signals, introducing substantial risk in arbitraging. Evidence in general supported pricing efficiency between SPDRs and the S&P 500 index futures—both ex‐post and ex‐ante. © 2002 Wiley Periodicals, Inc. Jrl Fut Mark 22:877–900, 2002