Investments,Credit, and Corporate Financial Distress: Evidence from Central and Eastern Europe

Although they are instrumental for economic development, productivity-enhancing corporate investments may increase the financial vulnerability of companies, especially in an economic and financial crisis. We employ an instrumental probit model with the aim of finding evidence for the investment and credit patterns that led companies into financial distress during the global financial crisis 2009–2010. The company-level micro-data for our study on three Central and East European countries—Hungary, Bulgaria, Romania and two Baltic countries, Latvia and Lithuania—originates from two independent surveys, the Business Environment and Enterprise Performance Survey conducted in 2008 and the Financial Crisis Survey conducted in 2009/2010. Both were carried out jointly by the EBRD and the World Bank. Our results emphasize a substantial adverse impact from investment intensity and debt financing on company financial soundness during a crisis. On top of that, we discover a strong non-linear pattern in the sensitivity of company distress to its investment-financing nexus.     

Performance of Moving Average Trading Rules in a Volatile Stock Market: The Russian Evidence

This article examines the profitability of dual moving average crossover (DMAC) trading strategies in the Russian stock market over the 2003–12 period. It contributes to the existing technical analysis (TA) literature by testing, for the first time, the applicability of ordered weighted moving averages (OWMA) as an alternative calculation basis for determining DMACs. In addition, this article provides the first comprehensive performance comparison of DMAC trading rules in the stock market that is known as one of the most volatile markets in the world. The results show that the best trading strategies of the in-sample period can also outperform their benchmark portfolio during the subsequent out-of-sample period. Moreover, the outperformance of the best DMAC strategies is mostly attributable to their superior performance during bearish periods and, particularly, during stock market crashes.     

Investigating Adoption of Free Beta Applications in a Platform‐Based Business Ecosystem

Planning new product development (NPD) activities is becoming increasingly difficult, as contemporary businesses compete at the level of business ecosystems in addition to the firm‐level product‐market competition. These business ecosystems are built around platforms interlinking suppliers, complementors, distributors, developers, etc. together. The competitiveness of these ecosystems relies on members utilizing the shared platform for their own performance improvement, especially in terms of developing new valuable offerings for end users. Therefore, managing the development of the platform‐based applications and gaining timely end‐user input for NPD are of vital importance both to the ecosystem as a whole and to the developers. Subsequently, to succeed in NPD planning developers utilizing beta testing need a thorough understanding of the adoption dynamics of beta products. Developers need to plan for example resource allocation; development costs; and timing of commercial, end‐product launches. Therefore, the anticipation of the adoption dynamics of beta products emerges as an important antecedent in planning NPD activities when beta testing is used for gaining end‐user input to the NPD process. Consequently, we investigate how free beta software products that are built upon software platforms diffuse among their end users in a cocreation community. We specifically study whether the adoption of these beta products follows Bass or Gompertz model dynamics used in the previous literature when modeling the adoption of stand‐alone products. Further, we also investigate the forecasting abilities of these two models. Our results show that the adoption dynamics of free beta products in a cocreation community follow Gompertz's model rather than the Bass model. Additionally, we find that the Gompertz model performs better than the Bass model in forecasting both short and long out‐of‐sample time periods. We further discuss the managerial and research implications of our study.     

Grundsteuerreform in Deutschland: eine unendliche Geschichte?

For many years property tax in its current form has been exhibiting increasing problems. There are three reform models currently being discussed that differ in their respective tax bases using either property values or areas, or both. They create different individual tax burdens and amounts of tax revenue in each state compared to the current property tax amount which alters local tax capacity within the fiscal equalisation system among the 16 states. The calculations on regional local tax revenue prove that the value-based models which promote greater equity are being neglected by the financially strong states. This is because they would be forced to provide higher transfer payments to the financially weaker states.     

Designing a medicalized wellness service: balancing hospitality and hospital features

Medicalized environments around the world are challenged with making trade-offs between the clinical nature of the service and the customer service elements needed to deliver the service. Many medicalized wellness services have yet to achieve an effective balance between their hospitality and hospital features to generate loyalty (repeat patronage). We present a case study of a blood service organization in a developed country that, at the time of data collection (2011), was working to resolve tension between clinical goals and expectations of Millennial donors. The results identified seven principles: ‘control over booking and service interactions’; ‘build social connections’; ‘offer a luxury, indulgent experience’; ‘build relationship with customer beyond the “medical” procedure’. The three remaining principles related to hospital-like features: ‘hide the functional/medical features of the service experience’; ‘demystify the “hidden” processes’; ‘ability for the physical service environment to be modified by the customer’.     

Improving the effectiveness of nondisclosure agreements by strengthening concept learning

Intellectual property infringements rank among the top economic crimes, even though there are mechanisms in place to prevent their occurrence. One such mechanism are nondisclosure agreements, which, however, have been reported to fail in practice. This article argues that this may be overcome by strengthening employees’ concept learning. In an experiment, we investigated whether extended nondisclosure agreements, which provide the employee with detailed explanations and examples, lead to better recognition of trade secrets as compared to a standard nondisclosure agreement or no agreement at all. It was found that the extended nondisclosure agreement indeed increased participants’ ability to judge what falls under the trade secret law, whereas the standard nondisclosure agreement showed no such effect. Furthermore, the effects of the factors ‘Involvement’, ‘Specificity’, ‘Publicity’, and ‘Purpose’ on the identification of trade secrets could be proven experimentally. Employees’ judgments of whether an information represents a trade secret seem to rely on general cognitive processes. From this follows that concept learning could be integrated into systematic approaches for protecting intellectual property.     

THE DYNAMICS OF REAL EXCHANGE RATES: A RECONSIDERATION

In this paper we offer a bootstrap‐based version of the Cox specification test for non‐nested hypothesis to discriminate between ESTAR and MSAR models. Both models are commonly used for modeling real exchange rates dynamics. We show that the test has good size and power properties in finite samples. In an application, we analyze several major real exchange rates to shed light on the question of which model describes these processes best. This allows us to draw conclusions about the driving forces of real exchange rates. Copyright © 2013 John Wiley & Sons, Ltd.