CEO career horizon,corporate governance,and real options: The role of economic short‐termism

Research Summary: Combining studies on real options theory and economic short‐termism, we propose that, depending on CEOs’ career horizons, CEOs have heterogeneous interests in strategic flexibility, and thus, have different incentives to make real options investments. We argue that compared to CEOs with longer career horizons, CEOs with shorter career horizons will be less inclined to make real options investments because they may not fully reap the rewards during their tenure. In addition, we argue that long‐term incentives and institutional ownership will mitigate the relationship between CEOs’ career horizons and real options investments. U.S. public firms as an empirical setting produced consistent evidence for our predictions. Our study is the first to theoretically explain and empirically show that a CEO's self‐seeking behavior will impact real options investments. Managerial Summary: This article helps to explain how a CEO's self seeking‐behavior may shape a firm's real option investment, which could result in different level of strategic flexibility. We argue that CEOs with short career horizons have less time to exercise their firms’ real options, which should lower the investments in the firms’ real options portfolios relative to CEOs with long career horizons. We study a sample of U.S. public firms and find strong evidence that a CEO's expected tenure in the firm is positively related to the real options investments at the firm level. We find that this agency issue can be mitigated by adopting appropriate corporate governance mechanisms such as long‐term incentives and institutional investors.     

The role of brand schemas,information transparency,and source of message on apparel brands' social responsibility communication

In today's complex business environment, apparel brands are communicating about their socially responsible (SR) practices through marketing messages to create a niche for themselves and show their SR efforts. However, SR aspects of products are difficult to verify by consumers. To help brands effectively communicate their SR efforts, this study assessed how consumers process an apparel brand's SR messages based on their prior experiences with that brand (brand schemas). Information transparency on messages and source of messages were tested as external cues to influence consumers' brand schemas and SR message evaluations in a mixed method repeated measures online experiment using a national US consumer sample. Results from regression-based conditional process analyses indicated that increased congruity of consumers' schemas to the fact that brands are SR led to more favorable attitude toward brands' SR messages. Also, presence of high information transparency on SR messages influenced consumers' schemas positively, and in turn, they evaluated messages more favorably. However, consumers were not influenced by whether messages were made by brands or third-party organizations. The study results show the importance of brand schemas and information transparency on apparel brand communications, helping both apparel brands and educators create effective SR-related marketing strategies.     

STOCK MARKET CONSEQUENCES OF POLITICAL VIBRANCY

We define areas with strong geographic ties to powerful politicians as politically vibrant and show that they are characterized by greater value-relevant information generation and symptomatic of equity market segmentation. Political vibrancy entails greater levels of local bias and local comovement and has two important return predictability implications. First, it enhances local institutions’ informational advantages; their trades’ ability to forecast local stock returns exceeds that of nonlocal institutions. Second, in support of the view that information diffuses slowly into prices, stock returns of firms from politically vibrant areas predict returns of similar firms in other areas.     

Unveiling cultures in emergency response communication networks on social media: following the 2016 Louisiana floods

While culture in emergency management has gained attention from the field of risk communication, few have systemically dealt with the nuances of general culture involved in the formation and differentiation of risk communication. To fill this gap, this research aims to first examine cultural nuances from the 2016 Louisiana flood response by primarily focusing on communications embedded in social media. The results from social network analysis and content analysis highlight that the flood response communication had strong cultural characteristics, highlighting the notion that of the cultures in Louisiana—faith-based, local authority, and nonprofits—were the prominent cultural responders in the flood response communication. In particular, cultural similarity in both intra/inter group response communication was observed, with each communication group comprising actors who shared a common cultural background and spoke similar keywords.     

Trade Between North Korea and China: Firm-Level Analysis

Using the unique survey data involving 138 Chinese firms, this study examines the determinants of the performance of the Chinese firms doing businesses with North Korea. The business ties between the Chinese firms and their North Korean counterparts affiliated with the army are positively correlated with the former’s performance. This finding suggests that North Korea’s “Military First” policy acts as a guiding principle of the resource allocation in the country’s export sector. We also found that South Korean sanctions against North Korea were ineffective in banning North Korean goods from gaining access to the South Korean market possibly because of the circumvention of Chinese firms.     

Dissecting Foreign Bank Lending Behavior During the 2008–2009 Crisis

This paper analyzes the lending behavior of foreign‐owned banks during the recent global crisis. Using bank‐level panel data for 51 countries, the paper explores the role of affiliate and parent financial characteristics, host location, as well as the impact of parent geographic origin and reach on foreign banks’ credit growth. Overall, the analysis finds robust evidence that foreign banks curtailed the growth of credit relative to other banks, independent of the host region in which they operate. Banks from the United States reduced loan growth less than other parent banks. Neither the global nor regional reach of parent banks influenced the lending growth of foreign affiliates. Parent capitalization and not parent funding explained the behavior of foreign bank credit growth during the global crisis. However, funding did affect the lending behavior of domestic and foreign banks in host countries, with those relying more heavily on deposits suffering a smaller decline in bank lending. Although not the focus of the paper, we also find that government‐owned banks played a countercyclical role in all regions.     

Korean unification prospects: an assessment through the BDN-model

The debate on the possible unification of South Korea and North Korea has often been assessed from the economic perspective, which is insufficient since unification entails not only the integration of two economies but political, social and technological integration of two territories. Using the box negotiation diagram model, this paper expands the scope of the study on South Korea and North Korea unification through a multidisciplinary approach encompassing the political, economic, social and technological perspectives. Given the huge imbalanced points of unification drawn from our analysis, we observed more divergence than convergence hence, hinging the possibility of unification of serious negotiation.     

A two-sector model with target-return pricing in a stock-flow consistent framework

In this paper, we build a generalized two-sector Kaleckian growth model and explore the dynamics towards long-run positions. The model incorporates conflicting claims of labour and firms over income distribution and endogenous labour-saving technical progress. Adopting a stock-flow consistent framework, our simulation experiments yield the following results. First, the ‘paradox of thrift’ and the ‘paradox of costs’ hold, meaning that lower saving rates generate higher growth rates while higher real wages generate higher profit rates, but the magnitude of the impact depends on the initial status of income distribution and monetary policy. Second, changes in autonomous labour-saving innovations might explain the phenomenon of the ‘New Economy’ of the second half of the 1990s within an alternative framework. Our simulations with a two-sector model retrieve the analytical results achieved with a one-sector Kaleckian model, with the addition of path dependence.     

Cross-Cultural Differences in Social Identity Formation through Travel Blogging

Blogs are an Internet application that continues to grow in popularity. Many blogs contain travel-related postings and, thus, are of importance for researchers and practitioners in the tourism field. Differences in blog use have been found across different cultures. This study seeks to test whether social identity theory can explain some of the differences in extent and type of blog use. A sample of 120 travel blogs written by Korean and U.S. bloggers about three different destinations (Paris, Hawaii, and Tokyo) was analyzed. The results show significant differences that fit the assumptions derived from social identity theory.     

Vertically integrated producer when a rival is also a customer: impact of demand uncertainty

When a vertically integrated producer (VIP) is also a supplier of a component for its rival firm, it was found that the profit in a decentralized structure is higher for the VIP than the profit in a centralized structure under deterministic demand. In contrast, we found that firms’ ordering decisions under uncertain demand can reverse this findings and it is more likely to happen as demand variability increases.