Stock price informativeness on the sensitivity of strategic M&A investment to Q

Using a strategic merger sample that covers the period from 1985 to 2011, we find that the acquirer’s stock price firm-specific information, the new information created by investors about the value of firm fundamentals, increases the positive sensitivity of strategic merger investment to the acquirer’s Q; the target’s stock price firm-specific information increases the negative sensitivity of merger investment to the target’s Q. These results suggest that managers learn from financial markets in identifying strategic merger investment opportunities by transferring assets from poorly managed firms to well managed firms. In addition, the target’s stock price firm-specific information itself increases the acquisition size, indicating that informed acquirer managers are more likely to take out large merger investment. Last but not the least, stock price informativeness increases merger synergies and post-merger performance, suggesting that informed managers make better merger investment that increases shareholder value. Our study contributes to the recent increasing stream of studies on managerial learning from the market.     

Illiquidity Premium in the MILA

This article analyzes the illiquidity premium in the MILA. Using seven proxies for illiquidity, we find a positive and significant illiquidity premium for our sample. A microstructure bias-free portfolio weighting based on past returns is critical in our finding of an illiquidity premium, which is robust to several methodological changes in our portfolio simulations. We also document that the premium is present only in small and high book-to-market stocks. Nonetheless, when we control for size and distress effects, the difference and significance in risk-adjusted returns between portfolios of high and low illiquidity stocks remains.     

Waves and Determinants in Mergers and Acquisitions: The Case of Latin America

This article contributes to the current literature on mergers and acquisitions (M&As) by identifying the existence of waves and the determinants of M&A activity in the economies of Argentina, Brazil, Chile, Colombia, Mexico, and Peru. From a sample of 2,391 M&A announcements reported by Thomson One on these countries, applying the methodology proposed by Harford (2005), evidence of M&A waves is found for the periods 1995–2002 and 2003–2010, as reported for other regions in various international studies. After controlling for economic and business environment variables, as well as for profitability and book-to-market variables at the industry level, we find evidence that supports neoclassical theory as a main explanation for M&A activity but not for the misvaluation effect.     

Assessing cross-cultural marketing theory and research: A commentary essay

Cross-cultural research (CCR) is extremely important for advancing understanding of the range and limits of theoretical constructs and frameworks across different cultural contexts. CCR also provides an important understanding of the differences between countries and cultures. This commentary essay examines the review conducted by Engelen and Brettel (2010) and comments on shortcomings, as well as identifying areas where more needs to be done. A critical first step is to properly define the unit of analysis. This step is particularly critical as the concept of “national culture” is becoming increasingly less relevant and the appropriate culture unit for examination is often a smaller, more homogeneous grouping within a given geographic location. This view allows more meaningful inferences to be made and controls for possible contextual confounds, as well as providing a richer understanding of the limits of national culture in an increasingly global economy.     

Organizational governance and TMT pay level adjustment

This paper analyzes how the characteristics of boards and structure of ownership moderate a firm's capacity to adjust top management team (TMT) pay levels in the face of changes in its economic and complexity conditions. Using panel data from Spanish listed companies between 2003 and 2007, the results indicate that, over time, characteristics of corporate governance system contribute to give a fundamental importance to boards and ownership structure in the determination and adjustment of TMT pay. These associations appear to be even stronger than those that in other Western European and North American countries. Both the Spanish cross-holding and concentrated firms' ownership structure, and socially intervened boards play a major role in the high levels of pay received by the TMT, which, in turn, reflect a moderate adjustment of compensation practices to variations of surrounded environment factors.     

Pricing the Groove: hedonic equation estimates for rare vinyl records

ABSTRACT

This contribution adds to the economic literature on the market value of rarity in markets for cultural collectible goods by studying the price of rare audio recordings (chiefly vinyl) sold on the online marketplace Discogs. Community-based variables serve as proxies for (inverse) rarity and (potential) demand. Results show that the elasticity of price with respect to our measure of inverse rarity (demand) ranges between ?0.120 and ?0.140 (0.150 and 0.160). In addition, effects of hedonic characteristics such as the popularity or collectibility of an artist can be identified. Finally, the study provides evidence for premia for rarity at the top end of the distribution of prices.     

The role of family decision makers in festival tourism

This study assessed the role of family decision makers in participating in a festival according to five stages of festival participation. A survey process was conducted using two sampling groups: the sample for families with children and the sample for families without children. According to the results of the study, a number of marketing implications were generated. For example, the husband was revealed to more actively join transportation-related activities including driving, deciding travel routes, automobile safety checks, and filling up with gasoline. The wife was a strong decision maker in selecting restaurants or menus in the festival tourism management process. Likewise, the role of the wife is very significant, from suggesting the festival participation at the first stage to determining a revisit to the festival at the last stage. However, the children or joint decision-making patterns were not distinctive as they are said to be in other tourism literature. Findings of the study are expected to offer valuable insights for all festival stakeholders including festival vendors, local government, local residents, and festival organizers.