Payment For Risk: Constant Beta Vs. Dual-Beta Models

Fama and French's (1992) assertion that investors receive premium payments for risk associated with the book value to market price (BE/ME) and size and not for holding beta risk has sparked a lively debate concerning risk factors that are priced in the market. Howton and Peterson (1998) use a dual-beta model to test the Fama and French conclusions. They conclude that the significant relationship between beta and returns depends on the use of the dual-beta model. This work, however, ignores the results reported by Pettengill, Sundaram, and Mathur (PSM, 1995). PSM find a significant relation between a constant risk beta and returns when data are segmented between up and down markets, but do not consider the impact of size and BE/ME. In this paper we show that the PSM (1995) market segmentation procedure alone provides a sufficient condition to identify a significant relation between beta and returns in the presence of size and BE/ME. Dual market betas may be relevant in explaining risk and return. However, the market segmentation procedure of PSM (1995) is the critical condition for finding a significant relationship between returns and betas.     

Participating convertible preferred stock in venture capital exits

This paper develops a theory of the participating convertible preferred (PCP) stock commonly used in venture capital settings. I show that the participation and convertibility features of PCP stock can be used to reduce information asymmetry between the venture and potential investors at the time of exit. Further, the convertibility feature of PCP helps in alleviating the problem of insufficient entrepreneurial effort. I then derive implications for the two most common types of exits in venture capital—initial public offerings and trade sales—and explain how US venture capital markets differ from other VC markets.     

Factors that Influence Consumer Adoption of E-government Services in the UAE: A UTAUT Model Perspective

The objective of this research study is to identify the constructs and factors important to the user-centric transformation of e-governments. The research design follows the comprehensive Unified Theory of Acceptance and Use of Technology model. The primary data for the research were collected from potential and current users of e-government services in the United Arab Emirates. Exploratory factor analysis was used to extract the important constructs from the 19 factors identified from the literature. Regression analysis was used to identify the influence of individual constructs on overall satisfaction, while correlation analysis was used to identify the relationship between Internet usage and user satisfaction. Analysis of variance and t-test were used to identify potential differences among demographic factors and their overall satisfaction with e-government services. This study identifies confidentiality and users’ trust and attitudes toward using technology as key determinants of overall satisfaction and the subsequent adoption of e-government services. The study also identifies significant differences in how different genders adopt the use of e-government services.     

Perverse liquidity effect of monetary policy: some evidence for India

The liquidity effect of money supply increases, as policy-oriented measures, would generally lead to a decline in interest rates. This is the direct effect. However, such money supply increases lead to a sum of the direct effect plus the positive indirect price and income effects. In sum, the net effect may be positive leading to a net increase and not a decrease in the interest rate. The regular money demand function is suitably modified to capture the structural changes of the Indian economy to verify the net effect of monetary policy-induced money supply movements. The empirical evidence indicates the presence of a perverse liquidity effect.     

The boundary spanning capabilities of purchasing agents in buyer-supplier trust development

This study examines how individual purchasing agents function as boundary spanners with suppliers to influence trust development in themselves and the buying firms that employ them. Building upon boundary theory and supply chain cooperation research, we identify three boundary spanning capabilities of purchasing agents and empirically test how these capabilities shape buyer-supplier trust development. Using two samples of data collected from suppliers in the automotive industry and food industry, we found that a purchasing agent's effectiveness in strategic communication with suppliers affects a supplier's trust in the buying firm, while an agent's professional knowledge and ability toreach compromises with suppliers affect a supplier's trust in the purchasing agent representing the firm. Trust in the purchasing agent in turn affects trust in the buying firm. Theoretical and managerial implications are discussed.     

Health claims and consumers’ behavioral intentions: The case of soy-based food

This research evaluates the impact of two soy-specific health claims (highlighting FDA approval along with scientific results and simply describing scientific results) on stated behavioral intentions toward soy-based food using a survey administered by Ipsos-Observer to a nationally representative web panel in the summer of 2007. Our research design randomly assigned respondents to a health claim. Three ordered probit models (non-soy users; infrequent soy users; regular soy users) show that non-soy users and infrequent soy users who were exposed to either FDA health claim or general health claim are significantly more likely to eat soy-based food products. FDA or general health claim, however, did not change the behavioral intentions of regular soy users. These results suggest that soy consumption status moderates the impacts of health claims on behavioral intentions. However, the impact of FDA health claim did not differ from that of general health claim, indicating that the word ‘FDA’ did not add any additional information to consumers beyond the general health claim.     

Price‐matching guarantees

Are price‐matching guarantees anticompetitive? We examine the incentives for price‐matching guarantees in markets where information about prices is costly. The conventional explanation of price matching as facilitating cartel pricing finds some theoretical support, but our model provides an additional explanation. A price‐matching guarantee may be a credible and easily understood means of communicating to uninformed consumers that a firm is low priced. The credibility of the signal is assured by the behavior of informed consumers. We contrast the testable implications of our model with those arising from two theories of price matching as anticompetitive, and show that available evidence supports the signalling theory.     

Relay network design in freight transportation systems

This paper provides techniques, heuristics, and algorithms for the location of a minimal number of relay points on a highway network that satisfies the driver-distance constraint––a driver leaving a distribution center does not travel for more than t miles before which he/she returns back to the originating point or rests before moving on further. Straight Route and Detour versions are considered. Empirical evaluations of the proposed heuristics on road networks are performed. The results indicate that the Straight Route version is computationally efficient but locates a larger number of relay points than the Detour versions.     

Assessing sales contest effectiveness: the role of salesperson and sales district characteristics

Sales contests are widely employed to improve short-term sales performance, but knowledge about their effectiveness at the individual salesperson level remains sparse. Proponents argue that contests increase sales by stimulating salespeople, while critics say that contests merely encourage strategic timing of sales efforts. The authors draw on the strategic sales timing literature and goal theory to hypothesize that in a consultative selling scenario, sales will dip below the baseline before the contest but increase above the baseline during and after the contest. They posit that sales district potential and salesperson ability moderate the pre-contest sales dip, contest sales boost, and post-contest sales. Results from a model based on individual-level data on 1180 salespeople in 78 sales districts are largely supportive of the hypotheses. They highlight the need for researchers to integrate the role of strategic timing, salesperson, and sales district characteristics to assess sales contest outcomes. For practitioners, the findings show that in consultative selling situations, contests can generate a net sales increase despite the occurrence of timing games, and the sales gain is higher in districts with lower sales potential and among salespeople with higher sales ability.