THE RISK IMPLICATIONS OF FORECAST ERRORS OF BANK EARNINGS, 1976–1986

The forecast errors arising from security analysts' predictions of commercial bank earnings are investigated here and compared with the earnings forecast errors associated with savings and loans, other financial services organizations, and a random sample of nonfinancial firms from 1976 to 1986. Although bank earnings forecast errors did increase over 1976–1986, analyses suggest that the rise was less than at other industries considered in the study. The increase in forecast errors appears to be centered at multinational banking organizations, with only limited increases in earnings forecast errors at regional banks.     

Strategy content and the research process: A critique and commentary

The purpose of this paper is to encourage discussion on the ‘state-of-the-science’ in strategy content research. We present a view of an interactive research process and argue that strategy content research would benefit from (1) more carefully developed theoretical work; (2) more theory-driven data analysis; and (3) less emphasis on the immediate applicability of results.     

Food Aid: A Cause of Development Failure or an Instrument for Success?

The role of food aid in furthering the economic developmentof poor countries and in alleviating the adverse effects onthe poor of structural and sectoral adjustment programs is discussed.A simple analytical framework for evaluating the incentive andwelfare impact of food aid is suggested. Domestic and internationalmarkets for food historically have been subject to severe distortions,leading to ever-growing food stocks in some, mainly rich, countrieswhile in others, largely poor, many cannot afford to consumeenough food. The possible impact of distortion-free global foodmarkets is sketched. The use of surplus food for payment ofwages in rural works programs has often been proposed as a meansto create productive assets while alleviating poverty. Usingan applied general equililbrium model of the Indian economy,it is shown that a well-designed and efficiently implementedfood-for-work program can virtually eliminate abject povertyin India at a modest cost. Experience with food aid in severalother countries is also briefly discussed.     

Ensuring Daughter Survival in Tamil Nadu,India

The South Indian state of Tamil Nadu is a relatively recent addition to the list of Indian states to experience the phenomenon of “missing girls”. Nonetheless, the government and non-governmental organizations in the state have been active for some time in collecting data to track gender differences in survival and in introducing interventions to prevent daughter elimination. Against this background, this article has two aims. First, it provides a temporal and spatial analysis of patterns of daughter deficits in Tamil Nadu over the period 1996–2003. Second, it undertakes an examination of the modus operandi, underlying assumptions, strengths and weaknesses of various interventions and assesses their effect on daughter elimination.     

Differences in Customers’ Online Service Satisfaction Across Cultures: The Role of Thinking Style

ABSTRACT

Online retailers constantly strive to improve customer satisfaction. However, satisfaction levels can vary significantly across cultures when customers experience mixed quality services, that is, services with a mixture of high and low quality service attributes. Based on two studies, we find that Westerners (e.g., European Americans) react more negatively than East Asians (e.g., Chinese) toward mixed quality online services. Our findings show that due to differences in thinking style, Westerners (analytic thinkers) are more likely to focus on negative service attributes than East Asians (holistic thinkers), who tend to consider the amalgam of high and low quality service attributes as an integrated whole when forming their overall perceptions and levels of satisfaction. Moreover, the results suggest that for online retailers marketing across cultures, providing superior quality on each individual service attribute may be more important to achieving satisfaction for customers from Western rather than Eastern cultures.     

Segmenting Markets Along Multiple Dimensions of Luxury Value: The Case of India

abstract

This is one of the first investigations of consumer motivations for purchasing luxury brands in India, a country with an emerging middle class. It identifies four dimensions of luxury benefits for segmenting markets. These include the financial, functional, personal, and social benefits of luxury value. Using data collected from 329 respondents in Mumbai the study identifies nine luxury factors for purchase behavior. These are used for classifying respondents into three behavioral segments using cluster analysis. The first segment appears to buy luxury goods primarily for their snob appeal, the second segment for their prestige appeal, and the third for their value appeal. The results show that while many consumers may buy the same luxury goods, their motivations for doing so differ. The findings should help marketers tailor their messages to specific luxury-seeking segments. There are many papers on luxury brands but very few are from emerging markets. The results may be of great use to global brands that are looking for expansion due to slowdown condition across globe.     

The relationship between the frequency of news release and the information asymmetry: The role of uninformed trading

This paper shows that the degree of information asymmetry is lower for firms with more frequent news releases. The relation holds for various measures of information asymmetry such as the probability of information-based trading (PIN), permanent price impact, and adverse selection component of bid-ask spread, even after adjusting for endogeneity between news release and information asymmetry. By decomposing the PIN into intensities of uninformed and informed trades, similarly to Brown and Hillegeist (2007), we find that intensity of uninformed trading increases much more than that of informed trading for firms with more frequent news releases. As a result, information asymmetry, as is measured by PIN, decreases for such firms due to the large increase in the intensity of uninformed trading. Our findings highlight not only the importance of news releases in leveling the playing field of investors but also the role of uninformed investors in reducing trading cost due to information asymmetry.     

Investments in worker health and production: Evidence from Vietnam

In manufacturing industries, occupational health and safety measures ensure better working conditions for employees, which may influence their productivity. We study the impact of investments undertaken by small and medium enterprises in Vietnam in mitigating indoor pollution (including air quality improvements, heat and noise protection as well as lighting) on firm-level gross output and value added. We find that the amount invested by the firm in health has a significant positive effect on both outcomes. Given historically poor working conditions in Vietnam, policy implications relate to incentivizing and enabling firms to undertake such investments, on both moral and economic grounds.     

Regulatory Protection and Opportunistic Bankruptcy*

We document controlling shareholder (insider) opportunism in an insolvency regime that uses an accounting rule to determine bankruptcy eligibility. Our study sheds light on managerial incentives induced by weak investor protection laws. Using unique data on bankrupt firms from an emerging market, consistent with our prediction, we show insiders intentionally manage earnings downward to understate firm net worth so as to be able to file for bankruptcy. Downward pre-bankruptcy earnings management is associated with more payments to insiders and weaker performance, post-filing. A battery of tests suggests our results cannot be fully explained as an artifact of financial distress. Rather, they are consistent with insiders exploiting weak investor protection to extract private benefits at the expense of lenders and outside shareholders. Our study serves as a cautionary tale for all insolvency regimes that use a balance sheet test in an environment with weak creditor protection.