The Effects of a Separation of Ownership from Control on UK Listed Firms: An Empirical Analysis

There has been a wide‐ranging debate concerning the effects of the separation of management and ownership of large firms. Given recent issues concerning corporate remuneration, this debate is as relevant and possibly more so today as it has ever been. Theoretically, as the ownership of a firm becomes more diverse, the management of the firm will have more discretion and opportunity to act in accordance with their own interests at the expense of those of the shareholders. This paper considers the effect of a separation of ownership from control on 406 UK listed firms. Simultaneous equations are used to test for a relationship between the percentage of shares owned by significant outsiders and insiders and the performance of the firm. A number of authors have suggested that there may be a significant relationship between these variables. The analysis conducted in this study supports the view that there is a relationship between ownership structure and firm performance. Copyright © 2011 John Wiley & Sons, Ltd.     

A Political–economic Analysis of Auditor Reporting and Auditor Switches

This study examines whether auditor opinions are affected by political and economic influences from governments. We use auditor locality (local versus non-local) to capture such influences from local governments in China. Based on data from China’s stock markets for the period 1996–2002, we find that local auditors, who have greater economic dependence on local clients and are subject to more political influence from local governments than non-local auditors, are inclined to report favorably on local government-owned companies to mitigate probable economic losses. Moreover, companies with qualified opinions are more likely to switch from a non-local auditor to a local auditor than companies with unqualified opinions. Contrary to some prior studies, we find that in China’s political environment, local government-owned companies that switched from a non-local auditor to a local auditor after receiving a qualified opinion can succeed in opinion shopping.

Does Mad Money make the market go mad?

Empirical studies of numerous popular investment advisory services find statistically significant abnormal returns at the time of their broadcast or published investment recommendations. Our analysis of returns and trading volume around stock recommendations aired on charismatic host Jim Cramer's Mad Money program reveals statistical evidence of response to both his buy and sell opinions, with most of the full-day return following an on-air buy recommendation captured by that day's opening price. Trading strategy analysis suggests that individuals with limited funds should be wary of short-term trading to exploit the show's suggestions, while professional investors may be able to exploit buy picks with a contra strategy.     

Imports versus Domestic Production: A Demand System Analysis of the U.S. Red Wine Market

The U.S. wine market experienced rapid growth in all facets—production, consumption, exports, and imports—over the past decade. Red wine imports more than tripled while consumption of domestically produced red wines doubled. This research estimates demand elasticities of U.S. red wine imports from five countries accounting for over 90% of imports—Italy, France, Spain, Australia, and Chile—using the first-difference version of the almost ideal demand system (AIDS). These elasticities are compared with those for domestically produced red wine. Results for conditional expenditure elasticities indicate that the U.S. red wine industry gains over imports when U.S. consumers' total expenditures on red wine increase. However, comparing own- and cross-price elasticities reveals an increase in the price of U.S. red wine results in a decline in quantity demanded six times greater than for French and Italian red wines and over 20 times greater than other import countries, thus harming the U.S. red wine industry. Empirical results suggest that U.S. red-wine producers could increase their total revenue by decreasing prices, while Italian and French producers can increase total revenues by increasing them.     

The Legacy of Serrano: The Impact of Mandated Equal Spending on Private School Enrollment

In Tiebout's idealized world, families would sort into homogeneous communities. Each family would get its preferred quality of public schools and there would be no demand for private schools. But limited public school options and a demand for religious instruction not permitted in public schools create a market for private schooling. Recently, many state governments have greatly limited districts' freedom to spend what they wish on education, often in response to court rulings to equalize education spending, such as Serrano in California. Funding equalization also affects the level of public school spending in the average state district; if this rises, as it has in many states, private schools become less attractive. Examining private school enrollment in 159 metropolitan areas in 1970, 1980, and 1990, we find that private school enrollments fall as average public spending rises and increase as public spending becomes more equal.     

Three levels of culture and firms’ entrepreneurial orientation: A research agenda

Numerous studies examining the linkage between corporate entrepreneurship and performance resort to the entrepreneurial orientation construct to assess a firm's degree of entrepreneurship. Little conceptual and empirical research has been devoted to understanding the factors and conditions that produce Entrepreneurial Orientation. Generic explanatory variables such as environment, organization, strategy and culture have been mentioned in past research, but though a number of hypotheses have been proposed, few have been thoroughly developed and tested. In this article, we focus on one explanatory variable – culture – that we develop along multiple axes. We propose a conceptual framework that aims to provide a better understanding of how three interdependent levels of culture – national, industry and corporate – influence Entrepreneurial Orientation.     

Corporate Social Responsibility,Institutional Environments,and Tax Avoidance: Evidence from a Subnational Comparison in China

We examine the association between mandatory corporate social responsibility (CSR) disclosure and economic contribution (tax payments) in China, where we expect this association to be affected by a region's institutional attributes. Exploiting a dataset that shows cross-regional variations in institutions, we find that in regions with lower institutional quality, firms claiming to be socially responsible actually avoid taxes, whereas CSR disclosure in other regions is more aligned with the social responsibility aspect of tax compliance. Our study contributes to the literature by demonstrating that in the absence of proper institutions, CSR disclosure is likely to remain a form of window dressing.     

Corruption in Asia: Pervasiveness and arbitrariness

How does one understand the differences and similarities of corruption among various Asian countries? We use a recent framework developed by Rodriguez, Uhlenbruck, and Eden (2005) to suggest that corruption has to be examined from two different dimensions: pervasiveness and arbitrariness. Using this framework, we ask why some Asian countries are able to achieve high levels of economic growth in the midst of high level corruption while other countries suffer from economic stagnation. We specifically suggest that more firms would bribe when pervasiveness is high, while fewer firms would bribe when arbitrariness is high. We also look into the implications on foreign direct investment.     

Recent Developments at the CMA: 2017–2018

We describe three interesting cases that the UK Competition and Markets Authority (CMA) has dealt with over the past year: first, we discuss the merger of two online food ordering platforms—Just Eat and Hungryhouse—which required an assessment of competition in the presence of indirect network effects. Second, we discuss the vertical merger of a grocery retailer and wholesaler—Tesco and Booker—which posed the challenge of how to assess a firm’s incentives to foreclose its rivals when there are thousands of local markets. Finally, we discuss Open Banking, which lies at the heart of the package of remedies that came out of the CMA’s market investigation into personal banking, and sought to tackle issues of low customer engagement.     

The mediating role of commitment in healthcare B2B marketing

Business to business transactions in pharmaceutical and healthcare industries may differ from those in other industries in terms of relational marketing factors such as customer acquisition and retention. Purchasing representatives, including medical physicians, may differ in their levels of commitment; this difference plays a mediating role in satisfaction, dependence, and intention to repurchase. This article begins by analyzing the structural relationships among these three variables: commitment, satisfaction, and dependence. The relationships are dichotomized into two dimensions: individual and organizational, and marketing performance is measured as repurchase intention. A critical literature review was conducted to identify key variables and derive their constructs. The subsequent empirical analyses have far-reaching implications from a marketing perspective.