Advertising as Unfavorable Self-Presentation: The Dirty Laundry Effect

Identity appeals—marketing communications that invoke one of the target market's identities—are typically well liked by consumers. In contrast with this notion, this research examines a situation when consumers respond negatively to identity appeals in advertising. Through three studies, we find that identity appeals fail when consumers judge an identity-congruent ad as portraying information about them that they would rather not have widely broadcast. In these cases, self-presentation concerns arise, leading to ad dislike. Thus, although identity-congruent ads resonate with consumers, such ads may lead to negative responses if consumers believe the ad airs their “dirty laundry.” We discuss implications for targeted advertising and identity marketing strategies.     

When do customers offer firms a “second chance” following a double deviation? The impact of inferred firm motives on customer revenge and reconciliation

The present research develops and tests a theory explaining how customers respond to failed service recoveries (i.e., double deviations). This work offers three novel and important conclusions. First, inferences about a firm's motive (negative vs. positive) mediate the impact of perceptions of the double deviation (i.e., severity, blame, and fairness) on resulting outcomes (i.e., customer anger, desire for revenge, and desire for reconciliation). Second, when inferred motive is positive, desire for reconciliation overwhelms desire for revenge, leading customers to choose more reparatory than retaliatory behaviors. Third, following a double deviation, firms that both compensate and apologize to customers can change customers’ inferred motives from negative to positive, leading customers to desire more reconciliation than revenge, and engage in more reparatory than retaliatory behaviors. These studies demonstrate that, contrary to common wisdom, customers do not always respond negatively to a double deviation, and firms still have a “second chance” following a failed recovery.     

Assessing the Efficiency of Risk Mitigation Strategies in Supply Chains

Mitigating supply chain risk is a critical component of a company's overall risk management strategy. Drawing upon Contingency Theory, we posit that the appropriateness and effectiveness of risk mitigation strategies are contingent on the internal and external environments and that there is no one‐size‐fits‐all strategy. While literature on risk management has proposed a variety of tools and techniques for effectively evaluating and managing supply chain risks, comprehensive assessment of the efficiencies of alternative risk mitigation strategies has not been addressed in the literature. Such an assessment will help managers select the appropriate mitigation strategy for a given decision‐making environment. To this end, this study is first of its kind in evaluating and proposing efficient supply chain risk mitigation strategies in the presence of a variety of risk categories, risk sources, and supply chain configurations. We combine an empirically grounded simulation methodology with data envelopment analysis and nonparametric statistical methods to analyze and rank alternative mitigation strategies. We find that the more efficient strategies focus on flexibility rather than on redundancy for supply chain failures. Our research presents several interesting and useful managerial insights for deciding what strategies are most capable of mitigating risks in a variety of contexts.     

Child maturation, time-invariant, and time-varying inputs: their interaction in the production of child human capital

We model the relationship over time between multiple good and bad inputs to the child development production process and the multiple good and bad outcomes which are generated. Doing this avoids several well-known empirical problems associated with construction and use of aggregated inputs and outputs, the assumption of separability among inputs and outputs, and the estimation of reduced forms. Using time-demeaned data for a balanced panel of families from the National Longitudinal Survey of Youth?CChild Sample for 1994?C2000, we estimate an output-oriented directional distance function that simultaneously relates good and bad inputs from home, school, and environment, to good and bad outcomes, measured as children??s math and reading test scores as well as parent-reported behavior problems. We are able for the first time to compute partial effects among endogenous outputs. Recovering consistent estimates of time-invariant coefficients using a second-stage estimator, we find that some time-invariant variables are significant. We also measure productivity growth, technical change, efficiency change, and technical efficiency. Children??s productivity growth is highest at age 5?years and diminishes thereafter. Finally, we investigate the effect on these estimates of the choice of alternative direction vectors for the good and bad outputs.     

Why are Some Engaged and Not Others? Explaining Environmental Engagement among Small Firms in Tourism

This paper examines the reasons for different levels of environmental engagement among small firms in tourism. Drawing on theories of motivation, notably Social Cognitive Theory, Motivation Systems Theory and Goal Orientation Theory, as well as the literature on environmental sensitivity, it proposes a novel conceptual framework that is subsequently used to inform an empirical study. The findings of the research suggest that varying levels of environmental engagement may be explained by differences in worldviews, self‐efficacy beliefs, context beliefs and goal orientation. The paper concludes by considering the policy implications of the results. Copyright © 2011 John Wiley & Sons, Ltd.     

An asset protection scheme for banks exposed to troubled loan portfolios

We examine a specific portfolio credit derivative, an Asset Protection Scheme (APS), and its applicability as a discretionary regulatory tool to reduce asymmetric information and help restore the capital base of troubled banks. The APS can be a fair-valued contract with an appropriate structure of incentives. We apply two alternative multivariate structural default risk models: the classical Gaussian Merton model and a model based on Normal Inverse Gaussian processes. Using a data set on annual farm level data from 1996 to 2009, we use the Danish agricultural sector as a case study and price an APS on an agricultural loan portfolio. We compute the economic capital for this loan portfolio with and without an APS. Moreover, we illustrate how model risk in the form of parameter uncertainty is reduced when an APS is attached to the loan portfolio.     

Strategic interventions of management accountants: everyday practice of British and German brewers

A popular stereotype has it that German firms are somehow ‘long-term strategically oriented’ and British firms focus on short-term financial gain. Analysing ethnographic material from British and German brewers, this paper explores how management accountants in the two countries conceive of their relationship with processes of strategic formulation and how they seek to mobilize strategic arguments in their day-to-day contacts with operational management. The focus of this study is not on the strategy debates which one might expect among senior management, but on routine interaction between management accountants and managers in which the mundane events of organizational life are made to happen in the name of loftier ‘strategic’ priorities. From observations of such interaction and management accountants' reflections on them, contrasting ways of integrating management accounting expertise with operational knowledge of the firm are suggested for the British and German brewers studied. Those contrasts are developed by drawing on the relationship between time and the possibility for strategic intervention more generally.     

The negative impact of R&D capitalization: A value relevance approach

Abstract

Accounting for R&D costs is an open issue. SFAS N°2 mandates that all R&D costs must be immediately expensed. IAS 38 requires capitalization of R&D costs if they meet certain criteria. Recent research papers show the value relevance of capitalized R&D. We test the value relevance of R&D reporting in a sample of 197 French firms between 1993 and 2002. The French context provides an interesting field for R&D value relevance studies because both accounting treatments of R&D costs (expensing and capitalization) are allowed. Unlike previous studies, we find that capitalized R&D is negatively associated with stock prices and returns. This negative coefficient on capitalized R&D implies that investors are concerned with and react negatively to capitalization of R&D. We also find that the firms choosing to capitalize (successful) R&D are smaller, more highly leveraged, less profitable and have less growth opportunities. Taking into account these characteristics, our robustness checks confirm that capitalized R&D is not associated with higher prices and is related to lower returns.