Corporate Risk Management under Information Asymmetry

This paper examines the financial and operational hedging activities of US pharmaceutical and biotech firms that are subject to a high level of information asymmetry stemming from R&D investments during 2001–2006. We find evidence in support of the information asymmetry hypothesis à la Froot, Scharfstein and Stein (1993) that hedging helps mitigate the under‐investment problem. Specifically, we find that the use of financial derivatives is associated with greater firm value and that the value enhancement is larger for firms subject to greater information asymmetry and better growth opportunities. There is a synergy between financial hedging and operational hedging where the latter is used to counter product development risk. The results are robust with respect to alternative performance measures, industry‐specific growth measures, and the endogeneity problem. Our work is differentiated from existing studies that examined commodity‐based industries without addressing information asymmetry.     

Trade Size Preference of Informed Traders in Indian Equity Markets

This study utilized high frequency transactions data to analyze the trade size preference of informed traders in Indian equity markets. It is observed that informed traders at an aggregate level adopt stealth trading strategy, wherein they prefer medium sized trades over large sized trades in order to camouflage their private information. However, the stealth trading behavior varies across stocks, wherein informed traders prefer more large sized trades on firms that are part of an index compared to non-index firms. Trading behavior also varies across other market conditions. It has been noted that informed traders prefer large sized trades during periods of high market thickness, negative returns, and low volatility. This study also provides a rationale for such varied behavior of informed traders.     

Chinese consumer decision-making styles: A comparison between the coastal and inland regions

China is rapidly becoming an important market for consumer goods, but relatively little is known about variations in consumer shopping patterns in different regions of China. We employ a cultural materialism perspective in understanding decision-making styles of inland and coastal shoppers. Our findings reveal that consumers in the two regional markets do not differ in utilitarian shopping styles but they do in hedonic shopping styles. Marketers need to understand these differences to be able to market effectively to consumers in different regional markets within China.     

Global marketing of industrial products: Are interpersonal relationships always critical?

The present paper examines the issue of whether interpersonal relationships are critical for global marketing of industrial products. The fields of relationship marketing, IMP group research, sales research, and network theory have stressed the importance of interpersonal relationships in the business-to-business or industrial marketing context. In contrast to this emphasis on interpersonal relationships, we argue that industrial firms can both conceive and enhance marketing strategies based on developing high quality and consistent processes, products, services or outcomes (consistent processes and outcomes). Such strategies are especially important given the fact that developing interpersonal relationships is expensive due to their reliance on frequent and/or face-to-face communications. In this paper, we examine industry and country contexts that lead to the choice of alternative industrial product marketing strategies and highlight some future research directions and managerial implications.     

Optimal Returns Policy under Demand Uncertainty

Multiple categories of retail products suffer limited shelf life, demand uncertainty, and, in some cases, long lead times. To provide retailers with an incentive to increase the stocking quantity of such products, manufacturers may offer an option to return unsold items at wholesale or less than wholesale prices. This article extends the additive price-dependent demand model in three ways. First, partial returns are optimal for the manufacturer but do not induce higher stocking quantities compared with when the manufacturer offers no returns. Second, in terms of the effect of investment in demand-enhancing activities, when retailers invest, they set higher resale prices, but an optimal partial returns policy still does not induce higher stocking quantity, whereas when manufacturers invest, the optimal returns policy induces higher stocking quantity. Third, when the manufacturer and retailer have different expectations of demand uncertainty, the retailer's estimate influences the expected profits for both, whereas the manufacturer's estimate has a major impact on its profits only.     

Board structure and CEO compensation: Evidence from U.S. lodging industry

Using a sample of U.S. lodging firms, this paper examines the relationship between board of director characteristics and chief executive officer (CEO) compensation. Previous research shows that larger boards are detrimental to the effectiveness of the board of directors and deteriorate the control imposed on CEO actions and pay. Board independence is also suggested as an important quality to emphasize the control on the CEO. We propose that U.S. lodging firms’ board of directors provide a nice setting to investigate the effects of size and independence on CEO compensation level. Our findings suggest that CEO compensation is not related to board size, and positively related to proportion of the outside board members. These findings are contrary to the findings of previous studies. Our findings may provide significant insights to lodging firms’ board of directors to structure efficient compensation packages.     

Identity,Spatiality and Post-colonial Resistance: Geographies of the Tourism Critique in Goa

This article maps some of the ways that the critique of tourism development in the Indian state of Goa is connected to Goan patriotism. Reactions against tourism in Goa assume a prior definition of 'Goa', and this definition is often patriotic. One of the central processes to understanding contemporary Goa's identity politics in the face of tourism is its former colonisation by the Portuguese. Treating the tourism critique in Goa as a geographically and historically specific discourse in this article means discussing four aspects of what will be called its spatiality: geopolitics, geohistories/disembeddings, socio-spatial biases and situatedness. It will be argued that the spatiality of the tourism critique shows that its connection to patriotism is not straightforward and immediate, but contingent. It will also be argued that although the spatiality of the tourism critique points to its heterogeneity, it is precisely because there are multiple constructions of 'Goa' and 'Goan identity' that the discourse constitutes its object, Goa.     

The political economy of corporate governance in developing economies: The case of Bangladesh

The paper investigates the influence of concentrated shareholding, boardroom politics and interest group politics in the quality of corporate governance in listed firms. It finds that the controlling shareholders exert influence in boardroom politics through family-aligned board and executive management. The evidence shows that concentrated ownership, family-aligned board and management, and political connection(s) of the controlling shareholder(s) tend to be inversely associated with the quality of corporate governance in a firm. The findings of the study suggest that the broad-based interest group politics which influence both political preference and corporate control politics contribute significantly to the current state of corporate governance in developing economies.