The Effects of Locus of Control on Word‐of‐mouth Communication

Word‐of‐mouth can be a powerful tool for and against marketing a brand. The effect of personality can have a significant effect on an individual's word‐of‐mouth behaviour. One of the most popular personality constructs is the locus of control. This research studied the influence of the locus of control on consumer word‐of‐mouth communications. The results showed that individuals who scored high on their internal locus of control were more likely to engage in word‐of‐mouth communication with their out‐groups. In addition, individuals who scored high on their external locus of control were more likely to engage in word‐of‐mouth communication with their in‐group. Out‐groups are defined as people with a weaker ties relationship, while in‐groups are defined as people with a stronger ties relationship (i.e. close friends and family). These findings would help marketers in directing their promotional programmes more effectively.     

What is the Relationship Between REIT Governance and Earnings Management?

The empirical corporate finance literature claims that better corporate governance constrains earnings management, while others argue that the unique legal and reporting structure of REITs may reduce the need for such internal corporate governance. Using a sample of publicly traded REITs for the 2004–2008 time period, we examine the relationships amongst corporate governance, accruals earnings management, manipulation of Funds from Operations (FFO), and real earnings management. We find that corporate governance quality is unrelated to accruals earnings management and manipulation of FFO. At first glance, the findings suggest that managers need less internal oversight because of the more transparent reporting structure of REITs. However, we document that REITs engage in significant real activities manipulation for earnings management purposes. Our empirical findings further show that corporate governance characteristics, in particular board size, independence, number of board meetings and audit committee financial expertise, are essential for constraining such activities. Finally, by focusing on a subset of REITs that act in ways which previous research has identified as more susceptible to earnings management activities, we demonstrate that good corporate governance effectively reduces accruals earnings management and manipulation of FFO for these REITs. Overall, our findings indicate that, despite the unique legal and reporting structure, REITs engage in certain forms of earnings management, and that the ability for REITs to manipulate earnings is reduced when corporate governance is more effective.     

An investigation into gambling purchases using the NBD and NBD–Dirichlet models

Past research on gambling behavior has focused largely on cognitive and affective explanations, but has not explored the influence of past gambling behavior or habit. In this study, it was hypothesized that gambling behavior followed predictable patterns based on past behavior. We found that these patterns could be described by the negative binomial distribution (NBD) and NBD–Dirichlet models at game and category levels, respectively. An empirical study using the 1999 Australia Productivity Commission survey dataset provided some support for the usefulness of these models in describing gambling consumption. The paper explores the implications for identifying problem gambling and influencing gamblers’ behavior.     

Global Financial Integration and Real Estate Security Returns

Have globalization and increasing economic and financial integration affected the rates of return of publicly traded real estate companies around the world? Using a set of multifactor models for annual data for 946 firms from 16 countries over the sample period, 1995–2002, we estimate the impact of a country's economic openness on returns of publicly traded real estate firms, controlling for the effects of global capital markets, domestic macroeconomic conditions and firm‐specific variables. We find that a country's real estate security excess (risk‐adjusted) returns are negatively related to its openness. The results are robust across different multifactor model specifications and are a testament to increasing global financial integration and its interplay with the real estate sector.     

Money,activity and prices: Some inter-country evidence

The paper explores the relationships between monetary variables and real economic activity and prices in the six largest industrialized economies. Univariate and multivariate time series forecasting models are used to break down monetary policy variables into anticipated and unanticipated components. Overall monetary policy variables, particularly domestic credit expansion, appear to be significant leading indicators for subsequent real economic activity and prices. Additionally, anticipated components of monetary policy are shown to have as much forecasting ability for subsequently realized economic variables as unanticipated components. This does not appear to be consistent with the implications of pure rational expectations models. It was also noted that results differed significantly according to the choice of monetary variable and across individual countries. In particular the results implied no contradiction with previous findings for the impact of unanticipated money supply in the U.S., though such contradictions would have appeared if DCE had been used as the monetary variable.     

Does IFRS 10 on Consolidated Financial Statements Abandon Accepted Economic Principles?

The 2007 global financial crisis revealed a deficiency in the financial reporting of off‐balance‐sheet vehicles. To better reflect risks associated with such items, International Financial Reporting Standard (IFRS) 10 provided new principles for determining an investor's control of an investee for the purpose of preparing consolidated financial statements. We show that an applicative example appearing under the new guidelines contradicts the conclusion drawn from widely accepted power indices: the Shapley‐Shubik value and the Banzhaf index. Our study adds to the literature aiming to incorporate methodological economic thought into accounting principles.     

The double‐edged effect of knowledge acquisition: How contracts safeguard pre‐existing resources

Research summary : Acquiring knowledge on a partner's pre‐existing resources plays an important yet ambiguous role in collaborative relationships. We formally model how contracts trade off productive and destructive uses of knowledge in a buyer‐supplier relationship. We show that, when the buyer's pre‐existing resources are vulnerable to the revelation of sensitive knowledge, the supplier overinvests in knowledge acquisition as it expects to use the knowledge as a threat in price negotiations. A non‐renegotiable closed‐price contract prevents such overinvestment and reduces the supplier's ability to expropriate the buyer ex post. Our results extend to the cases of renegotiable closed‐price contracts, repeated interactions between a buyer and a supplier, and the use of nondisclosure policies. We draw theoretical, empirical, and managerial implications from our model. Managerial summary : This study yields new insights regarding the use of contract design in protecting pre‐existing, nonrelationship specific assets in buyer‐supplier arrangements. Anecdotal examples illustrate the “dark side” of these arrangements where opportunistic suppliers exploit knowledge of buyers' pre‐existing resources to seek rent and appropriate value. When a supplier is likely to act harmfully, a closed‐price contract that specifies the price of the supplier's component upfront may reduce the supplier's incentives to overinvest in acquiring and exploiting knowledge of the buyer's pre‐existing resources. As such, when a buyer's pre‐existing resources are highly valuable, and thus more vulnerable to use by the supplier outside of the arrangement, a non‐renegotiable closed‐price contract is more efficient. Additionally, limited disclosure policies and informal agreements based on repeated interactions complement indirect governance via price contracts. Copyright © 2015 John Wiley & Sons, Ltd.     

Loyal Now,but Not Forever! A Study of Narcissism and Male Consumer–Brand Relationships

Two prominent areas of research to emerge in recent years are consumer relationships with brands and narcissism in society. Whilst each of these research streams has contributed valuable insights on contemporary consumer behavior, there has not yet been an in‐depth comparative study of the relations that narcissists and non‐narcissists have with products and brands, a gap that this study seeks to address. In the same vein as Fournier (1998), an idiographic qualitative study was devised to investigate whether there are consistent differences in orientation to (a) people and (b) brands between men scoring high and low on the Narcissistic Personality Inventory. The findings show the agentic nature of the narcissist, as compared to the communal orientation of the non‐narcissist, in dealing with both people and brands. Furthermore, the findings offer evidence of grandiose and fragile variants of narcissism.     

Stepping into the kitchen: lay clients as co-producers of a professional service

This study examines the implications for service organizations and their staff of clients’ involvement as co-producers of a professional service. Two female infertility clinics were analysed, one using micro-surgery (MS) and the other in-vitro fertilization (IVF) techniques. These differed on the dimension of patients’ involvement in the delivery of treatment. In the MS clinic patients were ‘passive’ recipients of treatment, whereas in the IVF clinic patients were required to partake as co-producers in the delivery of the medical service. Thus, reflected here are two different forms of client–provider interface, which the results show to have different implications. Bringing the clients, as co-producers, ‘into the kitchen’ where service is prepared (IVF) was found to involve issues associated with the lay client–professional provider work interactions, like perceptions of performance, functional work behaviour (conflicts, poor co-ordination, etc.), lower work/service satisfaction of staff and clients, and coping with service uncertainty. These and other implications for front-line service are examined and discussed.