When do the stock market returns to new product preannouncements predict product performance? Empirical evidence from the U.S. automotive industry

Substantial research has examined how stock market reactions to marketing actions affect subsequent marketing decisions. However, prior research provides limited insights into whether abnormal stock returns to a marketing action actually predict the future performance resulting from that action. This study focuses on new product preannouncements (NPPAs) and investigates the relationship between short-term stock market returns to an NPPA and the post-launch new product performance under various industry and firm conditions. Findings based on a dynamic panel data analysis of 208 NPPAs in the U.S. automotive industry between 2001 and 2014 reveal that stock returns associated with an NPPA are not an appropriate forward-looking measure of future product performance. However, under specific conditions (i.e., when the preannouncement is specific, the preannounced new product has low innovativeness, the preannouncing firm has a high reputation and invests heavily in advertising, and the preannouncement environment is less competitive), abnormal stock returns to NPPAs actually predict the future performance of new products. Thus, this study extends the marketing–finance and innovation literature with its focus on the conditions that affect the predictive power of immediate stock returns for the future performance of new products.     

Drivers of expected returns in Istanbul stock exchange: Fama–French factors and coskewness

We investigate the impact of coskewness on the variation of portfolio excess returns in Istanbul Stock Exchange (ISE) over the period July 1999 to December 2005. We form portfolios according to size, industry, size and book-to-market ratio, momentum and coskewness and compare alternative asset pricing models. The traditional capital asset pricing model (CAPM) and the three-factor model of Fama and French are tested in the multivariate testing procedure of Gibbons–Ross–Shanken (1989). Coskewness is introduced as a fourth factor and its incremental effect over CAPM and Fama–French factors is examined both in multivariate tests and in cross-sectional regressions. The findings reveal that coskewness is able to explain the size premium in ISE. Hence, the basic two-moment CAPM without the coskewness factor would underestimate the expected return of size portfolios. Multivariate test results indicate that coskewness reduces the pricing bias, albeit insignificantly. Cross-sectional analysis uncovers that coskewness has a significant additional explanatory power over CAPM, especially for size and industry portfolios. However, coskewness does not have a significant incremental explanatory power over Fama–French factors in ISE.     

Keeping it off the books: an empirical investigation of firms that engage in tax evasion

This article uses a unique dataset that contains detailed information on firms from around the world to investigate factors that affect under-reporting behaviour. The empirical strategy employed exploits the nature of the dependent variable, which is interval coded, and uses interval regression which provides an asymptotically efficient estimator provided that the classical linear model assumptions hold. These assumptions are investigated using standard diagnostic tests that have been modified for the interval regression model. Evidence is presented that shows that the firms in all regions engage in under-reporting. Regression results indicate that government corruption has the single largest causal effect on under-reporting, resulting in the percentage of sales not reported to the tax authority being 51.3% higher. Taxes have the second single largest causal effect on under-reporting, resulting in the percentage of sales not reported to the tax authority being 18.0% higher, followed by access to financing at 8.9% higher and organized crime at 7.6% higher. Inflation, political instability, exchange rates and the fairness of the legal system were found to have no effect on under-reporting. It is also found that there is a significant correlation between under-reporting and the legal organization of the business, size, age, ownership, competition and audit controls.     

Consumption volatility and financial openness

Economic theory predicts that the integration of financial markets lowers the volatility of consumption. In this article, we study long-term trends in the consumption volatility of the G7 countries. Using different measures of financial openness, we find evidence that greater financial openness has been associated with lower consumption volatility. However, volatility of consumption relative to output has not declined.     

Dynamic decision trees for building resilience into future eco-cities

Intensifying global urbanization and environmental changes bring about the imperative of sustainable urban development and decisions upon inescapable pressures and risks, but knowledge integration between disciplines is a limiting contextual challenge. This paper proposes a reformulation, in terms of urban risk management, of an earlier developed ontological scenario generation method. The procedure consists of several steps: (i) identification-and-prioritization of main pressures, (ii) paired discussion of pressures using four-cell matrices, (iii) re-visit of the pressures' priority order, (iv) articulation of short-listed pressures as decision-making questions, and (v) generation of scenarios via “yes/no” responses to each question, in their order of priority. In this article, the method feeds upon the general context described in recent multi-disciplinary urban studies and public strategic plans in the city of Iasi (Romania), to propose a formal procedure for enabling the acceleration of productive decision making towards city sustainability. Answering three top priority questions, namely “Implement a business-friendly and efficient governance system?”, “Develop a resource management system?”, and “Carry out a human capital accelerator strategy?” results in a 4-scenario set: Receding City, Wanting City, Promising City, Inspiring City. The scenarios are discussed in terms of systemic risks at the end of post-communist transition and beginning of the socio-economic convergence with Western Europe.     

Learning before the storm: Modeling multiple stakeholder activities in support of crisis management,a practical case

The severe consequences of a Critical Infrastructure (CI) crisis demand continued research directed toward proactive and reactive management strategies. Despite the best efforts of governments and communities, the diversity of stakeholders, conflicting demands for resources, and a lack of trust among organizations create complexities that limit the effectiveness of the response. This paper identifies four specific problems that appear to reoccur when CIs are challenged: heterogeneity, multiple and inconsistent boundaries, resilience building and knowledge transfer and sharing. A combination of collaborative modeling and software simulation methodologies is proposed in order to identify the interrelationships among diverse stakeholders when managing the preparation for and reaction to a CI crisis. This approach allows experts to work together and share experiences through the modeling process which can lead them to a better understanding of how other organizations work and integrate different perspectives. In addition, simulation models enable domain experts to understand the consequences of certain policies in the short and long terms, thus improving the crisis managers' knowledge for future crisis situations. This paper presents a practical case of a hypothetical crisis in the CI sector and the approach used in order to deal with the four problems identified above.     

The Organization of Innovation Brokers: An International Review

Research on networks of innovation has typically focused on relationships of competition and collaboration between firms in the network, sometimes extending the analysis to sources of new ideas such as universities. More recently, attention has been paid to the activities of intermediaries in such networks, which facilitate the innovation process, which are positioned between the sources and users of innovations. This paper focuses on the organization of a distinctive type of intermediary, which we have defined as an innovation broker, by providing an analysis of 10 case studies of organizations dedicated to innovation broking from around the world. Innovation brokers in our definition are organizations that are founded especially to undertake an intermediary role, rather than performing that role as a by-product of their principal activities. The results of this analysis suggest that the key role played by innovation brokers in the innovation process is the independent validation of new ideas, thereby facilitating diffusion. In order to carry out this task, innovation brokers are organized on a not-for-profit basis, typically as a public–private partnership. The paper concludes by discussing the implications of the findings for innovation theory and research in networks of innovation.     

Strategic niche management of social innovations: the case of social entrepreneurship

Strategic niche management (SNM), a tool to understand and manage radical socio-technical innovations and facilitate their diffusion, has always departed from a technical artefact. Many radical innovations, however, do not revolve around such an artefact. Social entrepreneurship is a new business model that combines a social goal with a business mentality and is heralded as an important new way to create social value such as sustainability. This study examines if and how SNM can be applied to such a social innovation. It identifies theoretical and practical limitations and proposes solutions. The main conclusion is that SNM can be used to analyse radical social innovation, although it requires rethinking the initial entry point for research and management. Exemplifying quotes are proposed as an alternative. Second, this paper suggests using values to describe niche–regime interaction as a better way to anticipate future niche–regime interactions.     

Some microfoundations of Austrian economics: Böhm-Bawerk's version

This paper investigates Böohm-Bawerk's version of Austrian microeconomics. It draws some comparisons with Carl Menger's programmatic work on the principles of economic theory which originally established a distinctive Austrian tradition. Böhm-Bawerk's microeconomics is also considered against the background of contemporary Walrasian, Edgeworthian and Marshallian thought as well as twentieth-century work on the theory of games. Böhm-Bawerk offers a theory of micro-structural dynamics. His emphasis on intentionality and imagination in value creation, the scope for bargaining and strategic behaviour in his theory of markets and the avowed indeterminacies and equilibrating tendencies in his theory of price formation, are all consistent with other first-generation Austraian contributions. There is nothing especially Walrasian or Marshallian about Böhm-Bawer's. microeconomics     

Benefits Of Communications Infrastructure Capital In U.S. Economy

In this paper we empirically estimate the contribution of the communications infrastructure to the growth of output and productivity at the dis-aggregate industry and at the aggregate economy levels. The estimated value of the marginal benefits or the shadow price of the communications infrastructure capital is positive in each of 34 industries representing the major industrial sectors of the U.S. economy. This effect captures network externality benefits and can be interpreted as a willingness to pay by each industry for communications infrastructure capital services over and above their direct payments for communications services. These results suggest that an increase in communications infrastructure capital services reduces cost in all the industries and as a consequence that of the entire economy. The relatively high value of estimated total marginal benefits for the aggregate economy indicates a high social rate of return to the investments in communications infrastructure.