The Effects of Changes in Property Tax Rates and School Spending on Residential and Business Property Value Growth

In this article, we examine the effects of changes in property tax rates and school spending on residential and business property value growth in southeast Michigan. We use panel data for 152 communities in the five counties surrounding Detroit between the years 1983 and 2002, a period during which state government mandated major changes to school finance. Using the mandated changes to identify causality, we find that: (1) residential property values are more responsive to school spending changes than property tax rate changes; (2) business property values are more responsive to tax rate changes than school spending changes; and (3) business property values are more sensitive to changes in tax rates as compared to residential property. We also examine tax competition effects on property value growth, showing that tax competition plays an important role in property value growth in the southeast Michigan region.     

CEO Overconfidence,REIT Investment Activity and Performance

This is the first article to study the effects of overconfidence on trading activity and performance in real estate. The article looks at Real Estate Investment Trusts (REITs), as their investments and divestments can be identified with precision. We look at the effect of CEO overconfidence on investment activity and separately investigate property acquisitions and dispositions. We find that REITs with overconfident CEOs tend to invest more; these REITs acquire more assets and are less likely to sell assets than their counterparts if they have enough discretionary cash. Valuable private information is not the main driver for CEOs to be net buyers of company shares: the shares of their companies perform relatively weakly. In addition, we find that overconfident managers have lower property investment performance measured by net operating income and gain on sale of real estate.     

How Does Ambiguity Influence IPO Underpricing? The Role of the Signalling Environment

We explore the relationship between ambiguity, or low information clarity, in the IPO prospectus of newly public firms and their underpricing. Consistent with signalling theory, we find that IPO underpricing is low when the prospectus contains less ambiguous information that creates a more reliable signal conveying the quality of the IPO firm. However, the positive association between ambiguity and IPO underpricing is less pronounced when IPO firms display low strategic conformity with other firms in the industry, operate in industries with high valuation heterogeneity, or are medium‐sized. Using a sample of 398 IPOs between 1998 and 2007, our results support these predictions. This study shows the importance of the signalling environment influencing boundedly rational signal recipients interpreting ambiguous signals.     

Equity‐Based Incentives,Risk Aversion,and Merger‐Related Risk‐Taking Behavior

We find that post‐merger equity risk is negatively related to the sensitivity of CEO wealth to stock return volatility (vega), but is concentrated in CEOs with high proportions of options and options that are more in‐the‐money. The probability of industrial diversification also increases in vega. Additional tests show that the decline in post‐merger equity risk results in a significant decrease in shareholder wealth. This decrease is concentrated among firms with CEOs having the highest delta and the highest delta and vega. Our results suggest that the increased convexity provided by option‐based compensation does not necessarily increase risk‐taking behavior by CEOs.     

Effect of an audience in public goods provision

This paper investigates a novel public goods game where contributions to the public goods require effort that is observable. When the players are observed, they exert more effort to contribute to the public goods, and free-riding diminishes significantly compared to the no observer case. These effects are absent when no effort is required in order to contribute to the public goods. Furthermore, in the presence of an audience, the contributions to the public goods do not diminish when the game is repeated in the effort-required environment. Being observed does not affect the performance of the players if there is no strategic aspect of the game, in other words, when they play a private goods game. These results indicate that an individual wants to avoid appearing lazy when her effort helps the society.     

Differential effects of pre- and post-acquisition R&D expenditures on post-acquisition performance

Drawing from the behavioral theory of the firm and the resource-based view, we argue that different types of R&D (explorative and exploitative) and the timing of R&D investments (pre- and post-acquisitions) have differential effects on post-acquisition performance. By using a sample of 396 technology acquisitions, we find that pre-acquisition explorative and post-acquisition R&D expenditures are more beneficial for post-acquisition performance than are pre-acquisition exploitative and post-acquisition explorative R&D expenditures. Our results also show that firms investing in explorative R&D in the pre-acquisition stage and then exploitative R&D in the post-acquisition stage have better post-acquisition performance than firms that do otherwise.     

Consumer–brand relationship quality: When and how it helps brand extensions

Two studies demonstrate that strong brand relationship quality (BRQ) enhances consumer judgments about brand extensions. Different methods (survey vs. experiment), participants (real consumers vs. college students), and cultural contexts (Korea vs. Canada) demonstrate that this effect generalizes. Study results suggest that this effect only occurs for two moderately-low-fit extensions: the extension and the parent are similar product categories with inconsistent attributes, or dissimilar product categories with consistent attributes. Two different cognitive processes underlie the BRQ effects depending on these conditions.     

Will cotton make a comeback in Mali?

With the decline of cotton especially in the marginal cotton areas, farmers have been using more of the cotton‐financed inputs on the cereals. The cotton para‐statal company (CMDT) has made a virtue out of this recommending diversification for these regions. Following the world price spike in 2010, the Malian government responded with a substantial price increase for cotton in 2011 of 38% to rejuvenate the Malian sector. This article looks at the impact of this price policy in the cotton economy and the potential of new cereal technology and marketing strategy to raise incomes and facilitate the diversification. Given the importance of the marketing decision of selling later after the recovery of cereal prices from the harvest collapse, a discrete stochastic programming model was developed for three‐stage decision making. Then, the recent changes in the cotton economy and government fertilizer subsidies were analyzed along with the introduction of the new technology marketing of sorghum. Cotton and maize continue to dominate the economy but the combined sorghum technology marketing increases farmers’ incomes by 16% to 21% and eases the return to normal cotton prices, after the 2011 price spike, as well as the removal of the fertilizer subsidies.     

The contingency effects of environmental uncertainty on the relationship between supply chain integration and operational performance

This paper extends prior supply chain research by building and empirically testing a theoretical model of the contingency effects of environmental uncertainty (EU) on the relationships between three dimensions of supply chain integration and four dimensions of operational performance. Based on the contingency and organizational information processing theories, we argue that under a high EU, the associations between supplier/customer integration, and delivery and flexibility performance, and those between internal integration, and product quality and production cost, will be strengthened. These theoretical propositions are largely confirmed by multi-group and structural path analyses of survey responses collected from 151 of Thailand's automotive manufacturing plants. This paper contributes to operations management contingency research and provides theory-driven and empirically proven explanations for managers to differentiate the effects of internal and external integration efforts under different environmental conditions.     

Central banks and their banknote series: The efficiency-cost trade-off

One of the most important results of theoretical research on currency systems is that spacing denominations apart by a factor of two is better than a factor of three as this lowers the average number of notes and coins exchanged in transactions. These theoretical studies also claim that an efficient denominational mix has the additional benefit of keeping down the production costs incurred by the central bank. This paper challenges this claim and demonstrates that more efficient currency systems can also be more costly. Central banks therefore face an efficiency-cost trade-off and have to weigh the benefits for transactors against those for the central bank itself.