Earnings Announcements and Information Asymmetry: An Intra‐Day Analysis*

This paper examines the effect of earnings announcements on information asymmetry as perceived by specialists. We use changes in quoted bid‐ask spreads and depths (relative to the average value in the non‐announcement period) as proxies for changes in information asymmetry in the market. To our knowledge, we are the first to employ a model that captures the simultaneous nature of the specialists' choice of spreads and depths in reaction to earnings news. We provide evidence that spreads are wider and depths are smaller before the release of earnings announcements. We also find that changes to depths are greater for announcements of quarterly earnings than for announcements of annual earnings and changes to spreads persist longer into the post‐announcement period when announcements are made outside trading hours. These changes to spreads and depths persist when earnings announcements are made after trading hours.     

Consumer response to social entrepreneurship: the case of the Big Issue in Scotland

The Big Issue is the most prominent example of social entrepreneurship in the UK. Initially started as a nonprofit organisation, it is now a limited company that provides homeless individuals with the opportunity to earn an income and donates its profits to a charity that addresses problems of homelessness. The paper explores how consumer response to the Big Issue is influenced by the fact that the magazine is sold by homeless people themselves. The findings suggest that consumers buy it both because they like the magazine and because they believe that they are helping the homeless, often paying more than the magazine cover price for the latter reason. The results also reveal that consumers see the direct involvement of homeless people in the exchange positively, recognising it as an empowering process. Copyright © 2002 Henry Stewart Publications     

Experimental research in financial accounting

This paper uses recent experimental studies of financial accounting to illustrate our view of how such experiments can be conducted successfully. Rather than provide an exhaustive review of the literature, we focus on how particular examples illustrate successful use of experiments to determine how, when and (ultimately) why important features of financial accounting settings influence behavior. We first describe how changes in views of market efficiency, reliance on the experimentalist’s comparative advantage, new theories, and a focus on key institutional features have allowed researchers to overcome the criticisms of earlier financial accounting experiments. We then describe how specific streams of experimental financial accounting research have addressed questions about financial communication between managers, auditors, information intermediaries, and investors, and indicate how future research can extend those streams. We focus particularly on (1) how managers and auditors report information; (2) how users of financial information interpret those reports; (3) how individual decisions affect market behavior; and (4) how strategic interactions between information reporters and users can affect market outcomes. Our examples include and integrate experiments that fall into both the “behavioral” and “experimental economics” literatures in accounting. Finally, we discuss how experiments can be designed to be both effective and efficient.     

Relationships among levels of government support,marketing activities,and financial health of nonprofit performing arts organizations

• This exploratory study researches and analyzes the empirical effects of financial levels of government support and marketing practices on the financial health of nonprofit performing arts organizations. Declining government subsidies and increasing competition from non-traditional sources have presented these organizations with unique opportunities and challenges that call for a market-centered, as well as an art-centered approach. Financial health is critical for the long-term success of a nonprofit performing arts organization. Few empirical studies have examined the interrelationships between these key variables. This study analyzes a sample of 63 American professional symphony orchestras employing 20 years of data. The correlations among financial levels of government support and marketing activities were positive and significant, the correlations among levels of government support and financial health were negative and significant, and the correlations between levels of marketing activity and financial health were negative and varied in significance. Causal analyses were less conclusive, but significant causal relationships were found for large symphony orchestras, indicating that segmentation research may be warranted. Implications and opportunities for future research are presented which have potential application for government agencies, academic researchers, and arts organization managers, boards of directors, and donors.

Copyright © 2006 John Wiley & Sons, Ltd.     

Relational Capital: Strategic Advantage for Small and Medium-Size Enterprises (SMEs) Through Negotiation and Collaboration

Collaborative entrepreneurship research suggests that organizations will soon pursue more collaborative relationships throughout a worldwide network of firms, driving a strategy of continuous innovation, specially small- and medium-size firms (SMEs). Tapping into a body of literature that focuses on the importance of human capital in driving long-term success, we merge ideas of collaborative research with a growing body of work on human capital or human resource management in SMEs. Our paper states that it is not the human, per se, that is the real asset but the relationships those humans have that are the most inimitable and important capital. We will discuss how companies use relational capital as the basis for collaborative entrepreneurship. Consistent with our hypotheses, our exploratory study suggests that smaller firms place more value on relational capital than do larger firms. We also have some indication that the key capital that differentiates low vs. high performance, regardless of firm size, is the relational capital aspect. To sum up, relational capital is a fundamental asset for firms, but especially for SMEs, and high performing companies are those that are able to negotiate with others and develop collaborative agreements, thus placing a high value in relational capital.