Practicing effective knowledge sharing in international hotel joint ventures

Knowledge sharing can be described as the process by which individuals mutually exchange their knowledge and collaboratively generate new knowledge. Since international hotel joint venture partners typically possess skills in competing areas, this process of knowledge sharing is critical to the success of these alliances. Therefore, this article presents a framework that can be used to foster effective knowledge sharing at the individual joint venture manager level, at the relationship level between individuals, and across the entire organization.     

STRUCTURAL HOMOPHILY

Homophily, or the fact that similar individuals tend to interact with each other, is a prominent feature of economic and social networks. I show that the equilibrium structure of homophily has empirical power. I build a strategic model of network formation, which produces a unique equilibrium network. Individuals have homophilic preferences and face capacity constraints on the number of links. I develop a novel empirical method, based on the shape of the equilibrium network, which allows for the identification and estimation of the underlying homophilic preferences. I apply this new methodology to the formation of friendship networks.     

The cyclical effect of default risk on industrial bond yields

This paper examines the determinants of default-risk premiums and the ways in which they change over the business cycle. Seven default-risk factors are constructed from a large number of financial ratio/accounting variables. Factor scores summarizing these variables for a sample of industrial corporations are regressed with bond risk premiums for all years from 1971 to 1977—a complete business cycle. A second sample covering the years 1975 to 1977 is also examined. The main conclusion is that the cyclical movement of business conditions influences investors' assessments of default risk. Bonds issued in periods of economic normalcy have premiums that are significantly associated with earnings instability in addition to sales and size factors. By contrast, firms issuing bonds during recessionary climates must have relatively greater size and profitability to obtain funding at lower-interest costs. Firms with higher sales turnover ratios and, therefore, greater earnings instability with respect to economic downswings, are less likely to issue debt securities during depressed business conditions.     

Can cigarette advertising be prohibited? Advertising and the First Amendment to the United States Constitution

Smoking has been considered a health problem virtually since its introduction to Europe in the 1500's. At various times, laws were enacted to attempt to control smoking, while cultivation of tobacco became economically more and more important. The development of widespread recognition of the health consequences of smoking has led to numerous suggestions that cigarette advertising be banned. However, the First Amendment to the U.S. Constitution protects freedom of the press. Analysis of the legal issues involved in such a ban requires consideration of the entire trend of Supreme Court decisions in the area of commercial speech. While it is not possible at this time to predict exactly how the Court would rule in this area, a comprehensive regulatory effort to reduce tobacco consumption could probably include a ban on tobacco advertising.     

The Effect of Demand for Shares on the Timing and Underpricing of Seasoned Equity Offers

Despite high levels of asymmetry of information, firms that issue seasoned equity offerings (SEOs) within a year of their initial public offering (IPO) (follow‐on SEOs) are able to offer shares at a lower discount as compared to more mature firms. We provide evidence that this seeming contradiction can be explained by a very high degree of demand for the follow‐on offering. We find that the likelihood of issuing a follow‐on SEO is significantly related to the level of institutional demand and that discounts are lower for follow‐on SEOs in which institutional demand is high. We also consider the joint effect of cash holdings and follow‐on SEOs on discounts since firms that have recently gone public tend to hold high levels of cash. Underpricing is higher for firms with elevated preoffer levels of cash, which is consistent with market timing predictions. However, this relation is mitigated for both follow‐on SEOs and issues that also have high share demand.     

The influence of lead indicator strength on the use of nonfinancial measures in performance management: Evidence from CEO compensation schemes

Nonfinancial measures (NFMs) are a common feature of strategic performance management frameworks. We examine the role of one widely used NFM: customer satisfaction, in one aspect of strategic performance management: CEO compensation schemes. Drawing on agency theory precepts, we hypothesize that the extent to which firms link CEO compensation to customer satisfaction is influenced by satisfaction's ability to act as a leading indicator of future profitability (lead indicator strength). We further hypothesize that the extent to which customer satisfaction's lead indicator strength influences the weighting of satisfaction in CEO compensation schemes has a positive influence on future shareholder value. Our empirical results offer strong support for both hypotheses and extend research on the use and efficacy of NFMs in CEO compensation schemes. Copyright © 2013 John Wiley & Sons, Ltd.     

Worst-case optimal redistribution of VCG payments in multi-unit auctions

For allocation problems with one or more items, the well-known Vickrey–Clarke–Groves (VCG) mechanism (aka Clarke mechanism, Generalized Vickrey Auction) is efficient, strategy-proof, individually rational, and does not incur a deficit. However, it is not (strongly) budget balanced: generally, the agents' payments will sum to more than 0. We study mechanisms that redistribute some of the VCG payments back to the agents, while maintaining the desirable properties of the VCG mechanism. Our objective is to come as close to budget balance as possible in the worst case. For auctions with multiple indistinguishable units in which marginal values are nonincreasing, we derive a mechanism that is optimal in this sense. We also derive an optimal mechanism for the case where we drop the non-deficit requirement. Finally, we show that if marginal values are not required to be nonincreasing, then the original VCG mechanism is worst-case optimal.     

The relation between forest clearance and household income among native Amazonians: Results from the Tsimane' Amazonian panel study, Bolivia

The Amazon rain forest harbors some of the world's richest biological diversity. During the twentieth century, two types of actors cleared that forest: native Amazonians and outside encroachers. Of the two actors, we know more about what drives outside encroachers to clear forest than about what drives native Amazonians to clear forest. The past research focus has served well because during the twentieth century outside encroachers cleared most of the Amazonian forest. But the past research focus needs to be expanded because native Amazonians are claiming de jure stewardship of the forests they inhabit, and with tighter jurisdiction over those forests will likely come changes in the amount of forest native Amazonians clear. Prior research in rural areas of low-income nations suggests that household income affects household forest clearance. To estimate the effects of household real income on the total forest area (old-growth + fallow) cleared by households we use a panel composed of five annual household surveys (2002-2006, inclusive) from 324 households of a native Amazonian society in Bolivia (Tsimane'). We control for household and village fixed effects and use an instrumental variable for household income. We find positive and significant household real income elasticities of forest clearance of 0.35 and 0.47 and an increase in forest clearance of 5.3%/year. The main finding stood up well to sensitivity analysis. These estimates suggest that in the near future, the forest in the Tsimane' territory will likely face increasing pressure from the Tsimane' themselves, not just from outside encroachers.