Tax avoidance and ex ante cost of capital

This study examines the association between tax avoidance and ex ante cost of equity capital. Based on prior research, we develop two proxies for investors’ expectations of tax avoidance and explore whether deviations from those expectations result in higher ex ante cost of equity capital. We find that the ex ante cost of equity capital increases with tax avoidance that is either below or above investor expectations and that the increase is larger for tax avoidance that exceeds investors’ expectations. We then examine whether firms that alter their future tax avoidance exhibit a lowering of their ex ante cost of equity capital and find that tax avoidance decreases (increases) from the prior year for firms that were above (below) investors’ expectations in the prior year. These results are consistent with the trade‐off suggested by the Scholes and Wolfson framework and reinforce the notion that balancing tax benefits and non‐tax costs is an important feature of firms’ tax planning.     

Conditional Persistence of Earnings Components and Accounting Anomalies

We suggest that the failure of investors to distinguish between an earnings component's autocorrelation coefficient (unconditional persistence) and the marginal contribution of that component's persistence to the persistence of earnings (conditional persistence) provides a partial explanation of post‐earnings‐announcement drift, post‐revenue‐announcement drift, and the accrual anomaly. When the conditional persistence of revenue surprises is high (low) relative to its unconditional persistence, both the post‐earnings‐announcement drift and the post‐revenue‐announcement drift are high (low), because investors’ under‐reaction to revenues and earnings is stronger when the persistence of revenue surprises is more strongly associated with the persistence of earnings surprises. Also, the mispricing of accruals decreases substantially when the conditional persistence of accruals is high relative to its unconditional persistence, because investors’ over‐reaction to accruals is mitigated when the persistence of accruals is indeed more strongly associated with the persistence of earnings. Our findings also suggest that financial analysts’ failure to distinguish between unconditional and conditional persistence of revenues and accruals results in more biased revenue and earnings predictions.     

Does Accrual Management Impair the Performance of Earnings‐Based Valuation Models?

This study examines how accrual manipulations affect firm valuation in the years surrounding the passage of the Sarbanes‐Oxley Act (SOX). We compare the absolute percentage pricing errors of RIM and DCF valuation models for a group of US firms suspected to have engaged in accrual manipulations to avoid a small loss or a small earnings decline vs. ‘Normal’ firms matched on industry, year and size. We find that RIM can better estimate intrinsic value than DCF for the matched Normal firms in the pre‐SOX period, but not so for accrual manipulators, and that SOX mitigates the harmful effect of accrual manipulations, completely eliminating the difference in RIM's accuracy advantage over DCF between Normal firms and accrual manipulators. As a further analysis, we redefine Suspect firms as real‐activity manipulators and find a significant across‐group difference in accuracy wedge in both sample periods, implying that SOX has prompted firms to favor real‐activity manipulations over accrual manipulations.     

Corporate Stock and Bond Return Correlations and Dynamic Adjustments of Capital Structure

This paper analyses the effects of dynamic correlations between stock and bond returns issued by the same firm on the speed of adjustment towards target leverage. The results show that the estimated correlations are time varying, show persistence and differ among firms. Analysis of the potential explanatory variables reveals that the correlations decrease with negative expectations about future aggregate risks, but only for firms with a low default probability. In contrast, correlations are positively associated with specific risk measures, especially idiosyncratic stock risk and financial leverage. The positive relationship between the correlations and the leverage ratio suggests that target leverage can be achieved faster when the stock–bond correlation is high. Our results show that this is the case.     

Institutional Monitoring: Evidence from the F‐Score

The extant literature shows that institutional investors engage in corporate governance to enhance a firm's long‐term value. Measuring firm performance using the F‐Score, we examine the persistent monitoring role of institutional investors and identify the financial aspects of a firm that institutional monitoring improves. We find strong evidence that long‐term institutions with large shareholdings consistently improve a firm's F‐Score and that such activity occurs primarily through the enhancement of the firm's operating efficiency. Other institutions reduce a firm's F‐Score. Moreover, we find evidence that, while monitoring institutions improve a firm's financial health, transient (followed by non‐transient) institutions trade on this information.     

AN ANALYSIS OF SUPPLY CHAIN COLLABORATIONS AND THEIR EFFECT ON PERFORMANCE OUTCOMES

This research examined how operational outcomes, relational outcomes and business performance are affected by a collaboration project between buyers and suppliers in a supply chain. It is hypothesized that interdependence of knowledge and process, supply chain partner insight, and the level of collaboration between the firms affect the outcomes of a collaboration project. Survey data from buyers and suppliers from a wide range of industries and organizations were used in this analysis. Among these participants, higher levels of collaboration led to improvements in operational and relational outcomes, which together led to improvements in asset utilization, competitive position, organizational performance, and profitability.     

Applying the dissonance‐minimising format to value cultural heritage in developing countries*

We adapt the dissonance‐minimising (DM) format proposed by Blamey et al. [Land Economics, 75 (1999) 126] in a dichotomous choice contingent valuation survey to estimate the economic benefits of preserving a cultural heritage site in Vietnam. We find that the DM format can be successfully applied to avoid biases because of yea‐saying in a developing country context.     

论产业集群背景下的浙江高等职业教育发展

近年来,浙江省高职教育发展迅猛,高职人才培养质量不断得到提升,然而在以产业集群为优势特征的浙江经济发展对人才需求特点,与高职院校人才供求之间存在错位。应有效培养浙江省高职教育针对产业案群对高职人才需求专业性、行业性、区域性、层次性特征,特别是在发挥政府职能之余,要挖掘院校潜力,吸引行业协会参与,搭建多渠道＂立交桥＂,创建出高职教育的品牌。     

OUTPUT FLUCTUATIONS PERSISTENCE: DO CYCLICAL SHOCKS MATTER?

The aim of this paper is to identify the different sources of persistence of output fluctuations. We propose an unobserved components model that allows us to decompose GDP series into a trend component and a cyclical component. We let the drift of the trend component switch between different regimes according to a first‐order Markov process. To calculate an appropriate p‐value for a test of linearity we propose a bootstrap procedure, which allows for general forms of heteroscedasticity. The performance of the bootstrap is checked by means of a Monte Carlo simulation. Our study concerns the USA. We find that cyclical shocks appear to play an important role on the observed persistence of output.     

Reconceptualizing value creation: Exploring the role of goal congruence in the Co-creation process

As companies gradually shift from the exchange view to the resource integration view, the creation of value also shifts from the customer sphere to the joint sphere. As a result, the customer and service provider are responsible for co-creating value through resource integration. However, it raises the question of whether customers are capable of contributing to the co-creation of value. Our study proposes a framework of how goal congruence plays a pivotal role in the resource integration process between all actors in the joint sphere. When the level of goal congruence between customer and service provider actors is high, it stimulates the exchange of valuable resources from all actors, which leads to the actual experience of co-creation resulting in value-in-use and improves service outcomes, i.e., customer satisfaction and loyalty. Data were collected through a field survey from salon-and-spa customers (n = 530) and PLS-SEM was employed to test the hypotheses and further analysis. The results show that goal congruence impacts customer satisfaction and loyalty through value-in-use. Therefore, suggesting service providers to properly socialize their goals will be a good strategy to increase customer capability to co-create value and ultimately enhance customer satisfaction and loyalty.