Spontaneous visualization and concept evaluation

This paper proposes that customers often respond to brand extension concepts by visualizing the product. We call this process spontaneous visualization and suggest that it precedes concept evaluations. In two studies, we show that spontaneous visualization is enhanced by the fit between the parent brand and the extension category and by the ease with which the product category can be imagined. The appeal of the visualized image in turn determines whether visualization enhances or decreases concept evaluations. In addition, we find a stronger link between product evaluations and delayed choice when evaluations are based on visualization; evaluations based on visualization hence appear to be more “valid” in the sense of predicting subsequent behavior. Implications of these findings and ideas for future research are discussed.

Are Accruals during Initial Public Offerings Opportunistic?

We find evidence that initial public offering (IPO) firms, on average, have high positive issue-year earnings and abnormal accruals, followed by poor long-run earnings and negative abnormal accruals. The IPO-year abnormal, and not expected, accruals explain the cross-sectional variation in post-issue earnings and stock returns. The results are robust with respect to alternative abnormal accruals and earnings performance measures. IPO firms adopt more income-increasing depreciation policies when they deviate from similar prior performance same industry non-issuers, and they provide significantly less for uncollectible accounts receivable than their matched non-issuers. The results taken together suggest opportunistic earnings management partially explains the new issues anomaly.     

Autoregressive Conditional Kurtosis

This article proposes a new model for autoregressive conditionalheteroscedasticity and kurtosis. Via a time-varying degreesof freedom parameter, the conditional variance and conditionalkurtosis are permitted to evolve separately. The model usesonly the standard Student’s t-density and consequentlycan be estimated simply using maximum likelihood. The methodis applied to a set of four daily financial asset return seriescomprising U.S. and U.K. stocks and bonds, and significant evidencein favor of the presence of autoregressive conditional kurtosisis observed. Various extensions to the basic model are proposed,and we show that the response of kurtosis to good and bad newsis not significantly asymmetric.     

Integrating Pragmatism and Ethics in Entrepreneurial Leadership for Sustainable Value Creation

The relationship between entrepreneurship and ethics has largely been characterized as antithetical. In this article we develop a conceptual model integrating pragmatism, a philosophical approach that emphasizes experimentation and action characteristic of entrepreneurial leadership, with ethics to suggest that the two are not incompatible and that sustaining entrepreneurial leadership for value creation necessitates ethical action to build legitimacy. Case studies from the United States and India highlight the necessity of infusing pragmatism with ethics for sustainable entrepreneurial leadership.     

Mistaken Inferences from Advertising Conversations: A Modest Research Agenda

I review the changing advertising landscape and suggest that the definition of advertising has inherently changed. Using the current advertising context, I develop research questions that consumer behavior scholars are well poised to address. This research agenda is rooted in real-world observations about advertising and can help us develop new theories about when, how, and why advertising influences and persuades consumers. A recurring theme in this article is that consumers may be misled due to information overload from multiple channels and sources. I use the advertising-as-conversation metaphor to derive hypotheses and test one such hypothesis in an experiment. I end with a summary and discussion of advertising impact measurement.     

Lending booms, sharp reversals and real exchange rate dynamics

Emerging markets in the 1990s experienced periods of booms followed by collapses in gross domestic product, consumption, traded and non-traded sector output and real exchange rate movements alongside unprecedented movements in foreign investor participation in these economies. An important feature of these episodes is the asymmetry in the pattern of booms and collapses. We introduce a natural search friction into the foreign investment decision in a small open economy and demonstrate that this can generate the asymmetry observed in the data. The magnitude of the reversals predicted by the model can be quantitatively large and empirically relevant.     

Contemplating the future: Mutating capitalism

After the fall of international communism in the former Soviet Union, capitalism has remained the only viable option for managing the economy. Economic and financial problems of capitalism of recent times, however, have brought forth debate about the role and shape of capitalism, and mainly its future. These problems have made it very clear that unbridled capitalism may not produce the proclaimed prosperity. Some have questioned its future viability in the present form and predicated its metamorphosing into a different kind that could make it more beneficial to the people and more resilient to survive. Questions regarding its future shape and form and the reasons for such predication are the subject of this article.