The consequences to analyst involvement in the IPO process: Evidence surrounding the JOBS Act

The JOBS Act allows certain analysts to be more involved in the IPO process, but does not relax restrictions on analyst compensation structure. We find that these analysts initiate coverage that is more optimistically biased, less accurate, and generates smaller stock market reactions. Investors purchasing shares following these initiations lose over 3% of their investment by the firm's subsequent earnings release. By contrast, issuers, analysts, and investment banks appear to benefit from this increased bias, as optimism is more positively associated with proxies for firm visibility and investment banking revenues when analysts are involved in the IPO process.     

Consumer sorting and hedonic valuation of wine attributes: exploiting data from a field experiment

This article uses a novel experimental approach to measure consumer willingness to pay (WTP) for wine attributes. We invited customers of a local supermarket who had selected a bottle of wine to purchase to participate in a valuation experiment. Integrating their original wine choice into the experiment, each participant evaluated six alternative wines, generating a rich set of data on willingness to pay and consumer characteristics. The data from the experiment allow us to compare standard shelf price‐based wine attribute valuation estimates with estimates using WTP data and an increasing amount of information about individual consumers. The full model employs individual fixed effects to estimate WTP parameters without bias from consumer sorting or supply side influences. Our WTP estimates for wine attributes differ markedly from previous attribute value estimates. Consumers in our sample display clear and stable preferences for wine varieties, but less clear preferences for appellations. Our results suggest caution is needed in using market prices to estimate parameters of the consumer valuation function for product attributes.     

Rorty,Caputo and business ethics without metaphysics: ethical theories as normative narratives

Using the works of Richard Rorty and John Caputo, I want to suggest that we might be better off treating the traditional ethical theories of Kant, Mill, Aristotle and Hobbes as normative narratives rather than as justificatory schemes for moral decision making to be set up against one another. In a spirit akin to Husserl's ‘bracketing’ of metaphysics, when discussing ethical theories in business ethics, we can easily avoid metaphysics and use an approach that sees ethical theory as socially convincing normative narratives – narratives that unify us with others insofar as they describe our phenomenological experiences in a way with which many of us mutually resonate. I will do this by attempting to show how John Caputo's thinking in Against Ethics and Rorty's postmodern pragmatism might be appropriated to some extent by us in business ethics.     

The impact of managerial values on decision-making behaviour: A comparison of the United States and Hong Kong

This study addresses cross-national value differences and how values held by managers influence their decision-making behaviour. A two-by-two research design was used to examine values held by practising managers and future business leaders in the United States and Hong Kong. Machiavellianism, locus of control, intolerance of ambiguity, and dogmatism were the measures used to assess these values. Social desirability scores were used as covariants to help control for cultural differences. The findings indicate that differences exist to affect decision-making behaviour. Consequently, managers in both environments must make adaptations to accommodate the values of those involved in transnational businesses.The authors thank Michael H Bond for his many helpful comments. Also, we thank Priscilla Elass for her assistance with data collection.     

On Moral Business: Classical and Contemporary Resources for Ethics in Economic Life. Max L. Stackhouse,Dennis P. McCann,Shirley Roels and Preston N. Williams

Teaching Business Ethics -     

Multidimensional scaling of consumer preferences for a public transportation system: An application of two approaches

Consumer attitudes toward a proposed new public transportation system were assessed through the application of two multidimensional scaling models to data on preference choices for system attributes. Carroll's vector model and Kruskal and Carmone's nonmetric unfolding model were compared on theoretical and empirical levels to determine their utility for exposing the latent structure of attitudes for a public project. While the unfolding model was attractive because of a theoretical property, the vector model was able to uncover latent dimensions for the attitudes which could be related via discriminant analysis to socio-economic and demographic characteristics of the respondents. The vector model also produced an outcome which was more closely related to a unidimensional analysis of these data. Therefore, even though both the vector and unfolding models produced plausible geometric representations of the attitudes which arc expected to aid urban transportation planners in designing systems, the vector model produced the more acceptable outcome.     

Memberships Levels in U. S. Private Clubs During the 2008–2010 Economic Downturn

This study measured membership changes in private clubs in the United States during the economic downturn from 2008 to 2010. Specifically examined were the changes clubs experienced with their number of members, waiting lists, and attrition rates. A letter was sent via e-mail to the same 1,000 private clubs that were sent a survey in a similar study conducted by Ferreira and Gustafson (2006 Ferreira, R. R. and Gustafson, C. M. 2006. Declining memberships during an economic downturn in U.S. private clubs. International Journal of Hospitality & Tourism Administration, 7(2/3): 3–18. [Taylor & Francis Online] , [Google Scholar]) The managers of these clubs were members of the Club Managers Association of America. The majority of respondents managed country clubs and member-owned clubs, representing different areas of the United States. An overall response rate of 53% was achieved. Most clubs experienced a decrease in the overall number of members and an increase in annual attrition rate. Fewer clubs reported having a waiting list of members wanting to join. The clubs without waiting lists reported a larger number of membership openings in their clubs. The results of this study suggest the levels of memberships in many private clubs are heavily influenced by economic conditions. An implication from this study is that clubs need to implement membership development strategies during economic downturns because of the decline in the number of members, candidates proposed, and waiting lists during these periods.     

An empirical examination of government expenditures and the ex-ante crowding-out effect for the British economy

The conventional macroeconomic view that consumers make their consumption decisions without regard for goods provided by the government has been examined in the literature. Moreover, the line of research that questions this conventional view argues that this separation does not have a firm theoretical backing. If consumers take government expenditures into account when maximizing their utility functions then the effects of fiscal policy actions will tend to appear weaker than those suggested by most conventional analyses. The examination of this issue should therefore have far-reaching political as well as economic implications within the context of traditional fiscal policies.

This paper will empirically examine the ex antecrowding-out effect of government expenditures upon private consumption expenditures for the British economy. An aggregate consumption function is derived and estimated in the context of a simultaneous equations model based on intertemporal consumption theory. The empirical results should shed some light on the real effects of fiscal policy on the British economy.     

Bank monitoring: Evidence from syndicated loans

We directly measure banks’ monitoring of syndicated loans. Banks typically demand borrower information on at least a monthly basis. About 20% of loans involve active monitoring (i.e., site visits or third-party appraisals). Monitoring increases with the lead bank’s incentives and the value of information and is negatively associated with loan spreads and maturity. The monitoring captured by our measures can either complement or substitute for covenant-based monitoring, depending on whether the monitoring informs covenant compliance. Banks increase monitoring following deteriorations in borrower financial condition and credit line drawdowns. Finally, monitoring is positively related to future covenant violations and loan renegotiations.     

Farmers' Preferences for Alternative Crop and Health Insurance Subsidy

In addition to production risks, farmers desire to balance personal risks of health care. A theoretical framework is developed for holistic health and crop insurance products that provide the opportunity to switch a portion of existing crop insurance subsidy for greater health coverage. A random utility discrete choice experiment is used to assess farmers' stated preferences for holistic insurance products. Farmers prefer higher levels of coverage and are price sensitive. A sample of farmers did not prefer the subsidy switch. However, the subsidy switch is preferred by older farmers, those with higher health care spending, and farmers who have experienced major health problems.