The Only Fund in Town? Geographic Segmentation in the US Mutual Fund Industry

We find that mutual funds located in regions with more competing funds charge lower management fees, but higher fees related to sales and distribution (12b‐1 fees), sales loads, and other nonmanagement fee expenses. There is some evidence that funds in more competitive regions have higher total expense ratios than similar funds in less competitive regions. Our results indicate that while increased competition drives down fund profits, it creates a negative externality by way of increased sales expenses. Overall, our results suggest the mutual fund industry is characterized by monopolistic competition determined at the local level.     

International compliance with new Basel Accord principles for risk governance

We assess international compliance with the Basel Committee's 2010 guidance on governance of banking organisations. Based on an extensive examination of regulatory documents in selected advanced economies, we find that reform is incomplete in jurisdictions most affected by the financial crisis, and with the largest financial centres. In contrast, other countries less affected by the financial crisis have enacted risk governance reforms as protection against potential future contagion. We provide insights for policy‐makers charged with improving governance at banks, and a richer understanding for international regulators as they revise the guidelines and aim for greater compliance at the national level.     

Pricing VIX derivatives with free stochastic volatility model

Review of Derivatives Research - This paper aims to develop a new free stochastic volatility model, joint with jumps. By freeing the power parameter of instantaneous variance, this paper takes...     

An investigation of problem-solving support and relaxation motivations on e-WOM

As a consequence of greater computer-mediated consumer-to-consumer communication within the firm's marketing communications, there has been a growing need to understand these digital interactions more explicitly. That is, we still know little about the exact extrinsic and intrinsic motivations that drive electronic word-of-mouth. The purpose of the paper is to better understand why members within community-based websites develop a need to exchange and/or develop a social bond within the community. Questionnaire data were gathered from 147 members of an online beauty forum in Australia. The findings highlight that those members seeking problem-solving support in combination with elements of relaxation will be more inclined to exchange with other community members and develop a social bond within that community. Marketing managers can capitalise these findings by strengthening problem-solving support systems and creating environments where community members can also relax and unwind to increase the exchange between members and also increase the social bonds within the community.     

Is regulatory adoption ceremonial? Evidence from lead director appointments

Research Summary: Regulatory bodies often wrestle with the thorny question of whether to mandate a governance practice or allow for organic adoption. While mandates afford rapid diffusion, we theorize that they also result in ceremonial adoptions. Leveraging a quasi‐natural experiment, we compare adoption outcomes for a governance practice—lead director adoption—that was mandated by the NYSE but not the NASDAQ. We find that NYSE firms are more likely than NASDAQ firms to have installed a lead director as a symbolic management tactic, so their lead directors are less effectual. We also find that transient institutional investors are deceived by this symbolic management, but dedicated institutional investors are not. Managerial Summary: Shareholders and analysts often desire to see companies introduce strict governance measures, such as proxy access and independent boards. Consequently, regulatory bodies often wrestle with the thorny issue of whether and when to mandate such practices for all companies. What they might not realize is that mandates may not work as well as they seem. Although more companies adopt reform under a mandate, they do so merely as a symbolic gesture. We look at one governance reform—appointing a lead director—finding that companies who introduce this reform as a result of a mandate appoint someone that is relatively toothless. We also find, though, that savvy investors are not actually fooled by this tactic and will trade out of firms that attempt such symbolic management.     

External corporate governance and financial fraud: cognitive evaluation theory insights on agency theory prescriptions

R esearch summary : Agency theory suggests that external governance mechanisms (e.g., activist owners, the market for corporate control, securities analysts) can deter managers from acting opportunistically. Using cognitive evaluation theory, we argue that powerful expectations imposed by external governance can impinge on top managers' feelings of autonomy and crowd out their intrinsic motivation, potentially leading to financial fraud. Our findings indicate that external pressure from activist owners, the market for corporate control, and securities analysts increases managers' likelihood of financial fraud. Our study considers external governance from a top manager's perspective and questions one of agency theory's foundational tenets: that external pressure imposed on managers reduces the potential for moral hazard. M anagerial summary : Many of us are familiar with stories about top managers “cooking the books” in one way or another. As a result, companies and regulatory bodies often implement strict controls to try to prevent financial fraud. However, cognitive evaluation theory describes how those external controls could actually have the opposite of their intended effect because they rob managers of their intrinsic motivation for behaving appropriately. We find this to be the case. When top managers face more stringent external control mechanisms, in the form of activist shareholders, the threat of a takeover, or zealous securities analysts, they are actually more likely to engage in financial misbehavior. Copyright © 2016 John Wiley & Sons, Ltd.     

The impact of seasonality on tourism and hospitality operations in the alpine region of New South Wales,Australia

Despite the recognized importance of seasonality for tourism businesses, there has been a distinct lack of studies undertaken in the past that discuss the impact of seasonality on alpine accommodation resorts, and more specifically that focus on an Australian location. The main purpose of this study was to examine whether or not the Australian alpine accommodation providers and ski operations have been significantly impacted by the issue of seasonality and to determine more specifically, had there been industry pressure placed on them to become all season operations? For this study, a total of 15 semi-structured interviews were conducted with managers of hospitality businesses located in the sub-alpine region of Jindabyne, and nearby alpine areas of Perisher and Thredbo in New South Wales, Australia. Study results indicated that the majority of managers acknowledged the fact that there has been an increase in the number of summer visitors each year which has pressured them to make changes to their operations. They conceded that such activity has served to reinforce a ‘stand alone’ mindset which was still prevalent amongst the majority of the managers in the region.     

Executive Forum: University technology transfer to entrepreneurial companies

This article discusses four dimensions of university–entrepreneurial firm collaboration—(1) industry-sponsored contract research, (2) consulting, (3) technology licensing and (4) technology development and commercialization—of which practitioners involved in university–private sector technology interaction need to be aware. The article identifies specific findings in each of the four areas and suggests important avenues for future work.     

CEO tenure and the performance-turnover relation

In a broad cross-section of US firms, we document that the likelihood of a CEO’s performance-related dismissal declines in his tenure. This finding is consistent with both firm performance revealing information about a CEO’s uncertain executive ability and CEO tenure reflecting weak firm governance choices that reduce the likelihood of performance-related dismissal. In a sample of CEOs who begin their appointment during our sample period, we find evidence more broadly in favor of the former explanation. Specifically, we find that (1) CEO survival is associated with superior firm performance, (2) this relation is unaffected by firm governance choices, (3) the intensity with which a firm monitors its CEO declines over his tenure, and (4) firms’ monitoring intensity increases following CEO turnover. Collectively, our results suggest that periodic performance reports increasingly resolve uncertainty regarding executive ability, thereby lowering firm owners’ demand for monitoring their CEO over his tenure.     

Comovement and investment banking networks

We test the hypothesis that investment banking networks affect stock prices and trading behavior. Consistent with the notion that investment banks serve as information hubs for segmented groups of investors, the stock prices of firms that use the same lead underwriter during their equity offerings tend to move together. We also find that when firms switch underwriters between their initial public offering (IPO) and a seasoned equity offering (SEO), they comove less with the stocks associated with the old bank and more with the stocks associated with the new bank. This change in comovement is greater for stocks completing their first SEO and for those experiencing large changes in institutional ownership.