Contracting and Reporting Conservatism around a Change in Fiduciary Duties*

We exploit an influential 1991 Delaware court ruling to examine simultaneously two types of conservatism that play important roles in resolving creditor–owner agency conflicts: contracting conservatism and reporting conservatism. The ruling expanded managerial fiduciary duties in favor of creditors for Delaware-incorporated firms in the vicinity of insolvency. In those firms, following the ruling, debt contracts are less likely to include conservative adjustments to accounting numbers used for covenant compliance (i.e., contracting conservatism decreases), while public financial reporting becomes more conservative (i.e., reporting conservatism increases). The decrease in contracting conservatism is concentrated in firms that exhibit a greater increase in reporting conservatism, suggesting that reporting conservatism is more cost-effective in resolving agency conflicts. In addition, the substitution effect is more pronounced in firms facing greater business uncertainty and firms with greater board independence.     

Intercorporate Ownership,Taxes, and Corporate Payout Choices*

This paper examines whether corporate payout choices (dividends or share repurchases) are associated with intercorporate ownership in a firm. Using the System for Electronic Document Analysis and Retrieval (SEDAR) and the Inter‐Corporate Ownership (ICO) database from Statistics Canada, I find that intercorporate ownership is positively associated with a firm’s propensity to pay dividends and negatively associated with a firm’s propensity to repurchase shares. The findings are robust to the endogeneity of intercorporate ownership and the inclusion of various control variables such as firm size, risk, liquidity, growth, and profitability.     

我国旅游资源和景区研究的十个前沿问题

旅游景区是旅游产业发展的核心要素，也是主要的旅游吸引物。有关旅游景区的规划、建设、管理和营销已成为研究重点，但总体上看，旅游景区研究还严重滞后于景区开发建设的实际需求。本文提出了我国旅游资源和景区发展中10个迫切需要研究的问题。     

Price formation in tourism industry branches

To examine the pricing behavior of suppliers of holiday goods and services, a margin approach, originally developed to explain price formation in service industries, has been applied to different sectors of the tourism industry, using Dutch data. The fundamental idea of the margin approach is that both cost and demand factors influence price formation. The specific market situation is supposed to determine the extent to which changes in cost factors can be passed on to consumers. Despite difficulties with the quality of data, the results can be characterized as promising.     

Timing of Sale,Pricing, and Cost Information: Evidence from the Airline Industry*

This study examines the association between when an airline sells its passenger seats and the pricing method (marginal cost or full cost) it employs. Prior literature suggests that when firms are able to change prices during the selling period, the optimality of full cost pricing or marginal cost pricing depends on when demand information is revealed during the period between capacity commitment decisions and time of sale. Full cost‐based pricing is appropriate in determining capacity commitment and prices simultaneously, while marginal cost provides more relevant information for pricing when capacity has been committed. Using the price and cost data from a sample of four U.S. domestic airlines, we find that full cost explains price variations of first‐day sales robustly. The adjusted R² of the marginal cost pricing model is larger in the sample of sales two days prior to departure than in the sample of first‐day sales. In the analysis of the sample of sales two days prior to departure, we find that, based on the adjusted R² of the full cost pricing and marginal cost pricing models, the explanatory power of marginal cost pricing is relatively weaker than full cost pricing. Our results document the use of different cost information along the dynamic change of price and provide implications in understanding the role of cost information in setting prices.     

Homewonder Ltd: Shareholders Versus Other Stakeholders

Corporate social responsibility involves various economic and social issues. This case presents a dilemma of the trade‐off between economic benefits to shareholders and social benefits to other stakeholders. To respond to recent flat sales growth, as well as serious needs for cost reduction and meeting analysts' expectations, Homewonder Manufacturing Ltd. is considering a strategic plan to expand into Asia. To facilitate this plan, the CEO of the company proposed offshoring and outsourcing some business operations, as well as downsizing the company's current social programs. Various stakeholders will be affected by this plan. This case analysis requires an integration of the shareholder and stakeholder theories of the firm. It provides opportunities for students to consider whether relationships with other stakeholders are a salient corporate strategic concern, and perform costs and benefits analyses arising from this dilemma.     

Independent Directors,Business Risk,and the Informativeness of Accounting Earnings for Debt Contracting

Using a sample of new bank loans, we investigate the impact of business risk on the usefulness of operating income after controlling for the proportion of independent directors. Consistent with the literature, our initial analyses reveal that the presence of independent directors on a board reduces the interest rate directly and indirectly through an increase in the usefulness of operating income. However, we further provide evidence that the indirect benefit of a high proportion of independent directors is reduced when we account for the presence of business risk. This suggests that studies examining the usefulness of operating income should take into account the effect of business risk. © 2018 ASAC. Published by John Wiley & Sons, Ltd.     

Why do companies issue convertible bond loans? An empirical analysis for the Canadian market

To identify issuer motives, we study the determinants of announcement effects of convertible debt issues in the Canadian market. Classified into equity‐ and debt‐like, wealth effects are significantly more negative for equity‐like convertible bond issuers. Equity‐like convertibles are significantly negatively affected by agency costs of equity. However, agency costs of debt have no significant effect on debt‐like convertibles. Consistent with Stein (1992), this suggests convertibles in particular represent a substitute for equity. Moreover, convertible debt offers announced by income trusts experience significantly less negative wealth effects than offers by nontrusts—a finding explained by a more debt‐like convertible design, very low agency costs of equity in case of income trusts, or both. Copyright © 2008 ASAC. Published by John Wiley & Sons, Ltd.     

Over the Line: Managers' experience of a labour strike

The experiences of managers who continue to work through a labour stoppage is a largely overlooked question in industrial relations research and practice. Qualitative long interviews were conducted with managers who worked through a strike. A shared narrative for managers' strike experiences emerged. Managers perceived that their prestrike workplace was cooperative and characterized by positive labour‐management relationships. The strike was experienced as contentious and personalized with managers reporting that they and their families were targets of aggression from strikers. The managers envisioned a more formal poststrike workplace characterized by less collegial labour‐management interactions. We discuss the implications of these findings and call for further research on managers' experiences of industrial relations events. Copyright © 2014 ASAC. Published by John Wiley & Sons, Ltd.