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After completion of the case study, the students will be able to understand the different risks associated with a business, focusing on price risk and the importance of price risk management in business; understand and evaluate the products available for hedging price risk through exchange-traded derivatives in the Indian scenario; and understand and evaluate the different strategies for price risk management through exchange-traded derivatives in the Indian scenario.

The case study pertains to a small business, M/s Sethi Jewellers. The enterprise is being run by Shri Charan Jeet Sethi and his son Tejinder Sethi. The business is located in Jain Bazar, Jammu, UT, in Northern India. The business was started in 1972 by Charan Jeet’s father. They deal in a wide range of jewelry products and are well-established jewelers known for selling quality ornaments. Tejinder (MBA in marketing) was instrumental in revamping his business recently. Under his leadership, the business has experienced rapid transformation. The business has grown from a one-room shop fully managed by Tejinder’s grandfather to a multistory showroom with several artisans, sales staff and security persons. Through his e-store, Tejinder has a bulk order from a client where the client requires him to accept the order with a small token at the current price and deliver the final product three months from now. Tejinder is in a dilemma about accepting or rejecting the large order. Second, if he accepts, should he buy the entire gold now or wait to buy it later at a lower price? He is also considering hedging the price risk through exchange-traded derivatives. However, he is not entirely sure, as he has a few apprehensions regarding the same, and he is also not fully aware of the process and the instruments he has to use for hedging the price risk on the exchange.

The case study is aimed to cater to undergraduate, postgraduate and MBA students in the field of finance. This case study can be used for students interested in commodity derivatives, risk management and market microstructure.

Teaching notes are available for educators only.

CSS 1: Accounting and finance.

Information was obtained in interviews with Richard Nagel in Winter/Spring 2022. This information was supplemented by material from secondary sources. The only information that was disguised were the real names for Bob Crater, Tim Landy, Jane Tolley and Mary Nagel.

The case was classroom tested in Summer 2022. The responses from students helped to shape the writing of the case.

Richard Nagel, the owner of the RE/MAX Elite real estate agency in Monmouth Beach, New Jersey, has just learned that one of his agents, Tim Landy, quit and left the industry. Tim was a young real estate agent and Richard had spent considerable time training him. Tim was motivated and he worked hard to prospect for business, but he showed that he was experiencing difficulty closing on his sales. Richard decided to recommend that Tim work with another agent, Bob Crater, as Bob was an experienced salesman but was not doing the up-front prospecting that Tim was doing. Richard suggested two different strategies to the two agents – a pairing up arrangement and peer-to-peer learning. The outcome that Richard envisioned was that both of the struggling salesmen would benefit from either of these strategies, but Bob refused to collaborate.

Tim’s quitting was characteristic of an ongoing problem with employee retention that Richard had been experiencing as a manager in recent years. This problem caused Richard to think about how he recruited his real estate agents, how he developed them through coaching and how he motivated them so that they would stay happy in their job and not leave. He recognized the importance of thoroughly examining his retention strategy within the next 12 months so that he could better manage the problem and strengthen the productivity of his real estate agency.

The case is intended for an undergraduate course in human resources management, as it deals directly with recruiting, coaching and retaining employees.

The income structure of banks has undergone a notable change in recent decades; therefore, non-interest-based activities have gained much attention. This paper aims to examine the impact of income diversification on bank performance in Pakistan.

A balanced panel data set of 20 Pakistani commercial banks is used from 2007 to 2020. The random effect model is employed to test the relationship between income diversification and financial performance.

The empirical results indicate a significant positive impact of income diversification of banks on risk-adjusted returns on assets and equity. Moreover, while banks' risk-adjusted profit performance improves with the increase in bank size, equity ratio and loan ratio, it deteriorates with high credit risk and technology. However, geographical diversification does not explain financial performance in all the risk-adjusted return on equity models. Among the macroeconomic factors, the interest rate influences bank risk-adjusted returns positively, whereas gross domestic product and inflation rate have a negative effect on banks' financial performance.

To the best of the author's knowledge, this study is the first to empirically investigate the relationships between income diversification and the risk-adjusted profits of Pakistani-listed commercial banks. This study has implications for regulators and policymakers of commercial banks.

This chapter introduces dividend policy as both financial and business decisions. First, it presents the history of dividend payment, definition of dividend, and typical types of dividend. Dividends originate from liquidating payments of sailing vessels in the early 16th century and become popular with the development of corporations. In this book, a dividend is defined as a cash payment to shareholders. By payment time, there are three typical types of dividend including final dividend, interim dividend, and special dividend. Second, it presents definition, important dates, measures, and patterns of dividend policy. Dividend policy includes two decisions: the first is to pay or not to pay dividends, and the second is the dividend magnitude. Investors have to follow important dates of dividend payments in order to make their investment decisions. Important dates include declaration date, record date, ex-dividend date, and payment date. Dividend payout ratio and dividend yield are two common measures of dividend policy. Common patterns of dividend policy are no dividend policy, residual dividend policy, stable dividend policy, and irregular dividend policy. Finally, dividend policy is both financial and business-related decisions. Therefore, dividend decisions are affected by various levels of business environment such as internal, micro (industry), and macro-environment. Dividend theories are the behind mechanisms to explain the effect of each factor in the business environment on corporate dividend policy. Dividend policy, in turn, determines shareholders' wealth through its impact on stock price.

The study endeavours to determine (1) whether the disposition effect exists among South African investor teams, (2) whether it is causally intensified by a set of psychosocial factors and (3) whether the disposition effect causally reduces investor welfare.

Following a natural field experimentation design involving a sample of investor teams participating in the 2019 run of the JSE University Investment Challenge, the authors use regression adjustments as well as bootstrap tests to investigate the casual implications of a set of psychosocial factors on the intensity of the disposition effect, as well on the attenuation of market-adjusted ex post returns (i.e. investor welfare).

South African investor teams are susceptible to the disposition effect, and their susceptibility to the bias is associated with attenuated investor welfare. Furthermore, low female representation in an investor team causally intensifies the disposition effect, subsequently leading to a causal reduction in investor welfare.

Using evidence from real-world observation, the authors contribute to the literature on team gender diversity and investment decision-making, and – using Hofstede's (2001) cultural dimensions – the authors offer a comprehensive account for how differences in culture may lead to differences in gender-related disposition effects across different nationalities. The authors also introduce to the literature experimental evidence from the field that clearly demonstrates that – among South African investor teams – a causal relationship exists (1) between female representation and the disposition effect, and (2) between the disposition effect and investor welfare.

The purpose of this paper is to explore the relationship between formal ethics and ethics in practice in the empirical context of real estate agents (REAs) working in the residential housing market, including owner-occupied houses and owner-occupied apartments, in Sweden. The paper investigates problems with the Swedish middleman model of real estate agency with regard to the acceptance among REAs of borderline professional behavior.

We report on a survey distributed to all Swedish licensed residential REAs to investigate their attitudes towards eight scenarios displaying borderline ethical behavior. Firstly, the means of each scenario were calculated, investigating signs of distance between formal ethics and ethics in practice. Secondly, logistic regressions were run for each scenario separately, thereby investigating factors affecting misconduct among REAs.

The empirical results show a clear difference between formal ethics and ethics in practice and also illustrate that some scenarios of borderline ethical behavior are creating greater problems for the REAs.

In Sweden, the seller is the principal, assigning the REA to sell a house or apartment, but the regulation is clear on the role of the licensed REA as responsible for promoting an informed and fair sales process where the buyer is safe to act without their own representative. Our study contributes with information to policymakers on possible areas for the development of the middleman model.

The paper is the first to empirically investigate the middleman model of a Swedish real estate agency in relation to the business ethics of the agents. The use of scenarios in close relation to the everyday working context of REAs as tests of ethics of practice is also of original methodological value to investigate possible diversions of professionals from national regulations.

Substantial pressure from civil society and investors has forced governments around the world to take climate neutrality initiatives. Several countries have pledged their nationally determined contributions towards net-zero. However, there exist various obstacles to achieving the same and the agriculture sector is one of them. Thus, this study identifies and models the critical barriers to achieving climate neutrality in the agriculture food supply chain (AFSC).

Sixteen barriers are identified through a literature survey and are validated by the questionnaire survey. Furthermore, the interactions amongst the barriers are estimated through the application of the “weighted influence non-linear gauge system (WINGS)” method which considers the both intensity of influence and the strength of the barrier. To mitigate these barriers, a framework based on green, resilient and inclusive development (GRID) is proposed.

The obtained results reveal that lack of collaboration amongst AFSC stakeholders, lack of information and education awareness, and lack of technical expertise obtained a higher rank (amongst the top five) in three indicators of the WINGS method and thus are the most significant barriers.

This paper is the first attempt in modelling the climate neutrality barriers for the Indian AFSC. Additionally, the mitigating strategies are prepared using the GRID framework.

The primary goal of this paper is to investigate the relationship between stock market liquidity and firm dividend policy within a market implementing the tax imputation system. The main aim is to understand how the tax imputation system influences the relationship between firm dividend policy and stock market liquidity within a cross-sectional framework.

This paper investigates the relationship between stock market liquidity and the dividend payout policy under the full tax imputation system in the Australian market. This study uses the Generalized Least Squares regressions with firm- and year-fixed effects.

In contrast to the negative relationship between the liquidity of common shares and the firms' dividends documented in countries with the double tax system, the study reveals that in Australia, the dividend payout ratios are positively associated with liquidity after controlling for various explanatory variables with both the contemporaneous and lagged time periods. Such a finding is robust to the use of alternative liquidity proxies and to the sub-period tests and remains during the COVID-19 pandemic period.

The insights derived from this study have significant implications for various stakeholders within the economy. The findings provide regulators with valuable insights to conduct a more holistic assessment of how the tax system impacts the economy, especially concerning the dividend choices of firms. Within the context of a full tax imputation system, investors can make investment decisions without factoring in the taxation impact. Simultaneously, firms can be relieved of concerns about losing investors who prioritize liquidity, particularly when a high dividend payout might not align optimally with their financial strategy.

This study contributes to the literature by extending the literature on the tax clientele effects on dividend policy, providing evidence that the tax imputation system can moderate the impact of liquidity on dividend policy. This study examines the impact of the dividend tax imputation system on the substitution effect between dividends and liquidity.