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Abstract

Details

Rutgers Studies in Accounting Analytics: Audit Analytics in the Financial Industry
Type: Book
ISBN: 978-1-78743-086-0

Article
Publication date: 1 December 2022

Fang Sun and Xiangjing Wei

In this paper, the impact of stock-based compensation and further the joint effects of stock-based compensation and investor sentiment on pension discount rate choice is examined.

Abstract

Purpose

In this paper, the impact of stock-based compensation and further the joint effects of stock-based compensation and investor sentiment on pension discount rate choice is examined.

Design/methodology/approach

The hypotheses is tested using fixed effects models and instrumental variable analysis where pension discount rate is the dependent variable, and stock-based compensation and investor sentiment are our variables of interest.

Findings

It was found that pension discount rate is negatively associated with managers' stock-based compensation. Further analysis indicates that managers with larger stock-based compensation tend to adjust down their pension discount rates in higher (smaller) degree, responding to high (low) investor sentiment.

Practical implications

The findings provide important insights into how managers use pension discount rates to engage in earnings management. Understanding these relationships has implications for interpreting pension numbers reported in the financial statements and designing pension accounting rules that minimize the possibility that managers take advantage of the complexity associated with pension accounting to influence the reported earnings and executive compensation. Moreover, the findings suggest the need for increased attention from boards of directors, auditors and regulators to reported pension liabilities and service costs, especially for firms paying higher proportion of stock-based compensation to managers and during periods of high investor sentiment.

Originality/value

The findings contribute to the extant literature by identifying the joint impacts of stock-based compensation and investor sentiment as incentives for pension discount rate manipulation. The empirical results of this study also have important implications for corporate governance and regulation.

Details

Managerial Finance, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0307-4358

Keywords

Article
Publication date: 1 April 1976

D.G. Watkin and M.E. Joseph

Discount food stores opened within days of each other in Welshpool and Porthcawl earlier this year. How have established retailers been affected in these two very…

Abstract

Discount food stores opened within days of each other in Welshpool and Porthcawl earlier this year. How have established retailers been affected in these two very difficult towns with their traditions of small independents (Welshpool) and larger supermarkets (Portcawl)? What has been the impact on shoppers from the surrounding countryside? Are the new stores nine‐day‐wonders or have they already attracted loyal customers? These are some of the questions investigated by the authors who are currently continuing their study of the effects of the discount stores on existing retail outlets in Welshpool and Porthcawl.

Details

Retail and Distribution Management, vol. 4 no. 4
Type: Research Article
ISSN: 0307-2363

Article
Publication date: 1 June 2006

Hwan Ho Ha, Jung Suk Hyun and Jae H. Pae

To investigate shoppers' decision‐making behaviour under conditions of expected and unexpected in‐store price discounts, using mental accounting theory as the analytical framework.

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Abstract

Purpose

To investigate shoppers' decision‐making behaviour under conditions of expected and unexpected in‐store price discounts, using mental accounting theory as the analytical framework.

Design/methodology/approach

In an experiment manipulating expected and unexpected discounts on electronic organisers and portable audio players, data collected by questionnaire from 240 first‐year business administration students at a Korean university were used to test two hypotheses predicting the ways in which the savings would be used.

Findings

Recipients of unexpected discounts tend to spend the savings in store. If a choice of two products is available, the savings are more likely to be applied to the discounted one than the other. Shoppers commit more actively to planned purchases when price discounts are known in advance. The key factor in purchasing behaviour with respect to discounts is the existence or otherwise of predictions. Shoppers' decision‐making in these conditions is, therefore, context and frame dependent.

Research limitations/implications

The experimental subjects were not representative of the general shopping population, and Korea is a distinctive culture. The findings should be interpreted with caution, but are indicative within limits. Aspects of the topic not investigated by the experiment are identified, and future research directions suggested.

Practical implications

Unadvertised discount available at the point of sale offer several potential benefits to retailers, including reduced costs and increased patronage. Pricing strategists need to understand the theoretical basis of customers' behaviour in response to discount offers, for effective planning.

Originality/value

Adds to the body of knowledge relating to crucial aspect of pricing strategy, and has potential applicability beyond retailing.

Details

Marketing Intelligence & Planning, vol. 24 no. 4
Type: Research Article
ISSN: 0263-4503

Keywords

Article
Publication date: 28 October 2014

Alexandra Luong and David Slegh

The purpose of this study was to examine the effects of price discounts on products perceived to provide hedonic value vs those perceived to evoke displeasure. Also…

1548

Abstract

Purpose

The purpose of this study was to examine the effects of price discounts on products perceived to provide hedonic value vs those perceived to evoke displeasure. Also examined were the effects of various discount levels on consumer intentions to purchase.

Design/methodology/approach

The study design was a 2 (emotion-evoked) × 2 (price) × 3 (level of discount) mixed-factorial design. In this study, 182 participants were presented with several products and indicated whether they would shop with a competitor offering various price discounts on pleasure- vs displeasure-evoking products.

Findings

ANOVA results indicated a significant main effect of price discounts on intention to purchase and a significant interaction between price discount and type/price of product. Discounts mattered more between certain levels (10 and 50 per cent) than others (50 versus 70 per cent). Discounts mattered more for hedonic products (pleasure-evoking) than those that evoked displeasure; however, price trumped all factors such that discounts mattered most when price of product is high.

Research limitations/implications

Limitations include age range of participants and that intentions to shop were measured. Future research should examine price effects on other socio-demographic groups and actual behavior.

Practical implications

Retailers would benefit from using price discounts as a competitive strategy, with attention given to the “percentage-off” levels that are perceived to be steeper. Discounts are more effective when the product offers hedonic value or when price is high.

Originality/value

To our knowledge, this is the first study to examine the relationship between “percentage-off” price discounts on hedonic products. This study contributes to the literature on pricing affect.

Details

Nankai Business Review International, vol. 5 no. 4
Type: Research Article
ISSN: 2040-8749

Keywords

Article
Publication date: 1 September 1997

Andreas Herrmann, Frank Huber and Robin Higie Coulter

Examines the effects of four factors (the bundle: pure or mixed, the price discount, the functional complementarity of bundle components, and the number of bundle…

14177

Abstract

Examines the effects of four factors (the bundle: pure or mixed, the price discount, the functional complementarity of bundle components, and the number of bundle components) on consumers’ intentions to purchase product and service bundles. The findings were relatively consistent across product (automobile) and service (automotive service) contexts, and illustrate that pure bundles are preferred to mixed bundles, and a greater price discount is preferred to a lesser one. The results also indicate that five component bundles generate greater purchase intention than either three or seven component bundles, and that “very related” bundle components result in greater purchase intention than either moderately or not related components. Additionally, several interactions are present.

Details

Pricing Strategy and Practice, vol. 5 no. 3
Type: Research Article
ISSN: 0968-4905

Keywords

Article
Publication date: 1 May 1988

Christopher J. Cowton and Andrew Wirth

Fringe, or “non‐wage”, benefits typically form an important part of the compensation package provided for employees, having grown considerably during the 20th century. One…

Abstract

Fringe, or “non‐wage”, benefits typically form an important part of the compensation package provided for employees, having grown considerably during the 20th century. One of the more traditional types of benefit, of interest in this article, is the provision of goods and services to employees at a price below that which they would normally expect to pay. More specifically, we are interested in the sale, at a discount, of a company's own products, rather than the provision of other goods and services, such as meals or private health insurance, at low rates made possible by company subsidy or the exploitation of its buying power or facilities. While a company may sometimes sell discontinued lines or damaged stock to its employees, our focus is on the sale of normal products. Our primary purpose is to show how, with an understanding of cost and revenue relationships, the problem of setting the rate of discount can be approached. The analysis draws on and extends previous work on shareholder concessions.

Details

Personnel Review, vol. 17 no. 5
Type: Research Article
ISSN: 0048-3486

Article
Publication date: 1 April 2004

Bülent Sezen

Consumers are less likely to purchase perishable goods when their expiry dates are near. For this reason, retailers frequently implement a discount pricing policy when the…

2567

Abstract

Consumers are less likely to purchase perishable goods when their expiry dates are near. For this reason, retailers frequently implement a discount pricing policy when the products have reached closer to their expiry dates. This paper introduces a simple methodology for helping the managers in their discount pricing decisions. Based on the expected value approach, the suggested method utilizes the probability values obtained from the past experiences and calculates an expected profit value for each alternative discount policy. Decision maker then selects the discount policy with the highest expected profit.

Details

International Journal of Retail & Distribution Management, vol. 32 no. 4
Type: Research Article
ISSN: 0959-0552

Keywords

Article
Publication date: 1 February 2006

Ramakrishnan Ramanathan

Commodities that have a fixed useful life are said to be perishable commodities. These commodities pose special problems to retailers and distributors as these have to be…

1411

Abstract

Purpose

Commodities that have a fixed useful life are said to be perishable commodities. These commodities pose special problems to retailers and distributors as these have to be sold before their shelf‐life. Retailers offer discounts on perishable products nearing their shelf‐lives to encourage consumers to buy. In these situations, retailers would like to know when they should begin to offer the discount, what should be the quantum of discount, and how many units of the commodity they should stock on the shelf to maximize their expected profit. This paper aims to address these three issues.

Design/methodology/approach

A recently published paper has suggested a simple procedure based on expected profits to identify time and quantum of discount for perishable products. Extending this, a modified empirical procedure is suggested in this paper to identify the number of units to be stocked, discount period and the quantum of discount. A numerical illustration is used to explain the steps involved in the procedures.

Findings

It is shown that offering discounts results in higher profit compared to the profit with no discount.

Research limitations/implications

For more complex situations where discounts are changed more frequently, simulation methodology or the yield management principles could be used. Game theory can be employed to identify the equilibrium strategies of price‐sensitive consumers and retailers.

Practical implications

Aids retailers and distributors with the special problems presented by the disposal of perishable commodities.

Originality/value

The application of an expected profit approach suggested earlier is extended to identify the number of items to be stocked. The results will be useful to retailer managers.

Details

International Journal of Retail & Distribution Management, vol. 34 no. 2
Type: Research Article
ISSN: 0959-0552

Keywords

Article
Publication date: 28 January 2014

Sanjai Bhagat

Venture capitalists typically use discount rates in the range of 30-70 percent. During the startup stage of venture-capital financing, discount rates between 50 and 70…

2388

Abstract

Purpose

Venture capitalists typically use discount rates in the range of 30-70 percent. During the startup stage of venture-capital financing, discount rates between 50 and 70 percent are common. The discount rate decreases from the first through fourth stage: from 60 to 30 percent. These rates of return are high compared to historical returns on common stocks or small stocks (12.1 and 17.8 percent, respectively). Such high discount rates cannot also be explained in the context of any existing asset pricing theory; that is, any reasonable risk-adjusted discount rates are not consistent with discount rates in the order of 30-60 percent. The paper provides a rational economic explanation why venture capitalists (VC) use such high discount rates. The paper aims to discuss these issues.

Design/methodology/approach

Let the discount rate of a venture project be 15 percent; this discount rate depends on the systematic risk of the cash flows from the project given that the project is successful. Using the procedure, a VC who estimates the probability of eventual success of the project between 60 and 40 percent will impose a discount rate between 42 and 74 percent. These discount rates are quite similar to the discount rates charged by VC in their startup and first stages.

Findings

The high rates of return charged by VC reflect the fact that not all their projects succeed in that they have no net cash-inflows. Adjusting for the probability of success of the project provides estimates of discount rates comparable.

Originality/value

The paper argues that reported rates of return of common stock are relevant for projects that have succeeded in that they have net cash-inflows.

Details

The Journal of Risk Finance, vol. 15 no. 1
Type: Research Article
ISSN: 1526-5943

Keywords

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