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Book part
Publication date: 13 August 2007

Timothy B. Folta and Jonathan P. O’Brien

We examine a central tenet of real option theory – whether real options influence managerial thresholds for investment. In contrast to prior studies that have focused on whether…

Abstract

We examine a central tenet of real option theory – whether real options influence managerial thresholds for investment. In contrast to prior studies that have focused on whether real options influence discrete investment decisions, our focus is on empirically isolating real options’ effects on thresholds. In particular, we examine the real options inherent in acquisition decisions. Our model posits that there are good reasons why we might expect there to be information asymmetry around the value of real options. Accordingly, if managers have unique information about growth options we might expect to observe them lowering their thresholds, perhaps to the point where they are willing to accept negative market returns. We further expect that the degree of information asymmetry for firm-specific growth options should be higher than for industry-specific growth options. Finally, we believe that managerial thresholds will be more prone to influence from growth options than deferment options. While thresholds are unobservable, we are able to isolate the effects of real options on acquisition thresholds by borrowing a method used originally in labor economics to isolate the determinants of reservation wages. Using a sample of over 28,000 acquisitions in the U.S., we find strong support for the model. These findings suggest that firms with low thresholds may choose to acquire despite comparatively low expected performance.

Details

Real Options Theory
Type: Book
ISBN: 978-0-7623-1427-0

Book part
Publication date: 19 September 2014

Fabio Zambuto, M. V. Shyam Kumar and Jonathan P. O’Brien

We propose that in addition to its resources and capabilities, a firm’s capital structure and financial health will act as an important determinant of its attractiveness as an…

Abstract

We propose that in addition to its resources and capabilities, a firm’s capital structure and financial health will act as an important determinant of its attractiveness as an alliance partner. Alliances with leveraged firms are prone to unplanned termination due to financial distress, which puts at risk the value embedded in the collaboration. As a result, ceteris paribus, highly leveraged firms will be viewed as less desirable partners in the market for interfirm collaboration when compared to low leverage firms. In support of this proposition, we find that when forming an alliance firms tend to partner with other firms with similar levels of leverage: low-leverage firms partner with other low-leverage firms while high-leverage firms partner with other high-leverage firms, as well as with lower quality ones. Furthermore, we show that alliances with highly leveraged firms are more likely to involve equity participation as a form of ex post protection, especially when they involve partners with relatively lower leverage. Finally, we show that leverage is negatively related to the intensity of alliance activity, suggesting that firms also maintain lower leverage in their capital structure in order to attract potential partners. Overall our results imply that financial policies regarding capital structure have an important role to play in alliancing activity.

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Finance and Strategy
Type: Book
ISBN: 978-1-78350-493-0

Content available
Book part
Publication date: 13 August 2007

Abstract

Details

Real Options Theory
Type: Book
ISBN: 978-0-7623-1427-0

Content available
Book part
Publication date: 19 September 2014

Abstract

Details

Finance and Strategy
Type: Book
ISBN: 978-1-78350-493-0

Book part
Publication date: 29 August 2018

Paul A. Pautler

The Bureau of Economics in the Federal Trade Commission has a three-part role in the Agency and the strength of its functions changed over time depending on the preferences and…

Abstract

The Bureau of Economics in the Federal Trade Commission has a three-part role in the Agency and the strength of its functions changed over time depending on the preferences and ideology of the FTC’s leaders, developments in the field of economics, and the tenor of the times. The over-riding current role is to provide well considered, unbiased economic advice regarding antitrust and consumer protection law enforcement cases to the legal staff and the Commission. The second role, which long ago was primary, is to provide reports on investigations of various industries to the public and public officials. This role was more recently called research or “policy R&D”. A third role is to advocate for competition and markets both domestically and internationally. As a practical matter, the provision of economic advice to the FTC and to the legal staff has required that the economists wear “two hats,” helping the legal staff investigate cases and provide evidence to support law enforcement cases while also providing advice to the legal bureaus and to the Commission on which cases to pursue (thus providing “a second set of eyes” to evaluate cases). There is sometimes a tension in those functions because building a case is not the same as evaluating a case. Economists and the Bureau of Economics have provided such services to the FTC for over 100 years proving that a sub-organization can survive while playing roles that sometimes conflict. Such a life is not, however, always easy or fun.

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Healthcare Antitrust, Settlements, and the Federal Trade Commission
Type: Book
ISBN: 978-1-78756-599-9

Keywords

Article
Publication date: 21 November 2016

Lisa Kiang, Sara Mendonça, Yue Liang, Ayse Payir, Lia T. O’Brien, Jonathan R.H. Tudge and Lia B.L. Freitas

Despite USA’s emphasis on children as consumers with great spending power, little is known about their actual spending preferences and how they might be linked to personal…

Abstract

Purpose

Despite USA’s emphasis on children as consumers with great spending power, little is known about their actual spending preferences and how they might be linked to personal character traits such as materialism and gratitude. This study aims to address this literature gap by examining children’s spending preferences in an imaginary windfall scenario, as well as main and interactive effects of materialism and gratitude on such preferences.

Design/methodology/approach

This was a school-based research study. Survey methodology was used in which self-report measures were collected from 247 7-14-year-old children (58 per cent male).

Findings

Results suggest that materialism was significantly associated with saving resources and allocating less money to charity. Gratitude was related to more charitable giving. One interactive effect was found whereby the link between more materialism and saving was attenuated by high levels of gratitude. Contrary to expectations, no age or gender differences in spending preferences or materialism were found, but older children and girls reported higher gratitude than did younger children and boys.

Research limitations/implications

Although cross-sectional data limit conclusions regarding directionality, the results have implications for understanding children’s consumer behavior, as well as children’s well-being, self-regulation and ability to delay gratification.

Practical implications

The results suggest that materialism, with its emphasis on consumption, and gratitude, with its positive feedback loop that encourages prosocial connections, are particularly relevant avenues to continue examining in future research on youth consumer patterns.

Social implications

Gratitude not only promotes social connectedness but also is more environmentally sustainable in promoting appreciation for what one has rather than wanting more. Uncovering ways that these characteristics are linked to hypothetical and, ultimately, actual spending behavior reflects a meaningful contribution to the field.

Originality/value

This paper fills gaps in the literature by examining links between specific character traits and potential spending behaviors, with deeper implications for children’s psychosocial development, self-regulation and environmental sustainability.

Details

Young Consumers, vol. 17 no. 4
Type: Research Article
ISSN: 1747-3616

Keywords

Article
Publication date: 15 December 2017

Tom Bason and Jonathan Grix

In recent years, there has been a decline in the number of cities seeking to host the Olympic Games, with several cities withdrawing from the bid process following referenda. The…

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Abstract

Purpose

In recent years, there has been a decline in the number of cities seeking to host the Olympic Games, with several cities withdrawing from the bid process following referenda. The debate around bidding have hinged on the costs and benefits of hosting events, with little consideration as to the benefits of a bid itself. The purpose of this paper is to identify the ways in which Olympic bids be leveraged for positive outcomes, regardless of the outcomes of the bid.

Design/methodology/approach

This research employs a content analysis, examining the 16 bid responses to the question in the International Olympic Committee Candidate questionnaire: “What will be the benefits of bidding for the Olympic Games for your city/region, irrespective of the outcome of the bid?”.

Findings

This research found that bid cities do attempt to use the Olympic bid process as a leveraging resource, with four unique opportunities arising from this; national and city pride, Olympism, the formation of networks, and global focus. These provide the opportunities for Olympic bid cities to achieve the following strategic objectives: nation and community building, sport participation, business opportunities, enhancing image and profile, and to push through infrastructural projects.

Originality/value

There has been little consideration as to the ways an Olympic bid can be used to leverage positive outcomes for a city or a nation, and therefore this research contributes to the literature on leveraging mega-events. The research also has practical value, in providing potential bidders with information regarding positive outcomes whether the bid is successful or not.

Details

Marketing Intelligence & Planning, vol. 36 no. 1
Type: Research Article
ISSN: 0263-4503

Keywords

Article
Publication date: 21 June 2021

Dmitri G. Markovitch and Jonathan O'Brien

Research finds that investors initially under-react to increases in R&D intensity. The phenomenon is commonly viewed as mispricing. We draw on behavioral theory of the firm (BTF…

Abstract

Purpose

Research finds that investors initially under-react to increases in R&D intensity. The phenomenon is commonly viewed as mispricing. We draw on behavioral theory of the firm (BTF) to propose an alternative explanation that increased R&D intensity is often indicative of problemistic search in firms. We empirically explore three contextual factors that may help discriminate between mispricing and problemistic search effects when capital markets frown on increased R&D intensity.

Design/methodology/approach

We use econometric methods to analyze longitudinal data on 4,561 US manufacturing firms.

Findings

We find that market reactions to R&D investments are consistent with the view that managers often engage in R&D-based search to correct anticipated problems. We show that increased R&D intensity is a stronger indicator of diminished expected future performance for firms with greater inertia, including larger firms and high-performing firms. However, greater R&D intensity is less indicative of problemistic search in slack-rich firms.

Originality/value

Whilst the BTF has been used extensively in management research, ours is one of the few studies which link the BTF to stock market phenomena.

Details

Journal of Strategy and Management, vol. 14 no. 4
Type: Research Article
ISSN: 1755-425X

Keywords

Open Access
Article
Publication date: 8 July 2022

Jonathan McCarthy

The paper’s aim is to consider how best to formulate sturdy regulatory frameworks for RegTech and SupTech. The paper appraises how key features of EU and UK regulatory and policy…

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Abstract

Purpose

The paper’s aim is to consider how best to formulate sturdy regulatory frameworks for RegTech and SupTech. The paper appraises how key features of EU and UK regulatory and policy initiatives can contribute to a functional framework for RegTech and SupTech.

Design/methodology/approach

The paper refers to the most comprehensive empirical findings within the EU and the UK on RegTech and SupTech, including reports released by the European Banking Authority and the Bank of England. As data is only gradually becoming available about the true rate of adoption of RegTech and SupTech, the paper identifies salient areas that warrant analysis from emerging findings. In light of the relatively restricted sources of empirical data, the article’s methodological approach is directed towards the most wide-ranging and detailed sources that are currently available at EU and UK levels.

Findings

The paper reveals distinct variations in how the EU and UK have pursued regulatory approaches towards RegTech and SupTech growth. However, there are many shared features in the respective approaches. The paper argues that a regulatory framework should ideally be imbued with overarching strategies and policy objectives, as well as with practical measures through innovation facilitators, such as sandboxes. Yet, legislative (top-down) intervention will be the significant ingredient in guaranteeing legal clarity for RegTech and SupTech.

Originality/value

By understanding the nuances in EU and UK approaches, the paper advocates for pragmatic reasoning when formulating a regulatory response. The importance of the article is in its focus on the elements of EU and UK regulatory approaches that are most capable of guaranteeing clarity on standards relating to RegTech and SupTech. The paper makes a vital contribution to existing commentary by determining how a balance can be struck between “top-down” and “bottom-up” types of regulation (i.e. should regulation be entirely concerned with industry-driven standards, such as codes of conduct?).

Details

Journal of Financial Regulation and Compliance, vol. 31 no. 2
Type: Research Article
ISSN: 1358-1988

Keywords

Article
Publication date: 1 October 2006

Stephen C. Trumble, Mark L. O'Brien, Matthew O'Brien and Bronwyn Hartwig

The purpose of this paper is to examine changes in patients' satisfaction after their doctor has participated in a brief educational intervention on medicolegal risk management.

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Abstract

Purpose

The purpose of this paper is to examine changes in patients' satisfaction after their doctor has participated in a brief educational intervention on medicolegal risk management.

Design/methodology/approach

Questionnaire completed by ambulatory patients, measuring satisfaction with their doctor's communication skills before and three months after the doctor participated in a three hour workshop on medicolegal risk management. 75 obstetrician/gynaecologists (O&Gs) and 99 general practitioners (GPs) were each rated by 60 of their patients following a consultation in their clinical rooms.

Findings

Patient satisfaction as evidenced by change to “complete satisfaction” with doctor's communication skills and overall satisfaction with the clinical encounter.

Practical implications

Participants had high initial patient satisfaction ratings and these were found to have improved across all parameters three months after the educational intervention.

Originality/value

The educational intervention was successful in improving doctors' communication skills as evidenced by enhanced patient satisfaction in all key areas, including those most frequently associated with patient complaint, litigation and adverse outcome.

Details

Clinical Governance: An International Journal, vol. 11 no. 4
Type: Research Article
ISSN: 1477-7274

Keywords

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