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1 – 10 of 813A stylized fact in finance literature is the belief in positive relationship between ex ante return and risk. Hence, a rational investor, by utility preference axiom can only…
Abstract
Purpose
A stylized fact in finance literature is the belief in positive relationship between ex ante return and risk. Hence, a rational investor, by utility preference axiom can only consider committing fund in asset which promises commensurate higher return for higher risk. Questions have been asked as to whether this holds true across securities, sectors and markets. Empirical evidence appears less convincing, especially in developing markets. Accordingly, the author investigates the nature of reward for taking risk in the Nigerian Capital Market within the context of individual assets and markets.
Design/methodology/approach
The author employed ex post design to collect weekly stock prices of firms listed on the Premium Board of Nigerian Stock Exchange for period 2014–2022 to attempt to answer research questions. Data were analyzed using a unique M Vec TGarch-in-Mean model considered to be robust in handling many assets, and hence portfolio management.
Findings
The study found that idea of risk-expected return trade-off is perhaps more general than as depicted by traditional finance literature. The regression revealed that conditional variance and covariance risks reveal minimal or no differences in sign and sizes of coefficients. However, standard errors were also found to be large suggesting somewhat inconclusive evidence of existence of defined incentive structure for taking additional risk in the market.
Originality/value
In terms of choice of methodology and outcomes, this research adds substantial value to body of knowledge. The adapted multivariate model used in this paper is a rare approach especially for management of portfolios in developing markets. Remarkably, the research found empirical evidence that positive risk-expected return trade-off, as known in mainstream literature, is not supported especially using a typical developing country data.
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Vikas Kumar and Vikrant Kaushal
Ethical consumerism is gaining importance as consumers are becoming increasingly concerned about brands' moral intentions and social and legal practices. Hence, in a quest to…
Abstract
Purpose
Ethical consumerism is gaining importance as consumers are becoming increasingly concerned about brands' moral intentions and social and legal practices. Hence, in a quest to advance the current application of ethics in branding, this study substantiates literature by investigating consumer-perceived brand ethicality's (CPBE) role in affecting psychological, affective and behavioral responses of consumers (i.e. psychological brand ownership (PBO), brand commitment and willingness to pay a price premium (WPPP). Further, the authors test self-congruence as the boundary condition for CPBE.
Design/methodology/approach
Online survey method resulted in 408 responses, and the data were analyzed using structural equation modeling (SEM).
Findings
CPBE emerged as a predictor for PBO, brand commitment and WPPP. However, counterintuitively, self-congruence failed to reflect any moderating effect on the relationships between CPBE and PBO and CPBE and brand commitment.
Practical implications
Brands are encouraged to indulge in and reflect ethical practices to generate favorable consumer responses, i.e. PBO, brand commitment and WPPP.
Originality/value
Based on the ethical and psychological ownership theories, the investigation adds to the scholarship on CPBE and its outcomes. Arguably, it remains the first study to document the linkage between CPBE and PBO.
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Shuchuan Hu, Qinghua Xia and Yi Xie
This study investigates firms' innovation behaviour under environmental change. Therefore, it examines the effect of trade disputes on corporate technological innovation and how…
Abstract
Purpose
This study investigates firms' innovation behaviour under environmental change. Therefore, it examines the effect of trade disputes on corporate technological innovation and how product market competition moderates this relationship.
Design/methodology/approach
This research tests the hypotheses using the fixed effects model based on panel data of publicly listed enterprises in China from 2007–2020.
Findings
The empirical results validate the positive association between trade disputes and corporate research and development (R&D) intensity as well as the U-shaped relationship between trade disputes and radical innovation. Additionally, the moderating effect of product market competition is verified: a concentrated market with less competition flattens the U-shaped curve of radical innovation induced by trade disputes; as the market becomes more concentrated and less competitive, the U-shaped relationship eventually turns into an inverted U.
Originality/value
First, this study contributes to the corporate innovation and trade dispute literature by expanding the environmental antecedents of technological innovation and the firm-level consequences of trade disputes. Second, this study enriches the theoretical framework of the environment–innovation link through an integrated perspective of contingency theory and dynamic capabilities view. Third, instead of the traditional linear mindset which had led to contradictory results, this study explores a curvilinear effect in the environment–innovation relationship.
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Mark S. Reed, Pippa J. Chapman, Guy Ziv, Gavin Stewart, Helen Kendall, Amy Taylor and Dianna Kopansky
There is growing interest around the world in more effectively linking public payments to the provision of public goods from agriculture. However, published evidence syntheses…
Abstract
There is growing interest around the world in more effectively linking public payments to the provision of public goods from agriculture. However, published evidence syntheses suggest mixed, weak or uncertain evidence for many agri-environment scheme options. To inform any future “public money for public goods” based policy, further synthesis work is needed to assess the evidence-base for the full range of interventions currently funded under agri-environment schemes. Further empirical research and trials should then focus on interventions for which there is mixed or limited evidence. Furthermore, to ensure the data collected is comparable and can be synthesised effectively, it is necessary to reach agreement on essential variables and methods that can be prioritised by those conducting research and monitoring. Future policy could then prioritise public money for the public goods that can most reliably be delivered, offering better value for taxpayers and improving the provision of ecosystem services from agricultural landscapes.
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Zack Enslin, John Hall and Elda du Toit
The emerging business partner role of management accountants (MAs) results in an increased requirement of MAs to make business decisions. Frame dependence cognitive biases…
Abstract
Purpose
The emerging business partner role of management accountants (MAs) results in an increased requirement of MAs to make business decisions. Frame dependence cognitive biases regularly influence decisions made in conditions of uncertainty, as is the case in business decision-making. Consequently, this study aims to examine susceptibility of MAs to frame dependence bias.
Design/methodology/approach
A survey was conducted among an international sample of practising MAs. The proportion of MAs influenced by framing bias was analysed and compared to findings in other populations. Logistic regression was then used to determine whether MAs who exhibit a higher preference for evidence-based (as opposed to intuitive) decision-making are more susceptible to framing bias.
Findings
Despite a comparatively high preference for evidence-based decision-making, the prevalence of framing bias among MAs is comparable to that of other populations. A higher preference for evidence-based decision-making was found to only be associated with higher susceptibility to endowment effect bias.
Originality/value
To the best of the authors’ knowledge, this is the first study to comprehensively examine framing bias for MAs as a group of decision-makers. Additionally, this study’s sample consists of practising MAs, and not only students.
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This short case could be handed out at the end of class discussion on “J&L Railroad” [UVA-F-1053] in preparation for the following class, or if students are more experienced with…
Abstract
This short case could be handed out at the end of class discussion on “J&L Railroad” [UVA-F-1053] in preparation for the following class, or if students are more experienced with hedging and option pricing, the instructor may choose to cover both cases in a single class period. It is the companion case to “J&L Railroad” [UVA-F-1053], and presents more technical issues regarding the hedging problem by requiring students to understand option-pricing principles. The board likes the CFO's hedging recommendations, but it wants a more careful analysis of the bank's prices for its risk-management products: the caps and floors. Besides demanding an understanding of option pricing, this case puts particular emphasis on the calculation and use of implied volatility.
Digitalization and marketing technologies have made it possible to overcome some barriers to pricing – a multidisciplinary field between marketing, finance and IT – and have set…
Abstract
Digitalization and marketing technologies have made it possible to overcome some barriers to pricing – a multidisciplinary field between marketing, finance and IT – and have set the stage for a paradigm shift in the pricing profession. Value creation, the pricing process, and price communication have been transformed by innovative business models and advanced algorithmic and human–machine solutions. This chapter synthesizes the literature to date and provides a comprehensive framework for an all-encompassing 360° pricing approach that broadens the understanding of pricing in the context of digital business across all steps of the price management process. Starting from product attributes and motivational beliefs in consumers' value assessment and adoption of (technological or digital) products or services, new business models and pricing models emerge in the digital economy, human–machine solutions for price implementation and repricing are increasingly applied, and price search and communication take place through a variety of digital communication channels. Each stage of this framework discusses concrete examples, highlighting the freemium strategy, the subscription model, price tracking and repricing tools, and digital price information channels such as e-commerce, marketplace, or price comparison platforms. The implications for price management in a digital, technology-driven landscape are discussed from the executive level to the analyst level.
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Dexter L. Purnell, Douglas Jackson and Kimberly V. Legocki
Research for the case study was conducted using a combination of semi-structured interviews and secondary data sources.
Abstract
Research methodology
Research for the case study was conducted using a combination of semi-structured interviews and secondary data sources.
Case overview/synopsis
This case traces the international expansion of Sadowsky Guitars’ bass guitar product line. Roger Sadowsky is one of the most respected instrument makers in the world and gained early acclaim for his outstanding repair and restoration work on guitars and basses. Some of his early clients included Prince, Will Lee (The Tonight Show), Tom Hamilton of Aerosmith, Jason Newsted of Metallica, Eddie Van Halen and Marcus Miller. Roger’s reputation and the demand for his instruments led to some customers having to wait for more than a year to obtain the chance to purchase a Sadowsky instrument, while others were unable to do so due to financial constraints. In 2003, Roger made the decision to form Sadowsky Japan to begin the contract manufacturing of more affordable Sadowsky instruments in Tokyo, Japan. As the company grew in size, Roger realized he was becoming more focused on running a business than building instruments. Furthermore, his Japanese partners were only interested in serving the Japanese market. This required him to handle the sales and distribution in the remaining parts of the world. In December of 2019, he announced a new, exclusive licensing agreement and distribution partnership between Sadowsky Guitars and Warwick GmbH & Co Music Equipment KG. The new agreement allowed Roger to continue running the Sadowsky NYC Custom Shop while Warwick would take over building and distributing the Metro instruments and a less-expensive, Chinese-built version of the MetroExpress instruments.
Complexity academic level
This case is appropriate for undergraduate and graduate-level courses related to marketing and consumer behavior. The case walks students through a real-life scenario when the founder of a well-known musical brand sought to expand internationally as a way to meet growing market demand. Students are asked to consider the advantages and disadvantages of the five key international market entry strategies: exporting, licensing, contract manufacturing, joint ventures and investment (equity/acquisition).
The case works well in the classroom, even if people are unfamiliar with the musical instrument retail industry. Participants are most likely aware of some of the artists and musicians mentioned in the case. Some may also be or know musicians. The instructor should be able to quickly engage participants in a lively discussion about Roger Sadowsky’s vision for his instruments and the opportunities and challenges of expanding product offerings and increasing market share.
Supplementary material
Teaching notes are available for educators only.
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Zhihao Qin, Menglin Cui, Jiaqi Yan and Jie Niu
This paper aims to examine whether managerial sentiment, extracted from annual reports, is associated with corporate risk-taking in the context of Chinese companies. This study…
Abstract
Purpose
This paper aims to examine whether managerial sentiment, extracted from annual reports, is associated with corporate risk-taking in the context of Chinese companies. This study expands the vein of literature on overconfidence theory.
Design/methodology/approach
By leveraging textual analysis on Chinese listed companies’ annual reports, the authors construct firm-level managerial sentiment during 2007 and 2021 to examine how managerial sentiment influences corporate risk-taking after control for firm characteristics. Corporate risk-taking is denoted by corporate investment engagements: capital expenditures and net fixed asset investment.
Findings
Results show that incentives for corporate risk-taking are likely to increase with the positive managerial sentiment and decrease with the negative sentiment in companies’ annual reports. Positive managerial sentiment is associated with over-/under-investment and low/high investment efficiency. Further additional tests show that the managerial sentiment effect only holds during low economic uncertain years and samples of private-owned firms. Furthermore, the robust tests indicate that there is no endogenous issue between managerial sentiment and corporate risk-taking.
Research limitations/implications
Annual report textual-based managerial sentiment may not perfectly reflect managers’ lower frequency sentiment (e.g. weekly, monthly and quarterly sentiment). Future studies could attempt to capture managers’ on-time sentiment by using media sources and corporate disclosures.
Practical implications
To the best of the authors’ knowledge, this paper is the first research to provide insights into supervising managers’ corporate decisions by observing their textual information usage in corporate disclosure. Moreover, the approach of measuring managerial sentiment might be a solution to monitoring managerial class.
Originality/value
This paper contributes to the literature on accounting and finance studies, adding another piece of empirical evidence on content analysis by examining a unique language and institutional context (i.e. China). Besides, the paper notes that in line with the English version disclosure, based on Chinese semantic words, managerial sentiment in the Chinese-speaking world has magnitude on corporate decisions. The research provides insights into supervising managers’ corporate decisions by observing their textual information usage in corporate disclosure. Moreover, the approach to measuring managerial sentiment may be a practical solution to monitoring managerial class.
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Shinyong Jung, Alei Fan, Xinran Lehto and Hhye Won Shin
This study aims to explore a potential conference experience design strategy, namely, festivalization. It investigates the potential festivalization effects on conference…
Abstract
Purpose
This study aims to explore a potential conference experience design strategy, namely, festivalization. It investigates the potential festivalization effects on conference attendees in two formats of business conferences: virtual and in-person.
Design/methodology/approach
A series of two scenario-based experimental studies were conducted. A series of one-way analysis of covariance and PROCESS procedures (Model 6) were performed for data analysis.
Findings
The inclusion of festivalization elements significantly enhances positive responses of attendees, especially for in-person conferences. This effect is further explained by a serial mediation effect, where enhanced perceived values and conference engagement play key roles in improving attendees’ conference experience.
Practical implications
By incorporating festivalization elements, conference organizers can create a more engaging and satisfying event experience for attendees. This can lead to greater satisfaction, positive word-of-mouth and increased registrations.
Originality/value
This study represents a pioneering effort in revealing the underlining mechanisms that explain how festivalization affects attendee engagement and subsequent behaviors in business event management in both face-to-face and virtual settings.
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