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21 – 29 of 29Peter Huaiyu Chen, Sheen X. Liu and Chunchi Wu
Current US tax laws provide investors an incentive to time the sales of their bonds to minimize tax liability. This gives rise to a tax-timing option that affects bond value. In…
Abstract
Current US tax laws provide investors an incentive to time the sales of their bonds to minimize tax liability. This gives rise to a tax-timing option that affects bond value. In reality, corporate bond investors’ tax-timing strategy is complicated by risk of default. Existing term structure models have ignored the effect of the tax-timing option, and how much corporate bond value is due to the tax-timing option is unknown. In this chapter, we assess the effects of taxes and stochastic interest rates on the timing option value and equilibrium price of corporate bonds by considering discount and premium amortization, multiple trading dates, transaction costs, and changes in the level and volatility of interest rates. We find that the value of the tax-timing option accounts for a substantial proportion of corporate bond price even when interest rate volatility is low. Ignoring the timing option value results in overestimation of credit spread, and underestimation of default probability and the marginal investor’s income tax rate. These estimation biases generally increase with bond maturity and credit risk.
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Sascha Raithel, Sebastian Scharf, Charles R. Taylor, Manfred Schwaiger and Lorenz Zimmermann
Purpose – Marketers are under increasing pressure to demonstrate the financial return associated with marketing expenditures. Concurrently, more attempts at measuring return on…
Abstract
Purpose – Marketers are under increasing pressure to demonstrate the financial return associated with marketing expenditures. Concurrently, more attempts at measuring return on investment from marketing as well as achieving other long-term goals such as building brand equity and increasing shareholder value have been made. As a result of this emphasis, the degree to which advertising budgets are spent efficiently and the impact of these expenditures on the bottom line are an important topic to study.
Methodology/approach – This study applies data envelopment analysis (DEA) to a group of large firms to assess the degree to which companies spend advertising dollars efficiently and to examine the impact of advertising efficiency on investor behavior and, ultimately, stock prices.
Findings – The analysis reveals that firms that advertise more efficiently are rewarded by investors by positive stock returns.
Research limitations/implications (if applicable) – The study is limited to large enterprises with strong brands within a time frame of only four years.
Practical implications (if applicable) – The results imply that it is advisable for marketing managers not to limit their focus to increasing market-based assets at any cost. The efficiency of their efforts can send a positive signal to investors and contribute to shareholder value enhancement.
Originality/value of the chapter – The chapter finds investors to pay attention not only to the effectiveness of advertising activities but also to their efficiency. The study also demonstrates how DEA and stock return response modeling can be combined to investigate the link between advertising efficiency and investor behavior.
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Lalit Narendra Wankhade and B.M. Dabade
The paper aims to study market dynamics in the backdrop of information symmetry and quality perception. The position of high quality products (HQPs) in the market is a focus of…
Abstract
Purpose
The paper aims to study market dynamics in the backdrop of information symmetry and quality perception. The position of high quality products (HQPs) in the market is a focus of this analysis. Also, an attempt is made to unfold the prevailing parametric relationships in the market of developed and developing nations.
Design/methodology/approach
Related literature is reviewed and investigation is attempted into market dynamics. System dynamics is used for preliminary modelling and analysis. Simulation runs are carried out to assess the impact of company reputation and advertising on market parameters.
Findings
Behaviours of market parameters are unraveled. From using correlation analysis and analytic hierarchy approach, the policy measures to improve the HQP position in the market are revealed.
Research limitations/implications
The study of some aspects of market dynamics is attempted. Further, study and modelling are required to completely understand the market behaviour.
Practical implications
The model has a practical relevance to implement quality perception enhancement by deciding on the policy mix.
Originality/value
This is a start for systems analysis of the market, which may offer a long‐term foundation to market dynamics.
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Social media (e.g., e-WOM) and traditional media (e.g., media coverage) serve different roles in a firm's marketing activities and also interact with each other, which in turn…
Abstract
Purpose
Social media (e.g., e-WOM) and traditional media (e.g., media coverage) serve different roles in a firm's marketing activities and also interact with each other, which in turn affect the market outcome. In addition, how market outcome affects the two types of media in turn has not been examined, which brings the need for a holistic framework. The rare study that examines this relation mostly relies on the volume of media rather than the valence. This study examines the interdependent relation between the volume and valence of social media, the volume of traditional media and TV ratings.
Design/methodology/approach
Forty-one South Korean TV drama shows from October 2014 to March 2016 were analyzed using the 3SLS estimation to examine the interdependent relation between the variables.
Findings
First, the volume of traditional media has a negative effect on the volume of social media. Second, ratings negatively affect the valence of social media. Third, the volume of traditional media is found to have a negative effect on ratings. This is explained by the displacement effect.
Originality/value
This study is one of the very few studies that examine the interdependent relation between various earned media and market outcomes in one framework. In addition, it has originality in that it considers the valence of social media, which is an important dimension in analyzing earned media. Our results show negative effects of news media on TV ratings and e-WOM, which diverge from common intuition.
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This paper considers a supply chain with a manufacturer (she) selling through an online retail platform (he) and studies the channel structure choices of two firms when investing…
Abstract
Purpose
This paper considers a supply chain with a manufacturer (she) selling through an online retail platform (he) and studies the channel structure choices of two firms when investing in advertising.
Design/methodology/approach
The authors assume that the platform provides the manufacturer with an agency and/or reselling channel; thus, there are three possible channel structures: agency channel, reselling channel and dual channel. By developing a game-theoretic model, the authors investigate the channel structure choices of two firms when advertising separately, simultaneously and cooperatively and analyze the optimal combination strategy of channel structure and advertising scheme for both firms.
Findings
When the advertising efforts of the two firms are independent of each other, the equilibrium results show that different advertising schemes lead to different channel choices. For the manufacturer, it is optimal to choose the dual channel structure and adopt the advertising scheme that both subsidizes platform advertising and advertises on her own. For the platform, this combination is also optimal at a high commission rate; otherwise, the advertising scheme in which both firms advertise simultaneously is optimal and he is better off switching from the dual channel structure to the reselling channel structure as interchannel substitution intensity increases. The above results still hold for complementary advertising efforts and asymmetric marginal advertising costs, while in the case of substitutable advertising efforts, one firm may ride on another firm's advertising efforts, leading to different strategic combinations.
Originality/value
This paper not only provides useful guidance for manufacturers and platforms in channel selection and advertising strategy, but also theoretically enriches the literature on manufacturer encroachment.
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– This paper aims to explore the role of line-item budgeting in film production in an effort to illustrate the positive effects that budgetary constraints can have on creativity.
Abstract
Purpose
This paper aims to explore the role of line-item budgeting in film production in an effort to illustrate the positive effects that budgetary constraints can have on creativity.
Design/methodology/approach
Using Elster’s (2000) constraint theory as a basis for the research, this paper conducted a case study on the making of a Danish adventure film and analysed the role budgeting plays from the film director’s point of view.
Findings
This paper suggests that the constraints of the line-item budget imposed on the director had positive effects in terms of the pre-commitments entailed, which aided in protecting the director against the negative aspects of passion (e.g. distorted thought processes, myopia and weakness of will) in the creative process and in terms of the ability of the constraints to channel creativity in certain directions, thus preventing the availability of too many options from hampering the creative process.
Originality/value
The paper contributes to management control research in two ways. By addressing calls to provide more insight into the positive effects management control constraints might have on creativity, this study explores somewhat ignored aspects of line-item budgeting, adding greater insight into the interrelations between creativity and control. By exploring the ways in which line-item budgeting might take on the role of pre-commitment advice and devices in the creative process, this paper further exposes the links between accounting constraints and self-control.
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Nikolina Koporcic, Miika Nietola and John D. Nicholson
The purpose of this paper is to investigate the current industrial marketing and purchasing (IMP) research that has a vague positioning of the bounded rationality of an actor. By…
Abstract
Purpose
The purpose of this paper is to investigate the current industrial marketing and purchasing (IMP) research that has a vague positioning of the bounded rationality of an actor. By borrowing insights from other disciplines, this study aims to develop the IMP approach further by acknowledging the importance of individuals who act and make decisions on behalf of their companies.
Design/methodology/approach
This study is conceptual. By examining the IMP studies in combination with decision-making literature from behavioral economics and psychology, this paper provides a new understanding of the phenomenon in question.
Findings
This study demonstrates that individual decision-making is not as rational as has previously been thought, thus indicating the bounded rationality of the actor. After examining the most common negative emotions that influence the decision-making process, the paper presents a research agenda. It provides a series of research topics and methodological choices for future IMP research endeavors.
Research limitations/implications
As this paper is conceptual, empirical research is needed to examine the role of negative emotions in dynamic decision-making processes.
Practical implications
Managerial implications of this paper are focused on providing instructions for managers on how to deal with negative emotions in dynamic decision-making processes.
Originality/value
To the best of the authors’ knowledge, this paper is one of the first papers that attempts to connect the IMP studies with the dynamics of decision-making by examining negative emotions in the business world.
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Sameh Saad, Eaid Khalil, Cliff Fowkes, Ivan Basarab‐Horwath and Terrence Perera
To highlight the differences and common features of taboo search (TS) and genetic algorithms (GA) in solving the problem of board‐type sequencing on the assembly line…
Abstract
Purpose
To highlight the differences and common features of taboo search (TS) and genetic algorithms (GA) in solving the problem of board‐type sequencing on the assembly line simultaneously with the combined problem of feeder assignment and component placement sequencing in the printed circuit board (PCB) industry.
Design/methodology/approach
Two metaheuristics (search techniques) are used to solve three problems associated with the PCB assembly line: TS and GA. The implemented approach is used to solve the three problems on a single pick‐and‐place sequential machine with a stationary board table and stationary feeders, and with the use of the Euclidean metric.
Findings
The achieved results show a satisfactory reduction in assembly time, when TS and GA are compared with a random solution, with a slight superiority of TS over GA. However, the program running time is longer for TS.
Practical implications
The hypothetical case study used shows that in real life the savings could reach an average of 6 per cent when TS is used. Slightly lower savings are possible when GA is used.
Originality/value
This paper provides a clear insight into how some of the problems associated with the production of PCBs can be solved simultaneously using metaheuristics such as TS and GA.
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