Business Commons^™

Unusual Digital Patterns In Eps: Evidence On The Association Between Earnings Management And Company Characteristics, Charles E. Jordan, Stanley J. Clark, Mary M. Anderson

Faculty Publications

Prior studies (Thomas, 1989; Das and Zhang, 2003) provide evidence of earnings manipulation to achieve cognitive reference points in EPS. The current study extends this line of research by examining the relation between unusual digital patterns in the right EPS position and specific firm characteristics. Results suggest that the propensity to manage earnings to effect desired EPS results is particularly associated with company size and to a lesser degree with operating performance and the level of debt leverage employed.

Indian Gaming On Newly Acquired Lands, Erik M. Jensen

Faculty Publications

This symposium article examines the meaning of the term Indian lands - the lands that might become sites for Indian gaming-in the Indian Gaming Regulatory Act of 1988. At its core, the term is unambiguous: it includes reservations and other lands that, at the time of IGRA's enactment, were held in trust by the United States for the benefit of American Indian nations. But Indian lands can include much more. Indeed, it is possible for real estate having only the most tenuous historical connections with a tribe (perhaps having no connections at all) to become Indian lands. The treatment of …

Why Do Firms With Diversification Discounts Have Higher Expected Returns?, Todd Mitton, Keith Vorkink

Faculty Publications

A diversified firm can trade at a discount to a matched portfolio of single-segment firms if the diversified firm has either lower expected cash flows or higher expected returns than the single-segment firms. We study whether firms with diversification discounts have higher expected returns in order to compensate investors for offering less upside potential (or skewness exposure) than focused firms. Our empirical tests support this hypothesis. First, we find that focused firms offer greater skewness exposure than diversified firms. Second, we find that diversified firms have significantly larger discounts when the diversified firm offers less skewness relative to matched single-segment …

Taxation And Doing Business In Indian Country, Erik M. Jensen

Faculty Publications

Furthering investment in Indian country (a term that includes, but is not limited to, reservations) is an important goal, but potential investors are hesitant - and with reason. One disincentive to invest is uncertainty about tax liability. Understanding taxation in Indian country requires knowledge not only of traditional tax law, but also of American Indian law principles dating from the early nineteenth century, and not many practitioners are up to that task. This article tries to make sense, as much as is possible, of the doctrines that have developed over the centuries.

The article first discusses some basics: the concept …

Lake 'N Sea Speedboats, Geoffrey D. Reynolds

Faculty Publications

Lake 'n Sea Speedboats concerns the manufacture of the Lake 'n Sea boat line by the LakenSea Boat Corporation (a division of Southern Plastic Corporation), Chris-Craft Corporation, Parsons Corporation and Michigan Fiberglass Company, Holland, Michigan.

The Business Value Of Social Network Technologies: A Framework For Identifying Opportunities For Business Value And An Emerging Research Program, Degan Kettles, Julie Smith David

Faculty Publications

Although social network technologies have been the focus of many articles in the popular and business press, businesses remain unclear about their value. We use theory and data gathered from IT leaders to develop an initial model assessing the value of social network technologies in the business environment. Insights are given into when different features should be used to enhance existing business processes and to provide business value.

Incentives Bring Zero-Emission Vehicle Manufacturing To California, Annette M. Nellen

Faculty Publications

No abstract provided.

The Relationship Between Corportate Social Responsibility And Shareholder Value: An Empirical Test Of The Risk Management Hypothesis, Paul C. Godfrey, Craig B. Merrill, Jared M. Hansen

Faculty Publications

Do shareholders gain when managers disperse corporate resources through activities classified as corporate social responsibility (CSR)? Strategy scholars have recently developed a theoretical model that links such activities to shareholder value when a firm suffers a negative event; we test key portions of this theory of the ‘insurance-like’ property of CSR activity. We posit that such activity leads to positive attributions from stakeholders, who then temper their negative judgments and sanctions toward firms because of this goodwill. We extend the risk management model by theorizing that some types of CSR activities will be more likely to create goodwill and offer …

Psychographics And Patronage Behavior Of Mature Consumers In Thailand, Howard W. Combs, A. Anken, S. Chaipoopirutana

Faculty Publications

The elderly market is critically important to many businesses due to its growing size and expanding economic potential. Lifestyles or psychographics have emerged as a viable means of determining market segments for this market. This research examined the relationship between lifestyle segments and retail patronage behavior of mature consumers in Thailand. Three lifestyle or psychographic segments of mature consumers, family oriented, young and secure, and quiet introverts demonstrated a low positive relationship with patronage behavior. Two additional lifestyle segments, active retiree and self reliant, demonstrated norelationship.

Evidence Contrary To The Statistical View Of Boosting, David Mease, A. Wyner

Faculty Publications

The statistical perspective on boosting algorithms focuses on optimization, drawing parallels with maximum likelihood estimation for logistic regression. In this paper we present empirical evidence that raises questions about this view. Although the statistical perspective provides a theoretical framework within which it is possible to derive theorems and create new algorithms in general contexts, we show that there remain many unanswered important questions. Furthermore, we provide examples that reveal crucial flaws in the many practical suggestions and new methods that are derived from the statistical view. We perform carefully designed experiments using simple simulation models to illustrate some of these …

Trademarks, Consumer Psychology, And The Sophisticated Consumer, Glenn L. Christensen, Eric D. Derosia, Thomas R. Lee

Faculty Publications

Trademark law rests on an amorphous foundation. The scope of protection afforded to the trademark holder turns on the psychology and behavior of the "ordinary" consumer "under the normally prevalent conditions of the market and giving the attention such purchasers usually give in buying that class of goods." In trademark law, "everything hinges upon whether there is a likelihood of confusion in the mind of an appreciable number of 'reasonably prudent' buyers." Where the ordinary consumer is deemed sufficiently "sophisticated" to discern differences between two competing marks, the law forecloses protection for the senior trademark.

Employing Adaptive Structuring As A Cognitive Decision Aid In High Reliability Organizations, Karlene H. Roberts, Kuo Frank Yu, Vinit M. Desai, Peter Madsen

Faculty Publications

The article begins by discussing processes contributing to high and low reliability decision making. It then discusses three cases, covering similar processes used in the three situations and notes what managers can take from this. Finally, the article argues for research that does not concentrate on a single organization but examines interactions among geographically distributed units addressing the same problem.

How Are Preferences Revealed?, John Beshears, James J. Choi, David Laibson, Brigitte C. Madrian

Faculty Publications

Revealed preferences are tastes that rationalize an economic agent's observed actions. Normative preferences represent the agent's actual interests. It sometimes makes sense to assume that revealed preferences are identical to normative preferences. But there are many cases where this assumption is violated. We identify five factors that increase the likelihood of a disparity between revealed preferences and normative preferences: passive choice, complexity, limited personal experience, third-party marketing, and intertemporal choice. We then discuss six approaches that jointly contribute to the identification of normative preferences: structural estimation, active decisions, asymptotic choice, aggregated revealed preferences, reported preferences, and informed preferences. Each …

The Importance Of Default Options For Retirement Savings Outcomes: Evidence From The United States, John Beshears, James J. Choi, David Laibson, Brigitte C. Madrian

Faculty Publications

This paper summarizes the empirical evidence on how defaults impact retirement savings outcomes. After outlining the salient features of the various sources of retirement income in the U.S., the paper presents the empirical evidence on how defaults impact retirement savings outcomes at all stages of the savings lifecycle, including savings plan participation, savings rates, asset allocation, and post-retirement savings distributions. The paper then discusses why defaults have such a tremendous impact on savings outcomes. The paper concludes with a discussion of the role of public policy towards retirement saving when defaults matter.

Short-Sale Strategies And Return Predictability, Karl B. Diether, Kuan-Hui Lee, Ingrid M. Werner

Faculty Publications

We examine short selling in US stocks based on new SEC-mandated data for 2005. There is a tremendous amount of short selling in our sample: short sales represent 24% of NYSE and 31% of Nasdaq share volume. Short sellers increase their trading following positive returns and they correctly predict future negative abnormal returns. These patterns are robust to controlling for voluntary liquidity provision and for opportunistic risk-bearing by short sellers. The results are consistent with short sellers trading on short-term overreaction of stock prices. A trading strategy based on daily short-selling activity generates significant positive returns during the sample period.

Investability And Firm Value, Todd Mitton, Thomas O’Connor

Faculty Publications

We study how investability, or openness to foreign equity investors, affects firm value in a sample of over 1,400 firms from 26 emerging markets. We find that, on average, investability is associated with a 9% valuation premium (as measured by Tobin’s q). However, in firm-fixed effects regressions this valuation premium disappears, suggesting that investability does not have a causal effect on firm value. Analysis of the components of Tobin’s q shows that firms that become investable experience significant increases in both market values and physical investment. These effects are strongest for firms that face country-level or firm-level financial constraints prior …

Diversification To Mitigate Expropriation In The Tobacco Industry, Messod D. Beneish, Ivo Ph. Jansen, Melissa F. Lewis-Western, Nathan V. Stuart

Faculty Publications

While it is well established that diversifying acquisitions by large, cash-rich firms destroy shareholder wealth, we document positive abnormal returns to such acquisitions in the tobacco industry. We show that these abnormal returns are associated with proxies for lower expected expropriation costs. Specifically, we show that wealth creation increases in the degree of domestic geographic expansion afforded by the acquisition (increasing tobacco firms’ influence in more political districts) and in the liquidity of tobacco firms’ assets (converting cash to harder-to-expropriate operating assets). We also show that the threat of expropriation constrains payments to shareholders before expropriation becomes certain in 1998.

Effects Of Friendship In Transactions In An Emerging Market: Empirical Evidence From Brazil, Wesley Mendes-Da-Silva, Thaís Fernanda Salves De Brito, Rubens Famá, Jonathan T. Liljegren

Faculty Publications

This paper considers the inclusion of human behavioral aspects and implications of cognitive psychology and anthropology in decisions relating to the emerging field of behavioral finance. The formulated hypotheses were tested using 400 questionnaires, answered by students enrolled in MBA programs. The principal results suggest that individuals involved in transactions among friends or among strangers assume different behaviors—friends agree about the price attributed to an asset, while strangers show the propensity to bargain.

Using Wheelchair Sports To Complement Disability Awareness Curriculum Among College Students, Neil R. Lundberg, Ramon Zabriskie, Kevin M. Smith, Keith W. Barney

Faculty Publications

The purpose of this study was to examine the effects of a campus-wide intramural wheelchair sports program on attitudes toward people with disabilities. The sample consisted of 126 participants at a large, western university. A quasi-experimental pre-post design was used. Results indicated that there was a significant decrease in discomfort in interaction with people with disabilities after participation in the program. Additional findings indicated that recreation majors who were required to have some disability awareness training in their coursework had statistically lower pre- and post-test scores than other majors and demonstrated the greatest change in attitude toward people with disabilities. …

Nonresident Fathers’ Family Leisure Patterns During Parenting Time With Their Children, Alisha T. Swinton, Patti A. Freeman, Ramon B. Zabriskie, Paul J. Fields

Faculty Publications

The purpose of the study was to examine the leisure patterns of nonresident fathers while spending time with their child(ren), and to examine leisure constraints, leisure facilitators and nonresident fathers’ satisfaction with family leisure activities. Four instruments were used to collect the data. Family leisure involvement was measured using the Family Leisure Activity Profile (FLAP), leisure constraints were measured using the Nonresident Father Leisure Constraint Scale (NFLCS), leisure facilitators were measured using the Nonresident Fathers’ Leisure Facilitator Scale (NFLFS), and family leisure satisfaction was measured using the Family Leisure Satisfaction Scale (FLSS). The sample was nonresident fathers (N = 129) …

Proposing The Hedonic Affect Model (Ham) To Explain How Stimuli And Performance Expectations Predict Affect In Individual And Group Hedonic Systems Use, Paul Benjamin Lowry, Jeffrey L. Jenkins, James Gaskin, Bryan Hammer, Nathan W. Twyman, Martin Hassell

Faculty Publications

Hedonic systems represent a multibillion-dollar industry and play an important role in how people recreate, socialize, and even conduct business. A key goal of hedonic system design is to promote positive affect—a variable known to influence cognitive beliefs, trust, disclosure, adoption, and purchase intentions. Yet, little research has identified or explained how stimuli from design features lead to positive affect in hedonic systems. This article introduces a new theoretical model, the Hedonic Affect Model (HAM), which is a comprehensive and generalizable model explaining the causes of positive and negative affect in a hedonic software context. HAM outlines three stages that …

Ict Perceptions And Meanings: Implications For Knowledge Transfer, Anne P. Massey, Taylor M. Wells

Faculty Publications

Driven by global competition and economic pressures, organizations are increasingly interested in transferring and leveraging local expertise at the global level. While many of the challenges of knowledge transfer (KT) have been discussed in the literature (e.g., incentives, cognitive limitations), the challenge of KT in distributed, or “virtual”, settings and the role of information and communication technologies (ICTs) have received limited attention. While any given ICT may be described in terms of one’s perceptual awareness of its capabilities (e.g., richness, interactivity), it may also be described relative to the meanings an individual attaches to it, i.e., the idea of it …

The Influence Of Distributive Justice On Lying For And Stealing From A Supervisor, Elizabeth E. Umpress, Lily Run Ren, John B. Bingham, Celile Itir Gogus

Faculty Publications

In a controlled laboratory experiment, we found evidence for our predictions that participants who received fair distributive treatment were more likely to lie to give a supervisor a good performance evaluation than those treated unfairly, and those who received unfair distributive treatment were more likely to steal money from a supervisor than those treated fairly. We further proposed that the presence of an ethical code of conduct would moderate these relationships such that when the code was present these relationships would be weaker than when the code was absent, but we failed to find support for these moderating effects. Our …

Sustainability In Mba Recruiting: Only A Marketing Piece?, Lisa Jones Christensen, Aram Kang, Sheri Willoughby

Faculty Publications

Recently, the business press has paid increasing attention to the issue of sustainable business practices. Such press lends increased support to the innovative practices by for-profit companies as well as the programbuilding work of faculty and administrators at leading business schools. Specifically, faculty at select schools have progressively been building courses, programs, and/or research support centers for ‘sustainability’ education in the MBA curricula, with the number of courses and the student interest in the courses having both increased significantly over the last five years (Christensen et al., 2007; and the article of J. Hitchman in this issue).

An Overview And Tutorial Of The Repertory Grid Technique In Information Systems Research, Aaron Mosiah Curtis, Taylor Michael Wells, Paul Benjamin Lowry, Trevor Higbee

Faculty Publications

Interest in the repertory grid technique has been growing in the IS field. This article seeks to inform the reader on the proper use and application of the technique in IS research. The methodology has unique advantages that make it suitable for many research settings. In this tutorial, we describe the technique, its theoretical underpinnings, and how it may be used by IS researchers. We conclude by detailing many IS research opportunities that exist in respect to the repertory grid technique.

Competitive Advantage In Alliance Governance: Resolving The Opportunism Minimization–Gain Maximization Paradox, Mark H. Hansen, Robert E. Hoskisson, Jay B. Barney

Faculty Publications

This paper offers a model of alliance governance that explicitly recognizes that managers of alliances simultaneously face the objectives of maximizing gains from trade while minimizing the threat of opportunism in the transaction—an apparent paradox. Our model shows that both the gains from trade and the threat of opportunism are influenced by firm characteristics (cooperative capabilities and trustworthiness) as well as transaction attributes (information asymmetry and asset specificity). The paradox may be resolved by strong form trustworthiness combined with relationship management capabilities because these characteristics allow the pursuit of gains from trade while simultaneously limiting the threat of opportunism.

The Importance Of Default Options For Retirement Saving Outcomes: Evidence From The United States, John Beshears, James J. Choi, David Laibson, Brigitte C. Madrian

Faculty Publications

If transaction costs are small, standard economic theory would suggest that defaults should have little impact on economic outcomes. Agents with well-defined preferences will opt out of any default that does not maximize their utility, regardless of the nature of the default. In practice, however, defaults can have quite sizeable effects on economic outcomes. Recent research has highlighted the important role that defaults play in a wide range of settings: organ donation decisions (Johnson and Goldstein 2003; Abadie and Gay 2004), car insurance plan choices (Johnson et al. 1993), car option purchases (Park, Jun, and McInnis 2000), and consent to …

Spirituality And Organizational Culture: Cultivating The Abcs Of An Inspiring Workplace, Stanley E. Fawcett, James C. Brau, Gary K. Rhoads, David Whitlark, Amydee M. Fawcett

Faculty Publications

Perhaps the greatest source of unique advantage is an organization’s workforce. Unfortunately, while many managers talk about the importance or their people, they often fail to cultivate a organizational spirit that leverages their people’s creativity, insight and passion. A senior executive at a Fortune 500 company commented on this reality, saying, “People are either the bridge or the barrier.” One of today’s primary leadership challenges is to overcome practices that limit workers’ involvement. The goal is to create a workplace that inspires creativity and contribution. The question becomes, “What practices cultivate a culture that can transform an organization’s workforce into …

Forecasting Default With The Merton Distance To Default Model, Sreedhar T. Bharath, Tyler Shumway

Faculty Publications

We examine the accuracy and contribution of the Merton distance to default (DD) model, which is based on Merton's (1974) bond pricing model. We compare the model to a "nai:ve" alternative, which uses the functional form suggested by the Merton model but does not solve the model for an implied probability of default. We find that the nai:ve predictor performs slightly better in hazard models and in out-of-sample forecasts than both the Merton DD model and a reduced-form model that uses the same inputs. Several other forecasting variables are also important predictors, and fitted values from an expanded hazard model …

Promoting Supportive Relationships In Youth Programs: A Self-Determination Theory Perspective, Mat D. Duerden, Ann Gillard

Faculty Publications

Although research suggests that positive contact with nonparental adults is developmentally beneficial for youth; many adolescents do not have access to such relationships. It is important that adults structure existing relationships to optimize positive youth development. Relationships with adults, who support youth’s needs for autonomy, relatedness, and competence, provide youth with scaffolding as they navigate their way through adolescence. Self-Determination Theory offers a straight-forward approach to understanding the elements of contexts that best promote the development of supportive relationships. The purpose of this paper is to review the literature concerning youth-adult relationships, including their associated prevalence and developmental benefits across …