The Business Review, Cambridge

Vol. 10 * Number 1 * Summer 2008

The Library of Congress, Washington, DC   *   ISSN 1553 - 5827 

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Minimum Tick Size Reduction and the Lead-Lag Effect in Weekly Size-Sorted Portfolio Returns

Dr. Orkunt Dalgic, State University of New York at New Paltz, NY

 

ABSTRACT

This paper studies the effect of pricing regime changes at the American Stock Exchange (AMEX) and the New York Stock Exchange (NYSE) on the lead-lag effect in weekly size-sorted stock portfolio returns, a traditionally observed market anomaly. In 1997, the AMEX and NYSE reduced their minimum mandated pricing increment, known as the minimum tick size, from eighths to sixteenths. Thus, the paper examines the impact of the minimum tick size reduction of both exchanges on the lead-lag effect in the weekly returns of their respective size-sorted stock portfolios. While a statistically significant lead-lag effect is found for NYSE stocks during the sample period, there is no evidence of a decrease in this effect resulting from the pricing regime change. In contrast, the lead-lag effect fell sharply for the AMEX one year prior to its minimum tick size reduction event, and remained statistically insignificant for the remainder of the sample period. The findings are partly consistent with Fargher and Weigand’s (1998) finding that the lead-lag effect in weekly size-sorted U.S. stock portfolio returns has declined over time. Finally, Chordia, Roll and Subrahmanyam‘s (2006) finding that stocks of small-cap firms experience greater price efficiency gains from a reduction in the minimum tick size, is not supported.  In the finance literature, studies of market pricing anomalies abound. Predictable changes in security prices allow investors to make abnormal profits. For instance, expected future price reversals make contrarian investment strategies, which prescribe the purchase of low-priced and the simultaneous sale of high-priced, securities, potentially profitable. The lead-lag effect observed in the weekly returns of size-sorted stock portfolios is a well-known example of a pricing anomaly that may be exploited in this manner. Lo and MacKinlay (1990) show that the weekly returns of large-cap U.S. stock portfolios lead those of small-cap portfolios. The positive cross-autocorrelation is so significant that contrarian strategies exploiting it generate around 50% of all expected trading profits. This lead-lag effect has often been attributed to market frictions such as infrequent trading or low trading volumes for small-cap stock, that delay the reaction of stock prices to new information.  The paper explores the impact of a reduction in the minimum mandated tick-sizes of two U.S. stock exchanges on this lead-lag effect. The implications of a minimum tick size reduction have been studied widely for transaction-level measures of market efficiency. Furthermore, as mentioned later in this section, empirical studies have found evidence that minimum tick size reduction events improve market quality, for instance by increasing trading activity and reducing transaction costs. Such events therefore play a constructive role in market efficiency at the individual transaction level. However, the relevance of these events for traditionally observed market anomalies such as the aforementioned lead-lag effect is less well understood. The mechanism by which a minimum tick size reduction can affect market efficiency is as follows. First, a minimum tick size reduction decreases a stock’s relative tick size, defined as the ratio of the minimum pricing increment, i.e. minimum tick size, to the stock’s share price. Second, a finer pricing increment enhances price competition and leads to a reduction in a stock’s quoted bid-ask spread. The enhancement of price competition occurs because market makers could then reduce (increase) their quoted ask- (bid-) prices given that a larger relative tick size had constrained trading activity and kept ask (bid) prices artificially high (low).  Furthermore, the typically positive correlation between market capitalization and share price means that small-cap stocks also tend to have small share prices, and therefore experience a greater proportional relative tick size reduction. Hence, a greater proportional reduction in transaction costs should be observed for small-cap stocks, as well as a greater increase in trading activity, including more frequent informed trading. This implies that small-cap stock prices should become relatively more informative after a reduction in the minimum tick size. This is supported by Chordia, Roll and Subrahmanyam (2006) who study the NYSE’s minimum tick size reduction events, i.e. its change to sixteenths in 1997 and its decimalization in 2001. The authors find that private information is more effectively incorporated into stock prices after these events, especially for small-cap firms.

 

An Investigation of the Impact of Degree of IFRS Implementation on the Comparative Accuracy and Bias of Equity Securities Analysts Asian Pacific Rim Firms Earnings Forecasts

Dr. Arsen Djatej, Eastern Washington University, Spokane, WA

Dr. Grace Gao, West Virginia University, Morgantown, WV

Dr. Robert H. S. Sarikas, Ohio University, Athens, OH

Dr. David L. Senteney, Ohio University, Athens, OH

 

ABSTRACT

This research investigates the comparative impact of country specific degree of IFRS implementation upon the accuracy and bias of equity securities analysts earnings forecasts for firms from 15 Asian Pacific Rim countries.  We utilize measures of equity securities analysts earnings forecast accuracy and bias in making comparisons of the impact of country specific degree of IFRS implementation upon the statistical properties of earnings forecasts for firms having domiciles in Asian Pacific Rim countries.  Extant research focusing on Asia Pacific firms is sparse, however, results indicate that Asia Pacific firms earnings forecasts display greater forecast error and optimistic bias.  Our results indicate that (1) overall, analysts earnings forecast errors decrease and systematic optimistic bias increases in relation to country specific degree of implementation of IFRS, and (2) analysts earnings forecast accuracy decreases and earning forecast bias increases in the sense of that their association with magnitudes of earnings changes increases in relation with country specific degree of implementation of IFRS.  Our results persist after controlling for cross-listing of ADRs on US securities exchanges.  Based upon this evidence we suggest that the firms implementing IFRS are associated with earning forecasts displaying uncertainty deriving from their operating environment rather than idiosyncratic characteristics deriving from country of domicile compliance-based regulatory accounting requirements.  A considerable portion of the research literature addressing analysts earning forecast documents the statistical properties of analysts earnings forecasts – i.e., forecast accuracy and bias – for U.S. vs. non U.S. companies listed in the U.S. (e.g., Das and Saudagaran [2002 and 1998]) and particularly European firms earnings forecasts. (1)  Furthermore, a considerable stream of related research examines the impact of differences in home country accounting standards and the utilization of IFRS (i.e, International Financial Reporting Standards) based earnings forecasts (Ashbaugh and Pincus [2001]). (2)  However, extant research regarding the earnings forecast impact of IFRS and focusing upon Asian Pacific countries appears sparse. We extend prior research to compare the impact of country-specific degree of IFRS implementation on the accuracy and bias of analyst earnings forecast errors for firms domiciled in Asian Pacific Rim countries.  We find that the degree of implementation of IFRS is associated with an overall decrease in analysts earnings forecasts errors.  However, we find that the association between magnitudes of earnings changes and analysts earnings forecasts errors and forecast bias increase in relation to country specific degree of IFRS implementation.  The findings of this research study are consistent with extant research documenting that analysts earnings forecasts for firms domiciled in Asian Pacific Rim countries display greater forecast error and optimistic bias.  However, the primary contribution of this research is providing evidence that the implementation of IFRS may make forecast error and optimistic bias even more pronounced.  This study makes a particularly noteworthy contribution to the extant literature regarding the statistical properties of equity securities analysts earnings forecasts and the usefulness of IFRS by illustrating the importance of the culture contextual dimension of the usefulness of IFRS to equity securities analysts earnings forecasting task and the overall quality of disclosure comprising firms information environment. In this next section we will explore the extant research related to analysts earnings forecasts for firms domiciled in Asian Pacific Rim countries.  This will be done to provide possible explanations why we find a stronger forecast error and optimistic bias for earnings forecasts for firms domiciled in Asian Pacific Rim countries.  The second section describes the data and empirical method and research hypotheses employed in our research study.  The results of the statistical models and hypotheses tests are presented and discussed in the third section of the paper.  The fourth section discusses the conclusions of this research and provides some suggestions for possible future avenues of inquiry. Ang and Ma (1999) use individual analysts earnings forecasts of Chinese firms earnings to investigate the transparency of the Chinese markets. Their results indicate that aggregate analysts forecast errors related to all Chinese firms are double the magnitude of forecast error relating to Hong Kong companies, and are also larger than for firms from several developed and developing Asia Pacific countries.  They also find that analylsts forecast errors depend on variables associated with the transparency of firms in the market e.g., total capitalized value of firms.  The Ang and Ma results indicate that there are costs associated with the absence of transparency - particularly, market valuations of more (less) transparent Chinese shares are priced higher (lower).

 

Why Culture Matters: Leveraging Cultural Differences to Create a Business Advantage

Dr. Arthur Shriberg, Xavier University, Cincinnati, OH

Richa Kumari, OptimaHR, Cincinnati, OH

 

ABSTRACT

This article discusses the needs of a Vice President for Sales in a Mid-American family-owned company who has no international experience but must prepare to meet and work with sales people who will represent his company in India, Brazil and Sweden. First we review the basis of understanding cultural differences from a historical and anthropological perspective. Then we utilize Hofstede’s (2001) model of analyzing elements of the four cultures. Next we connect diversity and multiculturalism using the diversity wheel by Gardenswartz and Rowe (1994) as a tool for analysis. Hoopes (1979) also provides a useful model for the Vice President to analyze his own process of communicating with people from other cultures. Finally we provide information and baseline advice to our mythical Vice President about both negative behaviors to avoid and positive behaviors that will help him build effective multicultural relationships. We close using Abbas (1997) providing specific suggestions to maximize the likelihood that he can leverage cultural differences to provide a business advantage. Imagine the following fictional scenario: ACME Incorporated is an organization based in Cincinnati, Ohio, selling computer peripherals. The company started as a small family-owned store in 1997 and grew rapidly in the age of the technology boom.  They now have offices in 5 locations across the country and have recently expanded operations to three other countries. The company’s newly hired Vice President of Sales, Alan, is getting ready to host his first international sales meeting for his counterparts in the other three countries – India, Brazil, and Sweden. Alan has often heard people talk about cultural differences getting in the way of communications with people in other countries and is worried about his sales meeting. He has lived and worked in Cincinnati all his life and has rarely interacted with people from other countries. Now, he is faced with the task of preparing himself and his team for an impending visit from people from cultures he has no idea about. Alan is well-read and proactive, and wants to use this opportunity to build a bond with the overseas teams that will be strong enough for them to work together on the company’s aggressive growth plans. This may be a fictional situation, but scenarios similar to this are being played out across the country with increasing frequency. In today’s multicultural society it doesn’t matter if you are a not-for-profit healthcare provider in the Northeast or a graduate student developing your professional/or personal path, you are part of the interconnected global economy. The challenges brought on by this dynamic require companies and individuals to strategize about how they will compete in international markets and work with overseas operations; necessitate government agencies to debate over how they will effectively serve growing minority and immigrant populations; call for hospitals and health organizations to consider the patient care implications introduced by different religious beliefs and practices; compel managers and leaders to understand how to attract, motivate, and retain Baby Boomer, Generation X, and Millennial talent; and entail individuals with self-reflecting and leadership skills to thrive in the increasingly multicultural world. Often, we think about cultural differences as “barriers” to achieving business or personal goals, but these very differences, if approached effectively, can be leveraged to create better outcomes than one could expect with homogenous teams. One reason for this is that diverse groups can come up with better, more creative ideas than homogenous groups, which are more likely to get caught up in group-think. Another, more subtle reason is that when people extend themselves to understand and appreciate those different from themselves, it goes a long way in building commitment and loyalty. In order to think about what steps Alan should take to get to his goal of leveraging cultural differences, we need to understand three elements: culture, individual reactions to culture, and the implications of these on professional and personal relationships.  Culture is often defined, historically and anthropologically, as a shared pattern of beliefs, values, norms, attitudes, and behaviors that are transferred from generation to generation. However, it is increasingly being recognized that culture refers to commonalities that have developed and continue to evolve in the context of the socio-political environment based on various dimensions including race, gender, ethnicity, sexuality, gender, religion, etc. In the U.S., the attributes that form the dominant culture are white skin, Christianity, physical and economic ability, heterosexuality, and English as a primary language. The population that has one or more of the dominant characteristics also enjoys privilege and access, which means, among other things, that they do not have to acknowledge their culture as the norm, and that they have access to resources, connections, and status. Privilege for the dominant group obviously creates a potential for dynamics of domination.  

 

Are International Financial Reporting Standards (IFRS) an Unstoppable Juggernaut for US and Global Financial Reporting?

Dr. L. Murphy Smith, Texas

 

ABSTRACT

 Importance of International Financial Reporting Standards (IFRS) has greatly increased in recent years. Pivotal events include acceptance of IFRS for financial reporting in the European Union in 2005 and the US Securities and Exchange Commission’s announcement in late 2007 to accept IFRS for financial reporting by non-US firms trading in US markets. How far away is worldwide acceptance of IFRS for financial reporting? To answer this question, this study offers a review of recent events, including a longitudinal analysis of adoption of IFRS by the countries of the world. In addition, perspectives regarding acceptance of IFRS, from top corporate accounting officers, are acquired and evaluated. Findings indicate that IFRS are increasingly accepted around the world and that top accounting officers are very favorable to adoption of IFRS worldwide. Based on these findings, acceptance of IFRS in virtually all countries, including the US, appears imminent, perhaps occurring within the next few years.  Revolutionary changes are occurring in accounting and financial reporting in the US and other countries. Until 2008, the Securities and Exchange Commission (SEC) in the US required for financial reporting by companies traded in the US stock market, that their financial statements either follow US generally accepted accounting principles (GAAP) or be reconciled to US GAAP. The SEC did not accept the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB). Until the early 2000s, securities commissions in most countries took the same basic position toward IFRS as did the United States SEC. 

 

Age barriers and Leadership Styles in Papua New Guinea

Dr. Murray Prideaux, Australia

 

ABSTRACT

 This research examines leadership style and leadership age barriers in the Papua New Guinean (PNG) context. The context (Avery, 2006; Osland, 2000; Prideaux, 2006), issues, and styles of leadership in developing countries, and PNG in particular, have received scant attention by researchers, resulting in considerable deficiencies in our understanding (Baker, 1997; Hay & Hodgkinson, 2005; Rost, 1991; Tivinarlik & Wanat, 2006). Also, extreme linguistic and cultural diversity, coupled with diverse local cultural systems and social organisations has resulted in a complex blend of traditional and contemporary  leadership styles and  practices (Tivinarlik et al., 2006).  Frequently, tradition holds leadership to be a birth right, restricted by age, or through inheritance, whilst many elders believe that leadership is ‘rightfully theirs’ (Essacu, 2005). The paper reports that traditional leadership style and age barriers are slowly giving way to leadership practices based on ‘Western’ approaches of knowledge, experience, and qualification; however, traditional customs, values, and leadership styles appreciably influence contemporary organisational leadership.  Limitations and further research are considered.  This paper is an exploratory study of leadership style and leadership age barriers in the Papua New Guinean (PNG) context. The paper begins by briefly outlining the theoretical framework guiding the research, and then provides an overview of the context, barriers and issues of leadership in PNG.  Next, methods are discussed, results presented, and conclusions drawn. The research partially addresses Ardichvili and Gasparishvili’s (2000, p62) call for research addressing leadership in countries facing strong challenges of political and economic transformations and adjustment to a market driven competitive economy.   Further, the study responds to Littrell’s (2002) call for research  identifying manifestations of generic leader behaviours in all cultures to which leadership theories might be applied. 

 

Job-Related Antecedents and Performance Outcomes of Individual: Level Customer Orientation

Dr. Ceyhan Kilic, NY

Dr. Turkan Dursun, TX

 

ABSTRACT

 The primary objective of this research study was to investigate the antecedents and consequences of customer orientation at the individual-level in the marketing context through a theoretical model. The suggested model captures a comprehensive set of potential job-related antecedents of customer orientation and its performance-related consequences. The job-related antecedents include job involvement, role ambiguity/conflict, job satisfaction, and organizational commitment and the performance-related outcomes include relationship development and individual performance. The suggested model was tested over a random sample of 2000 marketers from a broad range of businesses. The final sample consisted of 189 usable responses. A structural equation modeling (SEM) analysis via LISREL 8.5 was used for model specification and hypothesis testing. According to the study results, role ambiguity negatively affects customer orientation. There is a positive, insignificant relationship between job satisfaction and customer orientation. Organizational commitment positively influences customer orientation. The study results also revealed that higher levels of customer orientation result in higher levels of relationship development and performance.  Market orientation motivates employees to become more customer-oriented, more committed to their company and job, and more satisfied with their job (Kohli and Jaworski 1990; Siguaw, Brown, and Widing 1994). Having a workforce with a strong market/customer orientation is especially important for a firm in the selling context. If a firm is market-oriented, it is more likely to take a planned action to train its sales employees to make them more market/customer-oriented. Since the marketing concept requires a firm to direct all of its activities toward providing customer satisfaction and establishing long-term customer relationships (Kotler 1980; Tadepalli 1991), there is a mandate for market-oriented firms to adopt customer orientation at the individual level.

 

Conflict

Dr. Joseph J. French, CO

 

ABSTRACT 

This paper surveys selected literature on agency conflicts. Agency conflicts arise from divergences of interest between any two parties to a contract within an organization. As a result, they are almost limitless in nature. This paper has does not attempt to fully cover these conflicts, however, what is dealt with is some of the main research which has been conducted into the area of agency conflicts from the seminal work of Coase and Knight to more recent implications and manifestations of agency conflict.   This survey is different from others in this area in that the story in this paper begins with the early theory on the nature of the firm, discussing why modern business firms exist and grow.   From this foundational literature, this literature review turns to the ramifications of the nature of the firm to the behavior of managers and suppliers of capital.  Conflicts of interest are potential problems of any time individuals or groups of individuals enter into contracts.   In finance and economics the conflicts of interest that are most often studied occur within a business firm and more particularly within corporations.   The most common conflict of interest in modern corporations is between the suppliers of capital (i.e. shareholders and bondholders) and the managers of capital.   This literature review will look at the literature on this subject in an attempt to address the following questions: 1) Why do conflicts exist between management and owners of capital? and 2) What are the behavioral  manifestations of these conflicts?   These questions have been the topic of a vast amount of literature spanning more than eighty years.  This literature review begin from the foundational concept of why firms exist, this paper clearly demonstrates how the nature of business firms creates incentive conflicts.

 

A Study of Time Diversification With Block Bootstraps and Downside Risk

Dr. Sandip Mukherji, CFA, DC

 

ABSTRACT

 This study fills a critical gap in the time diversification literature by using block bootstraps to generate long-horizon returns and determining the allocations of six major financial assets in optimal portfolios that minimize downside risk relative to different target returns over various investment periods. The results show that the stock allocations of optimal portfolios rise and their bond allocations fall with the target return and with the investment period. For medium and high targets, over long periods, optimal portfolios comprise mainly stocks, primarily small company stocks. Further, the mean terminal wealth increases more than the downside deviation of optimal portfolios, improving the downside risk-return tradeoff as the investment horizon lengthens from 15 to 25 years.  Proponents of time diversification have argued that, although stocks are extremely volatile in the short term, since their returns are mean-reverting and positively skewed, stocks have less downside risk than bonds and bills over long periods. Some recent studies have investigated time diversification strategies for regular monthly investments, such as retirement savings. Since capital market history does not provide sufficient observations for statistical tests of long-horizon returns, researchers have used the available data to bootstrap returns. However, only Hansson and Persson (2000) have used block bootstraps, which preserve the time-series properties of returns, and they study mean-variance efficient portfolios. This study fills a critical gap in the time diversification literature by using block bootstraps to generate long-horizon returns and determining the allocations of six major financial assets in optimal portfolios that minimize downside risk relative to different target returns over various investment periods.

 

Developing and Validating a Multi-dimensional Brand Cognition Scale

Dr. Chyan Yang, Dr. Yau-De Wang and Han-Jen Niu, Taiwan

 

ABSTRACT

 Consumers’ mental decision-making processes have long been a subject of scientific inquiry. Although research on brand has been performed in a wide range of marketing studies, brands’ role in these processes has never been examined from a cognition psychology aspect. In this study, we develop a scale that measures the brand value associated with consumers’ cognition: the Brand Cognition Measurement (BCM) scale. Insights from communication theory, cognition psychology, and from empirical studies on brand equity indicate that this scale is multi-dimensional. Our findings have revealed that all four of the BCM dimensions are positively and significantly associated with brand cognition. Discussion centers on implications of this scale to theory and to managerial development of brand strategies. Directions for future research in brand marketing and promoting value are also presented.  Consumers’ purchase decision making has long been a subject of consumer behavior research. It is generally agreed, by marketers at least, that in order to be successful, they must learn to understand the wants and needs of their consumers, and their motivation and decision-making processes (Blackwell, Miniard and Engel, 2001). Marketers perceive the human brain as a black box they wish to understand.  In this study, we develop our concept by integrating elements of communication theory, cognition psychology, consumer behavior theory, and brand marketing. Our purpose is to investigate whether consumers’ brand cognition is a significant element driving consumers’ purchasing behavior when exposed to alternative products satisfying the same needs.

 

Spirituality in Managing: The Manager as Healer

Dr. Maurice Grzeda, Canada

 

ABSTRACT

 Spirituality in management has been partly explained by social trends reflected in employee and CEO values.  In a spiritual workplace, the practice of management may require new managerial roles as managers increasingly contend with values.  The application of spirituality in the healing professions reveal steps in the healing process that can be integrated to transform the practice of management in the spiritual workplace.  A transformation in the practice of management may ensure that spirituality in the workplace will be more than simply another passing management fad.  To consider the evolution of management thought without recognizing the emergence of spirituality in management would surely result in an incomplete assessment of contemporary advances.  Those who have followed the convergence of spirituality and management can certainly attest to the growing interest in a spiritual perspective of the workplace.  Indeed, some scholars believe the level of theory development qualifies this perspective as a new management paradigm (Harman, 1992; Hogan, 2000; Ray, 1992).  While it is not the purpose of this article to debate this belief, there are related issues which, I contend, need to be explored.  These issues concern the extent to which managerial behaviour has been affected by the integration of spirituality in organizations.  Specifically, I will attempt to focus the discussion on spirituality in management practice.  This literature review explores two main topics: a) the emergence of spirituality in organizational life; and b) the implications of spirituality on the role of managers in organizations.

 

Audit Pricing Decision: The Role of Institutional Investor

Tsai-Yen Chung and Sheng-Te Chou, Taiwan

 

ABSTRACT

 This article discusses exterior key features of the audit pricing decision. The study argues that institutional investors who exterior-based economic entities out of audit firms would influence the decision of audit fees. Given the Bushee and Noe’s agency typology, institutional investors can improve the disclosure quality of financial reporting, and the trading behavior exist difference in various institutional traders. Our conclusion is that different types of institutional investor impact audit pricing decision, and also highlight the role of institutional investors in corporate governance.  In past decades, researchers have found that much of the variability in audit fees is explained by client attributes associated with audit effort and audit risk. Auditor have been shown to adjust the elements of the audit risk model and increase the audit investment in response to increasing risk that client financial statements contain material misstatements (e.g., Joyce, 1976; Gaumnitz et al., 1982; Kaplan, 1985; Libby et al., 1985; O’Keefe et al., 1994). Across numerous empirical studies, measures of client size, complexity, and industry are consistently reported as having explanatory power (e.g., Simunic, 1980; O’Keefe et al., 1994; Simunic and Stein, 1996; Seetharaman et al., 2002; Lyon and Maher 2005). Some researchers have speculated that the regulatory presence in these industries functions somewhat like increased internal control, reducing the relative audit effort require to perform the audit and thereby lowering service fees (Simunic and Stein, 1996).

 

Improving the Advantages of Traditional Manufacturing Organizations in Taiwan based on Vision Using Fuzzy AHP

Dr. Jui-Kuei Chen, Taiwan

I-Shuo Chen, Taiwan

 

ABSTRACT

 The main purpose of this study is to identify the critical prior visional indices of Taiwanese traditional manufacturing organizations. In accordance with recent literature review, studies, and interviewing related background experts, the study summarized 15 visional indices, which will significantly affect a successful vision of a traditional manufacturing organization. Fuzzy Analytic Hierarchy Process approach will be used to tackle the different decision making criteria, like Leader’s Vision, Member’s Vision, Organizational Culture, and Organizational Structure, involved in the selection of prior visional indices. The findings stated that Taiwanese traditional manufacturing organizations may follow the priorities of visional indices of implementation. Leader’s Vision, Organizational Culture, Member’s Vision, and Organizational Structure are among the most crucial factors. A discussion of the key research findings and suggested directions for future research are provided.  In the past, traditional manufacturing organizations had been a miracle in Taiwan. However, facing increasing wages, eco-awareness, and low-cost competition from developing country, the breakthrough needed to operate Taiwanese traditional manufacturing organizations has changed drastically. Thus, leaders have found it necessary to adopt an attitude of anticipative reaction (Godet, 2001).

 

A Study of Customer Relationship Management Activities and Marketing Tactics for Hypermarkets on Membership Behavior

Dr. Wann Yih Wu, Dr. Hsi-An Shih, and Dr. Hui-Chun Chan, Taiwan

 

ABSTRACT

 In the current retail environment, relationship management activities and marketing tactics play a predominant role because of the increased importance that consumers attach to the relational properties of their interactions with retailers. As a result, substantial competitive advantage development is required in order to establish effective membership relations. Further, as a result of the vigorous development and competition of the Taiwanese hypermarket, establishment of the extant membership relationship becomes a key method of building competitive advantage in the hypermarket. Therefore, this study investigates the interaction of membership relationship management activities and marketing tactics in the hypermarket through: perceived relationship-investment linking; understood member's psychological factors that promote customer value; allowing industries and customers to establish a good membership relationship; and finally, the influences of relationship quality and membership behavior. It attempts to establish and strengthen the complete membership-relationship pattern and provides reference for industries to build their membership management.  The research is conceptualized and empirically examines relationship-building efforts that are theorized to enhance perceived relationship investment and relationship quality to membership behaviors. Moreover, a further discovered initiative in the relationship-strengthening strategy is compared to passive effective; relationship-management activities are more effective than relationship-marketing tactics. Therefore, the resultant constructs of relationship quality and membership behavior, which embody consumer reciprocation of the retailer’s investment, reflect the extent to which consumers want to maintain their relationship with the retailer.

 

The Relationship between Taxation and Financial Reporting: The Case of Malaysia

Dr Anna Azmi, Malaysia

 

Abstract

 

The operational links between taxation and financial reporting was reported in detail for various developed countries. These studies show that, over time, the operational links are not stagnant for any particular country. This paper is the first known study that observes this operational link in a developing country, Malaysia in particular. By doing this, the experiences of a developing country could be highlighted. This paper applies the methodology of earlier researchers in order to measure the tax/financial reporting linkages for Malaysia over a 20-year period up to the adoption of International Financial Reporting Standards (IFRS) in 2006. This paper shows that Malaysia, similar to the US and UK, experiences disconnection of tax from financial reporting in major areas. Malaysia’s colonial past had significantly influenced this disconnection and the adoption of IFRS has also preserved this disconnection.  The literature that analyses the relationship between taxation and financial reporting is mostly focused on developed countries (eg. Lamb, 1996; Lamb, Nobes and Roberts, 1998; Porcano and Tran, 1998; Oliveras and Puig, 2005 and Nobes and Schwencke, 2006). This article adds to the existing research on the relationship between taxation and financial reporting by focusing on the experience of a developing country, Malaysia. There is only a small amount of literature available on the relationship between taxation and financial reporting in Malaysia. Most of the literature (eg. Soin, 1978; Singh, 1980; Kanan, 1993; Subramaniam, 2001; Singh, 2003) come from tax technical books on the Malaysian income tax or articles in local professional journals. Their discussion centered only on the relationship between revenue law and financial reporting. The relationship is determined basically on decisions reached in old UK case law, which, at times can be vague.

 

Empirical Study of the Cross-Sectional Returns and Interaction Term Effects in Taiwan Stock Market

Dr. Yi-Wen Chen and Dr. Jui-Chi Wang, Taiwan

Mohammed Shaki, CA

 

ABSTRACT

 The CAPM determines the mean-variance efficiency of the market portfolio in the sense of Markowitz's modern portfolio theory. The primary implication of the CAPM is that there exists a positive linear relation between expected returns on securities and their market betas, and that variables other than beta such as volatility should not capture the cross-sectional variation in expected returns. Since the development of the CAPM model, however, there have been many researchers finding that the average returns on common stocks show little or no relation to the market betas. Increasing empirical evidence suggests that the beta of the CAPM is lacking in cross-sectional explanatory power (Fama & French, 1992; Jagannathan & Wang, 1996; Strong & Xu, 1997; Lettau & Ludvigson, 2001).  This study tries to adopt Fama and French three-factor model and extending two factors which are turnover rate and momentum strategy to explain excess stock return in Taiwan. This is trying to find the factors which are influence Taiwanese stock market.  From the results indicate excess market return and turnover rate have explanation power to excess stock return in Taiwanese stock market. However the turnover rate shows high turnover rate greater than low turnover rate in Taiwan that is different with prior study (DatarNaik and Redeciffe(1998)). Meanwhile SMB, HML, and MOM do not have significant power to explain abnormal return.

 

Application of Grey Relational Analysis to Studying Consumer Behavior of Motel Guests

Yungkun Chen, Dr. Chia-Yon Chen, and Tsuifang Hsieh, Taiwan

 

ABSTRACT

 Based on Grey Relational Analysis this research employed the questionnaire survey method to study motel guests. The outcomes indicate that the weighting of “promotion” is the greatest, while that of “price” is least significant. Secondly, motel operators employ different marketing strategies for different customers: Motel operators can focus on females consumers aged 21-40 with junior college degrees or higher, who are working in the business sector or service industry, as the initial target of their market development projects.  In recent years there has been a trend for motels in Taiwan to introduce innovative concepts and daring ideas in an attempt to outdo one another. Some claim to be six-star facilities, some boast more than a dozen exotic theme suites, and some have installed LCD TVs in the bathrooms and have provided massage chairs and sensual amenities to help create a romantic atmosphere. As the idea of health and recreation gains popularity, more and more motels are becoming involved in the SPA industry - incorporating fitness, cosmetic care and recreation in one - for the vast business opportunities it creates. As a result, the SPA industry has become a rising star in the market. What must a motel operator do to ensure its market share and profitability? In addition to a thorough understanding of the characteristics of the products and services it provides, as well as its standing in market competition, it must analyze consumer behaviors for further insights. 

 

An Empirical Analysis of the Effect Components of the Corporate Governance Index on Firm Value:  Evidence from Taiwan’s Financial Industry

Hou Ou-Yang, Tainan, Taiwan

 

ABSTRACT

 Prior empirical evidence in Taiwan supports the wealth expropriation hypothesis that the controlling stockholder tends to expropriate minority wealth, which results in reduced firm value. However, it is still unclear whether a corporate governance mechanism is related to this type of expropriated behavior in financial institutions. To answer this question, the present study chooses ten corporate governance variables and uses principal component analysis (PCA) to construct three composite indexes to proxy for the risk of expropriation by the controlling shareholder in order to solve interactions within variables (i.e. to mitigate multicollinearity problems). The indexes are: stockholders’ behaviors, firm credit ratings, information transparencies, and outside directors and supervisors. We add another six control variables to the model regression equation in order to explain Tobin’s q. We collect information on 27 financial companies as samples, all of which are listed on the Taiwan Stock Exchange (TSE) during the 2001-2006 period. Evidence suggests that the regression model for Tobin’s q is significant at the 1% level, the adjusting R2 is 0.708. In the meantime, stockholder behavior is negatively related to Tobin’s q, while credit rating and information transparency have significantly positive effects on Tobin’s q. Outside directors and supervisors are negatively related to Tobin’s q, but it is not significant, even after controlling for six variables. However, it is still unclear whether outside directors and supervisors are related to firm value in Taiwan.

 

The Effects of Service Quality, Customer Perceived Value, Customer Satisfaction on Behavioral Intentions:  A Study of Mobile Value-Added Services in Taiwan

Dr. Hsin Kuang Chi, Dr. Huery Ren Yeh, Bi Fen Jang, Taiwan

 

ABSTRACT

 

The purpose of this study is to explore the relationship among service quality, customer perceived value, customer satisfaction and behavioral intentions in the mobile value-added services. The samples were collected from consumers who had used the mobile value-added service. A total of 207 subjects participated and responded the questionnaires. The results indicated that customer perceived value was a crucial role in the mobile value-added services. In addition, the entrainment benefits and practical benefits are two important consumer demand factors in the mobile value-added services. The study found that service quality was insignificant to customer satisfaction and behavioral intentions. It maybe implied that the service providers did not promote the right service program that customers needed. It is recommended that the mobile value-added services enterprises should carry a customer service preference survey and design services to fit those preferences, according to the survey results. It will be helpful to promote customer satisfaction and behavioral intentions.  The boom of the information technology and mobile devices development has made the mobile phone service markets in Taiwan become more and more competitive. In order to keep grow, the mobile value-added service operators have to retain their customers in one hand and to attract new customers by the reduction of their service charges and by the expansion of their services on the other hand.

 

Socially Responsible Investing: United Nations Principles

Dr. Wm. Marty Martin, IL

 

ABSTRACT

 

Socially responsible investing (SRI) is ever-evolving and has been since its inception in the 1900s. The United Nations Principles of Responsible Investing (PRI) Initiative established in 2006 served as a catalyst to transform SRI from focusing solely on financial return and moral/ethical investment criteria to include investment criteria related to environmental, social, and governance (ESG) issues. These six PRI principles will be described and also evaluated based upon data from a survey of asset owners, investment managers, and professional service providers who are PRI signatories. The findings from this survey offer lessons for investment professionals and academics who study SRI, governance, and environmental management.  It has been reported that Socially Responsible Investing (SRI) has reached the tipping point and is now regarded as mainstream (Wagner, 2007). SRI has received considerable attention among academics in recent years (Orlitzky et al., 2003; Hill et al., 2007). Not only has SRI increased its visibility in academic circles but also in trade publications like The Economist which featured a special section on Corporate Social Responsibility (CSR) and made references to the UN Global Compact and the “…the integration of environmental, social and governance issues…(Franklin, 2008, page 4).”

 

United States District Court Applies Judicial Estoppel, Sua Sponte, Allowing MUSC to Avoid Allegations that the State of South Carolina “Dumped” Baby Judith, Thereby Violating EMTALA and 14th Amendment Due Process

Brad R. Johnson, Ph.D., J.D., S.C.

 

PREFACE

“Experience should teach us to be most on our guard to protect liberty when the government’s purposes are beneficent. . . The greatest dangers to liberty lurk in insidious encroachment by men of zeal, well meaning, but without understanding.” (1)  By means of a case study approach, this article analyzes the alleged facts in Hernandez v. Abel, Case # 2:06-cv-02582 (DC SC 2008) and proffers the following conclusions of law:  A. Within the meaning of The Emergency Medical Treatment and Active Labor Act [EMTALA], the Children’s Hospital of the Medical University of South Carolina [MUSC] UNLAWFULLY dumped Judith Hernandez [Baby Judith] as a patient by breaching its obligation under EMTALA to provide emergency medical treatment to Baby Judith, wherein, more specifically, MUSC personnel “pulled the plug” on Baby Judith’s life support systems causing Baby Judith to die. 1. South Carolina’s Uniform Determination of Death Act (S.C. Code § 44-53-460), declaring a person who is brain dead to be without life (a non-person) directly conflicts with the mandate of EMTALA and, accordingly, is preempted under 42 U.S.C. § 1395dd(f).

 

Developing a Strategy of Operation Skills in Retailers and Customers Shopping Preferences

Professor Ming-Tien Tsai, Dr. Mengkuan Lai, and Ching-Liang Chen, Taiwan

 

ABSTRACT

 As the international channels of retailers (i.e., Wal-Mart, Carrefour) intensify their presence in the marketing, what is the likely retail development in the future and what are the strategies of operation skills for retailers and customers’ shopping preferences? This research proposes the better understanding for operation skills of retailers through service quality to explore customers shopping preferences and uses structural equation model to analyze the model’s fitness. The empirical research displays the rigorous and robust method of SEM, and statistical significant level on the goodness of model fit in the five-point Likert scales (GFI=0.914 , IFI=0.961). The implications of these findings for retailers should strategic to reinforce their store formats, information technology and store image to attractive customers’ shopping preferences and improve the service quality as the best important strategy. The category management may not significant to influence the customer shopping preferences, but it shows that is negative significant effect on the retail cannels to service quality. It displays that the retailers should very take care of the category management in the store to satisfy their customers. Otherwise, it is easily to result in the problem of service quality and leaned unwillingness in the customers’ shopping preferences.

 

An Investigation of Intraday Volatility Interruption Mechanism for Taiwan Stock Market

Dr. Mei-Hsing Cheng, Taiwan

 

ABSTRACT

 This study examines the effects of intraday volatility interruption mechanism employed by the Taiwan Stock Exchange (TSEC). The results show that approximately half of interruptions were followed by another interruption within the same day, and consistent with Martens and Steenbeek (2001), these consecutive interruptions tended to be clustered. Even after the remedy of trading interruption, the problem of price jump is still notable, and the intraday volatility around trading interruption is striking. The evidences offered in this study show that the contribution of trading suspension imposed by TSEC to facilitate price continuity and reduce excessive volatility is limited. This is in line with the “learning-by-trading” hypothesis which suggests the trading interruption impedes information transmission. In addition, there exist size effects on the effect of intraday volatility interruption. The performance of intraday volatility interruption for large company is better than small company.  The use of circuit breaker that usually interrupts the transaction is prevalent among worldwide capital markets. The purposes of circuit breaker are either for reducing information asymmetry or preventing the markets from excessive fluctuation, or both. Substantial research has examined the effects of trading suspension on market quality. The benefits and costs of interrupting the market, however, remains an ongoing debate. Proponents support that the trading interruption mechanism like trading suspensions or price limits may improve the market efficiency as the interruption offer an opportunity to transmit information.

 

A Study for University Library Marketing Indicators Model in Digital Age

Mu-Chen Wu and Prof. Ling-Feng Hsieh, Taiwan

 

ABSTRACT

 

At present, university libraries are confronted with fierce competitions from other schools, readers’ high dependence on digital resources, and limited intra-school resource distributions. It is essential for university libraries in the digital age to monitor factors such as information technology progress, the internet environment, and readers’ rapidly changing use habits. As a result, university libraries are compelled to rely on collecting, organizing, and preserving the traditional data. As a matter of fact, the ultimate target should be toward providing services that meet readers’ actual needs in the digital age.  For a library, “marketing” is non-profit unlike other enterprises. Instead, it organizes activities that allow it to find out readers’ needs for information, and enhance the overall customer satisfaction level. In this context, the present marketing and management concepts applied in management areas are introduced. Through 4P marketing (Product, Price, Place, Promotionand 3P service industryPeople, Procedure, Physical facilityand 4C internet marketingCustomer experience, Customer relationship, Communication, Community, discussions are conducted on knowledge, skill, and activities feasible for “library marketing” at university libraries in the digital age.  The literatures cited are taken from literatures on library marketing, and are used to setup initial evaluation indicators in this context. Delphi Method is then applied. Expert opinions are subsequently compiled to complete the university library marketing indicators framework in the digital age. With the three dimensions as basis, AHP; Analytic Hierarchy Process is used to present problems. The two are combined to setup the indicator hierarchy framework in this study. The weighting between hierarchical indicators is first computed before calculating the overall hierarchy weighting.

 

Socio-Economic Development and Business Ethics

Bostjan Kuralt, EU

 

ABSTRACT 

Examining the elements in the development of society that have a major effect on the civilization streams as well as on the development, progress, and taking into account many other factors discovered when delving into facts about history, we can conclude that man, as a specific individual has survived all these various changes. Moreover, today, on these very foundations, asserts the need to establish new personal and social regulators of development, backed by innovation, which will open the door to new culture and will serve as the conducting thread, binding humankind throughout generations, past, present and future. At the same time, prove that the pattern for human acts and the meaning of it all is timeless when it comes to ethics and morality. When studying economic trends, we can establish a direct link between business ethics and socio-economic development.  We transmit the understanding of what is good and what is bad or evil on the level of society and at the same time, face or engage with this level. Science, which reflects such moral conduct, and thus morality itself, is ethics (Hribar, 1991).  Further developing this thought offers a logical conclusion, namely that ethics derives from morality, which has been a foundation and promoter since the times of Ancient Greece, when it was referred to as philosophical science and the basis for the existence of civilized society. Another important promoter of the development of society is its economy, which simultaneously creates progress, supports it and is an indicator of what level in the development cycle an individual society has reached. Development can be turbulent, almost chaotic, and at times we feel as if we are bringing down the familiar norms and annulling values on this path of ours, yearning for better, bigger; yearning to create material goods.

 

Academic Qualifications of Board of Directors and Company Performance

Cyril H. Ponnu, Malaysia

 

ABSTRACT

 The Board of Directors (BOD) plays an important role in corporate governance implementation in a company. The purpose of this research is to examine the impact of academic qualifications of BOD members on a company’s performance. Data was collected from 30 Malaysian companies (ranging from finance, manufacturing and the services industry) listed on Bursa Malaysia. Descriptive statistics and the Kruskal-Wallis non-parametric test were used to see whether there was any difference between companies whose BOD had a diverse educational background and companies whose BOD had similar educational background. Results show no significant difference between academic qualifications of BOD and company performance.  The roaring 1990’s came to a screeching halt with a stock market crash and a wave of corporate scandals. Investor that delighted with towering stock prices began to lessen their sight over monitoring the company’s act. Even for well-intentioned corporations, responsible governance was undermined by the demands of expectations of double digit earnings growth that justified ever rising share prices. (1) Securities and Exchange Commission (SEC) Chairman William H. Donaldson remarked that as the band played faster and faster, standards began to erode throughout the business community. (2)

 

E-learning: The Relationship Among Learner Satisfaction, Self-efficacy, and Usefulness

Dr. Joy Womble, CA

 

ABSTRACT

 The problem.  The year 2000 marked a new era of growth for online learning (American Society for Training & Development, 2002). Implementing e-learning is common practice in public and private sectors (Zimmerman, 2001). Training mandates are central among the factors fueling this upsurge (Tucker, 2005). Although an increasing number of organizations are developing e-learning strategies to address their training needs, exploring online learning theoretically and identifying key factors that will enhance its effectiveness is necessary. While previous research studies have examined student satisfaction in a distance-learning environment, this topic has not been given adequate attention (Biner, Dean & Mellinger, 1994). Despite the growing convergent research threads on e-learning (Davis, 1989; Malhotra & Galletta, 1999; Wang, 2003), few have strong theoretical foundations (Salas & Cannon-Bowers, 2001). Social learning theory and attitude-behavior theory can aid in developing guidelines for creating e-learning training. The present research measured the relationships among learner satisfaction, self-efficacy, and usefulness within an e-learning context. Method.  The sample consisted of 440 government agency employees in the Southwestern United States. Participants completed mandatory e-learning courses in Training and Development’s learning management system. They were asked to complete a demographics survey and three scales, Mungania’s (2004) E-learning Self-Efficacy Scale, Davis’ (1993) Perceived Usefulness Scale, and Wang’s (2003) Electronic Learner Satisfaction Instrument.  These were used to measure the relationships among employees’ perceptions of self-efficacy, usefulness, and satisfaction of e-learning. Results. Significant positive correlations were found among the three e-learning variables, the correlation between e-learner satisfaction and perceived usefulness being the strongest of these.

 

Operational Performance Assessment of Clinical Departments in the Hospital

Ching-Kuo Wei and Yaw-Ching Chen, Taiwan

 

ABSTRACT

 This research analyzes the operational performance of the departments in the target hospital of Taipei area in Taiwan by case study and probes into the efficiency of the departments in three models by DEA (Data Envelopment Analysis). The research finding shows that the performance of the surgical department in the target hospital is better and the unsatisfying performance of the department of internal medicine is due to the excess investment scale. Besides, the hospitalized cost of the hospital is too high and the occupancy rate of different departments and average length of days should be assessed. The target hospital should develop the departments with advantages and reinforce those with disadvantages in order to maintain the competitive advantages in the medical district.  In recent years, the medical environment in Taiwan changes dramatically. National health insurance was implemented in 1995. Before the implementation, there were over 800 hospitals in Taiwan and two years later, there were only over 500 hospitals (reduced by 35%). In 2002, Global Budget System was practiced and the government led the medical service by budget and controlled the growth of medical expenditure. In 2004, Bureau of National Health Insurance promoted Prominence Project which resulted in the unsteadiness of the revenues and medical revenues. Because of the implementation of national health insurance and the control of medical expenditure, the hospitals in Taiwan encounter the significant operational difficulties.

 

Cross-National R&D Collaboration: Determinants of Governance of Alliances and the Effect of Governance on Technological Innovation in Science-Based Industry

Ming-Hsin Li and Hung-Hsin Chen, Taiwan

 

ABSTRACT

 

Unlike traditional industrial R&D, biotechnology R&D, facing an innovative world of Schumpeterian competition, has been organized largely through a web of collaborative arrangements among large multinational firms (LMFs), dedicated biotech firms (DBFs) and research-type universities (RTUs). The increasingly close relationship between business and science is an issue in this science-based industry. This study proposes a conceptual model for determining the governance of such alliances. We argue that biotech R&D alliances can adopt a governance design to pursue their interests in R&D innovation. However, there are conflicting objectives and requirements between science and business, so the biotech industry needs to emphasize long-term transactional value over short-term gain from intellectual property. We propose a transactional value framework for analyzing inter-organizational strategies and their effect on the creation of value from inter-firm innovation. The strategic process in creating and claiming innovative value includes: (1) forms of governance of alliances, (2) linkage to science-based knowledge, and (3) relational investments.  Cross-national R&D-alliances have become more and more important since the mid 1980s. In multinational enterprises (MNEs), international collaboration is recognized as an important part of global strategic decisions to integrate innovation.

 

International Portfolio Hedging and Country Trade Interdependency

Mo Vaziri, Ph.D. and Carl Eric Zeise, CA

 

ABSTRACT

 This study examines the relationship between trade interdependency and correlation of market returns between the United States and the four emerging economies of Singapore, Malaysia, Thailand and the Philippines. The study also analyze the data for trade interdependency and market return to determine if there is a pattern that would provide the basis for increasing the return of a security portfolio without increasing the risk to the investor.  The four emerging markets, The Philippines, Thailand, Malaysia and Singapore, are growing economies situated on the Pacific Rim. Each of the for countries has signed free trade agreements with the United States to further open their markets to both import and export.  Review of the region as a whole finds that most of the member nation’s economies are low‑income, with per capita gross national product (GNP) of approximately $1,000 or less. The region enjoyed spectacular growth in the mid‑1990’s, however subsequently suffered from the effects of the “Asian Meltdown”. The monetary financial crisis caused most of the economies ground to a halt. With the new century, the economies have turned around; developing Asia reported a Gross Domestic Product (GDP) growth of 7%.   Economic crises in emerging-market economies were a prominent feature of the economic landscape during the second half of the 1990s. Though such crises were by no means a new phenomenon, what brought special attention to the recent episodes was the perception of a heightened possibility of contagion-the spread outward of pressures from one crisis country to other countries. 

 

A Canonical Correlation Study of Relations between External Recognition and Administration Approach of Innovation Ability in Organizations

Dr. Yuan-Duen Lee and Huan-Ming Chang, Taiwan

 

ABSTRACT

 

Innovation ability is the essential competence for business. This paper studied and discussed the view of employees of public wire and cable companies in Taiwan on the relations between job satisfaction and innovation ability of enterprise. The subject of this study were 339 employees, persons who worked in a variety of jobs, for 11 cable and wire companies quoted on the Taiwan Stock Exchange. This study adopted JSS indices (Job Satisfaction Survey) of Lyons, Laptin & Young (2003) for ‘job satisfaction’ and pointviews of Daft (1978) & Stalk (1992) for ‘innovation ability’ respectively, and then utilized descriptive statistics and factor analysis to identify the major factors of the dimensions. We got significant correlations between the two aspects of job satisfaction and the two aspects of innovation ability (from fig. 1) when we measured the relations between them by means of canonical correlation analysis. The study contributed the conclusions: (1) Employees prefer the innovation aspect on administration to research and development; and (2) External recognition is a key element to make employees satisfy their intention on jobs, top management teams shall focus on establishing remarkable reputation by company society responsibility (CSR).   

 

The Role and Importance of Groupware for Teamwork

Zlatko Nedelko, Slovenia

 

ABSTRACT

 Globalization, fierce competition and most importantly, advancement in information and communication technology (ICT), has made the business world more complex. This more complex business world has resulted in an increased complexity in everyday organization problems. Due to their limited abilities to handle complex problems, employees and  managers can no longer  make decisions on their own anymore, Therefore,  employees with complementary skills are put together in teams  to solve common problems. Many organizations have come to the realization that teamwork is a tool that can be used to increase productivity and performance of the whole organization. Teamwork has become prevalent in the business organizations of today, due to its many benefits. Organizations can form many types of teams. Development in ICT, especially in the field of groupware, has a significant influence on creating future opportunities for teamwork. The pure traditional, face-to-face, teams are now rare, because the advancement in ICT has enabled teamwork to occur outside the traditional framework where all team members must be at same place at same time. Therefore, people work together in distributed teams, where team members are not collocated anymore. The new teamwork style is the virtual team. In virtual teams, large and/or all interactions are computer-mediated.

 

The Relationships Between Perceived Justice and Consumers’ Behavioral Intentions after Service Complaint Handling and the Role of Anger

Jiafure Wang, Taiwan

 

ABSTRACT

 Drawing on researches in social psychology and organization behavior, the relationships between perceived justice and complainants’ behavioral intentions after service complaint handling, and the partial mediation effect by anger on these relationships are studied. Hence, there are two questions to be investigated: (1) whether perceived distributive justice, procedural justice, and interactional justice predict complainants’ negative word-of-mouth and repurchase intentions after service complaint handling; and (2) whether these relationships between perceived justice and complainants’ behavioral intentions are partially mediated by their experiences of anger. Those who with e-mail complaining experience to Taiwan Railway Administration Bureau in last 6 months were the samples of this study and were asked to answer the questionnaire by retrospective experience. Data were collected from 154 respondents and administered by regression analyses. The results indicate that complainants who perceived lower level of distributive justice, procedural justice, and interactional justice are less likely to repatronize the service provider and are more likely to engage in negative word-of-mouth behavior (and vice versa), and that anger is proved to be a partial mediator of these relationships.

 

Consumer Ethics: An Empirical Investigation of the Ethical Beliefs in Mainland China

Baochun Zhao, Wuhan, PRC

 

ABSTRACT

 Using a sample drawn from consumers of Mainland China, this study investigates the individuals’ ethical ideology and their ethical judgments in different consumption situations with ethical implications. The results reveal that consumers of mainland are more ethical in ‘illegal’ and ‘passive’ situations than in ‘active’ and ‘no harm’ situations, presenting double-standards in ethical evaluation, and consumers’ degree of idealism and relativism, birthplace, the new demographic variable, affect their ethical evaluations in different consumption situations. The results are also compared with those of similar previous studies based on the samples of Hong Kong. The conclusions provide theoretical support for further researches of consumer ethics as well as empirical implications for marketers entering Chinese market.  Since China’s adoption of open door and economic reform policy, the static agricultural society has been replaced by a very dynamic industrial one, and the traditional ethical standard has been challenged by utilitarianism, hedonism, money worship and other ethical conceptions. Although, in Chinese cultural system, individual ethics is always a vital standard for a social group to evaluate its members, unethical behaviors in consumption situations that do make inroads on others’ benefits have become more serious. For example, in 2006, 78% of all personal computer software sold in China was still counterfeit. Such questionable behaviors have become a hot topic of debate among general publics but hardly been studied in the past.  

 

Attitudes Towards Moving Picture Posters and Their Effects on Movie Seeing Behavior: A Case Study in Turkey

Dr. Mehpare Tokay Argan and Dr. N. Serdar Sever, Turkey

 

ABSTRACT

 

The practice of advertising and posters in movie industry has been an important area of marketing and advertising for many years. Marketers and movie producers now frequently use movie advertising and motion picture posters as the basis for multi-million dollar promotional campaigns. This study describes the attitudes of a sample of Turkish moviegoers’ attitudes towards moving picture posters and analyzes data to determine the effect of movie posters on movie going preferences, satisfaction and deriving an overall judgment on movies. In order to examine movie posters from an audience’s point of view, the study investigated a sample of Turkish college students. The findings indicate the emergence of five factors that are effective on the areas of movie going preference, satisfaction gained from a movie, and deriving an overall judgment on a movie. The findings also indicate that the factors related to moving picture posters vary by gender and movie going frequency. The results of this research have significant implications for both the practice of marketing as a whole as well as would be a contribution to relatively limited literature on the movie advertising in movie industry.  Companies often spend large sums on advertising for new products prior to their launch. That is particularly true for products in creative industries such as motion pictures, music, books, and video games, where the lion’s share of advertising spending typically occurs in the pre-launch period. Consider the case of motion pictures across the nearly 200 movies released by major studios in 2005, average advertising expenditures amounted to over $36 million, while average production costs totaled about $60 million (Elberse and Anand, 2007).

 

The Influences on Innovative Activities, Intellectual Capital towards Corporate Development: Evidence and Insights from Taiwanese-publicly Listed IT Corporations

Dr. Ching-Yaw Chen, Yu-Je Lee, Che-Tsung Tung, and Kae-Shuan Kao, Taiwan

 

ABSTRACT

 This study is aimed at exploring the influences on innovative activities, intellectual capital towards corporate development as exemplified by Listed IT companies in Taiwan. This study also implemented an empirical survey with stratified sampling. In addition, a popular and powerful method-SEM was used in this study. The results show that in Taiwanese publicly listed IT corporations: (1) There is a mutually positive correlation between innovative activities and intellectual capital; (2) Accumulation of intellectual capital has positive influences on their operation and development; (3) Innovative activities towards corporate development have also positive influences; and (4) this research would helpfully encourage these corporations to enhance the potential for sustainable development through innovation, and intellectual capital accumulation.  As the external environment is changing rapidly, management should adopt new thinking to face this fast-changing environment.  The key point to new management theory is to focus on sequential improvement or the so-called total innovation method. Innovative activities enable corporations to review all weaknesses to isolate out any unchanged situations.  At the same time, innovative activities provide corporations with more competitive ways of doing business.  The aims of corporations are to create value, which creates sustainable capital, both tangible and intangible.  More importantly, a continuously growing corporation with sustained management would create positive influences on its society.  

 

The Relevancy of Traditional Performance Measures in Explaining Stock Returns Variations in Emerging Economies: The Case of Jordanian Corporations

Mahmoud Alkhalialeh, Ph.D., University of Jordan, Amman, Jordan

  

ABSTRACT:

 This study provides evidence from an emerging market on whether the ability of traditional accounting based performance measures to explain stock returns variations has  diminished in the 1990s. Results indicate that traditional, accounting performance measures become less associated with stock returns during the 1990s compared to the 1980s and their ability to explain stock returns variation has declined substantially during the 1990s compared to the 1980s. However, results also indicate that accounting based performance measures, in particular, earnings based performance measures, still relevant as they remain explain significant proportion of the variation in stock returns. These results suggest that it may be too early to give up on traditional performance measures.  The purpose of this study is to examine whether the role of traditional accounting based performance measures in explaining the variation in stock returns has diminished or lost relevance over time possibly due to the developments in business environment and changes in accounting practice during the last decade.  Traditional accounting performance measures, such as ROA, ROE and EPS have been commonly used as a basis to evaluate a firm’s operating performance and as a basis for managerial compensations in bonus plans. Many empirical studies (e.g.,   Francis et al. {1}; Biddle et al. {2}) indicate that accounting based performance measures are positively associated with stock returns and explain a significant proportion of stock returns variations. Nevertheless, they have been criticized for their extensive reliance on estimate, backward looking and failure to reflect firm future operating performance.

 

The Effects of Innovation Diffusion on Customer Loyalty

Dr. Yao-kuei Lee and Dr. Tsai-lung Liu, Taiwan

 

Abstract

 The industry of health and beauty products in Taiwan has experienced a phenomenal growth for the past decade. Although macro-level factors such as the nation's economy, gross domestic products, and so forth may lead to this result, other micro-level factors at the individual level make contributions as well. Since customer loyalty can be used as a surrogate for market penetration as it creates a stable pool of customers for a firm’s product or service (Oliver, 1997), eliciting the factors that result in the phenomenal growth of the chained retailers of health and beauty goods requires further examinations of customer loyalty from an innovation diffusion perspective. This study explores the effects of innovation diffusion on customer loyalty by integrating Customer Satisfaction Index (CSI) and the diffusion of innovation perspective (Rogers, 1995). Using a sample of 247 Taiwanese customers, the proposed research model is tested. The results reveals that compatibility and relative advantage are crucial in influencing customer loyalty in addition to CSI determinants, and both have significant total effects on customer satisfaction, perceived value, perceived quality, and customer expectations. Implications to management and retailing are discussed.

 

An Investigation of Functional Requirement and Interface Design of Online Interactive Virtual Fitting Room

Shuo-Fang Liu, Wen-Cheng Wang, Ying-Hsiu Chen, Taiwan

 

ABSTRACT

 Internet influence and change human life vastly with its characteristics of without time and space limit, interaction, instant response, low cost and low usage barrier; people start to use internet for communicating, transferring and exchanging information, furthermore people even change from their street shopping to searching product, buying and recreation activities on internet. Internet changed the consuming pattern and life style in all over the world; it also brought a lot of business chances to dealers. At present there are few business style web sites offering service of online interactive virtual fitting room (OIVFR); they use image interactive technique to emphasize three-dimensional instant display. This enables consumers to try and match their own favorite clothes freely also to change various fashion styles in order to let users get more real consuming experience which can satisfy their requirement of customization shopping. But still they are short of investigating related to the function and interface design of OIVFR. Thus, our study investigated the function and interface design of OIVFR in two stages, we concluded design index which accords with OIVFR.  Our experiment result showed:

 

Networks and Management Decisions: Applying Connected Reliability Theory and Input-Output Tables

Dr. Heng-Sheng Chen and Dr. Jaw-Sin Su

 

Abstract

 

A product may be configured in many ways, and a component may be placed in series, parallel or both. Normally, two states—running or failure—are used to represent the reliability of components or systems. The input-output table is an absorbing Markov’s transition matrix, which consists of input states, transient states and output states. In this paper, the 3x3 matrix was used to show the combination of the three states of each component in series or parallel configurations. Because data for the input row was given, the data in the output row could be determined to allow construction of the input-output table from the 3x3 matrix. The user could manage or to make decisions based on the output data or the complete input-output table. To prove that our model can be applied to a practical area, we used data from 2001 stored in the computer system within the net station center set at the Gim-well Company in central Taiwan.  Our model was developed on the reliability connection with input-output table. It was not only a new quantitative model, but it was also a more powerful than individual reliability theory and input-output table applications. We described the processes of model development and provided a case example to prove the practicality of the method.  The model could be extended beyond three states of the input-output table, and it could be applied to any system consisting of components, even opposite ones, to derive input data from the output data. 

 

Strategies for Sustainable Economic Growth: The Role of Financial Depth

Shamsul Nahar Abdullah, Ph.D, Nur Azura Sanusi, Ph.D., Nik Fuad Nik Mohd Kamil, Ph.D.,

Fauziah Abu Hasan, Ph.D., Malaysia

  

ABSTRACT

 

Several indicators have been used to measure the economic development of a country; one of which is the role of financial markets in the growth process. This indicator has received significant attention in recent years. Recognizing the importance of this indicator, this paper aims to investigate the importance of financial depth in the economic development of selected Asia Pacific countries. The sample countries were drawn from countries which were categorized as well-developed, under-developed financial market and the middle-developed financial markets. By taking into account the individuality of cross sectional unit and time series, it allows us to capture the differences within these sub-samples. A panel data set for the period of 1970-2003 was tested using the panel unit root tests and the generalized least square panel estimation technique. Two proxies were selected to represent the financial depth in the sample countries, namely money and capital markets. Two control variables were included in the analysis:  government expenditure and openness to international trade. Empirical results reveal that there exists a positive and significant relationship between financial depth and economic growth.  Generally, a nation's economic growth is defined as the change in production of goods and services produced by all sectors in the economy. If the production level at time t is greater than the production level at time t-1, it can be said that the nation’s economy has had a positive growth, and vice-versa.

 

The Impact of Internships on Accounting Students:  A Bowie State University Study – 2007

Treisha Thorpe-Dulgarian, Bowie State University, Bowie, MD

 

ABSTRACT

 

Accounting Internship is a way that students can acquire real world job experience while in college.  Some schools set up internship programs in their departments or offer it through course-work to facilitate a practical learning experience for its students.  This study came about due to the need for more internship opportunities for students in the School of Business at Bowie State University (BSU), with particular emphasis on the Accounting Program.  To rectify this problem, I decided to do a research study on the impact of internships on accounting students at BSU, and develop a formal internship program.  Throughout my research, I will be studying the impact on accounting majors from internships.  I hope to find a positive correlation between internships acquired by BSU accounting students and better job opportunities.  Based on my research, I will document findings from prior studies on the impact of internships on accounting students.  This will provide information that will help me in comparing the results of my survey, and answer the question – will BSU accounting students benefit from the implementation of an accounting internship program?  Currently BSU does not have a formal internship program for accounting students in the School of Business.  Actually, there is only one accounting program in the State University System of Maryland, which requires an internship and has a formal program for students i.e., Salisbury University.  Therefore, after completing my survey, if the results indicate that a significant number of students are interested in participating in such a program.

 

Benchmarking and Monitoring Performance of Retailing: An Empirical Study of Convenience Stores in Taiwan

Dr. Wann-Yih Wu and Chuen-Jing Bai, Taiwan

 

ABSTRACT

 

This paper discusses the benchmarking and monitoring the productivity of retailing by employing the method of Data Envelopment Analysis (DEA) and empirical data of convenience stores in Taiwan. DEA measures relative-to-best performance efficiency of retail stores characterized by multiple inputs and outputs and the results can be a value in examining the competitiveness of the chain as a whole.  The operating efficiency has become an important element of success and survival for convenience stores in a highly competing environment. This paper makes use of the Data Envelopment Analysis (DEA) and Malmquist Productivity Index (MPI) to investigate the productivity efficiency and to monitor the performance of convenience stores characterized by multiple inputs and outputs. The findings indicate that DEA can provide useful diagnostic information for managers and suggest useful ways to improve efficiency to keep up with the competition and progress.  Donthu, Hershberger, & Osmonbekov (2005) argue that many companies have adopted the benchmarking method for improving business processes to gain higher profit and market share.  For example, AT&T, Chevron, American Express, and 3M, Fortune 500 companies, have successfully applied the benchmarking to excel in their respective industries (Camp, 1998).  Not only the large corporations similar to the ones mentioned above reap benefits using benchmarking, small and medium size companies can also imitate and learn from them and improve their performance (McGonagle & Fleming, 1993).  Donthu & Yoo (1998) propose a different approach of measuring retail productivity, which is a relative-to-best measure rather than a relative-to-average measure.  Thomas, Barr, Cron, and Slocum (1998) postulate that Data Envelopment Analysis (DEA) method could overcome four concerns raised by employing efficiency measures:  individual store differences, identifying benchmarks, controllable/uncontrollable resources, and conflicting performance outcomes. 

 

Utilizing Knowledge Management for Effective Virtual Teams

Gamze Karayaz, Ph.D., Turkey

 

ABSTRACT

 There is a wide recognition of knowledge management to survive in business world, especially where the work is distributed around the world. Effective usage of knowledge management systems enhances organizational performance. One of the positive effects of using knowledge management systems is to leverage the management of virtual teams, and to help to articulate the challenges. This paper aims to answer some of the implementation challenges virtual teams face using knowledge management concept. Bridging these two important facts of the global economy, virtual teams and knowledge management, may help us to find better ways to operate these teams. After reviewing recent work from relevant literature, this research establishes the link between virtual teams and knowledge management.  A framework for knowledge management implementation for virtual teams is discussed, and set of recommendations is made fro global managers.  The boundaries around the world are disappearing and the transformation does change the traditional structure of the business world. More of the work is being distributed in order to save cost, and time in this borderless era. Yet, implementing distributed work brings some challenges. Various challenges are identified in the literature, among them, effective coordination strategy, team structure, and timely information sharing raises as some of the top challenges (Karayaz, 2006). These challenges may point out an emerging demand for knowledge management strategy in virtual teams. As De Long-Fahey (2000) states that effective usage of knowledge management systems will enhance organizational performance by designing and implementing explicit tools, processes, systems, structures, and cultures to improve knowledge sharing, which is critical for decision-making purpose (pg.115).

 

Expanded Perspective on the Biotech Industry: Qualitative Research for Assisting in Establishing Sustainable Competitive Advantages

Dr. Meng-Shiunn Lee and Jui-Ying Hung, Ph.D. Candidate, Taiwan

 

ABSTRACT

The biotechnology industry currently is developing rapidly and expanding into multitudinous fields. Consequently, this investigation examines the case of the Taiwanese biotechnology industry to understand how different strategies can be applied by industries to create competitive advantage. This study performs the value chain construct (Porter, 1985) to devise concept indicators, and implements the Fuzzy Delphi Method expert questionnaire (FDM) for drafting strategic hierarchy structure. Next, this study uses the Fuzzy Analytic Hierarchy Process (FAHP) to derive “the key success factors for biotechnology industry competition advantages in Taiwan”. Finally, this study treats the most important and critical development strategy of the biotechnology industry in Taiwan based on the research results.  Porter (1990) once observed that national economic success derives not from individual industries, but rather from the combined influences of numerous industries. Therefore, ‘industry’ rather than ‘country’ may be the best basic unit for analyzing national competitive advantage. To maximize benefits from international specialization and regional competitiveness, particularly for developed countries, the industry structure adjusting vigorously in their countries under the new world industry.  The “biotechnology industry” developed out of the life sciences. The global research and development direction of the life sciences will significantly impact the humanity in the future. humanity Furthermore, following the decoding of the human genome, life sciences will become the most significant technology industry of the 21st century with all nations striving to include it in their information technology development.

 

Deriving High Order Error Derivatives of Backpropagation Neural Networks

Kua-Ping Liao, Taiwan

 

ABSTRACT

 

Backpropagation neural networks can be used to build business forecasting models.To further enhance the power of the backpropagation algorithm, the full-power backpropagation algorithm is proposed so that the third derivatives of the error function with respect to the biases and weights can be derived efficiently. The first and second derivatives of the error function with respect to the biases and weights are derived and used in obtaining these third derivatives. It is quite natural to apply the method proposed here to obtain higher order error derivatives. This is important if we want to appreciate better the capability and elegance of the backpropagation neural networks. This is also important if we want to develop a high-order search method by using backpropagation neural networks.  Although the backpropagation algorithm has been derived (Rumelhart et al.,1986) and  the algorithm for obtaining the second derivatives of the error function with respect to the biases and weights has also been derived (Bishop,1992; Buntine & Weigend, 1994), the present paper is aimed at proposing a structured and revealing algorithm so that higher order error derivatives can be obtained if necessary. The present paper is also conducive to better appreciation of the elegance of obtaining the first, second, and third order error derivatives.  

 

The Long-Run Performance of Initial Public Offerings:  New Evidence from Thailand

Dr. Chaiporn Vithessonthi, Thailand

 

ABSTRACT

 

This paper reviews empirical studies of the long-run performance of initial public offerings in an effort to evaluate the long-run performance of initial public offerings in Thailand in a post-1997 Asian financial crisis era. In particular, I examine a sample of such offerings on the Market for Alternative Investment between 1999 and 2005. The literature yields highly mixed results, however, regarding the long-run aftermarket performance of initial public offerings. I find that the sample firm, on average, underperforms a benchmark by 41.68 percent for a three-year holding period after going public. Of the three subsamples by size, I find that only the small-sized IPO category has a poor performance in long run. In sum, the findings provide further evidence on the long-run underperformance of initial public offerings.  What is the long-run performance of firms that make an initial public offering in an emerging market economy? I address this question by studying the long-run stock price performance of initial public offering in Thailand, which represents an interesting example of an emerging market economy. As a member of the Association of South-East Asian Nations (ASEAN) since 1967, Thailand has achieved considerable progress since 1980s in terms of economic growth. The Stock Exchange of Thailand, a first organized stock exchange in Thailand, was established to promote the development of the capital market in Thailand in 1975.

 

Share Price Reaction to Dividend Announcements

Syeda Faiza Urooj and Nousheen Zafar, Muhammad Ali Jinnah University, Islamabad

 

ABSTRACT

 This study is aimed at finding out the relationship between dividend announcements and share prices. It is hypothesized that dividend announcements positively affect the share prices. Further dividend announcements are classified as positive, negative or neutral based on “naïve model”. We found overall positive returns in the 21 day event window after the announcement of positive dividends and negative returns after the announcement of negative dividends. Neutral dividends do not have any impact on abnormal returns as they were negative both before and after dividend announcements. The impact of total dividend announcements is somehow mixed because of the inclusion of all types of dividend announcements. Cumulative Average Abnormal Returns are more significant than the Average Abnormal Returns because of the cumulative effect of returns on a single day. Dividend policy has been a controversial issue since very beginning. There are different dividend policies adopted by the companies as per their current position (organization’s age). Dividend cuts are value destroying while dividend increases are value enhancing.  The dividend policy is not only used to signal the expected level of earnings but also the volatility of earnings. Firms with more volatile earnings promise a lower dividend. Dividend policy includes the decision to payout earnings or to retain them for further investment in the firm. As Dividend pay out ratio serves to be the indicator of firm’s earnings, the cyclical firm may retains more earnings to be reinvested at a rate of return that exceeds opportunity cost of stockholders and pay such a low dividend that could be maintained even in adverse times. (Sydney. M. Leveson).

 

Performance Measurement of Supply Chain Via Balanced Scorecard: The Case of a Brewing Group

Karmen Muratoglu, Istanbul

 

ABSTRACT

 The successful organizations are those that develop abilities in harmony with supply chain strategies, integrate well with customers and organize all internal activities as one. In order to derive maximum value from the supply chain and to maintain its efficiency, its performance should be measured and assessed. Ideal performance measurement provides feedback to organizations on their activities, signals potential problems and ensures that preventive actions are taken beforehand. Through performance measurement, organizations are able to review their strategies and to make changes whenever necessary. As a result, processes can be managed efficiently and maximum value can be provided to the stakeholders of the organization. The first section of this study provides a literature review on supply chain management, performance measurement and supply chain performance measurement. The second section attempts at providing a performance measurement model for one of the biggest supply chains in Turkey, via applying the balanced scorecard method. Supply chain management is the integration of activities which starts with the procurement of materials, continues with the transformation of the material to semi finished or finished products and extends to the transportation of the product to the final customer (Heizer and Render, 2000). The goal is to establish a chain which provides the greatest value to the customer and in the mean time, to decrease waste considerably. (Christopher, 1998).

 

Business Process Management and Business Intelligence as Performance Measurement Drivers

Vesna Bosilj-Vuksic, Ph.D., Croatia

Mojca Indihar-Stemberger, Ph.D. and Andrej Kovacic, Ph.D, Slovenia

 

ABSTRACT

 

The ability to apply performance management principles to daily operations is now the ultimate goal of most large business organizations. Most performance measurement systems developed and implemented in organizations are the result of business practices that have been integrated with various performance measurement frameworks. Business process management (BPM) is a methodology to improve processes and to implement systems that allow for improvement. The ultimate goal of BPM is performance management. Since business intelligence (BI) plays another key role in managing performance, BPM and BI solutions are linked, thus resulting in products that can combine the strengths of both concepts. This developing convergence of BPM and BI approaches is called process intelligence (PI). This paper gives an overview of the literature, and a summary and comparison of PI tool features, placing them within a performance measurement framework.  It is widely held that performance information enables organizations to gain a competitive advantage. Every organization measures, monitors and analyzes its performance (Davenport and Harris, 2007). Kueng (2000) defines a performance measurement system as an information system which: (1) gathers performance relevant data through a set of indicators; (2) compares the current values against historical or planned values, and (3) disseminates the results to the process actors and managers.

 

Integration of Comparison Level Theory to Analyze the Relationship between Complaint Recovery Satisfaction and Post-Complaint Consumer Responses

Prof. Dr. Kemal Kurtulus and Assist. Prof. Dr. Süphan Nasýr, Turkey

 

ABSTRACT

 Effective complaint handling management (CHM) can have a dramatic impact on customer retention rates, market share, and likelihood of repurchase. Effective resolution of consumer complaints and relationship marketing are linked closely in terms of their mutual interest in customer satisfaction, trust, and commitment. The aim of this research is to contribute to the growing literature on CHM and complaint recovery by integrating comparison level theory to analyze the relationship between complaint recovery satisfaction and post-complaint consumer responses.   Customer satisfaction is the cornerstone of the marketing concept; because, developing long-term relationships with customers is generally assumed to lead to repeat sales, improved customer retention rates, positive word of mouth, profitability and consumer loyalty (e.g., Bearden and Teel, 1983; Reichheld, 1994; and Rust and Zahorik, 1993). Therefore, the philosophy of relationship marketing concept leads the producer/seller to be customer-centric. Within the framework of the relationship paradigm, consumer complaint is an invaluable feedback mechanism which companies should take into account to monitor customer satisfaction. When firms fail to provide customer satisfaction, they can recognize their failure through two feedback mechanisms; exit and voice (Hirschman, 1970). In the context of exit, customer stops buying from the firm when he/she encounters with a dissatisfaction; whereas in the episode of voice, customer expresses his/her dissatisfaction. Firms have to be responsive to customer exit; because exit causes customer and revenue lost.

 

Ethical Orientation of Malaysian Middle Managers Towards Corporate Gifts

Cyril H. Ponnu, Mohd Said and Abdullah Apnizan

 

ABSTRACT

 This is an exploratory study on the ethical orientation of Malaysian middle management towards corporate gifts. This paper will examine the level of acceptance by middle management of the practice of corporate gift giving as part of corporate business strategy, since they are the most frequent party to be involved in this practice.  Since they are not the ultimate decision makers, the conflict between company’s objectives and ethics may arise. Results show corporate gifts are found to be used mainly as a tools or methods of enhancing corporate image, promoting the company and retaining loyalty of existing customers.  In the corporate world today, corporate gifts are an important tool used for marketing strategy. Giving gifts is a valuable means of strengthening relationships with its key customers and employees, creating goodwill, fostering new relationships and promoting the company’s business, thus making it as a double-edge sword (Pachter, 1995). Giving appropriate gift at the appropriate time is one of the best ways of conveying an important message of relationship to the customer (Davies, 1996). In fact gift giving can be a complicated matter and can take place in the form of art (Pachter, 1995; Davies, 1996; Campbell, 1997; Feder, 1998; Gines, 1998; Speer, 2000; Taylor, 2003). The use of gifts and incentives as tools to promote sales should also be considered to help integrate, synergize and support other promotion activities in the marketing communication mix. Gifts with company’s logo on them form a longer lasting reminder of the company which could lead to a favorable business decision, when compared to verbal communication (Axtell, 1990).

 

Corporate Governance and Productive Efficiency: A Comparative Study on Japanese Manufacturing and Utility Industries

Dr. Mika Goto and Yusuke Omi, Japan

Dr. Toshiyuki Sueyoshi, Taiwan

 

ABSTRACT

 This study investigates relationship between operational efficiency and governance mechanism. For the purpose, this study compares between Japanese manufacturing and energy utility industries. Using the bootstrap method, we measure the DEA-based efficiency of these firms. Then, we apply truncated regression to examine whether corporate governance improves the operational efficiency of the two industries. The empirical results identify that common stocks owned by foreign shareholders increase the operational efficiency. Such a relationship can be found in both manufacturing and energy utility industries. Meanwhile, stable shareholders decrease the operational efficiency of the manufacturing industry. Such an effect cannot be found in the energy utility industry.  After the collapse of “bubble economy” in 1991, Japan fell into the long-term economic depression known as "Lost Decade". During the period, the fundamental problems of Japanese economy became evident. All the problems were characterized by “three excesses” and those were caused by excessive holdings of equipment, employment and debt by firms. The excessive resources held by firms were due to the intention and desire of Japanese managers. They believed that firms could expand their corporate sizes to attain operational efficiency during the bubble economy period. However, the expansion led firms to an inefficient use of resources in production. Under such an economic situation, the Japanese traditional corporate governance system was regarded as a source of inefficiency represented by the three excesses, whereas they once contributed to improving the production of firms.

  

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