The lesson is clear. The inability of American business to respond to its public responsibilities has spawned an underlying public distrust of the business community. Increased…
Abstract
The lesson is clear. The inability of American business to respond to its public responsibilities has spawned an underlying public distrust of the business community. Increased regulation, product lawsuits and the public's desertion of American‐made products reflect the shaky coalition between business and the public, which in turn has contributed to the general weakening of American business both at home and abroad.
Amal Ahmadi, Bernd Vogel and Claire Collins
We take an affect-based approach to theoretically introduce and explore the knowing-doing gap of leadership. We focus on the emotion of fear that managers may experience in the…
Abstract
Purpose
We take an affect-based approach to theoretically introduce and explore the knowing-doing gap of leadership. We focus on the emotion of fear that managers may experience in the workplace, and how it may influence the transfer of their leadership knowledge into leadership action.
Methodology/approach
We use Affective Events Theory as our underlying theoretical lens, drawing on emotional, cognitive, and behavioral mechanisms to explain the role of fear in the widening and bridging of the knowing-doing gap of leadership.
Findings
We theoretically explore the interplay between leader fear, the leadership contexts, and the knowing-doing gap of leadership. From this, we develop a multidimensional theoretical framework on the influence of leader fear on the knowing-doing gap of leadership.
We highlight how fear and the knowing-doing gap of leadership may be influenced by and potentially impact on individual managers and their leadership contexts.
Originality/value
Our initial theoretical framework provides a starting point for understanding fear and the knowing-doing gap of leadership. It has implications for future research to enhance our understanding of the topic, and contributes toward existing approaches on leadership development as well as emotions and leadership.
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Reza Houston and Stephen P. Ferris
In this study, we examine the relationship between political connections of private firms and the initial public offering process. Using registration statement information, we…
Abstract
In this study, we examine the relationship between political connections of private firms and the initial public offering process. Using registration statement information, we create a unique database of politically connected IPO firms. We find that political connections are substitutes to high-quality underwriters and big four auditors. Politically connected firms manage earnings more highly upward than non-connected firms prior to the public offering. Politically connected firms also exhibit less underpricing than non-connected firms. Finally, politically connected IPO firms have superior post-IPO returns relative to non-connected IPO firms.
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Brandon Dupont, Drew Keeling and Thomas Weiss
We present a continuous time series on first cabin passenger fares for ocean travel from New York to the British Isles covering nearly a century of time. We discuss the conceptual…
Abstract
We present a continuous time series on first cabin passenger fares for ocean travel from New York to the British Isles covering nearly a century of time. We discuss the conceptual and empirical difficulties of constructing such a time series, and examine the reasons for differences between the behavior of advertised fares and those based on passenger revenues. We find that while there are conceptual differences between these two measurements, as well as differences in the average values, the two generally moved in parallel, which means that the advertised fare series can serve as a reasonable proxy for movement of the revenue-based fares. We also find that advertised fares declined over time, roughly paralleling the drop in freight rates for US bulk exports, until around 1890, but thereafter increased while freight rates continued to decline. We propose several hypotheses for this divergent behavior and suggest lines of future research.
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Caleb Kwong, Dylan Jones‐Evans and Piers Thompson
The purpose of this study is to examine whether being female increases the probability that an individual feels difficulty in obtaining finance is a barrier to starting a…
Abstract
Purpose
The purpose of this study is to examine whether being female increases the probability that an individual feels difficulty in obtaining finance is a barrier to starting a business. The study aims to extend this to examine if a pure gender effect exists or whether it is the interaction of gender with demographic, economic and perceptual characteristics that plays the most important role in the perception of financial constraint.
Design/methodology/approach
The data within this study are drawn from the Global Entrepreneurship Monitor (GEM) adult population survey between 2005 and 2007. The first stage of the study splits male and female respondents into separate sub‐samples and runs individual regressions on each portion of the sample. The second stage of the study combines the male and female portions of the sample to directly examine the differences in perceived financial constraint between genders.
Findings
The findings suggest that a greater proportion of women are solely constrained by financial barriers than their male counterparts. The gender of the respondent was also found to interact with a number of other personal characteristics in a significant manner.
Practical implications
This finding suggests that policymakers should be encouraged to market the availability of start‐up finance from various sources to encourage women to attempt to obtain the necessary finance rather than being discouraged at the first hurdle.
Originality/value
Although actual financial barriers faced by female entrepreneurs have been extensively studied, this is one of the first studies to focus on the concept of perceived financial constraints faced by potential female entrepreneurs.
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The purpose of this paper is to develop a model to hedge annuity portfolios against increases in life expectancy. Across the globe, and in the industrial nations in particular…
Abstract
Purpose
The purpose of this paper is to develop a model to hedge annuity portfolios against increases in life expectancy. Across the globe, and in the industrial nations in particular, people have seen an unprecedented increase in their life expectancy over the past decades. The benefits of this apply to the individual, but the dangers apply to annuity providers. Insurance companies often possess no effective tools to address the longevity risk inherent in their annuity portfolio. Securitization can serve as a substitute for classic reinsurance, as it also transfers risk to third parties.
Design/methodology/approach
This paper extends on methods insurer's can use to hedge their annuity portfolio against longevity risk with the help of annuity securitization. Future mortality rates with the Lee-Carter-model and use the Wang-transformation to incorporate insurance risk are forecasted. Based on the percentile tranching method, where individual tranches are aligned to Standard & Poor's ratings, we price an inverse survivor bond. This bond offers fix coupon payments to investors, while the principal payments are at risk and depend on the survival rate within the underlying portfolio.
Findings
The contribution to the academic literature is threefold. On the theoretical side, building on the work of Kim and Choi (2011), we adapt their pricing model to the current market situation. Putting the principal at risk instead of the coupon payments, the insurer is supplied with sufficient capital to cover additional costs due to longevity. On the empirical side, the method for the German market is specified. Inserting specific country data into the model, price sensitivities of the presented securitization model are analyzed. Finally, in a case study, the procedure to the annuity portfolio of a large German life insurer is applied and the price of hedging longevity risk is calculated.
Practical implications
To illustrate the implication of this bond structure, several sensitivity tests were conducted before applying the pricing model to the retail sample annuity portfolio from a leading German life insurer. The securitization structure was applied to calculate the securitization prices for a sample portfolio from a large life insurance company.
Social implications
The findings contribute to the current discussion about how insurers can face longevity risk within their annuity portfolios. The fact that the rating structure has such a severe impact on the overall hedging costs for the insurer implies that companies that are willing to undergo an annuity securitization should consider their deal structure very carefully. In addition, we have pointed out that in imperfect markets, the retention of the equity tranche by the originator might be advantageous. Nevertheless, one has to bear in mind that by this behavior, the insurer is able to reduce the overall default risk in his balance sheet by securitizing a life insurance portfolio; however, the fraction of first loss pieces from defaults increases more than proportionally. The insurer has to take care to not be left with large, unwanted remaining risk positions in his books.
Originality/value
In this paper, we extend on methods insurer's can use to hedge their annuity portfolio against longevity risk with the help of annuity securitization. To do so, we take the perspective of the issuing insurance company and calculate the costs of hedging in a four-step process. On the theoretical side, building on the work of Kim and Choi (2011), we adapt their pricing model to the current market situation. On the empirical side, we specify the method for the German market. Inserting specific country data into the model, price sensitivities of the presented securitization model are analyzed.
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Sean A.G. Gordon and James A. Conover
We investigate whether external investment banks or internal key IPO insiders such as company directors and officers, venture capitalists and institutions that hold an IPO's stock…
Abstract
We investigate whether external investment banks or internal key IPO insiders such as company directors and officers, venture capitalists and institutions that hold an IPO's stock serve as effective monitors of IPO investments over the post-IPO period. We measure median changes in each group's holdings for the sample, finding large changes in these values during a long-run holding period. We find that long-run buy-and-hold returns (BHARs) are positively related to the lead investment bank underwriter reputation and the gross spread demonstrating that the external monitoring by investment banking firms increases the post-IPO firm's value. Holding the underwriter reputation constant, we find that the BHARs are positively related to the gross spread, also indicative of the value of monitoring by external investment banks.
This paper examines the pricing of Initial Public Offerings (IPOs) in the secondary market on the first day of aftermarket trading. The focus of this study is on shifts in average…
Abstract
This paper examines the pricing of Initial Public Offerings (IPOs) in the secondary market on the first day of aftermarket trading. The focus of this study is on shifts in average returns over time, and does not necessarily address the cross‐sectional implications of a risk/return relation. The focus of the study is to examine the reasonableness of first day trading prices of IPOs. Initial returns of IPOs, issued during the period, January 1, 1999 to June 30, 2000, reached as much as 800 per cent, and the average initial return for the study sample was of 76 per cent. An important question is whether the high initial returns, observed during this time period, are appropriate for the level of risk associated with these new issues. Related to this question is the pricing of these securities by investment bankers (i.e. the offer price) and the pricing of the securities in aftermarket trading (i.e the secondary market). The results of this study indicate the presence of speculative excesses in the initial pricing of IPOs in aftermarket trading during 1999 and part of 2000. Further there is no indication that IPOs are excessively underpriced by investment bankers during the study period, January 1, 1997 through June 30, 2000. The results of this study may be useful to investors in making decisions about purchasing new public securities in the secondary market.