Jaideep Chowdhury and Sourish Sarkar
While store closure announcements frequently appear in newspapers, little is known about the financial impact of store closure decisions on the retailer’s market value. The…
Abstract
Purpose
While store closure announcements frequently appear in newspapers, little is known about the financial impact of store closure decisions on the retailer’s market value. The purpose of this paper is to investigate the stock market reaction to the announcements of retail store closure decisions.
Design/methodology/approach
The authors collect data from news articles on store closure announcements in the USA during 1995-2016. Using the four-factor model in an event study, the authors compute the abnormal stock returns for the retail firms due to these announcements.
Findings
Based on the authors’ analysis for sample and matching control firms, the abnormal stock returns for store closure announcements are found to be positive overall. The authors find evidence that the positive effects of the announcements are stronger, particularly for the firms which have positive sales growth at the time of the announcements. The authors also report that industry competition acts as a negative moderator in the relationship between announcements and financial impacts.
Practical implications
The authors’ analysis implies the investors’ positive sentiment of store closure announcements as a viable cost-cutting strategy, especially when it is done proactively by better performing retailers. The findings should be useful to the supply chain managers of retail industries in making store closure decisions.
Originality/value
This paper is believed to be the first to address the impact of retail store closure announcements on the stock market. The authors’ approach of categorizing the firms based on their sales growth seems to be the first in the event study literature on corporate restructuring.
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Fariss Terry Mousa and Jaideep Chowdhury
The slack-innovation relationship has interested scholars for years. The authors aim to delve into the impact of financial slack on firm innovation by replicating a classic study…
Abstract
Purpose
The slack-innovation relationship has interested scholars for years. The authors aim to delve into the impact of financial slack on firm innovation by replicating a classic study arguing that this relationship has an inverse U-shape.
Design/methodology/approach
The sample consists of all US firms that were publicly traded between 1993 and 2011. The authors employ the standard econometrics methodology of panel regression with firm-fixed effect and time-fixed effect to estimate the regression equation of firm innovation on financial slack.
Findings
The authors find that the relationship between financial slack and R&D investments is similar to that suggested by earlier authors, thus enhancing the generalizability of this important finding in management research. The authors also find that this relationship holds even during economic downturns.
Originality/value
The authors replicate Nohria and Gulati's classic study by considering the impact of slack on innovation. The authors also move away from survey data, as used by Nohria and Gulati. The authors utilize actual firm-level data for a large sample of US publicly traded firms from 1993 to 2011, thus enhancing the generalizability of these findings.
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Jaideep Roy and Prabal Roy Chowdhury
In a global environment where terrorist organisations based in a poor country target a rich nation, this paper aims to study the properties of a dynamically incentive compatible…
Abstract
Purpose
In a global environment where terrorist organisations based in a poor country target a rich nation, this paper aims to study the properties of a dynamically incentive compatible contract designed by the target nation that involves joint counter-terror tasks with costly participation by each country. The counter-terror operations are however subject to ex post moral hazard, so that to incentivise counter-terror, the rich country supplies developmental aid. Development aid also helps avoid unrest arising from counter-terror activities in the target nation. However, aid itself can be diverted to non-developmental projects, generating a novel interlinked moral hazard problem spanning both tasks and rewards.
Design/methodology/approach
The authors use a dynamic model where the aid giving countries and aid receiving countries behave strategically. Then they solve for the sub game perfect Nash equilibrium of this game.
Findings
The authors characterise the optimal contract, showing that the dynamic structure of counter-terror resembles the shock-and-awe discussed by military strategists. The authors then prove that it is not necessarily the case that a more hawkish (resp. altruistic) donor is less pro-development (resp. softer on terror). In addition, the authors show that it may be easier to contract for higher counter-terror inputs when the recipient is more sympathetic to terrorists. The authors also discuss other problems faced by developing nations where this model can be readily adopted and the results can endorse appealing policy implications.
Originality/value
The authors characterise the optimal contract, showing that the dynamic structure of counter-terror resembles the shock-and-awe discussed by military strategists. It is proved that it is not necessarily the case that a more hawkish (resp. altruistic) donor is less pro-development (resp. softer on terror). In addition, the authors show that it may be easier to contract for higher counter-terror inputs when the recipient is more sympathetic to terrorists. Other problems faced by developing nations are also discussed where this model can be readily adopted, and the results can endorse appealing policy implications. These results have important policy implications, in particular in today’s world.
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Abstract
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Abderahman Rejeb, John G. Keogh, Steven J. Simske, Thomas Stafford and Horst Treiblmaier
The purpose of this study is to investigate the potentials of blockchain technologies (BC) for supply chain collaboration (SCC).
Abstract
Purpose
The purpose of this study is to investigate the potentials of blockchain technologies (BC) for supply chain collaboration (SCC).
Design/methodology/approach
Building on a narrative literature review and analysis of seminal SCC research, BC characteristics are integrated into a conceptual framework consisting of seven key dimensions: information sharing, resource sharing, decision synchronization, goal congruence, incentive alignment, collaborative communication and joint knowledge creation. The relevance of each category is briefly assessed.
Findings
BC technologies can impact collaboration between transaction partners in modern supply chains (SCs) by streamlining information sharing processes, by supporting decision and reward models and by strengthening communicative relationships with SC partners. BC promises important future capabilities in SCs by facilitating auditability, improving accountability, enhancing data and information transparency and improving trust in B2B relationships. The technology also promises to strengthen collaboration and to overcome vulnerabilities related to moral hazard and shortcomings found in legacy technologies.
Research limitations/implications
The paper is mainly focused on the potentials of BC technologies on SCC as envisioned in the current academic literature. Hence, there is a need to validate the theoretical inferences with other approaches such as expert interviews and empirical tests. This study is of use to practitioners and decision-makers seeking to engage in BC-collaborative SC models.
Originality/value
The value of this paper lies in its call for an increased focus on the possibilities of BC technologies to support SCC. This study also contributes to the literature by filling the knowledge gap of how BC potentially impacts SC management.