Shu-Hsien Liao, Da-Chian Hu and Cai-Jun Chen
This study proposed an extended theory of planned behaviour (TPB), that is, considering that behavioural beliefs, normative beliefs and control beliefs (beliefs) will influence…
Abstract
Purpose
This study proposed an extended theory of planned behaviour (TPB), that is, considering that behavioural beliefs, normative beliefs and control beliefs (beliefs) will influence perceived service quality (PSQ) on food delivery services. PSQ (behavioural intention) will influence electronic word-of-mouth (EWOM) (behaviour). In addition, exogenous variables including information from online ratings and consumer groups will affect the strength of the relationship between received service quality and EWOM on food delivery service.
Design/methodology/approach
This study aimed to investigate the mediation (PSQ) and moderation (Online ratings and consumer groups) effects on the extended TPB for Taiwanese consumers (n = 823).
Findings
This study first found a positive relationship between different beliefs and PSQ (behavioural intention). In addition, there is a positive relationship between PSQ and EWOM. Online rating has a moderating effect between PSQ and EWOM. Consumer group has a moderating relationship between PSQ and EWOM.
Originality/value
This study first found that the three stages of beliefs-intention-behaviour for consumers on food delivery service are reciprocal with two paths, starting with offline-to-online in terms of generating the positive relationship between individual belies and PSQ. Next, it can generate positive power to return online with a behaviour of EWOM. In addition, online ratings can enhance and strengthen the positive effect between PSQ and EWOM.
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José M. Barrutia and Ainhize Gilsanz
The purpose of this paper is to highlight research avenues for improving the understanding of electronic service quality (e‐SQ) management, based on a critical review of previous…
Abstract
Purpose
The purpose of this paper is to highlight research avenues for improving the understanding of electronic service quality (e‐SQ) management, based on a critical review of previous literature.
Design/methodology/approach
The conclusions are based on a critical review of previous literature. Computer databases (e.g. Google scholar) were the main tools used to identify relevant research in the area. Then, the electronic and physical bibliographical resources from universities in two different countries were used to obtain the papers.
Findings
The authors describe the current e‐SQ research gaps (research opportunities) and indicate possible routes for future investigation.
Practical implications
The orientation of this study aims to reduce the efforts of researchers who desire to enter this field.
Originality/value
The development of new orientations and focuses for the conceptualisation and measurement of e‐SQ are crucial for the effective management of e‐SQ and a major issue on the market research agenda.
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Huan Yang, Jun Cai and Robert Webb
We aim to examine two issues. First, we intend to identify the best performing expected return proxies. Second, we investigate whether the expected return proxies for individual…
Abstract
Purpose
We aim to examine two issues. First, we intend to identify the best performing expected return proxies. Second, we investigate whether the expected return proxies for individual stocks can track the corresponding realized returns during extremely good or extremely bad times of the economic environment related to business conditions, stock market valuation and broad market performance.
Design/methodology/approach
We construct four sets of expected return proxies, including: (1) characteristic-based proxies; (2) standard risk-factor-based proxies; (3) risk-factor-based proxies that allow betas to vary with firm characteristics and (4) macroeconomic-variable-based proxies. First, we estimate expected returns for individual stocks using newly developed methods and evaluate the performance of these expected return proxies based on the minimum variance criterion of Lee et al. (2020). Second, we regress expected return proxies and realized returns on indicator variables that capture the extreme phases of the economic environment. Then we compare the estimated coefficients from these two sets of regressions and see if they are similar in magnitude via formal hypothesis testing.
Findings
We find that characteristic-based proxies and risk-factor-based proxies that allow betas to vary with firm characteristics are the two best performing proxies. Therefore, it is important to allow betas to vary with firm characteristics in constructing expected return proxies. We also find that model-based expected return proxies do a reasonably good job capturing actual returns during extremely bad and extremely good phases of business cycles measured by leading economic indicators, consumer confidence and business confidence. However, there is a large gap between the adjustment of model-based expected returns and realized returns during extreme episodes of stock market valuation or broad market performance.
Originality/value
We examine four types of expected return proxies and use the newly developed methodology as in Lee et al. (2020) to see which one is the best. In addition, we document whether model-based expected returns from individual stocks adjust partially or fully to keep pace with actual returns in response to changing economic conditions. No prior studies have examined these two issues.
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Hee-Joon Ahn, Jun Cai and Yan-Leung Cheung
This paper focuses on execution costs as liquidity measure. Execution costs are related to volatility and are an important component of a firm’s cost of capital. The purpose of…
Abstract
Purpose
This paper focuses on execution costs as liquidity measure. Execution costs are related to volatility and are an important component of a firm’s cost of capital. The purpose of this paper is to examine whether emerging market firms have lower execution costs when they face less restrictions on foreign investment and when they have more foreign shareholders.
Design/methodology/approach
The authors begin by documenting the cross-sectional behavior of execution costs. The authors then obtain preliminary evidence on the interaction between execution costs, the investability index and actual foreign investment. These results foreshadow those the authors obtain with the regression analysis. The ordinary least square results show that more investable firms have lower execution costs after the authors control for firm size, stock price, return volatility, industry effects and country effects. This evidence is very robust and highly significant. Direct foreign ownership (FO) in emerging market firms also appear to be associated with lower execution costs. The economic benefit from lowering the investability index on trade execution costs is highly significant.
Findings
Using a large cross-sectional sample from 23 emerging markets, the authors show that firms with more ex ante restrictions on FO, measured by the investability index, have lower execution costs, such as quoted spreads (QS) and effective spreads (ES), after the authors control for firm size, stock price, return volatility, industry factors and country effects. In addition, direct FO in emerging market firms appears to be associated with lower execution costs. However, ex ante restrictions on FO dominate the influence of direct FO. For a 0.5 increase in the investability index in the range of 0–1, the QS will be reduced by 17 percent of the mean QS, and the ES will be reduced by 12 percent of the mean ES from the sample stocks.
Originality/value
There are important differences between the approach and most of the financial liberalization studies. First, whereas most of the earlier studies are conducted at the level of country or market analysis, the investigation is at the level of individual stocks. Second, the authors focus on a cross-sectional association that avoids a criticism leveled at time series analyses. Over-time studies often use specific time points to represent financial liberalization watersheds. This approach can be misleading when financial liberalizations are viewed as processes that unfold over time. Third, the proxies for financial openness are available not only for individual firms across markets, but the authors also make a distinction between potential and actual foreign investment. The authors further categorize actual foreign investment into direct and indirect FO.
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Abstract
Purpose
For most companies, growth measures such as asset growth are positively correlated with accrual measures. Just like investment in fixed assets, current accrual represents one form of investment and is an integral part of a firm’s business growth. This makes it difficult to distinguish between the growth-based and earnings quality-based interpretations of the accrual effects, because high accruals can represent both high growth and inflated earnings. The purpose of this paper is to add to the literature by examining an issue that has not received much attention: the correlation between asset growth and accruals and its implication on stock return predictability. The authors address the issue using Fama and Macbeth’s (1973) cross-sectional regressions that are conditional on the correlations between the two variables.
Design/methodology/approach
The authors partition firms based on whether the correlation between current accrual and asset growth in the past five years is positive (ρ+) or negative (ρ−). The authors refer to these two types of firms such as “positive correlation” and “negative correlation” groups. For both groups, the authors examine whether firms with higher asset growth and higher accruals are associated with lower future stock returns. The authors implement Fama and MacBeth’s cross-sectional regressions incorporating the effect of correlations between growth and accrual measures. In addition, the authors regress hedge portfolio returns on Fama and French (1993) three-factor and Fama and French (2015) five-factor models to see if the intercepts (a’s) from these regressions are significantly different from 0.
Findings
For each year, the authors partition firms based on whether the correlation between asset growth and current accrual is positive or negative. For both the “positive correlation” and “negative correlation” firms, the authors examine the association between accruals and future stock returns. The authors find that accruals remain strong in predicting future stock returns for both groups. The accrual effects from the “negative correlation” group cannot be attributed to the growth-based hypothesis because for these firms, when accruals are high, growth measures tend to be relatively low and vice versa. The effects are most likely driven by the alternative hypothesis that investors overvalue the accrual part of earnings.
Research limitations/implications
There exist a few issues when investors actually implement these strategies. These include liquidity costs, institutional holdings and short sale constraints. Lesmond (2008) concludes that the bulk of the trading profits is derived from the short side of the trade, but that this position suffers from high liquidity costs that reduces institutional holdings with consequent short sale constraints. The net gains after taking into account these issues remain an open question be addressed in the future.
Practical implications
The empirical results indicate that investors can do an implementable portfolio strategy of going long for a year on an initially equally weighted lowest asset growth (accrual) decile portfolio and going short for a year on an initially equally weighted highest asset growth (accrual) decile portfolio, which produces significant abnormal returns. The results further show that these abnormal returns can be improved if investors classify stocks into “the positive correlation” and “negative correlation” groups and implement trading similar trading strategies.
Originality/value
The empirical evidence finds that firm-year observations that exhibit a negative correlation between growth and accrual measures represents a significant 30 percent of the total firm-year observations during the sample period from July 1974 to June 2017. This highlights the necessity to undertake a detailed analysis on the issue. The authors continue to find accrual effects among these groups of firms. Therefore, the accrual effect cannot be attributed to the diminishing marginal return hypothesis. This is the main contribution of the paper.
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The question is whether debt market investors see through managers' attempts to hide their pension obligations. The authors establish a robust relation between understated pension…
Abstract
Purpose
The question is whether debt market investors see through managers' attempts to hide their pension obligations. The authors establish a robust relation between understated pension liabilities and corporate bond yield spreads after controlling for factors that have been previously identified as having a significant impact on firms' cost of borrowing. The results support the idea that bond market investors are not being misled by the use of high pension liability discount rates by some companies to lower their reported pension obligations. For a small fraction of debt issuers, the reported pension liabilities are larger than the pension liabilities valued at the stipulated interest rate benchmarks. For these issuers with overstated pension liabilities, bond investors adjust their borrowing costs downward.
Design/methodology/approach
The authors investigate the relation between corporate bond yield spreads and understated pension liabilities relative to long-term Treasury and high-grade corporate bond yields. They aim to answer two questions. First, what are the sizes of over or understated pension liabilities relative to guideline benchmarks? Second, do debt market investors see through the potential management manipulation of pension discount rates? The authors find that firms with large understated pension liabilities face higher marginal borrowing costs after taking into account issue-specific features, firm characteristics, macroeconomic conditions and other pension information such as funded status and mandatory contributions.
Findings
The average understated projected benefit obligations (PBOs) are understated by $394.3 and $335.6, equivalent to 3.5 and 3.0% of the beginning of the fiscal year market value, respectively. The average understated accumulated benefit obligations (ABOs) are understated by $359.3 and $305.3 million, equivalent to 3.1 and 2.6%, of the beginning of the fiscal year market value, respectively. Relative to AA-grade corporate bond yields, the average difference between firm pension discount rates and benchmark yields becomes much smaller; the percentage of firm pension discount rates higher than benchmark yields is also much smaller. As a result, understated pension liabilities become negligible. The authors establish a robust relation between corporate bond yield spreads and measures of understated pension liabilities after controlling for issue-specific features, firm characteristics, other pension information (funded status and mandatory contributions), macroeconomic conditions, calendar effects and industry effects.
Originality/value
S&P Rating Services recognizes the issue that there is considerably more variability in discount rate assumptions among companies than in workforce demographics or the interest rate environment in which firms operate (Standard and Poor's, 2006). S&P also indicates that it would be desirable to normalize different discount rate assumptions but acknowledges that it is difficult to do so. In practice, S&P Rating Services conducts periodic surveys to see whether firms' assumed discount rates conform to the normal standard. The paper makes an initial attempt to quantify the size of understated pension liabilities and their impact on corporate bond yield spreads. This approach can be extended to study firms' costs of equity capital, the pricing of seasoned equity offerings and the pricing of merger and acquisition transaction deals, among other questions.
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Yiyi Qin, Jun Cai and Steven Wei
In this paper, we aim to answer two questions. First, whether firms manipulate reported earnings via pension assumptions when facing mandatory contributions. Second, whether firms…
Abstract
Purpose
In this paper, we aim to answer two questions. First, whether firms manipulate reported earnings via pension assumptions when facing mandatory contributions. Second, whether firms alter their earnings management behavior when the Financial Accounting Standard Board (FASB) mandates disclosure of pension asset composition and a description of investment strategy under SFAS 132R.
Design/methodology/approach
Our basic approach is to run linear regressions of firm-year assumed returns on the log of pension sensitivity measures, controlling for current and lagged actual returns from pension assets, fiscal year dummies and industry dummies. The larger the pension sensitivity ratios, the stronger the effects from inflated ERRs on reported earnings. We confirm the early results that the regression slopes are positive and highly significant. We construct an indicator variable DMC to capture the mandatory contributions firms face and another indicator variable D132R to capture the effect of SFAS 132R. DMC takes the value of one for fiscal years during which an acquisition takes place and zero otherwise. D132R takes the value of one for fiscal years after December 15, 2003 and zero otherwise.
Findings
Our sample covers the period from June 1992 to December 2017. Our key results are as follows. The estimated coefficient (t-statistic) on DMC is 0.308 (6.87). Firms facing mandatory contributions tend to set ERRs at an average 0.308% higher. The estimated coefficient (t-statistic) on D132R is −2.190 (−13.70). The new disclosure requirement under SFAS 132R constrains all firms to set ERRs at an average 2.190% lower. The estimate (t-statistic) on the interactive term DMA×D132R is −0.237 (−3.29). When mandatory contributions happen during the post-SFAS 132R period, firms tend to set ERRs at 0.237% lower than they would do otherwise in the pre-SFAS 132R period.
Originality/value
When firms face mandatory contributions, typically firm experience negative stock market returns. We examine whether managers manage earnings to mitigate such negative impact. We find that firms inflate assumed returns on pension assets to boost their reported earnings when facing mandatory contributions. We also find that managers alter earnings management behavior, in the case of mandatory contributions, following the introduction of new pension disclosure standards under SFAS 132R that become effective on December 15, 2003. Under the new SFAS 132R requirement, firms need to disclose asset allocation and describe investment strategies. This imposes restrictions on managers' discretion in making ERR assumptions, since now the composition of pension assets is a key determinant of the assumed expected rate of return on pension assets. Firms need to justify their ERRs with their asset allocations.
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Sheng Peng, Lu-jun Cai, Tian-hua Jiang and Xu Kai
The purpose of this paper is to investigate the explosive performance and explosion damage mechanism of T-beam bridge structure.
Abstract
Purpose
The purpose of this paper is to investigate the explosive performance and explosion damage mechanism of T-beam bridge structure.
Design/methodology/approach
On the basis of the existing specification, two T-beam bridge models were designed and fabricated. Test specimens of different explosive dosage and different blast height were carried out. The mechanical process, failure mode, blast damage model, damage identification mechanism and blast evolution law and quantitative evaluation were taken into account.
Findings
The results revealed that the web plate fracture failure is the key to the unstable failure of the whole T-beam bridge. The explosion failure phenomenon and blast damage evaluation criterion of RC T-beam bridge was divided into five stages: the original cracks stage of concrete material (D = 0 ∼ 0.1), the fractures initiation stage of concrete material (D = 0.1 ∼ 0.3), the stable expansion stage of cracks in concrete material (D = 0.3 ∼ 0.55), the unstable expansion stage of cracks in concrete material (D = 0.55 ∼ 0.8), the explosion fracture of steel bars and the overall instability and damage of the bridge (D = 0.8 ∼ 1.0), which can also be described as basically intact, slight damage, moderate damage, severe damage and collapsed.
Social implications
The research result will provide basis for the antiknock evaluation and damage repair technical specifications of the RC T-beam bridge.
Originality/value
The research results of damage evaluation serve as a basis for damage repair and reinforcement of bridge structures after explosion.
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Amit Shankar and Charles Jebarajakirthy
Providing high-quality e-banking services is considered a basic strategy for attracting and retaining customers with electronic-banking platforms. The purpose of this paper is to…
Abstract
Purpose
Providing high-quality e-banking services is considered a basic strategy for attracting and retaining customers with electronic-banking platforms. The purpose of this paper is to empirically investigate a comprehensive moderated mediated mechanism for enhancing customer loyalty toward e-banking platforms via e-banking service quality (EBSQ) practices. Reliability, website design, privacy and security and customer service and support are the dimensions of EBSQ.
Design/methodology/approach
Data were collected through structured questionnaires from a sample of 1,028 e-banking users in India. To test the hypotheses, a structural equation modeling approach was used.
Findings
The findings showed that of the EBSQ dimensions, reliability along with privacy and security enhanced customer loyalty to e-banking. The initial trust in e-banking mediates the effects of EBSQ dimensions on customer loyalty except for website design. The mediation effects of initial trust varied between high and low-involved consumers.
Research limitations/implications
This study was conducted with e-banking users in one country using cross-sectional data. Hence, the model should be replicated among e-banking users in other countries and with the longitudinal data.
Practical implications
Establishing a loyal customer base is an important goal for banks. This study demonstrates which specific EBSQ dimensions banks should emphasize to enhance consumers’ initial trust and loyalty toward e-banking services.
Originality/value
This study suggests a moderated mediated mechanism for enhancing customer loyalty to e-banking, which incorporates initial trust as a mediator and consumer involvement as a moderator. It applies cognitive-motivation-relational theory to link EBSQ dimensions with customer loyalty. Thus, this study enables a better understanding of this theory in the e-banking context.
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José Carlos Pinho, Isabel Maria Macedo and Albertina Paula Monteiro
The purpose of this paper is to test the adequacy of SERVQUAL within the context of public online services, more specifically those provided by the Department of Taxation through…
Abstract
Purpose
The purpose of this paper is to test the adequacy of SERVQUAL within the context of public online services, more specifically those provided by the Department of Taxation through its web‐based electronic declaration system.
Design/methodology/approach
Following a quantitative methodological approach, a survey was applied to a sample of 351 certified accountants to empirically test the conceptual model. A first order confirmatory factor analysis was used to test the validity of different SERVQUAL online dimensions while multiple regression analysis was used to test the proposed hypotheses.
Findings
Overall, the study finds that Certified Accountants revealed a low perceived quality with regard to empathy and responsiveness. Instead, tangibility, reliability and security were the SERVQUAL dimensions which were favourably evaluated by Certified Accountants. The study also revealed that empathy, tangibility and convenience were those dimensions that better contributed towards satisfaction.
Practical implications
This study offers the opportunity to rethink how the Portuguese Department of taxation website provides online services and how it conforms to rigorous quality standards in order to assist users in complying with fiscal obligations.
Originality/value
This study provides an empirical test regarding the adequacy of the SERVQUAL instrument for assessing service quality of online taxation services as perceived by Certified Accountants. It also validates this instrument in the specific context of taxation services of the Portuguese public sector.