Journal of Applied Business and Economics

Salespeople’s Work-Orientation Preference: An Exploratory Attributional Analysis of Intrinsic/Extrinsic Motivation

Jie Sun — Wed, 14 Feb 2024 00:00:00 -0500

Salespeople have different work attitude toward teamwork. Some of them value communication and coordination between team members, whereas others enjoy working on their own. It is believed that the discrepancies in work attitude derives from the different attribution styles, that is, whether people attribute failure outcomes to the external environment (e.g., lack of organizational support, unstable task situation, etc.) or to internal factors (e.g., self-ability, personal skills, consciousness, etc.). In addition, intrinsic/extrinsic motivation also comes into play during the formation of work-orientation preference. Using an attributional perspective, this article examines how different attribution styles influence the development of varying work attitude (team-orientation vs. self-orientation). Self-determination theory is also employed to explain the moderation role of intrinsic/extrinsic motivations.

The Intervening Influence of Internal Controls on the Relationship Between Board Practices and Performance of Government Owned Entities in Kenya

Fredrick Otieno Oyugi, Cyrus Iraya, Zipporah Onsomu, Stephen Odock — Wed, 14 Feb 2024 00:00:00 -0500

There is a growing public debate on the role of boards in government-owned entities due to poor performance, corporate scandals, and increased corruption. Good board practices and internal controls, including enterprise risk management, are crucial for enhancing performance. Research findings on their impact have been contradictory. However, improving transparency, accountability, and adherence to governance frameworks can positively influence performance. Addressing governance issues is crucial to mitigate resource mismanagement and corruption, leading to better overall performance. The objective was to determine relationships among board practices, internal controls, and government-owned entities’ performance. Data was collected from 153 properly completed questionnaires out of the 157 returned, representing 65.38% of the entire population of 234 government-owned entities. The findings established that internal controls positively and significantly intervened in the relationship between board practices and performance. Implementing good board practices and internal controls promotes accountability and transparency, leading to enhanced organizational performance. Government-owned entities should prioritize implementing effective board practices and internal controls to enhance their overall performance.

Green Marketing or Greenwashing: How Consumers Evaluate Environmental Ads

Nguyen T. Pham, Paul G. Barretta — Wed, 14 Feb 2024 00:00:00 -0500

Over the past few years, there has been a significant increase in the number of cases related to greenwashing. This research investigates how consumers develop green skepticism to react to greenwashing practices. In two studies, we demonstrate that environmental ads (either vague or specific ads) are more effective in persuading weak-attitude consumers resulting in lower green skepticism than strong-attitude consumers. In contrast, strong-attitude consumers exhibit a backfiring behavior when presented with vague ads, evidenced by their higher level of green skepticism and lower WTP for products featured in the ads. More interestingly, specific ads are effective among strong-attitude consumers, lowering their green skepticism and increasing their WTP. Our research has theoretical and managerial implications for green marketing communication.

A Critical Analysis of the Small Business and Startup Community in the U.S. State of Maine: A Sustainable Way Forward

Logan J. Nimick, Ikechukwu Ndu — Wed, 14 Feb 2024 00:00:00 -0500

This study is a student-faculty research collaboration that examines the landscape in which small business owners, startups and entrepreneurs operate within the U.S. State of Maine with the aim of bringing invaluable insight and creating awareness. Supporting small business is a salient topic for local economic development councils, governments, and agencies. A survey was conducted and distributed to small business owners and entrepreneurs to gather their perspectives and opinions. One finding is that there are significant gaps in awareness with regards to support entities and their associated programs in general. Another finding is that survivorship bias has a large presence in the data collected previously by other agencies as well as by the data collected by the study. Finally, sustainable recommendations are suggested which, when implemented by the state of Maine as well as by municipalities, counties, or regional development boards, governments, and business support organizations, will increase the efficacy of existing policy and create a more cohesive, diverse, equitable, inclusive, resilient, and robust small business, startup, and entrepreneurship community.

New Required Characteristics for Entrepreneurs Trans-COVID-19 Vis-a-Vis Pre-COVID-19

Segundo Castro-Gonzáles, Rafael Pérez Ramírez, Jorge Haddock — Wed, 14 Feb 2024 00:00:00 -0500

This qualitative systematic study analyzes the entrepreneur concept and its transformation during the COVID-19 pandemic. The study reports the results of a metasearch of keywords such as entrepreneurial traits, entrepreneur’s characteristics, business adaptations due to COVID-19, COVID-19 protocols, management responses to COVID-19, and entrepreneurship during COVID-19, among others. It has fulfilled the objective of confirming the presence of an adaptation and transformation process of the skill set and traits of a successful entrepreneur Trans-COVID-19 vis-a-vis Pre-COVID-19. Prevalent characteristics during the COVID-19 pandemic include adaptability, technological knowledge, creativity, innovation, ability to network, and creating new relationships. These characteristics suggest avenues for further investigation. Research opportunity lies in examining potential shifts in strategic orientations that may arise from the post-traumatic effects on organizations due to the profound changes brought about by the COVID-19 pandemic. Furthermore, the recognition of these new traits and shifts in managerial paradigms during the Trans-COVID-19 period raises significant questions about potential changes in academic processes aimed at developing future entrepreneurs.

A Practical Approach to Incorporating ESG Risk Into Equity Valuation

Seth A. Hoelscher, Caleb Sappington, Liam R. Stros — Wed, 14 Feb 2024 00:00:00 -0500

The rise in the capital allocated and investor focus attributed to ESG investing over the past several years has been significant. However, the current literature is not settled regarding the value that ESG risk measures and reporting has on investments and valuations. If this risk is essential, then this risk should be incorporated to account for the presence or the lack of ESG-related risk in valuation models. However, with the relative newness and difficulty of quantifying ESG risk, there is little practical guidance on incorporating this risk into valuation estimates. We provide evidence that ESG-related risk scores are positively associated with the cost of equity. Building upon that result, we operationalize the positive relationship to adjust the cost of equity in free cash flow to equity valuation models. Firms with higher ESG risk have a higher required return, while firms with lower ESG risk have a lower discount rate. Our approach is a practical guide for investors and analysts to account for ESG risk adjustments in valuation models.

Financial Reporting Transparency and the Cost of Equity: Evidence From Newly Listed Firms

Yang Cheng, Pervaiz Alam, Liya Hou — Sun, 25 Feb 2024 00:00:00 -0500

This paper explores the economic effects of financial reporting transparency of newly listed firms and outcomes associated with enhanced disclosure and financial reporting activities. We find a negative correlation between financial reporting transparency and information asymmetry in newly listed firms during their first five years of public trading. Further, we find a significant positive link between perceived business risk and implied cost of equity for these new public companies. Furthermore, we find a positive association between financial reporting transparency and the cost of equity. Our study helps to extend the research on the consequences of increased disclosures of newly listed firms.

Resilience Amidst Adversity: A Qualitative Exploration of Black Entrepreneurs in South Metro Atlanta

Leon C. Prieto, Vinod Vincent, Everod A. Davis, Jacob Chacko — Sun, 25 Feb 2024 00:00:00 -0500

In this qualitative study, we explore the resilience and innovation of Black entrepreneurs in South Metro Atlanta amidst systemic financial constraints and racial discrimination. Our investigation reveals not only the obstacles these business owners face but also their strategic responses to such challenges, especially during the tumultuous times of the COVID-19 pandemic. Highlighting the indispensable role of community support and the necessity for inclusive policies, our findings offer actionable insights for fostering an environment where African American businesses can thrive. This study serves as a roadmap for policymakers, stakeholders, and scholars to understand and support the dynamic landscape of Black entrepreneurship.

Hispanic Ethnicity and Hidden Barriers to CPA Exam Success

Aida Lozada, Luz Gracia, Teresa Longobardi — Fri, 08 Mar 2024 00:00:00 -0500

The performance of Hispanic candidates on the CPA Exam has not been studied to identify predictors of performance. However, speculations have been made in the literature that, understandably, proficiency in the English language is a factor. Our study aims to combine the jurisdiction performance on the CPA Exam from 2015 and 2019 with U.S. Census Bureau estimates of the proportion of Hispanic residents that speak English to identify if there is an association to be found between language and performance. To this end, we explore whether the propensity of a Hispanic population to speak English is associated with improved performance. We begin with a descriptive analysis of Puerto Rico candidates and seven jurisdictions that had relatively high participation on the CPA Exam and the greatest proportion of Hispanics in their population. We found the Puerto Rico pass rate consistently below the other jurisdictions. This result suggests that the greater the proportion of Hispanic people, the lower the overall performance.

The Role of Intellectual Capital on Hospital Performance: Evidence at Facility-Level

Mark Chun, Michael Seagraves, Charla Griffy-Brown, Doug Leigh — Fri, 08 Mar 2024 00:00:00 -0500

Based on the social capital theory, this study argues that intellectual capital, defined as knowledge and capabilities within the organization, significantly affect hospital performance. This study examines the impact of intellectual capital on four key hospitals’ performance metrics, i.e. quality, productivity, length of stay, and satisfaction. Using a sample of 34 hospital facilities’ operational reports to construct hospital performance and individual-level survey of 143 individuals across these 34 facilities to construct intellectual capital during 2018, this study finds that intellectual capital significantly increases employee productivity and reduces patient stay length. This study contributes to the literature by providing evidence that intellectual capital plays an important role in reducing bottleneck for hospitals to meet increasing demand in healthcare services.

Environmental Risks and Agricultural Commodities

Kaveh Moradi Dezfouli, Thomas J. Walker — Fri, 08 Mar 2024 00:00:00 -0500

As natural disasters are expected to increase both in severity and frequency, their impact on agricultural commodities and the food supply chain is likely to rise in tandem. We use a unique data set of natural disasters that occurred globally between 1970 and 2015 and study their impact on the price and price volatility of eight globally traded agricultural commodities that account for more than 75% of the food supply in the world. Our results show that price and the price volatility of commodities are impacted around the occurrence of a natural disaster in producing countries. In addition, we find that the affected country’s production shares, the total damage caused by a natural disaster relative to the affected country’s GDP, and the demand pressure for the commodity have an impact on the magnitude of price and price volatility changes of a given commodity around the occurrence of a natural disaster.

A Tale of the Two Economic Systems: Institutional Perspective of Chinese Outward FDI

Yuanyuan Li, Marcus I. Crews — Sun, 24 Mar 2024 00:00:00 -0400

State-owned multinational enterprises (SOMNEs) constitute a substantial portion of Chinese outward foreign direct investment (FDI). From an institutional affiliation perspective, this paper examines the differences in the two economic systems (state-owned vs. privately owned) for engaging in outward FDI. Leveraging a sample of Chinese outward FDI projects between 2004 and 2018, we conduct analysis on FDI frequency, location choices, and FDI motives. We also consider the moderating effects of the temporal and space dimensions. The results inform us that the two economic systems are complementary in promoting outward FDI from the home country.

Effect of Federal Funds Rate on CPI and PPI

Deergha Raj Adhikari, David P. Stevens — Sun, 24 Mar 2024 00:00:00 -0400

One of the crucial jobs of central banks is to rein in inflation as it creates uncertainty in the economy and in private investment and ultimately negatively impacts the economy. If the source of inflation is positive demand shock, then raising the federal funds rate target is the right way to rein in inflation. If the source of inflation is negative supply shock, then raising the federal funds rate target will make things worse. In this study, the impact of FFR (federal funds rate) on CPI (consumer price index) and producer price index (PPI) is examined. Findings indicate that raising the federal funds rate will have a negative impact on both CPI and PPI with a 2-period lag. The possible explanation of this finding is that raising federal funds rate lowers aggregate demand, lowers the price level and thereby the CPI. And when CPI falls, it lowers per-unit profit, prompting producers to cut supply, which in turn lowers the demand for producer goods and services, and thereby lowers PPI.

Inflationary Pressures Surrounding COVID – Are Price Increases Consistent With Changes in Costs

Yu-Ho Chi, David A. Ziebart — Sun, 24 Mar 2024 00:00:00 -0400

Evidence suggests that companies are more eager to raise prices than to cut them (Karaian et al., 2023). Profit margins remain high even as inflation drops. This is accomplished by raising or holding prices steady as inflation shrinks. We examine the changes in selling prices and underlying costs between pre and post COVID periods. We expect that the shift in the relation between selling price and underlying costs prior to COVID would be less than the shift post-COVID. We investigate grocery food items because food inflation has been a main driver of inflation in the United States and other countries (Cavallo, 2022). Focusing on this specific cost behavior between the pre- and post-COVID periods allows us to measure the relationship between raising selling prices and related underlying increases in cost of goods sold and selling, as well as general and administrative expenses. The inference from our analyses suggests that food companies may have taken advantage of COVID-driven inflation to justify and increase their profit margins.

A Meta-Analysis of the Relationship Between Corporate Social Responsibility and Consumer Response in the Chinese Context

Shuping Zhang, Xiaofeng Su, Shirley Ye Sheng — Sun, 24 Mar 2024 00:00:00 -0400

Consumers’ attitudes toward corporate social responsibility (CSR) and their response levels can significantly affect a firm’s behaviors. Based on 61 research papers addressing CSR responses to consumers in China, this study conducted a meta-analysis on three variables: CSR type, CSR characteristics, and CSR publicity behavior, which impact the CSR relationship. The following conclusions are drawn: Corporate social responsibility (encompassing private and public moral dimensions) elicits a positive consumer response, with private moral behavior having a greater positive effect compared to public moral behavior. The four dimensions of CSR characteristics (CSR commitment, CSR level, CSR correlation, and CSR timing) all lead to positive consumer responses. Positive consumer responses also arise from CSR publicity behavior, including publicity initiative and publicity intensity. Additionally, product type, sample time, and sample source have significant moderating effects on these relationships.

“Whatchu Talkin’ ‘Bout, Willis?” — The Importance of Proper Language in Financial Literacy

Reinhold Lamb — Fri, 12 Apr 2024 00:00:00 -0400

Words matter. The use of imprecise or improper words can introduce an element of confusion or ambiguity. In finance, accuracy in language is particularly important because clarity of communication can impact on deals, valuations, and investment decisions. The use of sloppy words or statements can also lead to questions about the individual’s professionalism, competence, and degree of financial literacy. Finance professionals such as analysts and financial planners should give thoughtful attention to the terminology they express, as subtle differences or miscommunications could lead to decision-making errors or introduce questions about the credibility and professionalism of the individual.

The Effect of Financial Development and International Trade on Deregulation

Justice Kyei-Mensah — Fri, 12 Apr 2024 00:00:00 -0400

This paper provides robust evidence of financial development and international trade liberalization on deregulation in some developing economies. Specifically, it investigates the effect of financial development and international trade liberalization on deregulation in 45 African countries in a panel set between January 1, 1980, to December 31, 2017. It employed the system Generalized Method of Moments (GMM) panel data estimation to address potential endogeneity concerns. Demir and Dahi (2011) showed that system GMM can effectively deal with any endogeneity issue originating from unobserved country-specific effects, and bias. The study found a robust positive effect of financial development and international trade liberalization on deregulation. The key finding was that technological impact is observed when private credit is regressed on market capitalization on Gross Domestic Product (GDP). It found that both GDP and gross per capita negatively impact financial development, conceivably causing the selected African countries’ markets to be insulated.

When Does a Firm Have Faster Speed Despite Inferior Capability? Disintegrating Capability and Incentive Effects When Examining Firm Speed

Minjae Lee, Jae Kyun Yoo — Fri, 12 Apr 2024 00:00:00 -0400

Firm speed has long been a construct of interest among managers and researchers. Although both a firm’s capabilities and incentives to be fast determine observed firm speed, practitioners and academic scholars have typically focused on the capability mechanism alone. However, the omission of incentives in understanding firm speed can lead to mistaking faster firm speed for superior firm capability. To address this shortcoming, we develop a theoretical framework considering both capabilities and incentives simultaneously to examine faster firm speed. Our developed framework allows us to discern whether superior capabilities or greater incentives lead to a faster speed. We also show how to apply our framework to empirical analysis by analyzing actual firm data in the Liquefied Natural Gas industry from 1996 to 2007. In this way, the current paper contributes to the literature on firm speed by providing a theoretical framework that enables a more nuanced understanding of firm speed.

Bit by Bit: Household Characteristics of Cryptocurrency Owners — Early Evidence From the 2019 Survey of Consumer Finances

Randy Beavers, John Godek — Fri, 12 Apr 2024 00:00:00 -0400

Developments in financial technology over the past decade have increased the importance and use of cryptocurrency, though not much is known about the characteristics of cryptocurrency owners. Data on the ownership of cryptocurrency by U.S. households has recently been made available via the 2019 Survey of Consumer Finances. In the present research we identify key aspects that differentiate cryptocurrency owning households from those that do not. We find that households owning cryptocurrency tend to have a higher risk profile, especially pertaining to decisions concerning other investments, and demonstrate more financial acumen than households that do not own cryptocurrency. This has important implications as cryptocurrency ownership becomes more mainstream.