Abandonment Decision Research Articles

Remember Kabul? Reputation, strategic contexts, and American credibility after the Afghanistan withdrawal

ABSTRACT We examine how a great power’s past behavior toward an informal security partner affects the broader credibility of its security commitments, focusing on the implications of America’s dramatic troop withdrawal from Afghanistan in 2021 as perceived by the U.S., South Korean, and Chinese publics. Against conventional wisdom, we show that knowledge about a great power’s decision to abandon an informal partner in one region of the globe can help increase confidence about its alliance commitments elsewhere. Our survey experiments identify a striking disjuncture: Although Americans tend to believe that the abandonment decision in Afghanistan will hurt their country’s credibility in East Asia, no such effect is found in South Korea and China. In fact, East Asian respondents who are reminded of the Afghanistan withdrawal become more confident about American security commitments when alerted to the possibility that this decision will help Washington to concentrate additional military capabilities in their region.

Understanding cropland abandonment from economics within a representative village and its empirical analysis in Chinese mountainous areas

China has been experiencing "Lewis Turning-Point", which means rural labor has been continuously transmitting to manufacturing sector and urban areas, ended up with old or female labor left in agricultural sector. One immediate result from agricultural labor shortage, some pieces of farmland will be abandoned, especially in mountainous area where large-farming-machinery cannot be applied due to terrain restrictions, and labor loss from agriculture cannot be supplemented. In this context, understanding land abandonment is critical for land planning and management. Specifically, it is necessary to figure out which cropland is more likely to be abandoned? To what scale of the land will be abandoned in the future? This article aims to figure out the basic rules behind land use or abandonment decision from a perspective of economics. In China, village is the basic unit for land use and land use rights transferring, thus we introduced a representative village, featured by an average farmland size with distribution pattern following questionnaire survey carried out in Wulong district, Chongqing city. We developed a theoretical land use decision-making model with its objective of maximizing land use incomes among ‘representative village’. This model is employed to simulate land abandonment rate in the year of 2011 and 2020 by changing the external variables given by the market survey, with a result of 9.25% and 33.40% respectively. The simulated land abandonment rate shows only 3.84 percentage point difference with the official data, which certified that this model is reasonable and applicable for land use decision in mountain areas in China. The model also shows a rise of labor wage will lead to huge land abandonment. To counter land abandonment, government should take some measures, such as rise of agricultural product sale price or decline the chemical fertilizer price, to alleviate land abandonment effectively.

Pricing in Service Systems with Rational Balking and Abandonment of Time‐Sensitive Customers

The current literature on pricing in service systems with time‐sensitive customers predominately ignores the rational abandonment of customers with mixed‐risk attitude. The goal of this study is to address this gap. We consider an unobservable queueing system with a nonlinear waiting cost function, which is concave up to a certain point and then becomes convex, capturing the mixed‐risk attitude of customers observed in empirical studies. We assume that customers are sensitive with respect to waiting time (delay) and strategic regarding their balking and abandonment decisions. We characterize the optimal pricing policy that maximizes the service provider's revenue. We show that the pricing policies studied in the literature, including the joint service and cancellation (entrance) fee policy, are suboptimal and cannot induce the socially optimal behavior. We demonstrate that while the cancellation fee can regulate a customer's balking strategy, the service fee cannot effectively control a customer's abandonment decision. We then provide conditions under which the joint service and cancellation fee policy is optimal. We finally prove that the service provider should compensate customers for their waiting in order to efficiently control the abandonment of customers. We propose a pricing policy, which includes entrance, service, and wait time (delay) fees, that maximizes the provider's revenue. We derive the optimal fees and show that, under the proposed optimal pricing policy, customers pay service and cancellation fees while they are partially compensated for the time spent waiting for service.

Abandonment of Patented Inventions in an Emerging Economy: How Would Peers’ Decisions Matter?

This study applies the inter-organizational imitation perspective to analyze a firm’s decision of abandoning invention efforts in a technological space. In particular, a growing number of peers’ abandonment decisions in a technological space would impose the institutional pressure on the focal firm to follow the crowd, and has implications for its abandonment decision in the same technological space. Moreover, the impact of peers’ abandonment decisions is contingent on how the focal firm frames its abandonment decision in the gain versus loss domain. Studying Chinese publicly listed firms’ abandonment decision, we document a higher likelihood of the focal firm’s abandonment decision in a technological space where it observes more peers’ abandonment decisions. Moreover, the imitation impact is weakened when firms have superior downstream capability or are financially performing well.

Pricing in Service Systems with Rational Balking and Abandonment of Time-Sensitive Customers

The current literature on pricing in service systems with time-sensitive customers predominately ignores the rational abandonment of customers with mixed-risk attitude. The goal of this paper is to address this gap. We consider an unobservable queueing system with a nonlinear waiting cost function, which is concave up to a certain point and then becomes convex, capturing the mixed-risk attitude of customers observed in empirical studies. We assume that customers are sensitive with respect to waiting time (delay) and strategic regarding their balking and abandonment decisions. We first analyze the equilibrium customers' behavior and determine the optimal social behavior. We then characterize the optimal pricing policy that maximizes the service provider's revenue. We show that the pricing policies studied in the literature, including the joint service and cancellation (entrance) fee policy, are suboptimal and cannot induce the socially optimal behavior. We demonstrate that while the cancellation fee can regulate a customer's balking strategy, the service fee cannot effectively control a customer's abandonment decision. We then provide conditions under which the joint service and cancellation fee policy is optimal. We finally prove that the service provider should compensate customers for their waiting in order to efficiently control the abandonment of customers. We propose a pricing policy, which includes entrance, service, and wait time (delay) fees, that maximizes the provider's revenue. We derive the optimal fees and show that, under the proposed optimal pricing policy, customers pay service and cancellation fees while they are partially compensated for the time spent waiting for service.

Influence of Managers’ Subjective Judgments on Project Abandonment Decision Making

Real option valuation with flexibility under uncertainty has been proposed as an alternative and advantageous complement to the traditional net present value (NPV) method for capital budgeting decisions, yet the problem with unrealistic expectations on precision has still not been solved. It appears clearly that a high level of precision in cash flow estimates can be misleading for the decision makers with sentiments. To the extent that precision surrounds a decision, we introduce a fuzzy process into an abandonment option approach, which is built on the use of fuzzy numbers, to investigate the effects of managerial optimism and pessimism when a manager considers whether or not to abandon capital budgeting decisions under imprecision and uncertainty. From the numerical analyses of the proposed model, we find that an optimistic manager tends to continue executing the project, while a pessimistic manager tends to give up the project and liquidate it as the value of the abandonment option is within the range of a fuzzy sentiments interval. In addition, if the project value is below the lower bound of the fuzzy sentiments interval, then it is better to exercise the abandonment option rather than to continue holding it, for both optimistic and pessimistic managers. Finally, this paper also examines why managers may still continue a project, even if its Tobin’s [Formula: see text] value is smaller than one.

Feeling Committed?: The Inter-organizational Effect on Patent Abandonment

This study investigates the inter-organizational effect on a firm’s patent abandonment decision. Firms may postpone the patent abandonment decision if they feel committed to a patent. This is espec...

The impact of a Firm’s Abandoned Patent on Subsequent Cumulative Invention

This paper explores the impact of a focal firm’s patent abandonment decision on subsequent cumulative inventions derived from this abandoned patent. In the United States, a firm needs to renew its ...

Performance-based bonuses for investment and abandonment decisions

This paper examines whether a performance-based bonus for a manager’s investment influences her abandonment decision. First, we derive optimal performance-based bonuses for investment and abandonment decisions. Second, we show that there could be a discrepancy between the managers abandonment timing and that of the shareholders, even though an appropriate performance-based bonus was compensated to mitigate agency conflicts in the investment decision. Third, we also show that as long as the manager is contracted to receive the optimal performance-based bonus for the abandonment decision, only the effort costs that she incurs affect the abandonment timing.

Probability of Loss Reversal in Tehran Stock Exchange (Iranian evidence)

Investors of loss firms face abandonment decision based on their assessment of the likelihood of loss firms becoming profitable in future periods (i.e. loss reversal, Joos and Plesko, 2005). 72 companies from the companies listed in Tehran Stock Exchange during the 10 year period between 2002 to 2011 were reviewed. This research examines factors useful for predicting future loss reversal in the Iranian market. Specifically, the research focused on loss firms’ investment activities and the degree of accounting conservatism in addition to factors examined in the previous literature (Joos and Plesko, 2005; Dhaliwal et al., 2012). The result shows that variable measuring the activities of earlier investment stage are negatively associated with future loss reversal, while investment related to the close-to-production stage has positive impact. Accounting conservatism, as a persistent feature of financial reporting, is positively associated with future loss reversal. These results have implications for loss firm valuation.

"Social influence, learning, and the abandonment of corporate venture capital practices"

The adoption and diffusion of practices has been the subject of intense study, but much less is known about why firms abandon practices they had formerly adopted. Studies of practice abandonment have found that abandonment processes mirror adoption processes of mimesis and contagion, such that firms abandon previously adopted practices when their social referents do. However, unlike adoption decisions where organizations must rely on the experiences and behaviors of others, firms have their own direct experience to draw on when deciding to abandon previously adopted practices. We propose that the firm’s implementation and ongoing management of a practice influence its abandonment decision and also condition its response to contagion pressures for abandonment. We test our hypotheses using data on the abandonment of corporate venture capital units by a sample of information technology firms. Results suggest that firm’s utilization of a practice and staffing choices influence abandonment decisions. We furthe...

Lawsuits Against Local Governments by Citizens and Abandonment Decision of Local Councils (Ⅰ).

Lawsuits Against Local Governments by Citizens and Abandonment Decision of Local Councils (Ⅰ).

Case Study 35 : Lawsuits Against Local Governments by Citizens and Abandonment Decision of Local Councils (Ⅱ).

Case Study 35 : Lawsuits Against Local Governments by Citizens and Abandonment Decision of Local Councils (Ⅱ).

The impact of unprofitable customer abandonment on current customers' exit, voice, and loyalty intentions: an empirical analysis

PurposeThe management of unprofitable customer relationships and particularly their abandonment is a topic that has received increasing interest among practitioners and researchers over recent years. Within this manuscript, the authors aim to analyze the impact of unprofitable customer abandonment on the abandoning firm's current customers, specifically their exit, voice, and loyalty intentions toward the abandoning firm.Design/methodology/approachThe study is based on an online experiment conducted among 385 US customers. Respondents were allocated randomly to one of ten conditions (five levels of tie strength x two types of abandonment strategy) and exposed to a scenario describing a customer abandonment decision implemented by a mobile phone provider. The resulting data were analyzed using a combination of analysis of variance (ANOVA) and structural equation modeling.FindingsThe study shows that current customers are significantly more likely to respond actively to unprofitable customer abandonment (exit/voice) than passively through silence and loyalty. Additionally, it shows that increasing satisfaction or switching cost among current customers are unlikely to limit the potential negative consequences of unprofitable customer abandonment. The only variable that drives the choice between exit, voice, and loyalty is the perceived attractiveness of the best alternative relationship.Originality/valueThis work analyzes for the first time how existing customers that the firm would like to retain react toward the news that the company proactively terminates unprofitable customer relationships. Therefore, insight is provided into the likely cost associated with unprofitable customer abandonment – a question that has not been the subject of any empirical study as of today.

Investment Effects of Capital Gains Taxation Under Simultaneous Investment and Abandonment Flexibility

The influence of capital gains taxes on investment decisions is a central issue of accounting and public finance research. However, the implications of capital gains taxes on investors' willingness to invest in irreversible projects with entry and exit flexibility have not yet been a focal issue. As a result, the effects of taxing capital gains on the interdependencies of investment and divestment decisions have to be identified, especially under timing flexibility. This paper closes this gap by simultaneously analyzing investment timing and abandonment decisions for risky irreversible investment projects with uncertain cash flows under differential tax rates for ordinary income and capital gains. We investigate whether capital gains taxes affect immediate and delayed investment asymmetrically. Furthermore, we investigate the impact of capital gains taxation on the optimal abandonment decision. Performing extensive numerical simulations we find that varying the liquidation proceeds affects the decision whether or not to postpone the investment decision. Higher cash flow volatility favors delayed investment. We find that the introduction of capital gains taxation tends to be harmful for immediate investment. Moreover, we show that taxing capital gains may induce a tax paradox for delayed investment. Depending on the pre-tax parameter setting the future value of delayed investment may even increase in absolute terms for increasing capital gains tax rates. For sufficiently high liquidation proceeds capital gains taxation tends to favor continuation of a project. We find taxing capital gains mainly induces other, but not necessarily less arbitrary distortions than exempting capital gains.

Sooner or Later? – Paradoxical Investment Effects of Capital Gains Taxation under Simultaneous Investment and Abandonment Flexibility

This paper analyzes the impact of capital gains taxation on investment timing decisions for risky investment projects with entry and exit flexibility under differential tax rates for ordinary income and capital gains. We investigate whether capital gains taxation influences immediate and delayed investments asymmetrically, given the optimal abandonment decision. If capital gains taxation induces a lock-in effect, this effect is anticipated in the investment timing decision. In contrast to prior research, our numerical simulations show that this lock-in effect of capital gains taxation can induce normal as well as paradoxical effects on investment timing under simultaneous entry and exit flexibility. A paradoxical timing effect, i.e., investment accelerated by capital gains taxation, especially emerges for high liquidation proceeds or, more conservative tax accounting, low interest rates, and low volatilities. In these cases, capital gains taxation reduces the value of the option to invest and hereby increases the propensity to invest immediately. As a second paradoxical tax effect, capital gains taxation may favor delayed real investment over financial investment. Facing these results, tax legislators should not use capital gains taxation as a short-term tax policy instrument to influence investors' timing decisions.

Pediatric and Adult Congenital Endocardial Lead Extraction or Abandonment Decision (PACELEAD) Survey of Lead Management

Nonfunctional, dysfunctional, recalled, or additional endocardial leads in pediatric and congenital heart disease patients pose significant challenges for management. There are no set standards for lead extraction in this patient population. Physician members of the Pediatric and Adult Congenital Electrophysiology Society (PACES) were contacted via e-mail and invited to respond to a 33-question online Pediatric and Adult Congenital Endocardial Lead Extraction or Abandonment (PACELEAD) survey. Responses were received from 75 of 138 (54%) physician members of PACES. Institutional volumes of device placement (<25 devices/year for 51% of responders), patients with abandoned leads (<25 patients for 71%), and lead extractions (<10 extractions/year for 51% and no extractions for 29%) were low for the majority of responders. Personal experience with lead extraction was also minimal with 49% not performing the procedure and 39% with less than 40 leads extracted as primary operator. Most responders (54, 72%) refer their lead extractions to another practitioner or facility with more experience. Responders were more likely to recommend lead extraction (>70%) for class IIa indications such as bacteremia, chronic pain that is not medically manageable, and functional leads with ipsilateral venous occlusion. Lead abandonment was favored (>70%) for one class IIb indication, a functional lead that is not currently being used. Optimal lead management is challenging in pediatric and congenital heart disease patients, and considerable variability of practice is reported in their care. Low institutional and personal volumes may account for this variability.

Partial abandonment as an exit strategy for troubled IT projects

PurposeThe purpose of this paper is to conduct a stakeholder analysis to find out what factors contribute to partial abandonment and also to examine stakeholders' roles and role conflicts in a partial abandonment implementation process.Design/methodology/approachA case study of a partially abandoned electronic procurement system project is discussed and analyzed within a small‐and‐medium enterprise in Australia. Semi‐structured interviews, on‐site observation and documentation were the data collection method adopted in this study.FindingsBased on the findings derived from the study, this paper proposes a stakeholder assessment framework of partial abandonment to examine stakeholders' roles and role conflicts in influencing organizational decisions to partially abandon troubled IT projects.Originality/valueThe framework will help both researchers and practitioners to shed light on stakeholder‐related issues of partial abandonment, as it offers the flexibility to accommodate understanding of various causes that may have contributed to the partial abandonment decision.

Are real options more valuable in the presence of agency conflicts?

The theory on real options has extended the traditional net present value rule in order to capture the value of flexibility in investment decisions. Typically, the theory of real options does not take into account agency conflicts (between central and divisional management). In this paper, we investigate the influence of agency conflicts on real options within a LEN-type model. We extend a standard LEN model with investment activities by explicitly considering the possibility to abandon an investment project after all parties involved have received further information about the project’s development. Especially, we analyze how the option’s flexibility value is influenced by the agency conflict. Our analysis shows that the real option alters the trade-off between risk sharing and incentives that underlies the agency conflict. Thereby, situations can occur in which central (and divisional) management evaluates the abandonment option ex ante differently than ex post. Using this framework, we discuss the role of commitment and the advantages of centralization and delegation of the abandonment decision.

Liquidity and the choice to abandon production in declining industries

The study presents tests of several theoretical hypotheses that are potential determinants of the choice to abandon production in declining industries. A binary qualitative choice model of the abandonment decision is estimated. The probability of choosing abandonment is found to be positively related to the firm’s debt ratio, and negatively related to liquidity at the firm level, the level of efficiency of the operating unit, and uncertainty about liquidity at the operating unit level as measured by output and input price variability. Results are also presented for a multinomial choice model accounting for the full menu of capacity decisions open to the firm over time. The results are robust across all specifications as well as to alternative statistical assumptions