Extra Premium Research Articles

Examining the persistent and transient technical efficiency of the Indian fertilizer industry

ABSTRACT This study examines the persistent and transient technical efficiency of the Indian fertilizer industry using the Stochastic Frontier Analysis (SFA) model developed by Kumbhakar et al. (2014). The firm-level data is obtained from the Centre for Monitoring Indian Economy (CMIE) for the time frame spanning from 2009 to 2019. The results demonstrate a potential scope to enhance technical efficiency, with an average increase of up to 20%. It varies across firms where state-owned enterprises (SOEs) can achieve maximum improvement through continuous efforts to enhance efficiency by restructuring operations. Similarly, leveraging advanced technology and management practices can elevate efficiency by 20% by minimizing transient inefficiency. The result from Tobit regression suggests that private firms (individual and part of conglomerate) are more technically efficient than SOEs. The firms’ age, financial performance, and R&D are positively related to persistent and transient TE. Meanwhile, the size and embodied technology are positive and significant in influencing persistent TE. Private firms with R&D or embodied technology activities have no extra premium of higher TE against the R&D activity of SOEs. It underscores that the effectiveness of innovative activity varies across ownership of the firms due to differences in structure and functioning.

Prospect theory in M&A: Do historical purchase prices affect merger offer premiums and announcement returns?

Prospect Theory suggests that when the pre-offer market price is below the historical purchase price, target shareholders may be reluctant to accept a merger offer, because it requires realizing nominal losses. In a sample of all U.S. public firm merger offers in 1990–2019, we find that the acquirer partially compensates target shareholders, including retail investors, for their losses via a higher offer premium. Consistent with Prospect Theory, the marginal compensation decreases with loss size and is higher in cash-only deals. We also show that the extra premium paid hurts (boosts) acquirer (target) shareholders' wealth.

Separating insider and informed behavior: Evidence from a natural setting

AbstractPrevious literature has established the need to separate insider from expert trading in both financial and betting markets. This type of separation proves difficult to achieve because experts and insiders co‐exist in most market settings. Utilizing novel betting markets in which expert skill bettors are unable to use their expert knowledge, this study uncouples insider from expert betting, and allows more direct measurement of insider trading than in previous empirical tests. Evidence is presented in favor of some predictions from the highly cited Shin model of insider trading. Price setters charge an extra premium in markets with high proportions of insiders when compared to equivalent markets. The insiders accurately predict event outcomes, and their presence exacerbates a well known bias in betting market prices whereby returns on betting favorites is higher than for bets on longshots.

Heterogeneous preferences and market potentials for biofortified foods in sub-Saharan Africa: Evidence from Nigeria

In recent time, biofortified staple crops have been bred to correct for Vitamin A deficiency in sub-Saharan African countries. In this study, we used a cross sectional preference data from a survey of 750 food buyers in Nigeria to access heterogeneous preferences and market potentials for biofortified foods. We used Hybrid Latent Class (HLC) framework to jointly examine respondents’ choice component with their responses to attitudinal questions preventing potential endogeneity and measurement error. The result indicate that consumers are willing to pay an extra premium of ₦l50 for biofortified garri over the normal price of white or yellow garri for health gains, thus suggesting that there is a potential market for biofortified foods in Nigeria. Our results show that consumers who had higher preference for biofortified foods attached a greater preference for higher vitamin A content of the product. We also observed that respondents were faced with regional heterogeneity. We observed that respondents in the urban area were more willing to pay for biofortified food quality attributes. We observed that in order to increase the demand for biofortified foods in Nigeria, a key strategy is to ensure that consumers have access to the products. In addition, the public should be better informed on health implication of consuming foods fortified with vitamin A such as biofortified products.

An investigation of bird strike cases in the aviation sector with a novel approach within the context of the principal-agent phenomenon: Bird strikes and insurance in the USA

Bird strikes, a risk factor in the aviation industry, are a common problem in certain states of the USA, while they are extremely rare in other states. Similarly, the seasonal distribution of bird strikes is not proportional. This situation poses an unfair situation in the aviation insurance of airline companies in terms of routes taken. The current study, detecting a literature gap related to the principal-agent problem within the aviation sector, evaluates the possible differences in aviation companies' insurance costs, assuming bird strikes are spatially and temporally analyzed in the US, and airline companies are provided with complete information regarding bird-strikes. In this research, QGIS software served in spatial model mappings. In terms of the threshold value, the study results show that making bird-strike insurance aircraft in twenty-one states which were below the threshold value increased the aviation costs of these airline companies, while in the remaining twenty-nine states, non-insurance raised the cost. In this context, as of 2022, it has been determined that not paying an extra premium for bird strikes in twenty-one states below the threshold value will create efficiency, while expending an above-average insurance premium in twenty-nine states and the District of Columbia above the threshold value will create efficiency. The research seeks to answer the following question: Is it fair for airlines operating on routes with low or high bird strike risks to pay the same amount of insurance cost?

Effect of Heating Temperature of High-Quality Arbequina, Picual, Manzanilla and Cornicabra Olive Oils on Changes in Nutritional Indices of Lipid, Tocopherol Content and Triacylglycerol Polymerization Process.

The aim of the study was to determine the stability and heat resistance of extra premium olive oil. The study material consisted of six extra virgin olive oils (EVOO) obtained from Spain. Four samples were single-strain olive oils: Arbequina, Picual, Manzanilla, and Cornicabra. Two samples were a coupage of Arbequina and Picual varieties: Armonia (70% Arbequina and 30% Picual) and Sensation (70% Picual and 30% Arbequina). Olive oil samples were heated at 170 °C and 200 °C in a pan (thin layer model). In all samples, changes in indexes of lipid nutritional quality (PUFA/SFA, index of atherogenicity, index of thrombogenicity, and hypocholesterolemic/hypercholesterolemic ratio), changes in tocopherol, total polar compounds content, and triacylglycerol polymers were determined. Heating olive oil in a thin layer led to its degradation and depended on the temperature and the type of olive oil. Increasing the temperature from 170 to 200 °C resulted in significantly higher degradation of olive oil. At 200 °C, deterioration of lipid nutritional indices, total tocopherol degradation, and formation of triacylglycerol polymers were observed. A twofold increase in the polar fraction was also observed compared to samples heated at 170 °C. The most stable olive oils were Cornicabra and Picual.

Can Dried Fruits Replace Unhealthy Snacking among Millennials? An Empirical Study on Dried Fruit Consumption in Italy

The consumption of dried fruits in place of unhealthy snacks, which are rich in sugars, salt, and fats, could represent a valid option for reaching the daily intake recommended by the WHO for fruits and for encouraging the adoption of a sustainable diet. However, the consumption of dried fruits is lower than that of unhealthy snacks, especially among young people. Therefore, to foster young people’s intentions to consume dried fruits instead of unhealthy snacks, it is important to identify the factors underlying millennials’ consumption intentions. Using a convenience sample of 174 Italian millennials, this paper aimed to understand the factors influencing young people’s intentions to consume dried fruits by measuring their willingness to pay a price premium. The findings showed that under half of respondents were willing to pay an extra premium for dried fruits. The intentions to consume dried fruits among Italian millennials would seem to be characterized by a certain predisposition toward novelty, as revealed by the attitudes of being neophiliacs, as well as by convenience and emotional aspects related to the product. Relative to socio-demographic factors, Italian millennials with higher household incomes and high educational levels tended to show a high willingness to pay a price premium for dried fruits. These results may have theoretical, managerial as well as policy implications. They could enrich the existing literature on dried fruits consumption and provide suggestions for practitioners wishing to adopt effective marketing strategies and specific promotion campaigns, as well as for government policies or programs.

Two-dimensional extended warranty length design from incomplete warranty data based on a new price curve considering different maintenance policies

The extended warranty issue is concerned with additional after-sale protection for a consumer, at the cost of an extra premium. Depending upon the reliability and durability of the components or the system, the extension of warranty may be done with regard to either age or usage or both, for those specified components or the entire system. The age-based analysis is usually referred to as the one-dimensional problem, while age along with usage-based analysis is termed as the two-dimensional problem. By considering two factors, viz. premium ceiling and premium escalation rate, respectively indicating the maximum allowable premium and the rate at which the allowable premium is raised with the increased coverage, the present paper deals with the design of a new price curve based optimum extended warranty policies corresponding to perfect, minimal, and imperfect repairs, for both one- and two-dimensional problems. The availability and use of incomplete field data on age and usage, facilitate establishing the relative advantage of the two-dimensional modeling over its one-dimensional counterpart, while considering an extension of the baseline warranty coverage. The findings have been elaborated with the help of a synthetic real-life data.

Expanding insurability through exploiting linear partial information

<abstract> <p>This contribution aims to expand insurability using partial linear information (LPI) on probabilities of the type, $ {r}_{1}\ge {r}_{3} $ (with $ {r}_{1}+{r}_{2}+{r}_{3}+\dots {r}_{n} = {1} $). LPI theory permits to exploit such weak information for systematic decision-making provided the decision-maker is willing to apply the maxEmin criterion in a game against Nature. The maxEmin rule is a natural generalization of expected profit (probabilities are known) and the maximin rule (probabilities are unknown). LPI theory is used to find out whether a crypto assets portfolio offered to an insurance company is insurable. In an example, an unfavorable future development of losses causes maximum expected loss to exceed the present value of premiums, rendering the portfolio uninsurable according to maxEmin. However, this changes when LPI concerning this development is available, while the integration of uncertain returns from investing the extra premium fails to achieve insurability in this example. Evidently, LPI theory enables insurers to accept risks that otherwise are deemed uninsurable.</p> </abstract>

Premium for implicit deposit insurance within Russian state banks

Deposit insurance system (DIS) exists for 17 years in Russia. The major deposit market share belongs to state banks. Ordinary depositors may perceive the status of the bank state ownership to reflect additional deposit safety, even in the excess of the DIS limits. Such a situation is called an “implicit deposit insurance” in the literature. By offering a sort of implicit deposit insurance services state banks might underprice the deposits in excess of DIS limits compared to the private banks. We utilize data from the open sources to measure the scale of the implicit deposit insurance pricing in Russian state banks. We have revealed that Russian state banks pay extra premium all other things being equal. More specifically, the premium is larger in the smallest and the largest state banks, than in the medium-sized ones. Thus, we claim that the implicit insurance premium has a U-shaped form for Russian state banks depending on their asset size. However, Russian state banks underprice all deposits all other things being equal. Additionally, we find out that IRB banks in Russia are more prone to set up higher deposit rates when they take on more risks, than non-IRB banks.

Size effect and the measurement of firm size

The size effect is mainly observed when firm size is measured by stock market value and absent when measured by firm's total asset, book equity, or total revenue. We argue that if the profitability shocks are neutralized on cross section, the Chinese equity market shows a significant size effect in ex ante expected returns no matter how firm size is measured. Moreover, the size premium measured by market value is indeed larger than those measured in other variables. We provide evidences that the value factor (HML) and the short‐term reversal factor (LMW) can moderate this extra premium.

FINANCIAL CONSTRAINTS: A MYTH OR REALITY? AN EMPIRICAL EVIDENCE FROM PAKISTAN STOCK EXCHANGE

Purpose of the study: This study investigates the stock pricing of financially constrained (FC) firms in Pakistan for the period of 20 years (2000 to 2019). The researcher uses accounting information (financial ratios of the firms) to categorize Pakistani firms as the most and least financially constrained firms. Further, it examines how the Asset Pricing models perform with the risk-adjusted portfolio of the stock returns sorted based on financial constraints.
 Methodology: Using the financial constraint proxies/ leverage ratios (Total Debt to Market Value(TDMV), Total Debt to Common Equity (TDC), Interest Coverage Ratio (ICR) and the asset pricing models of Sharpe (1964), Lintner (1965), and the three-factor and the five-factor model of Fama and French (1993, 1996), the returns of all the non-financial firms listed in PSX were sorted as the most and the least financially constraint firms and then their risk-adjusted portfolios were analyzed through Excel, Eviews and STATA.
 Main Findings: Positive results (e.g. higher returns) are observed when the capital structure of the FC firms is heavy with debt as compared to unconstrained firms on Pakistan Stock Exchange (PSX). The time series outcome showed that risk-adjusted returns of most FC firms give an extra premium to investors in the PSX when the leverage ratios are used as proxies of financial constraints.
 Applications of the study: This study can be used to make an augmented model of asset pricing specifically for emerging and frontier markets by taking the FC factor as one of the main contributing risk factors to predict returns in the equity market.
 Novelty/Originality of the study: The devised methodology also results in a more refined and accurate quality of analyses and findings and more comprehensive and sound knowledge of asset pricing as compare to previously conducted studies in PSX.

Equilibrium Asset Pricing in Directed Networks*

Abstract Directed links in cash flow networks affect the cross-section of risk premia through three channels. In a tractable consumption-based equilibrium asset pricing model, we obtain closed-form solutions that disentangle these channels for arbitrary directed networks. First, shocks that can propagate through the economy command a higher market price of risk. Second, shock-receiving assets earn an extra premium since their valuation ratios drop upon shocks in connected assets. Third, a hedge effect pushes risk premia down: when a shock propagates through the economy, an asset that is unconnected becomes relatively more attractive and its valuation ratio increases.

Consumer Sensory Evaluation of Beef Top Sirloin Cap Steaks from Four USDA Quality Grades

ObjectivesThe objective of this study was to evaluate the influence of quality grade on the palatability of beef top sirloin cap (biceps femoris) steaks.Materials and MethodsFour quality treatments [Prime, Top Choice (Modest and Moderate marbling), Low Choice and Select] were equally represented (n = 15/treatment) from beef top sirloin caps (IMPS # 184D). Sirloin caps were fabricated into 2.5 cm steaks from posterior to anterior following a 28-d aging period and randomly assigned to one of 3 analysis methods: Warner-Bratzler shear force (WBSF), fat and moisture analysis, and consumer sensory analysis. Steaks were cooked on a clamshell grill (Cuisinart Gridler Deluxe, Model GR-150, East Windsor, NJ) to a peak medium (71°C) degree of doneness monitored using a thermometer (Super-Fast Thermopen, ThermoWorks, American Fork, UT). Consumers (N = 118) evaluated each sample for juiciness, tenderness, flavor liking, and overall liking on a 0 to 100-point continuous line scales. Additionally, consumers rated each trait as either acceptable or unacceptable and classified all samples as one of 4 quality levels: unsatisfactory, everyday quality, better than everyday quality, or premium quality. Data were analyzed as a completely randomized design with the fixed effect of quality treatment.ResultsConsumers rated Top Choice, Low Choice, and Select similar (P < 0.05) for overall like, however, Prime rated (P < 0.05) higher than all other treatments. Also, Prime and Top Choice were similar (P > 0.05) for flavor liking, with Low Choice and Select also similar to Top Choice (P > 0.05). There was no difference (P > 0.05) among the quality treatments for tenderness and juiciness ratings. Similar to the rating results, when evaluating the percentage of samples rated acceptable for each palatability trait, no differences (P > 0.05) were found among quality treatments for tenderness, juiciness, and flavor, with all traits rated over 71.5% acceptable. However, a greater (P < 0.05) percentage of Prime samples were rated acceptable overall compared to Low Choice and Select. Additionally, there was no difference (P > 0.05) among the quality treatments for the percentage of samples classified as unsatisfactory. Consumers perceived a similar (P > 0.05) percentage of Top Choice and Low Choice samples at each quality level. Moreover, Prime had a greater percentage (P < 0.05) of samples perceived as Premium Quality than Select. For WBSF, there were no differences (P > 0.05) among treatments. Prime steaks had a similar (P > 0.05) moisture percentage as all other treatments, with Select having the greatest (P < 0.05) percentage of moisture compared to Top Choice and Low Choice. Furthermore, Top Choice and Low Choice had a similar (P > 0.05) percentage of fat, with Prime having the highest (P < 0.05) fat percentage and Select having the lowest (Prime > Top Choice = Low Choice > Select).ConclusionThese results indicate that quality grade has minimal impact on the palatability of beef top sirloin cap steaks. Therefore, food service does not need to pay the extra premiums associated with a higher grading product, as consumers will experience the same eating experience as with lower quality grades.

Consumer Sensory Evaluation of Beef Top Sirloin Cap Steaks from Four USDA Quality Grades

ObjectivesThe objective of this study was to evaluate the influence of quality grade on the palatability of beef top sirloin cap (biceps femoris) steaks.Materials and MethodsFour quality treatments [Prime, Top Choice (Modest and Moderate marbling), Low Choice and Select] were equally represented (n = 15/treatment) from beef top sirloin caps (IMPS # 184D). Sirloin caps were fabricated into 2.5 cm steaks from posterior to anterior following a 28-d aging period and randomly assigned to one of 3 analysis methods: Warner-Bratzler shear force (WBSF), fat and moisture analysis, and consumer sensory analysis. Steaks were cooked on a clamshell grill (Cuisinart Gridler Deluxe, Model GR-150, East Windsor, NJ) to a peak medium (71°C) degree of doneness monitored using a thermometer (Super-Fast Thermopen, ThermoWorks, American Fork, UT). Consumers (N = 118) evaluated each sample for juiciness, tenderness, flavor liking, and overall liking on a 0 to 100-point continuous line scales. Additionally, consumers rated each trait as either acceptable or unacceptable and classified all samples as one of 4 quality levels: unsatisfactory, everyday quality, better than everyday quality, or premium quality. Data were analyzed as a completely randomized design with the fixed effect of quality treatment.ResultsConsumers rated Top Choice, Low Choice, and Select similar (P < 0.05) for overall like, however, Prime rated (P < 0.05) higher than all other treatments. Also, Prime and Top Choice were similar (P > 0.05) for flavor liking, with Low Choice and Select also similar to Top Choice (P > 0.05). There was no difference (P > 0.05) among the quality treatments for tenderness and juiciness ratings. Similar to the rating results, when evaluating the percentage of samples rated acceptable for each palatability trait, no differences (P > 0.05) were found among quality treatments for tenderness, juiciness, and flavor, with all traits rated over 71.5% acceptable. However, a greater (P < 0.05) percentage of Prime samples were rated acceptable overall compared to Low Choice and Select. Additionally, there was no difference (P > 0.05) among the quality treatments for the percentage of samples classified as unsatisfactory. Consumers perceived a similar (P > 0.05) percentage of Top Choice and Low Choice samples at each quality level. Moreover, Prime had a greater percentage (P < 0.05) of samples perceived as Premium Quality than Select. For WBSF, there were no differences (P > 0.05) among treatments. Prime steaks had a similar (P > 0.05) moisture percentage as all other treatments, with Select having the greatest (P < 0.05) percentage of moisture compared to Top Choice and Low Choice. Furthermore, Top Choice and Low Choice had a similar (P > 0.05) percentage of fat, with Prime having the highest (P < 0.05) fat percentage and Select having the lowest (Prime > Top Choice = Low Choice > Select).ConclusionThese results indicate that quality grade has minimal impact on the palatability of beef top sirloin cap steaks. Therefore, food service does not need to pay the extra premiums associated with a higher grading product, as consumers will experience the same eating experience as with lower quality grades.

The role of international and domestic R&D outsourcing for firm innovation

Firms are increasingly outsourcing their high-tech services. Theory suggests that R&D outsourcing allows firms to specialize in core knowledge-intensive tasks, thereby increasing innovation, but R&D outsourcing may also undermine internal capabilities. Our goal is to empirically assess the relative importance of these two possibilities, distinguishing between national and international R&D outsourcing and firms’ exporting status. We examine R&D purchases of more than 10,000 Spanish firms for the period 2004–2014. We show that R&D outsourcing improves firm innovation. Product innovation rises mostly with domestic outsourcing, while process innovation increases with both domestic and international R&D outsourcing. In addition, we find that international outsourcing provides an extra premium, mostly for exporters. Our results contribute to a better understanding of how firms organize the production of knowledge and innovation.

FDI, service intensity, and international marketing agility

PurposeThe purpose of this paper is to provide a nuanced understanding of international marketing agility by connecting organizational capability literature with that of standardization and adaptation. The focus of the research is to clarify whether managing the tension between product standardization and service customization generates an extra premium in international markets.Design/methodology/approachTwo disaggregated Chinese data sets, the Annual Survey of Industrial Enterprises and the China Customs Database, are used for developing an econometric model. Export quality improvement is the outcome variable in reflecting the effect of international marketing agility on performance.FindingsInternational marketing agility is reached through upstream FDI intensity, particularly in the context of service FDI. Manufacturing sectors with higher service intensity have more agility, being more likely to generate export quality.Research limitations/implicationsThis study makes three theoretical contributions by clarifying the concept of international marketing agility as an organizational capability generated by manufacturing standardization and service customization; investigating the influence of upstream FDI intensity for export quality while taking into account the industry contexts; and obtaining an enhanced understanding of the service intensity of manufacturing firms on export quality.Originality/valueThe authors offer a nuanced and contextualized understanding of international marketing agility and explore the complex relationships between FDI, service intensity and export quality.

What do we mean by the right to be forgotten? An analysis of the French case study from a lawyer’s perspective

The return to normal life of cancer survivors is not easy, especially when it comes to taking out insurance. Therefor, France has put in place the Right to be forgotten in order to promote their insurability: it permits every cancer survivor not to declare their cancer 10 years after the end of the active treatment and 5 years if they had cancer under 18. A reference table also defines for different types and stages of cancer, a shorter period of time after which insurers have to apply standard conditions (no extra premium, no exclusion). After presenting the difficulties encountered by former cancer patients, the content and scope of the right to be forgotten will be presented as well as the key aspects of this important reform.

Influence of Farmer demographics and Supply Chain Issues on Organized Retailer Performance

Advances in information technology and increased social networking have increased health awareness among people in this era. The increased health awareness has prompted people to eat healthy and stay fit. In this regard, the food sector has seen tremendous demand in terms of good quality vegetables/fruits, cereals, with hygiene, nutrition, proteins etc. With the consumer willing to pay an extra premium for the quality expected, it has been observed that the producers are still offered low prices for a good quality produce whereas the intermediaries grab a huge share of the price paid by the consumer. This research tried to understand the supply chain with the farmers in focus and explored the influence of farmer demographics and the supply chain issues on the performance of the organized retail. Linear regression analysis was used to test the linear relationship of supply chain issues with organized retailer performance. The outcome of the study implies that independent variables like demographic characteristics and supply chain issues had no control over the retailer’s performance.

Influence of Farmer demographics and Supply Chain Issues on Organized Retailer Performance

Advances in information technology and increased social networking have increased health awareness among people in this era. The increased health awareness has prompted people to eat healthy and stay fit. In this regard, the food sector has seen tremendous demand in terms of good quality vegetables/fruits, cereals, with hygiene, nutrition, proteins etc. With the consumer willing to pay an extra premium for the quality expected, it has been observed that the producers are still offered low prices for a good quality produce whereas the intermediaries grab a huge share of the price paid by the consumer. This research tried to understand the supply chain with the farmers in focus and explored the influence of farmer demographics and the supply chain issues on the performance of the organized retail. Linear regression analysis was used to test the linear relationship of supply chain issues with organized retailer performance. The outcome of the study implies that independent variables like demographic characteristics and supply chain issues had no control over the retailer’s performance.