Negative Price Effect Research Articles

The non-linear price effect on guest satisfaction of the Michelin-starred restaurants

ABSTRACT Existing studies on the price–satisfaction relationship in the tourism industry are limited, particularly those examining the causality in the restaurant industry. This study examines the effect of price on guest satisfaction based on a sample of 439 customers in 8 Taiwanese Michelin-starred restaurants during the period of January 2022 to April 2022. Theories suggest two opposite price effects on satisfaction: the positive price effect represents the signal of expected quality while the negative price effect is associated with the guests’ perception of sacrifice. The empirical results indicate an inverted U-shaped impact of the restaurant price on food satisfaction but the price does not affect service and physical environment satisfaction. Moreover, the restaurant price–food satisfaction relationship could be affected by the moderating influence of the star rating system to become a U-shaped function (for one-starred restaurants).

The Impact of CSI SEEE Carbon Neutral Index Launched on Order Aggressiveness

In the context of carbon peaking and carbon neutrality goals, in order to clarify the investment direction for investors, China Securities Index Co., Ltd. (CSI) has collaborated with the Shanghai Environmental Energy Exchange to develop the CSI SEEE Carbon Neutral Index (CSCNI), which has also played a leading role in the subsequent preparation of the Green Finance Index. The launch of this index has sparked research interest among scholars in stimulating investor order aggressiveness. This study employs event study methodology to examine the impact of the CSCNI launch on order aggressiveness. The sample companies are categorized into two groups: deep low-carbon and high-carbon reduction, with a focus on studying buy and sale order aggressiveness. The results indicate that the launch of CSCNI has mobilized order aggressiveness but has led to a negative stock price effect as investors anticipate an increase in environmental costs for the sample companies. Furthermore, we reveal that the long-term growth potential of the deep low-carbon field is more promising compared to the high-carbon reduction sector, making stocks in the deep low-carbon field more attractive. The launch of CSCNI has shown contrasting effects on the buy and sale order aggressiveness of investors, with the impact of the index announcement being more significant on the sample companies. This research provides valuable insights for evaluating the impact of green finance indices and contributes to the understanding of internal mechanisms. It provides an important reference for financial regulators to evaluate the development of the current green index. At the same time, it expands the domestic research on order aggressiveness, which studies the action mechanism of the stock price effect of the green stock index from the perspective of order aggressiveness.

The effect of corporate reputation on accounting conservatism

This study examines the impact of corporate reputation on accounting conservatism. We argue that firms with valuable reputations are likely to select conservative accounting practices as a form of insurance to protect their reputations. We document strong evidence that companies with high reputations—those included on Fortune's “Most Admired Companies” list—employ more conservative accounting than firms not on the list. We also investigate a hand-collected sample of firms with product recalls. Accounting conservatism appears to offset the negative stock price effect of product recalls, and high-reputation firms appear to benefit substantially more from conservative accounting than control firms.

Enforcing Disclosure Compliance in Mergers and Acquisitions: Evidence from China

This study examines how enforcement of acquisition disclosure regulation affects investors’ assessment of the transactions’ quality at merger and acquisition (M&A) announcements. Using a novel sample of comment letters on acquisition filings by public companies in China, we document that regulatory requests for disclosure enhancement and clarifications are more common on lower quality transactions obfuscated by weaker disclosure as evidenced by (i) a lower likelihood of the deal closing, and if the deal does close, lower post-deal firm profitability; and, (ii) a greater likelihood of subsequent goodwill impairment. Using entropy balancing matching, we document that transactions that receive comment letters associate with significant negative bidder announcement returns suggesting that regulatory actions reveal new information that aids investors to identify lower quality deals. The negative price effect is greater when comment letters have more acquisition-specific comments, compared to letters with more comments on general accounting and governance issues. Our results showcase that enforcing disclosure compliance in M&A filings aids investors in assessing the quality of M&A transactions at the time when the filings are made public.

Estimating timber supply elasticity of private forest landowners in the US South

In the US South, private forest landowners own the majority of timberland; therefore, understanding the timber supply behavior of these landowners is a fundamental forest economic question. This study estimates the pine stumpage supply equations and elasticities of private landowners in TimberMart-South (TMS) regions. It uses individual landowner pine stumpage (sawtimber, pulpwood, and Chip-N-Saw [CNS]) sales data from 2010 to 2019 and employs the seemingly unrelated regression (SUR) to estimate supply elasticities. Over the study period, nominal sawtimber stumpage price has decreased, while CNS stumpage and pulpwood stumpage prices have not effectively changed. The SUR estimate results revealed that pine sawtimber (2.452) and CNS (1.675) stumpage supply were price elastic, while pine pulpwood stumpage supply was price inelastic (0.352). Furthermore, there was a significant and negative effect of sawtimber price on pulpwood and CNS volume supplied and vice-versa, however, the effect of the former was larger in magnitude. This study provides not only a nuanced understanding of landowners' supply elasticities of three principal stumpage products but also a valuable empirical basis to better understand the market outcomes and welfare changes that market participants might experience due to new policies and market shocks.

Consumer perceptions of price increase by CSR: Focusing on construal level and consumer attribution

Product price increases caused by Corporate Social Responsibility (CSR) activities can stifle sales. In this study, we investigate consumers’ perceptions of prices raised by CSR and ways to improve negative consumer viewpoints. This study presents consumers’ construal level and internal attribution as key variables. As a result of Study 1 applying 2 (price level) x 2 (construal level) between-subjects analysis, consumers with activated high-level construal perceived product price as a benefit derived from CSR, whereas those with activated low-level construal perceived product price as a cost. As a result of Study 2 examining the influence of intrinsic attribution, the negative effect of product price was mitigated when consumers’ intrinsic attribution was activated. Consumers with intrinsic attribution perceived product price as benefits of CSR regardless of their construal level. The results of this study are expected to provide important guidelines regarding the success of corporate CSR strategies. Finally, we propose the related academic and practical implications.

Solar farm policy and farmland price – A land zoning perspective

Photovoltaic or solar energy is recognized as a significant source of renewable energy on a global scale. The utilization of ground-mounted solar panels is closely associated with the use of farmland, as solar power generation typically requires vast expanses of farmland. While previous studies have explored the use of price incentives to regulate the adoption of solar panels, little is known about the impact of land zoning policies on farmland prices. The relationship between farmland use policies and farmland prices is well-documented, with policies often capitalizing into the value of the land across various countries. The deployment of ground-mounted solar panels has raised concerns about the potential loss of farmland and the degradation of the farming environment. However, the policy debate has largely overlooked the price capitalization effect of solar panel installations. In an effort to mitigate the adverse effects of solar panels on agriculture, the Taiwanese government implemented revised zoning regulations that impose stricter limitations on small-scale ground-mounted type solar panels installed on farmland. As a result of this policy reform, solar panels are no longer permitted on farmland areas measuring less than 660 square meters. While it is expected that the installation of solar panels will slow down, the resulting price effects on farmland remain poorly understood. This paper measures the impact of the land zoning regulation on farmland prices in Taiwan. By utilizing nationwide data on farmland transactions and employing the difference-in-differences method, we discover that the tightened regulations pertaining to solar panel installation have led to a 21.8% reduction in farmland prices. Furthermore, the negative price effect is found to be least pronounced in high-productivity farmland. We also find that the decline in prices commenced two months after the reform and continued to intensify over time. Additionally, we identify a distributional effect concerning price, whereby farmland with higher prices per hectare experiences the most significant impact. Consequently, our study contributes an empirical analysis that confirms the substantial price capitalization effects of land zoning policies on farmland.

Board characteristics and firm resilience: Evidence from disruptive events

AbstractResearch Question/IssueWe study the contribution of board characteristics such as independence, size, busyness, and CEO duality, to firm resilience at times of firm‐specific crises.Research Findings/InsightsBased on manually collected US data, we document that board‐related variables affect the short‐term market reactions around disruptive events. Board independence exacerbates the negative share price effect, whereas the converse is true for director busyness and board size. However, the negative impact of board independence is attenuated in complex firms. We do not find that CEO duality affects market reactions. By contrast, in the long run, we do not observe stable and significant relationships between board‐related variables and firm performance with the exception of a negative impact of board independence.Theoretical/Academic ImplicationsOur paper contributes to different strands of the literature. First, it contributes to the literature on the effects of board characteristics by showing how they affect stock price reactions at the time of firm‐specific crises. Second, our results on board attributes provide a new take on the two monitoring and advisory functions of the board. Third, we add to the literature that measures the value of directors. More generally, the paper contributes to the literature on the role of corporate governance, and in particular the board of directors, in crises situations.Practitioner/Policy ImplicationsWe show that three board‐related attributes affect market reactions at the time of a firm‐specific shock. Board independence exacerbates the negative share price effect of disruptive events, whereas the reverse is true for director busyness and board size. These reactions imply that, in times of crisis, advice‐oriented boards fare better than monitoring‐oriented boards. More specifically, information flows less easily within independent boards. In addition, busy directors and large boards are more talented, respectively more effective in complex situations. However, these results do not hold for industry‐wide shocks.

Impact of Oil Price on Economic Growth of OECD Countries: A Dynamic Panel Data Analysis

Crude oil usage in (Organization for Economic Co-operation and Development) OECD countries has been significantly higher since the early 1970s and therefore, oil can be considered as one of the driving forces of the OECD economies. Moreover, oil prices have been frequently fluctuating over time, creating adverse economic and social impacts. The study examines the impact of oil price on the economic growth of 38 OECD countries over the period 2000–2020, through four channel variables such as real interest rate, exchange rate, government expenditure and investment. A dynamic panel data analysis based on Generalized Method of Moment (GMM) is employed to accomplish the objective of the study. The study confirms that there is a mixed impact of oil price on economic growth. More specifically, an increase in oil price positively affects economic growth only through interest rates while the oil price hike negatively affects economic growth through all other channel variables such as exchange rate, government expenditure and investment. Since the total negative effect of oil price on economic growth outnumbers the positive effect, the net impact of an oil price hike on economic growth is negative. Hence, the study strongly recommends applying appropriate polices to reduce oil price fluctuations while encouraging the use of country-specific renewable energy sources.

Hiding or disclosing? Information discrimination in member-only discounts

E-commerce platforms commonly offer price discounts as a loyalty benefit for fee-based members. Some of them disclose the member-only discount, while others strategically hide the specific discount information from non-members, which can be seen as information discrimination between non-members and members. This paper constructs a stylized model to examine whether disclosing or hiding member-only discounts yields higher revenue. Our study also incorporates the two-sided reference price effects into customers’ utility formation to reveal how information discrimination works. By comparing the revenue gap between information disclosing and hiding strategies concerning exogenous and endogenous member-only discounts, we find that platforms that aim at the high-end market by charging a higher product price and membership fee and whose target customers hold higher negative but lower positive reference price effect should implement the information hiding strategy. The findings guide e-commerce platforms to improve revenue by strategically hiding or disclosing member-only discounts in fee-based membership management.

Impact of rising food prices on food security in Rajasthan and Gujarat

A large area of Gujarat and Rajasthan is rain-fed exposing rural population to food prices spike due to frequent droughts. The present study was conducted in year 2020 and is based on NSSO data on household consumption expenditures of rural households of these states for the year 2009 to analyse the effects that food price changes have on food expenditure and calorie intake. The results show a strong negative effect of price rises on calorie intake. The negative impact of prices of foods particularly wheat, and milk is more on richer than on poorer households as they have the capability to cut calorie intake in the event of a price rise while its opposite for coarse cereals. The food prices particularly, milk, wheat and, pulses also have highly positive influence on food expenditure of poorer households. Rice price does not have much significant effect on food security in both the states.

The Size and Spatial Extent of Neighborhood Price Impacts of Infill Development: Scale Matters?

Infill investments are argued to mitigate environmental footprints, regenerate places and accommodating population growth, but frequently generate local opposition. However, there is a dearth of knowledge around how different types of infill affect different segments of local property markets, how persistent effects are and how far they reach. Using detailed geocoded infill development activity and sales data, we test the price level and trajectory impacts of five infill types, distinguished by the net scale of additional dwellings, on property prices within five concentric 100-meter rings. Using an adjusted interrupted time-series estimation strategy with locality, property and neighborhood characteristic controls we find that developments that generate a net increase in dwellings of four or less, typically result in an appreciation in the average sales prices of proximate dwellings. Moderate and large-scale developments generate negative price effects, but these effects predominantly affect apartments and townhouses, not the dominant detached house submarket. Over time, amenity effects and local market potential may even have a further positive expectation effect on detached house prices. Infill type differentiation shows that urban densification may result in positive affordability outcome in the apartment submarket, but has the opposite effects in the detached house submarket. Divergent price trajectories also contribute to widening wealth disparities.

The impact of current and former REOs across owner types: the case of Detroit

This article examines home price spillovers associated with the number of nearby current and former real estate owned (REO) properties. The effect of active REOs is decomposed into the contributions of properties owned by the government sponsored enterprises (GSEs), US Department of Housing and Urban Development (HUD), and private entities to assess impacts associated with differences in managing REO inventories. The impact of former REOs is decomposed into spillovers associated with investor and owner-occupied properties. This study draws on home sale price data in the Detroit tri-county area 2008–2013. Results indicate REOs owned by HUD and private entities are associated with substantial discounts, with the largest effects appearing after remaining in REO inventory for more than one year. Investor-owned properties are associated with sustained and growing negative price effects through more than three years of ownership. Policies ensuring adequate oversight of REOs and sales to owner-occupants and non-speculative investors are encouraged.

The impacts of land supply on PM2.5 concentration: Evidence from 292 cities in China from 2009 to 2017

The 2030 Agenda for Sustainable Development proposes to considerably reduce the number of deaths and diseases caused by air pollution. It pays special attention to attaining this via urban air governance and management. Although the development of China's air governance has been a lengthy process, there is no indication of instituting a plan based on land supply (LS) in the foreseeable future. This paper introduces a novel perspective of the role of LS in managing air pollution, and builds a comprehensive analysis framework that includes the quantity, structure, and price of LS for management of particulate matter with an aerodynamic diameter of 2.5 μm or less (PM2.5). The dynamic relationship between LS and PM2.5 is revealed by a panel-data vector autoregression model on a district scale. The study found that: (1) The Central District has the highest average annual PM2.5 concentration in China from the year 2009–2017. (2) The supply of the four types of land—industrial and mining storage land (IMSL), commercial and business facilities land (CBFL), residential land (RL), and other land (OL)—showed increase in the Central District, while only IMSL decreased in the Western District. The supply of IMSL decreased the most in the Northeast District, and in the Eastern District, only the supply of OL increased. (3) In the Northeast District, the quantity, structure, and price of LS have no significant effect on PM2.5 concentration. However, in China, the Eastern District, and Central District, the bidding, auction, and listing prices have a significant negative effect on the PM2.5 concentration. As for the Western District, it exhibits not only the “negative price effect,” but also the “negative quantity effect.” In future, the government should adopt different strategies: (1) For China, the Eastern District, and Central District, the bidding, auction, and listing prices should be further increased; (2) In the Western District, local government should also focus on expanding the area of LS.

Examining the vintage effect in hedonic pricing using spatially varying coefficients models: a case study of single-family houses in the Canton of Zurich

This article examines the spatially varying effect of age on single-family house (SFH) prices. Age has been shown to be a key driver for house depreciation and is usually associated with a negative price effect. In practice, however, there exist deviations from this behavior which are referred to as vintage effects. We estimate a spatially varying coefficients (SVC) model to investigate the spatial structures of vintage effects on SFH pricing. For SFHs in the Canton of Zurich, Switzerland, we find substantial spatial variation in the age effect. In particular, we find a local, strong vintage effect primarily in urban areas compared to pure depreciative age effects in rural locations. Using cross validation, we assess the potential improvement in predictive performance by incorporating spatially varying vintage effects in hedonic models. We find a substantial improvement in out-of-sample predictive performance of SVC models over classical spatial hedonic models.

World capital markets facing the first wave of COVID-19: Traditional event study versus sensitivity to new cases

The aim of the paper is to analyse the impact of the new coronavirus on financial markets. The sample comprises returns from 80 countries, across all regions and incomes for the period known as the first wave. By combining event study methodology and time series analysis of new COVID-19 cases it is found that the negative price effect is widespread but unequal across regions. It is also noted that the distribution of the impact is also uneven with a high concentration in the week after the first local case but especially in the weeks around the pandemic declaration. Finally, it has been shown at different levels how the markets most affected by the crisis are not necessarily the most sensitive to the virus.

Can the resource curse be avoided? An empirical examination of the nexus between crude oil price and economic growth.

This paper revisits the resource curse hypothesis by examining the nexus between crude oil price and economic growth for a panel of 32 Sub-Saharan Africa countries from 1980 to 2017. Employing the panel vector autoregression (VAR) estimation technique, we found evidence of a significant positive effect of crude oil price on economic growth both in the short run and long run. However, after splitting the panel into net oil exporters and importers, the results for net oil importers remain consistent with those obtained for the whole panel, unlike those for net oil exporters revealing a positive and negative effect of crude oil price on economic growth in the short-run and long-run periods, respectively. This confirms the resource curse hypothesis for oil-exporting countries under consideration. Moreover, we found evidence of bidirectional causality between crude oil price and real GDP. Consequently, to boost economic growth in Sub-Saharan Africa, various governments should encourage economic diversification, increase investments in human capital in view of enhancing the development of the oil sector by ensuring an efficient management of oil revenues, as well as intensifying the fight against corruption.Supplementary InformationThe online version contains supplementary material available at 10.1007/s43546-021-00179-x.

Economic links and the wealth effects of layoff announcements along the supply chain

PurposeThis paper investigates the effects of layoff announcement by customers on the valuation and operating performance of their supply chain partners.Design/methodology/approachThe authors collect corporate layoff announcements from 8-K filings submitted by US publicly-traded firms from 2004 to 2017. Using event study methodology, they examine the information externality of corporate layoffs on announcing firms' suppliers.FindingsResults show that suppliers, on average, experience a negative stock price reaction around their major customers' layoff announcements. The negative price effect is exacerbated when industry rivals of layoff-announcing customers also suffer from negative intra-industry contagion effects. Additionally, supply chain spillover effects are asymmetric, with only “bad news” layoff announcements causing significant value implications for suppliers, but not “good news” announcements. Supplier firms also reduce their investments in and sales dependence on layoff-announcing customers in subsequent years.Practical implicationsThis study shows that layoff decisions, often aimed at improving firms' efficiency and effectiveness, create uncertainty for the suppliers' operation and cause negative value implications on firms' upstream partners. Findings should be useful to corporate decision-makers in making layoff decisions.Originality/valueThis paper is one of the first to address the value implications of corporate layoffs on announcing firms' suppliers. It provides a more comprehensive picture of the economy-wide impact of achieving efficiency through employee layoffs.

Clean Electricity, Dirty Electricity: The Effect on Local House Prices

Renewable energy production is one of the most important policy instruments to fight climate change. However, despite global benefits, renewable energy production entails some local challenges, such as requiring more space per unit production capacity. In this paper, we study the external effects of large-scale conventional and renewable electric power generation facilities on local house prices. We combine information of all coal, gas, and biomass plants, as well as all wind turbines in the Netherlands, with 1.5 million housing transactions over a period of 30 years. Using a difference-in-difference as well as a repeated sales model, we study the effects of facility openings and closings. Our results show negative external price effects for gas plants and wind turbines, but positive effects for biomass plants, conditionally upon ex-ante lower priced locations. The external effects of power generating facilities on local housing markets are important to consider, especially with the current focus of public policies on the expansion of renewable energy generation. Our paper is one of the first to present a large-scale study, using detailed information, and comparing several different energy sources in one framework.

How to make money with credit information? Information processing on online accommodation-sharing platforms

Online accommodation-sharing has experienced rapid growth and greatly attracted the interest of current scholars. This study develops a theoretical model to explore the factors determining future bookings based on the novel perspective of information processing. We examine the effects of basic room and host information and the contingent role of credit information. The research model is tested by using a dataset from xiaozhu. com , one of the largest accommodation-sharing platforms in China. The results show that basic room information plays a major role in affecting future bookings, with room price generating a negative effect and consumer reviews generating a positive effect. Similarly, host information (reply rate and acceptance rate) is also significantly related to future bookings. Moreover, credit information weakens the negative effect of the room price and strengthens the effects of consumer reviews and the host acceptance rate. This study contributes to the literature on online accommodation-sharing, consumer booking behavior, and information processing theory and provides practical implications.