Negative Price Effect Research Articles

Federal Forum Provisions and the Internal Affairs Doctrine

A key question at the intersection of state and federal law is whether corporations can use their charters or bylaws to restrict securities litigation to federal court. In December 2018, the Delaware Chancery Court answered this question in the negative in the landmark decision Sciabacucchi v. Salzberg. The court invalidated “federal forum provisions” (“FFPs”) that allow companies to select federal district courts as the exclusive venue for claims brought under the Securities Act of 1933 (“1933 Act”). The decision held that the internal affairs doctrine, which is the bedrock of U.S. corporate law, does not permit charter and bylaw provisions that restrict rights under federal law. In March 2020, the Delaware Supreme Court overturned the Chancery’s decision in Salzberg v. Sciabacucchi, holding, among others, that in addition to “internal” affairs, charters and bylaws can regulate “intra-corporate” affairs, including choosing the forum for Securities Act claims. This Article presents the first empirical analysis of federal forum provisions. Using a hand-collected data set, we examine the patterns of adoption of such provisions and the characteristics of adopting firms. We show that adoption rates are higher for firms with characteristics, such as belonging to a particular industry, that make them more vulnerable to claims under the 1933 Act. We also show that adoption rates substantially increased after the Supreme Court case Cyan Inc. v. Beaver County Employees Retirement Fund, which validated concurrent jurisdiction for both federal and state courts for 1933 Act claims. We also find that the firms that adopt FFPs at the initial public offering (“IPO”) stage tend to share characteristics that have been associated with relatively good corporate governance. To assess the impact of the Sciabacucchi decision, we also conduct an event study. We find that the decision is associated with a large negative stock price effect for companies that had FFPs in their charters or bylaws. The effect is robust even for firms that had better governance features, that underpriced their stock at the IPOs, and whose stock price traded at or above the IPO price prior to the Sciabacucchi decision. In light of the empirical findings suggesting that federal forum provisions may serve shareholders’ interests by mitigating excessive 1933 Act litigation, we consider alternative legal theories for validating federal forum provisions in corporate charters and bylaws. We suggest two possible approaches: (1) allowing corporate charters and bylaws to address matters that are technically external but deal with the “affairs” of the corporation; and (2) adopting a more “flexible” internal affairs doctrine that could view 1933 Act claims as being “internal” to a corporation’s affairs. The Delaware Supreme Court’s decision can be viewed as being more consistent with the first, rather than the second, approach. We examine the possible implications of adopting either approach, particularly with respect to the existing Delaware statute on exclusive forum provisions and to mandatory arbitration provisions.

Energy price shocks and dynamics of current account in Turkey: is this time different

Purpose- In this article, we examine the link between current account and energy prices, namely crude oil, coal and natural gas in Turkey the years between 2005 and 2016 . Methodology- This article investigates how the changes in the energy prices affect the current account in Turkey. For this purpose, a Factor-Augmented Vector Auto Regression (FAVAR) model is used with economic data from the Turkish economy and world commodity price indexes to obtain empirical results for current account dynamics in the Turkish economy. The impact of various factors that include crude oil prices, coal prices, natural gas prices data have been studied by obtaining impulse response functions. Findings- Natural gas prices gradually affect the current account. The impact is permanent after a period indicating a very limited elasticity. Oil prices have an immediate impact on the current account. Swings, in the long run, indicate some degree of elasticity. The negative effect of coal price on the current account deficit occurs with a significant delay. Conclusion- We can conclude that, from all of the energy indices, the crude oil price is the most effective on the current account.

The myth of retail pricing policy for developing organic vegetable markets

This paper examines the effects of retail pricing policy on the diffusion process of organic vegetables. Based on a unique dataset consisting of three-year transaction data from an online fresh produce retailer, we modeled the vegetable diffusion process with price and promotion effects, estimated the brand-level generalized Bass model and compared these effects on organic as well as conventional vegetables. Our findings are two major parts. First, only regular price exhibits significant effects on organic vegetable diffusion, while promotion depth or frequency does not. Furthermore, the negative effect of regular price is stronger for organic vegetables than for conventional vegetables.

Impact of Sovereign Debt Credit Rating Revision on Banking Industry: Evidence from G7 Countries

Abstract The aim of this study is to identify the economic impacts on G7 banking industry when sovereign rating is revised. We used event study methodology (t-statistics) and found that sovereign rating changes significantly affect share market prices. It seems that there is information leakage prior to sovereign rating announcement dates as released by the S&P: there are some negative price effects as well on mixed-type rating change effects, such as ‘rating watch’ announcements. These are new findings that may help to extend the sovereign rating literature in terms of findings from multiple countries, and on sustainability of debt taking.

Does energy price affect energy efficiency? Cross-country panel evidence

In this paper, we analyze the relationship between energy intensity and energy price in a panel of 120 countries over 34 years, from 1980 to 2013. We use information on energy intensity and real oil price, and merge it with macroeconomic data on the countries' structural characteristics. We assess their long-run relationship and direction of causality using panel cointegration tests and dynamic panel data models. We identify a statistically significant, but weak negative effect of real oil price on energy intensity, which corresponds to a positive effect of energy price on energy efficiency. We also show significant, large regional differences in this relationship. We thus posit that a global policy aimed at increasing the price of oil would induce a limited increase in average energy efficiency through a more efficient use of energy, but this increase would differ considerably across regions around the world.

Refugees and apartment prices: A case study to investigate the attitudes of home buyers

We evaluate the price development of apartments in neighborhoods surrounding temporary housing for refugees in the year after an unpredicted announcement of building sites, targeting refugees, in Gothenburg. Information on such a development can indicate how much home buyers dislike the idea of having refugees in their neighborhood. We use a difference-in-difference approach that takes into account the walking distance to the building sites and the time since the announcement. We find support for a negative and significant price effect of around 4 percent for apartments that were within a 5-minutes walking distance from the building sites, while there is no impact for houses situated at a longer distance. We find that the impact essentially comes from a drop in apartment prices at the moment that the building permits were accepted. We find that the price effect increases with the neighborhood's education level.

Sustainability Labels: Are Price Premia Relevant in Online Food Retailing?

Consumers are willing to pay a higher price for products certified as sustainable. By implication, such certification is in the interest of producers, too. A general claim that sustainability characteristics automatically imply a price margin may not, however, be justified. Rather, several price premia might be necessary. This analysis based on 882 product prices of the German online retail, is concerned with the price premia attached to various labels and products. It estimates individual price premia for products, like coffee, tea, sweets, spices, etc., showing that sustainable food labeling is not always an indicator for a price markup. In fact, for some products (e.g. spices, chocolate) and labels (e.g. UTZ) a negative price effect is even estimated. Such markdowns may be due to a differing emphasis on sustainability issues along the supply chain for some products or the label’s certification policies.

The Deadweight Loss of Christmas - Reply

In this paper, we study the welfare effects of Christmas presents with a focus on the effect of presents for gift-givers. Based on a survey among students at the University of Gottingen, Germany, we find that the vast majority of gift-givers prefers in-kind gifts compared to gifts of money. The average present in our survey has a price of 36 Euro and results in a surplus of 10 Euro. This indicates a welfare gain of approximately 143% from the average giver's perspective. The welfare gain for presents to friends and partners is lower than for presents to close family members. Our empirical analysis shows a negative effect of a present's price on the welfare gain for gift-givers.

Economic Links and the Wealth Effects of Layoff Announcement Along the Supply Chain

This paper examines whether suppliers suffer from information externalities when their major customers make layoff announcements. We find suppliers, on average, experience a negative stock price reaction around their major customers’ layoff announcements. Furthermore, the negative price effect is exacerbated when the industry rivals of layoff-announcing customers also suffer from negative intra-industry contagion effects, indicating that the interaction of vertical and horizontal effects can have an impact on the magnitude of supply chain information externalities. Additionally, our results show that the 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 and sales dependence on layoff-announcing customers and experience a higher profit margins and investment profitability in the subsequent years.

Sponsorship of the FIFA world cup, shareholder wealth, and the impact of corruption

ABSTRACTThe Fédération Internationale de Football Association's World Cup (FIFA WC) is one of the most popular sporting events in the world in general and Europe in particular, and famous for the extraordinary amount of sponsorship fees it attracts. To create value for the stockholders of FIFA’s respective commercial affiliates, these sponsorship expenses should be exceeded by (discounted) future cash flows in order to make this investment profitable. This study analyses return effects for stockholders of FIFA WC Commercial Affiliates, while distinguishing between several image scenarios pertaining to FIFA and applying several models for calculating abnormal returns. We find weak evidence for significant positive abnormal returns of announced FIFA sponsorships in case of a stable FIFA image across different return models. In contrast, we find negative abnormal returns when the latest corruption scandals around FIFA became public. We also detect negative price effects when Gianni Infantino was announced as new FIFA president. The image-related price effects become less pronounced for FIFA Partners and initially closed sponsorship contracts. Finally, we do not find any image-related spillover effects for main competitors of firms sponsoring FIFA.

The Effect of Post-Purchase Discount Format on Consumers’ Perception of Loss and Willingness to Return

Price discount is one of the commonly used promotion strategies to increase sales and revenue. If a discount is perceived before the purchase (i.e., pre-purchase discount), consumers are likely to perceive it as a potential gain. If it is noticed after making a regular-priced purchase (i.e., post-purchase discount), consumers may develop negative emotions and attitudes. Based on the rising transparency and omnipresence of price and discount information through web and mobile platforms, we attempt to tackle an understudied topic on the negative effect of post-purchase price discount. Specifically, post-purchase discount information may increase consumers' perception of monetary loss, which may affect consumers' decision to return the product, potentially increasing the operating costs borne by retailers. Based on a close scrutinization of the current market environment and previous academic literature, we suggest a novel conceptual framework to understand consumers' perception, attitude, and behavior (perception of loss, willingness to return) upon perceiving various formats of discount promotion (absolute value vs. percentage discount) posterior to the purchase of a product. We also look at the effect of price level (low-priced vs. high-priced). For marketing practitioners, we intend to suggest optimal promotion formats that can alleviate consumers' negative perceptions and prevent additional operation costs.

Limited Service Brokerage: Positive Broker Intermediation?

Recent research on limited service brokerage finds positive broker intermediation effects evidenced by price increases ranging from 2% to 6%. Time-on-market effects of limited service contracts range from an increase of 20% to a reduction of 14%. One article indicates the results suggesting positive broker intermediation effects are contrary to expectations. After controlling for builder-owned properties and the type of listing contract, we find no evidence of positive broker intermediation associated with limited service listings. Houses listed using an exclusive-right-to-sell and limited service contract experience negative price effects with no impact on time-on-market. A repeat sales sample provides additional evidence supporting either a negative or zero intermediation effect for limited service listings.

Immigration and house prices under various labour market structures in England and Wales

This article estimates the impact of immigration on local house prices under various local labour market structures in England and Wales. Typically, for the nation as a whole, newly arriving immigrants add to the overall housing demand; this would in general push up house prices when facing an upward-sloping supply curve. However, sorting and native-outmigration response to immigration may change the dynamics and impact at the ‘local’ level, depressing house prices through income change. We use data on England and Wales to investigate the local house price effect of immigration when taking into account the local labour market structure of the areas, particularly with respect to employment density and average socioeconomic profile (skill) of workers. We found that in high density of employment areas but with a majority of the occupations in low skill sets, there is a negative house price effect led by immigrant inflows, and this might be due to a type of tenure ‘downgrade’ in the area as immigrants increase the rate of free renting. Free renters are less likely to participate in the housing market themselves and an increase in the rate of this form of tenure could also reduce their mobility further, hence lead to lower levels of housing stock turnover and transaction-related renovation; as a result, both housing quality and house prices fall. The evidence is in addition to the native flight argument typically found in the literature to explain house price depreciation led by immigration.

Determinants of demand for traditional Chinese opera

Following the econometric approach in cultural economics, this paper investigates factors that determine the demand for traditional Chinese opera by applying annual aggregate time series data from 1995 to 2015 in China. The analysis estimates two multiple linear regression equations for traditional Chinese opera by OLS. We find a positive effect of the income level and a negative effect of the admission ticket price on the demand for traditional Chinese opera. We are able to identify that opera, dance and music might not be close substitutes to traditional Chinese opera or cannot be easily defined as complements to it. Attendance is found to be insignificantly affected by capacity constraints and quality of traditional Chinese opera. The percentage of the population with college or higher degree has a negative impact on traditional Chinese opera attendance. The results also reveal that 2-year lagged consumption capital and the proportion of 15–24-year-old population positively affect current demand for traditional Chinese opera.

Gentrification through the sale of rental housing? Evidence from Amsterdam

Summary This paper analyzes the impact of the sale of rental housing in Amsterdam on the local housing market. This increases the supply of owner-occupied housing, but can also contribute to gentrification associated with the inflow of different household groups. Earlier literature focused on the former effect and reported a negative price effect. We take a fresh look at the issue by considering the sale of private as well as social rental housing, allow for differing time trends within the municipality, controlling for area fixed effects, distinguishing between short and long-term impacts and addressing endogeneity of the sale of rental housing. The main finding is a robust gentrifying effect of the sale of private rental housing in the core area of Amsterdam.

If you, tourist, behave irrationally, I’ll find you!

When departures from rational behavior can potentially be expected, modeling should allow for their identification and their quantification. In this regard, prices in tourism might have effects that may not be as apparent as economic theory predicts. This article incorporates the sticker shock formulation into the mixed logit model without imposing consistency with consumer theory to accommodate any possible positive or negative price effects. By allowing the parameters of “price” and “sticker shock term” to take any value – negative or positive – we detect abnormal behaviors in the tourist demand: not only is the negative relationship between price and demand inverted for some people but also some tourists might be willing to accept higher-than-expected prices. The “non-well-behaved” groups' shares are estimated.

Oil production cost, financial development, and economic growth in Russia

ABSTRACTThe study investigates the causal relationship between fossil energy sources, the production cost of oil and financial development on economic growth in Russia. The results show that Russian companies’ production cost of oil and oil prices cause economic growth and the one-way causality is negative. We also find that there is one-way positive causality from natural gas price, financial development, and education to economic growth. The negative oil price effect supports the resource curse hypothesis, whereas the positive natural gas price effect does not. Russian policies should focus on lowering companies’ production cost of oil, improving financial development and investing in education.

EFFECTS OF INFLATION ON FINANCIAL SECTOR PERFORMANCE: NEW EVIDENCE FROM PANEL QUANTILE REGRESSIONS

<p>This paper explores the influence of inflation on the conditional distribution of financial development, an issue that has not received attention in related literature, with data from 84 countries covering the 1980-2010 period. In our data we show the presence of fixed effects, reject cross-sectional dependence in the error structure and justify poolability. Our empirical strategy employs standard and fixed-effects quantile regressions to demonstrate that the influence of inflation varies along the quantiles of the conditional finance distribution. In general, we find a consistently negative and nonlinear effect of price increases on financial variables; in particular, it is statistically significant in the full sample of countries, significant in developing countries, and insignificant in developed countries.</p>

Gentrification Through the Sale of Rental Housing? Evidence from Amsterdam

This paper analyzes the impact of the sale of rental housing in Amsterdam on the local housing market. This increases the supply of owner-occupied housing, but can also contribute to gentrification associated with the inflow of different household groups. Earlier literature focused on the former effect and reported a negative price effect. We take a fresh look at the issue by considering the sale of private as well as social rental housing, allow for differing time trends within the municipality, controlling for area fixed effects, distinguishing between short and long-term impacts and addressing endogeneity of the sale of rental housing. The main finding is a robust gentrifying effect of the sale of private rental housing in the core area of Amsterdam.

The impact of sovereign rating events on bank stock returns

PurposeThis paper aims to investigate the impact of sovereign rating signals on domestic banks’ stock returns in a European context.Design/methodology/approachThe author uses an event study technique to measure short-term bank stock abnormal returns that result from domestic positive or negative sovereign rating events. Then, test results from the univariate event studies are further scrutinised with the bank- and sovereign-related factors related to cross-sectional variations in abnormal bank returns.FindingsThe univariate results show that positive sovereign rating events do not lead to significant bank stock price reactions, while negative events are associated with negative share price effects on domestic banks. The multivariate regression results for the subsample of negative rating events show that the degrees of contagion effects depend on which credit rating agency issues the signal, on whether the events are preceded by other negative sovereign rating signals, and in some cases on the sovereign’s initial rating level and on the bank’s liquidity ratio, profitability level and size.Originality/valueThe study improves the test procedures used by Caselli et al. (2016) and sheds light on the bank valuation effect induced by massive negative sovereign rating signals during the crisis period. The results highlight the share price effect of sovereign events and address political implications of introducing risk weights for sovereign debts.