Firm Prefers Research Articles

EXPRESS: Strategic Patent Disclosure: Unraveling the Influence of Temporal Preferences

We examine how the temporal preferences of a firm’s management and shareholders affect the textual properties of patent documents. We argue that low patent readability decreases imitation concerns due to lower information disclosure but increases concerns of patent invalidation or litigation. These concerns are likely to materialize at different points in time, implying that decision-makers with different time horizons prefer different levels of patent readability. Building a theory on the time horizon of institutional owners and CEOs, we hypothesize a positive relationship between institutional ownership and textual readability of patent documents. Our analysis of over 200,000 US patents provides empirical support for our theoretical contentions. Our findings suggest that the temporal preferences of firms’ decision-makers influence not only the extent of innovation activities but also the way in which firms craft and disseminate information about such activities.

Determinants Of Reputable Underwriters In Green Bond Offering

This research paper delves into the process by which industrial companies issuing green bonds can secure certification from reputable underwriters. By analyzing data from international green corporate bond offerings from the period between 2014 and 2022, the study aims to unravel the factors that influence underwriter selection decisions. Using a logit model to address the potential biases, the research reveals specific firm and bond characteristics that significantly impact the likelihood of collaborating with reputable underwriters. The findings indicate that reputable underwriters exhibit a preference for larger firms demonstrating strong financial performance, dealing with larger bond sizes, and possessing distinct bond features such as callability and involvement in private placements. Additionally, variables like maturity periods, involvement in finance vehicles, credit ratings, and syndicate size emerge as crucial factors in underwriter selection processes. These insights highlight the critical factors that issuers must thoroughly assess when selecting underwriters with strong reputations. The significance role of underwriter credibility, capabilities, and reliability in shaping the landscape of green bond underwriting is emphasized. This analysis holds relevance for both academic research and industry practitioners within the realm of sustainable finance.

A Comprehensive Analysis and Research on the Factors Affecting the Growth of Rural Trade in Cultural Communities

This article analyzes the elements that impact the stages of rural retailing development in the Hwange villages, namely in the areas of Jambezi, Mununa, Milonga, Ndlovu, Chikhanda, Mashake, and Monde. The study used a quantitative technique with a sample size of 400 people, recruited by stratified random sampling. The data analysis was performed using SPSS version 26.0. The survey's main findings reveal that rural residents have a preference for firms that value outstanding customer service and offer a broader range of recreational choices. Furthermore, the condition of road networks was recognized as a crucial element impacting the operational effectiveness of rural businesses. The presence of essential services such as water and electricity was discovered to have a substantial influence on the condition of the retail sector. The paper provides numerous recommendations based on the findings. The implementation of these recommendations is anticipated to stimulate economic expansion, boost living standards, and promote overall welfare in rural regions. By effectively dealing with the highlighted causes, the communities in Hwange have the opportunity to experience positive changes in their retailing industry, which will result in sustainable development and an enhanced quality of life.

The effect of informality on profit rates: the role of feminization of labor

This paper explores the intricate dynamics among the informal economy, profit rates, and the feminization of labor. While extensive literature has delved into the causes and consequences of the informal economy, a notable gap exists in understanding its impact on profit rates—an essential indicator of a capitalist economy’s health. The preference of certain firms to operate informally enables them to reduce costs, enhance competitiveness, and diminish union influence, ultimately boosting profitability. The paper proposes and tests the hypothesis that the informal sector’s presence is linked to higher profit rates. Methodologically, the study introduces a Post-Keynesian model that incorporates gender-specific marginal propensities to consume, followed by a simulation analysis. Subsequently, an econometric model is employed, utilizing data from 127 countries spanning 1991–2018. Results from both simulation and panel data analysis robustly indicate a significant association between the informal sector and increased profit rates. This phenomenon is attributed to the feminization of labor, suggesting a role in cost reduction.

Belief disagreement and debt maturity structure

This paper examines how investors’ belief disagreement affects the firm’s debt maturity choice. We find that in the presence of belief disagreement, the firm prefers short-term debt to long-term debt. This is because short-term debt is less risky and can attract more optimistic investors, which raises the debt price and reduces the cost of debt financing. Our result is stronger when long-term debt is more risky compared to short-term debt and investors’ belief dispersion is higher.

The impact of digital infrastructure on the geographical supply chain layout of firms —— Evidence from Chinese microdata

This study investigates how the development of digital infrastructure in China affects the geographical layout of supply chains of listed companies. This work finds that (1) The development of digital infrastructure has led to firms prefer suppliers or customers nearby, rather than looking for distant supply chain partners. (2) The development of digital infrastructure can reduce the costs of the firms, and improve their productivity. However, firms with cost reduction and productivity improvement will not expand the geographical scope of their supply chains. From the perspective of the concentration of supply chains, firms reduce their dependence on the top five customers and suppliers, indicating that with the support of digital technology, firms are willing to seek new partners to achieve closer and more diversified supply chains. (3) Heterogeneous analysis shows that firms with longer operational time, located in developed regions and eastern regions, or in primary and secondary sectors will choose a closer supply chain partner under the influence of digital infrastructure. (4) Extended analysis shows that digital infrastructure in neighboring cities will weaken the preferences of firms in those regions to find supply chain partners nearby.

Matching in Networks: Structure of the Set of Stable Allocations

Matching models with contracts have been extensively studied in the last years as a generalization of the classical matching theory. Matching in networks is an even more general model in which firms trade goods via bilateral contracts constituting a supply chain. Hatfield and Kominers ([2012] Matching in networks with bilateral contracts, Am. Econ. J., Microecon. 4(1), 176–208, doi:10.1257/mic.4.1.176) showed that a natural substitutability condition characterizes the maximal domain of firm preferences for which the existence of stable allocations is guaranteed in such a model, if the set of all existent contracts is acyclic. Moreover, they asserted that these conditions are sufficient to obtain a suitable lattice structure for the set of all stable allocations. In this paper, we exhibit an inconsistency in the last point through an example, and introduce an additional condition over firm preferences that allows to recover an appropriate lattice structure.

Channel selection strategy with consumer impulse purchase in livestream selling

AbstractConsumer impulsive purchasing is very common, especially in the livestream selling where they are influenced by policies such as low prices, limited time, and limited quantity. This behavior can increase a firm's sales, but it also leads to higher return rates. Considering consumer impulse purchase, this paper conducts an analytical model to investigate the conditions for a firm to introduce a livestream channel and whether the firm should adopt a low or moderate livestream price strategy when introducing a livestream channel. Our results show that, when return processing cost is small enough, the firm benefits from the livestream strategies as long as the streamer's fan effect is larger than a threshold. Specifically, a firm prefers to adopt the low livestream price strategy when cooperating with a large fan effect streamer and a moderate livestream price strategy with a small fan effect streamer. However, when return processing cost is large, the low livestream price strategy cannot be the dominant strategy. Furthermore, we make several extensions (i.e., different impulse utility on different livestream price, impact of positive impulse utility of low impulsive consumers, different online return rates of different types of consumers, the costs of introducing the livestream channel, and consumer return processing cost) to verify the robustness of the model, and the main conclusions remain unchanged. These results provide guidance for firms on the introduction of livestream channel and pricing decisions of different channels.

Exploring the financing gap for entrepreneurial firms in a developing economy: a case of mismatched expectations?

PurposeThis paper investigates the financing preferences and practices of Senegalese entrepreneurial firms, with a particular focus on understanding the gaps between the two and how they may contribute to financing constraints in developing economies. By juxtaposing the preferences of different financing options against their degree of usage, this study attempts to reveal the mismatch in demand and supply of entrepreneurial firms financing in Senegal.Design/methodology/approachA structured questionnaire was used to survey 524 entrepreneurial firms, and data was analyzed using various statistical methods.FindingsThe results indicate that the most preferred sources of financing for Senegalese entrepreneurial firms are self-financing and short-term bank loans. Short-term funding horizons are also much more preferred than their long-term counterparts. However, there is a mismatch between financing preferences and practices, particularly with regards to equity sources, which were found to be more preferred than used. The study argues that a combination of preferences, firm, and owner characteristics can explain the choice and frequency of usage of financing sources.Originality/valueThis study contributes to the literature by contrasting preferences and practices, revealing gaps between theory and practice, and providing better insight into the real financing needs of entrepreneurial firms in developing economies. To the authors’ knowledge, this is the first study to examine the financing preferences of Senegalese entrepreneurial firms, making it an important contribution to the literature on entrepreneurial firms financing in developing economies.

The Role of Informative Advertising in Aligning Preferences Over Product Design

Abstract This article explores the relationship between product design and advertising, traditionally viewed as distinct business decisions. I build upon the seminal work of Matutes and Regibeau (1988. “Mix and Match: Product Compatibility Without Network Externalities.” The RAND Journal of Economics 19 (2): 221–34), where firms produce components that combine to form product systems, and introduce the necessity for firms to advertise their products to create consumer awareness. I find that a firm’s incentive to advertise increases with product compatibility. Greater product compatibility reduces competition, encouraging firms to broaden their market presence through advertising. Contrary to Matutes and Regibeau, when advertising influences product awareness, consumers prefer products with moderate compatibility over those that are entirely incompatible. Consequently, advertising aligns the compatibility preferences of both firms and consumers.

Financial flexibility and enterprise entity investment preferences

With the growing trend of firms investing in financial products rather than physical assets, concerns about losing the industrial basis of the real economy have arisen. This study aims to determine how financial flexibility influences corporate investment decisions in China and how operational risk moderates this relationship. As such, we examine the impact of financial flexibility on the investment preferences of Chinese firms, specifically focusing on A-share listed companies from 2012 to 2021. Employing a theoretical and empirical framework, the research reveals that higher financial flexibility is associated with a lower preference for physical investment. However, business risk significantly mitigates this negative effect, suggesting that firms with higher operational risks are more likely to convert financial flexibility into physical investments to enhance expected returns and manage risks. These findings highlight that the influence of financial flexibility on investment preference is most pronounced in small- and medium-sized companies. This research underscores the importance of rationally utilizing financial flexibility, effective risk management, and differentiated strategies based on firm size to promote sustainable investment and economic growth. The implications extend to policymakers, suggesting the need for supportive measures to guide firms toward increased physical investment and a strengthened national economic basis.

Robot-assisted surgery and artificial intelligence-based tumour diagnostics: social preferences with a representative cross-sectional survey

BackgroundThe aim of this study was to assess social preferences for two different advanced digital health technologies and investigate the contextual dependency of the preferences.MethodsA cross-sectional online survey was performed among the general population of Hungary aged 40 years and over. Participants were asked to imagine that they needed a total hip replacement surgery and to indicate whether they would prefer a traditional or a robot-assisted (RA) hip surgery. To better understand preferences for the chosen method, the willingness to pay (WTP) method was used. The same assessment was conducted for preferences between a radiologist’s and AI-based image analysis in establishing the radiological diagnosis of a suspected tumour. Respondents’ electronic health literacy was assessed with the eHEALS questionnaire. Descriptive methods were used to assess sample characteristics and differences between subgroups. Associations were investigated with correlation analysis and multiple linear regressions.ResultsAltogether, 1400 individuals (53.7% female) with a mean age of 58.3 (SD = 11.1) years filled in the survey. RA hip surgery was chosen by 762 (54.4%) respondents, but only 470 (33.6%) chose AI-based medical image evaluation. Those who opted for the digital technology had significantly higher educational levels and electronic health literacy (eHEALS). The majority of respondents were willing to pay to secure their preferred surgical (surgeon 67.2%, robot-assisted: 68.8%) and image assessment (radiologist: 70.9%; AI: 77.4%) methods, reporting similar average amounts in the first (p = 0.677), and a significantly higher average amount for radiologist vs. AI in the second task (p = 0.001). The regression showed a significant association between WTP and income, and in the hip surgery task, it also revealed an association with the type of intervention chosen.ConclusionsIndividuals with higher education levels seem to accept the advanced digital medical technologies more. However, the greater openness for RA surgery than for AI image assessment highlights that social preferences may depend considerably on the medical situation and the type of advanced digital technology. WTP results suggest rather firm preferences in the great majority of the cases. Determinants of preferences and real-world choices of affected patients should be further investigated in future studies.

Effectiveness of environmental regulations: firm’s decisions and welfare implications

In this paper, we compare four policy instruments–tax, subsidy, binding emissions and cap-and-trade, to determine which policy is the most effective and whether they are equivalent. We also examine if a firm’s policy preference differs from that of a policymaker. Our motivation stems from the global use of a wide array of pollution instruments. Using a game theoretic approach, we analyze how carbon abatement, production quantity, profitability and welfare vary between different policy tools. We find that the tax policy is equivalent to the binding emission standards while welfare comparison shows that the highest welfare is attributed to either the tax or subsidy policy depending on the levels of environmental damage. We find that both the policymaker and the firm prefer a subsidy policy under lower thresholds of environmental damage. Exploring hybrid policies, we find that a multi-part tariff contract jointly implements the socially optimal outcomes and leads to a win-win situation for both the firm and the policymaker. Our findings offer guidance for policymakers and managers to implement appropriate policies based on the degree of environmental damage and to consider using hybrid policies that achieve higher pollution abatement and improved welfare.

Attitudes toward Women’s Layoffs during Recessions: Evidence from Chinese Firms

Sociological research has identified persistent disadvantages that face women in hiring and promotion opportunities in firms. This article extends this research on gender inequality to examining firm preferences for women’s layoffs when faced with the prospect of an economic recession. Drawing on nationally representative microdata on workers in China, this article reveals that these preferences differ by firm type. Men in state firms report significantly higher odds of preferring to lay off women first, but this effect is even stronger in private firms. As symbols of economic stability, state firms are prohibited from conducting layoffs, creating insulated organizational cultures with traditional gender role beliefs that are resistant to change. Meanwhile, private firms are governed by a firm logic of profit maximization that creates more precarity among workers and compels them, men and even women, to embrace layoffs of fellow women workers to protect themselves.

ANALYSIS OF THE VALIDITY OF TRADE-OFF AND PECKING ORDER THEORIES IN CAPITAL STRUCTURE DECISIONS OF SUSTAINABLE COMPANIES

In the study, it is aimed to test the validity of the Pecking Order Theory and Trade-Off Theory, which are among the theories on which the capital structure decisions of companies, which are extremely important in terms of firm value, are based, on sustainable companies included in the BIST Sustainability Index, since they carry out activities to reduce the cost of capital. In the study, the total indebtedness ratios, long-term indebtedness ratios and short-term indebtedness ratios of 40 companies included in the BIST Sustainability Index between 2015-2021, as well as liquidity, asset structure, non-debt tax shield, tax, profitability ratio, change in assets, firm size and the relationship between firm risk is examined. In general, the capital structure preferences of sustainable firms support the Trade-Off Theory. In addition, it was revealed that the dummy variable created for the periods when companies entered the BIST Sustainability Index was statistically significantly and positively related to their borrowing behavior. This result is interpreted in the direction of an increase in the borrowing rates of the companies after they are included in the index.

To commercialize inside or outside of the firm: Behavioral considerations in patent exploitation by family firms

AbstractResearch SummaryThis article examines the relationship between family ownership and patent use strategy using primary data from a patent survey, as well as patent and firm‐level data from secondary sources. The findings reveal that family firms are less likely than non‐family firms to license their patents and more likely to internally commercialize them. We show that the decision of family firms to license less does not depend on lower patent quality or inefficient patent use. Instead, it arises from their preference for patent uses that allow them to exert greater control over the value they can derive from their innovations. We also show that family firms commercialize more patents because they leverage their managerial discretion to explore and seize emerging internal patent commercialization opportunities.Managerial SummaryWhether the desire of families in family firms to maintain control over the company and strategic resources negatively impacts their economic performance has important governance implications. Within the context of patent commercialization, in line with this desire for control, our study highlights the preference of family firms to prioritize internal commercialization over licensing. To offset their underlicensing tendency, family firms internally commercialize more patents by being nimble to identify and capitalize on emerging commercialization opportunities. This enables them to align their control ambitions with patent commercialization efficiency, akin to nonfamily firms.

Does the financial investment preference of renewable energy firms promote their advance towards sustainable development goals?

Does the financial investment preference of renewable energy firms promote their advance towards sustainable development goals?

Managing presales with two payments and return policy when consumers are time‐inconsistent

We consider a firm using presales with two payments—including an upfront deposit and a postponed arrear—to sell a product to time‐inconsistent consumers under various return policies. With the passage of time, consumers decide whether to preorder the product by paying the deposit, whether to settle the balance by paying the arrear by the due date, and, when returns are allowed, whether to return a fully paid product for a refund after its fitness is revealed. Canceling a preorder before settling the balance or failing to settle the balance on time causes a deposit payer to lose deposit. Consumers use quasi‐hyperbolic discounting to weigh intertemporal utilities and exhibit time inconsistency when making purchase decisions. Our results indicate that, as consumers' time inconsistency weakens, the firm manages the deposit and the arrear to induce no, some, and all deposit payers, in that sequence, to settle the balance. It has mixed effects on the profit of the firm and consumer surplus but always causes social welfare to improve since actual sales increase. Regarding the choice of return policy, the firm prefers full returns while consumers prefer no returns when consumers are time‐inconsistent; they share similar preferences when consumers are time‐consistent. Moreover, we find that consumers' imbalance (caused by time‐inconsistent preference) is less likely to occur as consumers are more sophisticated, as the presales period shortens, as the product value increases, or as the product is more likely to be a good fit. In addition, allowing a quick refund for fully paid but not yet delivered products can completely deter imbalance, while this option harms the firm and may or may not benefit consumers. All this yields novel insights into managing presales with two payments and returns when consumers are time‐inconsistent.

Effects of partial passive ownership in a successive endogenous timing game with R&D spillovers

AbstractThis study explores the effect of partial passive ownership (PPO) in a successive two‐round endogenous timing game wherein firms choose research and development (R&D) investments in the first round and then subsequently choose quantities in the second round. We show that each firm prefers to be a quantity leader independent of the timing of R&D decisions, but the welfare‐inferior Cournot competition is an equilibrium of an endogenous production timing game. Moreover, we discover that the equilibrium of an endogenous R&D timing game crucially depends on the PPO level and R&D spillovers rate, while the R&D timing coordination may not be socially desirable unless both are low or high. Our findings suggest that the R&D leadership position of a PPO holder can play an anticompetitive role in the coordination of R&D competition with higher R&D spillovers rates and PPO levels.

Zero leverage and dividend policy

This study investigates zero leverage firms and their choice to pay dividends among New Zealand (NZ) listed firms for the period 2007 – 2021. Overall our findings indicate that after allowing for financial constraints limiting firm debt capacity and firm preference for financial flexibility, firm priority to pay dividends affects firm debt levels. Additional analysis shows that dividend paying firms with growth opportunities will increase short-term debt to maintain dividend payments.