Sep 2016, Volume 10 Issue 3

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  • Orginal Article
    Rolf van Dick,Rudolf Kerschreiter

    When employees identify with the groups and organizations they work for, this typically has positive implications for work-related attitudes and behaviors. The present paper provides a focused overview of the social identity approach to leadership and some ideas on its cross-cultural generalizability. To this end, we will first outline the basic tenets of the social identity approach and summarize the relations of organizational identification with work-related variables. Then, we will discuss the role of social identity-related concepts for effective leadership. In particular, we will present empirical studies on the following three aspects: (1) the transfer of leader identification onto their followers, (2) the role of leader prototypicality, and (3) the ways for leaders to actively manage the identities of the groups they lead. Finally, we will provide some suggestions on how to implement the principles of identity management into practice and offer suggestions for future research, with a special focus on China.

  • Orginal Article
    Jun Yuan,Leonard MacLean,Kuan Xu,Yonggan Zhao

    If common factors jointly affect country stock markets, it is an indication of global stock market integration. Common factors may affect some markets more/less than other markets, an indication of the degree of global stock market integration/ segmentation. In this paper, we study the integration of global stock markets based on the returns on exchange traded funds (ETFs) for the US, Canada, UK, Germany, France, Italy, Australia and Japan. The relationship between country ETF returns and common risk factors may be time-varying across countries, and that favors a regime switching (RS) factor model for the dynamics of the country ETF returns. A RS factor model for the relationship between country ETF returns and common risk factors is fitted to daily data for the period from May 31, 2000 to March 31, 2014. We use the data to test a hierarchy of hypotheses on country ETF returns: (1) common factor exposure across all country ETFs and all regimes; (2) common factor exposure across some country ETFs and all regimes, and (3) common factor exposure across some country ETFs and some regimes. The RS factor model for ETF returns fits the data well and the common factors have variable effects across countries and over regimes.

  • Orginal Article
    Bo Zhang,Hanze Wei,Lijun Ma

    In this study, we investigate the association between financial reporting quality and a firm’s deviation from its optimal capital structure. We find that a firm’s deviation from its optimal capital structure is decreasing in financial reporting quality. The results suggest that high-quality financial reporting helps to reduce a firm’s deviation from its optimal capital structure. In addition, we document that the relationship is intensified in non-SOEs, in which financial reporting quality plays a more crucial role. Furthermore, we find that bank connections diminish the role of financial reporting quality in optimal capital structure. Our results hold when we control for potential endogeneity in financial reporting quality and capital structure decisions. Our study contributes to both financial reporting quality and capital structure literature. We also contribute to the literature on informal contracts in organizational decision-making.

  • Orginal Article
    Xia Wang,Chunling Yu,Lily C. Dong

    Advertorials have been shown to influence advertising recall and brand evaluation. However, no research has examined their impact on sales. This study uses longitudinal data on durable consumer goods in China to assess the extent to which advertorials influence sales. The study finds that advertorials have dual, positive effects on firms’ sales: a direct effect through original copy and a reposting effect through online exposure.

  • Orginal Article
    Yan Li,Sisi Sheng

    Using a large dataset obtained from “Paipaidai,” an online peer-to-peer lending platform in China, we examine whether credit officers’ mood affects the efficiency of credit approval from a perspective of individual decision-making. Refering to studies in psychology and financial economics, we employ season, temperature and weather as mood proxies, and control the variables related to the quality of the loan to study credit approval behavior under different mood conditions. The results suggest that the efficiency of credit approval by individual credit officers is significantly correlated with their mood—a positive mood improves efficiency, while a negative mood reduces it. Specifically, loans examined under better mood conditions (e.g., during spring, comfortable temperatures, and sunny days) have a significantly higher probability of approval, but a lower probability of default if approved; and those examined under poorer mood conditions show a lower probability of approval and a higher probability of default if approved. This effect of mood is even stronger when a loan application is more complex, atypical, or unusual to evaluate. Moreover, investor sentiment, denoted by closed-end fund premiums, has the same effect on credit approval as well.

  • Orginal Article
    Sheng Zhang,Yuan Li,Jingyu Chen

    In this paper, we examine the relationship between CEO power, CEO age and the efficiency of policy implementation in listed corporations controlled by each province’s State-owned Assets Supervision and Administration Commission (SASAC) in China. We find that CEOs with more power implement policy are more efficiently. We also find that younger powerful CEOs will act more effectively than their older competitors. The reason for the difference is that younger powerful CEOs in state-owned companies are incentivized to implement their policy tasks to gain promotions or political capital. Our results are important to future SOE reform and to understanding the characteristics of SOEs as policy instruments.