Articles

Pricing and Capacity Allocation for Shared Services

V. KOSTAMI, D. KOSTAMIS, S. ZIYA

Manufacturing & Service Operations Management

printemps 2017, vol. 19, n°2, pp.230-245

Départements : Information Systems and Operations Management

Mots clés : customer mix; customer interaction; price discrimination; capacity allocation; shared services

http://pubsonline.informs.org/doi/abs/10.1287/msom.2016.0606


We study the pricing and capacity allocation problem of a service provider who serves two distinct customer classes. Customers in each class are inherently heterogeneous in their willingness to pay for service, but their utilities are also affected by the presence of other customers in the system. Specifically, customer utilities depend on how many customers are in the system at the time of service as well as who these other customers are. We find that if the service provider can price discriminate between customer classes, pricing out a class, i.e., operating an exclusive system, can sometimes be optimal and depends only on classes’ perceptions of each other. If the provider must charge a single price, an exclusive system is even more likely. We extend our analysis to a service provider who can prevent class interaction by allocating separate capacity segments to the two customer classes. Under price discrimination, allocating capacity is optimal if the “net appreciation” between classes, as defined in the paper, is negative. However, under a single-price policy, allocating capacity can be optimal even if this net appreciation is positive. We describe in detail how the nature of asymmetry in classes’ perception of each other determines the optimal strategy

Public-Private Collaboration, Hybridity and Social Value: Towards New Theoretical Perspectives

B. QUELIN, I. KIVLENIECE, S. LAZZARINI

Journal of Management Studies

septembre 2017, vol. 54, n°6, pp.763-792

Départements : Stratégie et Politique d’Entreprise, GREGHEC (CNRS)

Mots clés : cross-sector collaboration, hybrid arrangements, interorganizational governance,organizational design, public-private partnerships, social value


Focusing on the collaboration intersecting public, non-profit and private spheres ofeconomic activity, we analyse the conceptual forms of hybridity embedded in these novel inter-organizational arrangements, and link them to different mechanisms of creating social value. Wefirst disentangle alternative notions of hybrid arrangements in existing literature by proposing aconceptual typology on two theoretically complementary yet distinct dimensions: hybridity ingovernance and hybridity in organizational logics. We show how both forms of hybridity canjointly occur in complex public-private and cross-sector collaborations, and propose the notion ofvalue as a crucial bridging point between these perspectives. Crucially, we develop a conceptualframework on key theoretical mechanisms leading to economic and social value in these inter-organizational collaborations. Our work deepens the understanding of how diverse, hybrid formsof collaboration can create value and builds critical links between previously disparate streams ofliterature on public-private interaction, cross-sect or collaboration and social enterprises

Questionable Transactions, Unquestionable Rules: The Odebrecht/Braskem Case and the Foreign Corrupt Practices Act

L. SCOLLO, M. M. WINKLER

Diritto del Commercio Internazionale

2017, vol. XXXI, n°3, pp.521-542

Départements : Droit et fiscalité, GREGHEC (CNRS)


This article offers a critical analysis of the Odebrecht/Braskem case under theForeign Corrupt Practices Act (FCPA ). Two Brazilian companies, Odebrecht S.A.and its subsidiary Braskem S.A., have been caught in a massive bribery machinethat concerned Brazil as well as many other countries, including Switzerland andthe United States. Not only did these companies create a true consortium throughwhich they controlled Brazil’s public procurement system in a way to adjudicateand make profit out of multibillion projects in South America and abroad, but theyalso exploited the U.S. financial market to transfer money to corrupt public officers.The two companies cut a deal with the U.S. prosecutors under the FCPA, which thearticle comments in two parts. First, it recounts the case’s factual background,casting a light on the companies’ business models and corrupt conduct. The secondpart delineates the legal arsenal underlying the deal signed with the U.S. prosecu-tors, which reflects a consolidated practice of the U.S. government to prosecutenon-American multinational enterprises pursuant to the FCPA. Such practice isbased on the broad discretion enjoyed by U.S. federal prosecutors in exercising their prosecutorial power, which includes the possibility to halt or defer theprosecution upon the condition that the defendant pays a penalty and submits to certain compliance and self-reporting obligations. Through the FCPA, they cantarget foreign corporations whose bribery scheme involved, even indirectly, theU.S. financial market. Finally, the Odebrecht/Braskem case represents the firstexample of a deal that was indirectly participated by foreign governments, whosesanctions were considered part of the deal itself

Relative Optimism and the Home Bias Puzzle

B. SOLNIK, L. ZUO

Review of Finance

août 2017, vol. 21, n°5, pp.2045–2074

Départements : Finance

Mots clés : G15 - International Financial Markets G02 - Behavioral Finance: Underlying Principles

https://academic.oup.com/rof/article/21/5/2045/2670076


We study whether relative optimism leads to home bias in portfolio holdings by looking at two novel databases: a survey that includes expectations of identified professional asset management companies for equity, bonds, and currencies, and the International Monetary Fund portfolio holdings data for equity and bonds. We document that relative optimism for equity is persistent over the period 1997–2012, but relative optimism for bonds and currencies exhibits more time-series variation. Moreover, we show that relative optimism is an economically significant variable that helps explain home bias in portfolio holdings, not only for equity, but also for bonds

Strategic Investment in Renewable Energy Sources: The Effect of Supply Intermittency

S. AFLAKI, S. NETESSINE

Manufacturing & Service Operations Management

Summer 2017, vol. 19, n°3, pp.489-507

Départements : GREGHEC (CNRS)

Mots clés : Electricity Generation, Renewables, Intermittency, Capacity Planning and Investment, Incentives and Contracting

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2661582


To analyze incentives for investing in the capacity to generate renewable electricity, we model the trade-off between renewable (e.g. wind) and nonrenewable (e.g. natural gas) technology. Renewable technology has a higher investment cost and yields only an intermittent supply of electricity; nonrenewable technology is reliable and has lower investment cost but entails both fuel expenditures and carbon emission costs. With reference to existing electricity markets, we model several interrelated contexts - the vertically integrated electricity supplier, market competition, and partial market competition with long-term fixed-price contracts for renewable electricity - and examine the effect of carbon taxes on the cost and share of wind capacity in an energy portfolio. We find that the intermittency of renewable technologies drives the effectiveness of carbon pricing mechanisms, which suggests that charging more for emissions could unexpectedly discourage investment in renewables. We also show that market liberalization may reduce investment in renewable capacity while increasing the overall system's cost and emissions. Fixed-price contracts with renewable generators can mitigate these detrimental effects, but not without possibly creating other problems. In short: actions to reduce the intermittency of renewable sources may be more effective than carbon taxes alone at promoting investment in renewable generation capacity

Systemic Risk in Clearing Houses: Evidence from the European Repo Market

C. BOISSEL, F. DERRIEN, E. ORS, D. THESMAR

Journal of Financial Economics

septembre 2017, vol. 125, n°3, pp.511-536

Départements : Finance, GREGHEC (CNRS)

Mots clés : repurchase agreement; sovereign debt crisis; LTRO; secured money market lending; clearing houses

http://www.sciencedirect.com/science/article/pii/S0304405X17301277


We study how crises affect Central Clearing Counterparties (CCPs). We focus on a large and safe segment of CCP-cleared repo market during the Eurozone sovereign debt crisis. We develop a simple model to infer CCP stress, which is measured as repo rates’ sensitivity to sovereign CDS spreads and jointly captures (1) the effectiveness of haircut policies, (2) CCP-member default risk (conditional on sovereign default), and (3) CCP default risk (conditional on both sovereign and CCP-member default). During 2011, repo rates strongly respond to sovereign risk, particularly for GIIPS countries: repo investors behaved as if the conditional probability of CCP default was substantial. (100 words)

The Effect of Business and Financial Market Cycles on Credit Ratings: Evidence from the Last Two Decades

G. LOBO, L. PAUGAM, H. STOLOWY, P. ASTOLFI

Abacus

mars 2017, vol. 53, n°1, pp.59-93

Départements : Comptabilité et Contrôle de Gestion, GREGHEC (CNRS)

Mots clés : Business cycles; Credit rating agencies; Financial marketcycles; Investor reaction


We analyze the effect of business and financial market cycles on creditratings using a sample of firms from the Russell 3000 index that are ratedby Standard and Poor’s over the period 1986–2012. We also examine inves-tor reaction to credit rating actions in different stages of business andfinancial market cycles. We document that credit rating agencies areinfluenced by business and financial market cycles; they assign lower creditratings during downturns of business and financial market cycles andhigher ratings during upturns. Our study is the first to find strong evidenceof pro-cyclicality in credit ratings using a long window. We also documentstronger investor reaction to negative credit rating actions during down-turns. Our results confirm theoretical predictions and inform regulators

The Effect of Joint Auditor Pair Composition on Audit Quality: Evidence from Impairment Tests

G. LOBO, L. PAUGAM, D. ZHANG, J.-F. CASTA

Contemporary Accounting Research

Spring 2017, vol. 34, n°1, pp.118-153

Départements : Comptabilité et Contrôle de Gestion, GREGHEC (CNRS)

Mots clés : Joint Audits, Audit Quality, Auditor Independence, Impairment Testing, Conservatism


The expanding domain of strategic management research and the quest for integration

R. DURAND, R. M. GRANT, T. L. MADSEN

Strategic Management Journal

janvier 2017, vol. 38, n°1, pp.4-16

Départements : Stratégie et Politique d’Entreprise, GREGHEC (CNRS)

Mots clés : literature reviews; paradigm; scholarly field; fragmentation, integration


This special issue of Strategic Management Journal was motivated by concern that the growing scope and diversity of the strategic management field creates the risk of incoherence and fragmentation and the belief that research reviews could contribute to synthesis and integration. In this introductory essay, we address the expanding domain of strategic management, consider where its boundaries lie, identify the forces engendering fragmentation, and discuss how this special issue—and research reviews in general—can assist convergence within the field of strategy. We conclude by addressing the potential for integration more broadly in relation to the theories we deploy, the phenomena we investigate, and cohesiveness of our scholarly community

The Political Economy of Financial Innovation: Evidence from Local Governments

C. PERIGNON, B. VALLEE

Review of Financial Studies

juin 2017, vol. 30, n°6, pp.1903-1934

Départements : Finance, GREGHEC (CNRS)

https://academic.oup.com/rfs/article/30/6/1903/3098538/The-Political-Economy-of-Financial-Innovation


We investigate the development of an innovative and high-risk type of borrowing for local governments, known as structured loans. Using transaction data for more than 2,700 local governments in France, we show that the adoption of these instruments is more frequent for politicians from highly indebted local governments, from politically contested areas, and during political campaigns. Taking on structured loans helps incumbents win a reelection, and initially allows them to maintain lower taxes. Our findings illustrate how financial innovation can amplify principal-agent problems within the political system


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