It is conventional wisdom that a manufacturer's encroachment into retail space will likely hurt an existing retailer. In contrast to this belief, current research indicates retailer may welcome despite the new competition in final market. The help manufacturer have some “skin game” at level, which cause make selfish cost‐reducing investment spills over as lower wholesale price. Such spillover effect enhances retailer's profit long does not result extreme by certain degree of product...

The widespread adoption of activity-based costing enables firms to allocate common service costs each customer, allowing for precise measurement both the cost serve a particular customer and customer's profitability. In this paper, we investigate how pricing strategies based on information affects firm's acquisition retention dynamics, ultimately its profit, using two-period monopoly model with high- low-cost segments. Although past purchase helps increase profits through differential prices...

There are many circumstances in which manufacturers provide inputs to wholesale customers only subsequently compete with these the retail realm. Such dual distribution arrangements commonly suffer from excessive encroachment that manufacturer's ex post aggression is harmful ante because it undercuts potential profits. This paper demonstrates distribution, a manufacturer can benefit decentralized control and use of transfer prices above marginal cost. Although often create coordination...

ABSTRACT Firms’ reluctance at times to publicly disclose financial information is often attributed concern that the may be used against them by self‐interested outside parties. These parties interact with firm in horizontal realm (e.g., retail competitors) or vertical arena wholesale suppliers). This article built on premise fully understanding strategic consequences of disclosure requires joint consideration and relationships. When both rivals suppliers are accounted for, we demonstrate (i)...

ABSTRACT The textbook make-or-buy decision is typically described as choosing the cheaper of two sourcing options. However, research in accounting has consistently demonstrated that strategic and informational considerations often complicate such seemingly straightforward criteria. In a similar vein, this paper shows when firm becomes privy to information pertaining its profitability, choice powerful reverberations. This because input procurement from an outsider serves convey both...

A persistent question in industrial organization is whether regulations restricting price discrimination input markets can promote efficiency. Despite the extensive study of economic effects pricing regulations, literature bereft an examination role accounting information. In this paper, we seek to fill gap by modeling uniform restrictions on firms’ information generation and disclosure. doing so, find that considerations present impetus for requirements since they incentives retail firms...

Fear of escalating input prices in response to retail success is a commonly discussed phenomenon affecting supply chains. Such ratchet effect arises when retailer feels compelled modify its investments better serve the end customers order hide positive prospects and restrain future wholesale price hikes. In two-period model chain interactions, authors demonstrate that such an endogenous can have multifaceted reverberations. A fearing hikes may be tempted curtail near-term profits ensure...

This paper examines the difference in compensation structure between family firms and non-family Korea. A manager's is an important means of motivating a manager to make decisions for shareholders by mitigating conflicts interest them. However, role can be weakened following reasons. First, member has fewer interest, compared manager. Second, intrinsic incentive increase firm's value (i.e., wealth). Finally, monitor managers more effectively. For reasons, agency problem will less severe...

According to the unraveling result, an informed party ends up revealing all private information uninformed parties without being able exploit advantage despite its discretion disclose (Grossman and Hart, 1980; Grossman, 1981; Milgrom, Milgrom Roberts, 1986). In contrast, this paper shows that strategic delegation of disclosure decision coupled with relative performance evaluation (RPE) enables a firm withhold by serving as credible commitment information. The use RPE naturally makes manager...

Retailers are often willing to share demand information with manufacturers despite the danger that will exploit such for their own benefit. To this end, theoretical research in operations and marketing has consistently warned retailers should be more cautious sharing upstream. In paper, we seek provide one explanation apparent disconnect between theory practice, rooted manufacturer investments. Whether launching new products or supporting existing offerings, undertake substantial investments...

The conventional wisdom is that a manufacturer's encroachment into the retail space will likely hurt an existing retailer. In contrast to belief, current research shows retailer may in fact welcome despite of new competition final market. help manufacturer have some "skin game" at level which get it make selfish cost-reducing investment turn spills over Such spillover effect enhances retailer's profit as long does not result extreme competition. so robust benefit from remains even after...

Independent external audit of financial reports public organizations is mandatory in many jurisdictions the world. Regulatory regimes attempt to maintain and enhance effectiveness audits so they can serve their fundamental purpose facilitating capital investments through more informative reports. Regulations seek improve reporting by promoting quality competition market, restricting managers auditors from taking actions which may lower information quality. In this paper, using two examples...

This study examines how a job training, combined with put options, may induce workers poor fit firm to leave, which would enhance the firm's screening efficiency and value. In many cases, neither nor employing have information about their fit, even though be most important determinant of employee performance. Job training offers an opportunity for worker learn fit. Although remains worker's private information, can design more efficient contracts selectively motivate trained signal high...

This paper examines how the choice of an upstream firm's compensation structure can affect investment hold-up problems in vertical relationships. I show that employing option-based mitigate problem by creating more bargaining power. Intuitively, limited downside option spurs aggressive negotiation, and such aggressiveness is made pronounced when a sunk renders out money if negotiations break down. The resulting increased transaction price improves profit, improved return on induces firm....