Can Transient Institutions Correctly Interpret Small Negative Earnings Surprises in the Absence of Access to Management’s Private Information?

Professor, Provost's Chair Ke Bin, Accounting

Using a proprietary database of institutional investors’ daily stock trading records in the post–Regulation Fair Disclosure (FD) period, this study examines whether transient institutions have the independent ability to correctly process small negative earnings surprise announcements, which management claims transient institutions have difficulty in interpreting. We find economically significant abnormal selling by transient institutions in response to small negative earnings surprises. Transient institutions’ selling in response to small negative earnings surprises is also associated with significant contemporaneous stock price declines. However, we find no evidence that transient institutions’ trading in response to small negative earnings surprises is an overreaction as there is no reversal of stock prices subsequent to transient institutions’ trading. More importantly, we show that transient institutions’ trading in response to small negative earnings surprises helps improve the informational efficiency of share prices.

Polluted work: A self-control perspective on air pollution appraisals, organizational citizenship, and counterproductive work behaviour.

Assistant Professor Yam Kai Chi, Management & Organisation

Air pollution is a growing concern in rapidly developing nations. Nonetheless, theory and data on the impact of air pollution on employee behaviour are essentially non-existent. In this paper, we employ a diary methodology to examine the within-individual effects of air pollution appraisals on employees’ daily self-control resources and behaviour. Multi-level data collected across two weeks from 155 employees located in urban China indicate that appraisals of air pollution severity deplete employees’ self-control resources. This depletion, in turn, mediates the effects of air pollution appraisals on employee behaviour, resulting in decreased organisational citizenship behaviour and increased counterproductive work behaviour. In support of the depletion perspective, the effects of air pollution appraisals are moderated by employees’ trait self-control and hold even after controlling for employees’ daily negative affectivity and objective levels of air pollution. We also discuss the implications for future research and practice in this paper.

Revolutionizing Customer Service

Vice Dean (Graduate Studies), Professor Wirtz Jochen, Marketing

Traditional approaches to service improvement often don’t work. They are fragmented, incremental, and based on faulty assumptions about the true nature of service. Companies try these approaches again and again, and while they may enjoy temporary surges of improvement, people run out of steam and the improvement dies.