Vol. 4, No.2, June 2020

Contemporary Issues of Behavioral Research in Business, Economics and Finance

Editor-in-chief: Prof. Johannes Platje

Editors: Mehmet Baha KARAN, Kazim Baris ATICI

Vol. 4, No. 2, 7-19, June 2020

Reflecting on reflections on covid-19

Authors: Ynte K. VAN DAM, Joke F. WEBBINK
Wageningen University

Aim: This paper is an invited reaction to Platje, Harvey & Rayman-Bacchus, March 2020, ‘COVID-19 – reflections on the surprise of both an expected and an unexpected event’ in CEREM 4(1). In the tradition of critical science this paper starts from a discussion of the assumptions underlying the paper it reacts upon.

Findings: The original text is a laudable attempt to initiate a discussion on unpredictable future threats that remains constricted in semantic confusions, misperceptions, misinterpretations, and logical fallacies implying preconceived conclusions. As a logical consequence of a socio-economic system that systematically disregards human wellbeing and welfare – and exploits human weaknesses – in its endless pursuit of short term profit, the current pandemic and its subsequent crisis was expected and predictable, but wilfully ignored. And, unless this crisis will be used to rebuild the socio-economic system for sustainable development, so will be the next one.

Key words: COVID-19, Economy, Psychology, Sustainable Development

doi: http://dx.doi.org/10.29015/cerem.876

Vol. 4, No. 2, 21-40, June 2020

Effects of terrorism and political instability on tourist behavior: 2016 conflicts in Turkey

Author: Onur KOYUNCU
Hacettepe University, Turkey

Aim: This article investigates the effects of two attacks and a failed coup attempt during 2016 on the tourist behavior. Foreign tourist data for the 2003-2019 period is analyzed to observe irregularities in Turkey’s national tourism income.

Design / Research methods: Linear regression, multivariate regression and regression based static forecasting methods are applied for modeling the relationships. These models are supported with statistical tests.

Conclusions / findings: Results on this study are in accordance with the current literature in the sense that conflicts in 2016 caused a shift in tourist behavior which in turn impaired the tourism industry in Turkey. Repercussions did not endure longer than expected and Turkish tourism recovered rapidly, only facing a serious loss due to the shift in tourism demand trend.

Originality / value of the article: This study makes an addition to the terror and tourism literature, especially for the Mediterranean region and specifically for Turkey both of which are among the most popular tourist destinations worldwide. The aftermath of attacks and the coup attempt in Turkey during 2016 have not been researched before. The data and the outcomes presented sufficient evidence to infer on this issue.

Keywords: Terrorism, Mediterranean tourism, Turkey, Economic impact, Forecast, Demand

JEL: C12, C22, C53, E71

doi: http://dx.doi.org/10.29015/cerem.866

Vol. 4, No. 2, 41-89, June 2020

Stock Market Reactions to Financing and Payment Decisions for European Mergers and Acquisitions

Authors: Wolfgang BESSLER
University of Hamburg, Germany / University of Groningen, The Netherlands
University of Groningen, The Netherlands
University of Groningen, The Netherlands

Aim: We analyze stock market reactions to merger and acquisition announcements for firms in Europe and contribute to the literature by providing empirical evidence how the decisions with respect to alternative financing sources (equity or debt) and methods of payment (cash or stock) affect the magnitude of the valuation effects.

Research design: An event study methodology is applied to 717 M&A transactions. We analyze the size of the cumulative abnormal returns using the financing sources and payment methods and other variables as the relevant determinants.

Findings: The cumulative abnormal results suggest that target shareholders and bidder shareholders in private deals benefit from mergers and acquisitions. The effect found is centered around the announcement date, making our findings consistent with market efficiency. Debt financed deals outperform equity financed deals and cash paid M&A outperform stock paid M&As due to information asymmetries as well as signaling and agency effects.

Originality: This study adds to our understanding of the relevance of the financing sources and the payment methods for the magnitude of valuation effects of mergers and acquisitions in Europe.

Implications: This study may help practitioners to better assess the valuation effects of alternative financing sources and payment methods when acquiring other firms.

Key words: mergers & acquisitions, abnormal returns, financing sources, payment methods, Europe
JEL: G32, G34

doi: http://dx.doi.org/10.29015/cerem.866

Vol. 4, No. 2, 91-105, June 2020

The behavioral investigation of industry 4.0 concept: a research on Twitter

Author: Bulent CEKIC
Hacettepe University, Ankara, Turkey

Aim: This paper is going to investigate how Industry 4.0 concept, behaves in social networks and the context of this innovative approach find a place in time in means of content and sentiment comprising.

Design / Research methods: Expeditious progress in industrialization and information techniques has made great advancement in developing the next span of production technology. Industry 4.0 is an imperative action where the intention is the alteration of modern production through digitalization and profiteering of the capabilities of new advancements. Today, the absence of powerful appliances still feigns a significant impediment for utilizing the ample potential of Industry 4.0. Notably, behavioral approaches are essential for understanding Industry 4.0, which professes novel trials. This paper briefly surveys the area of Industry 4.0 as it relates to behavioral operations by using sentiment analysis and social network analysis methods and tools by describing features of the relationship network either through numerical and visual representation

Conclusions/Findings: First of all, it should be presumed that the name Industry 4.0 describes various, fundamentally internet-based developments in manufacturing operations. These advancements do not only have technological but moreover accomplished organizational engagements. Appropriately, a shift from product to service orientation is assumed. Following, the introduction of novel varieties of businesses can be envisioned which embraces new particular functions within the production process sequentially the value-creation networks.

Originality/value of the article: Within the context of the current state of the art in operations management literature, this paper fulfills the gap between behavioral operations and Industry 4.0 context for the researchers both in operations management and behavioral sciences

Keywords: Industry 4.0, Behavioral Operations Management, Social Network Analysis.

JEL: C88, D23, D24, E71, M11, O14, O33

doi: http://dx.doi.org/10.29015/cerem.878

Vol. 4, No. 2, 107-135, June 2020

Underpricing of initial public offerings in hot and cold markets: An empirical study on Borsa Istanbul

Authors: Ezgi TUNCAY, Mehmet KARAN, Eren MISKI AYDIN
Hacettepe University, Ankara, Turkey

Aim: The performance of the initial public offerings is one of the most discussed anomalies in financial literature. The study aims to evaluate the initial public offering performance of Borsa Istanbul companies during the hot and cold periods. The size of the companies, industry concentration and investor optimism are considered in this respect.

Design / Research methods: The study covers the 119 IPOs of various sizes from different industries between 2010 and 2017 just after the global financial crisis. The standard event study methodology is applied. This study has revealed the existence of post-crisis underpricing effects in Turkey.

Conclusions/findings: The research shows that although low pricing is valid in hot periods, hot and cold markets do not differ significantly from each other in this context. Besides, this study finds that the low price effect exists for small firms, and this effect is more common in hot markets. On the other hand, although there is a relationship between consumer confidence index and low price, no relation with industry concentration was found

Originality/value of the article: This study has reported the IPO performance in Borsa Istanbul, an important emerging market, after the 2008 crisis, taking into account various market characteristics. This study provides practical results for the capital market players and institutions.

Implications of the research: The study will guide Borsa Istanbul’s new companies to have successful public openings and international investors, which pursue market timing along with the financial institutions and policymakers

Limitations of the research: Subsequent studies may include variables such as corporate characteristics, financial performance, firm age and region, and corporate governance.

Keywords: Emerging market, Anomaly, Underpricing, Initial Public Offerings, hot and cold markets.

JEL: G14;G24;G32

doi: http://dx.doi.org/10.29015/cerem.871

Vol. 4, No. 2, 137-153, June 2020

Demand deficiency, money velocity and heterogeneity

Authors: Sidika BASCI
Ankara Yildirim Beyazit University, Turkey and EISTI, Cergy, France
EISTI, Cergy, France

Aim: Money velocity data for the United States show that there is a decline in all of the broad money aggregates in recent decades. This points to a sustained demand deficiency element. Can consumer heterogeneity be the cause of this declining trend? The aim of this paper is to find an answer for this question.

Design / Research Methods: To achieve our aim we use Agent Based Modelling (ABM). In our model, the agents are heterogeneous consumers with different spending propensities.

Conclusions / findings: We show that heterogeneous consumers with different spending propensities alone puts a downward pressure on money velocity. This pressure is coupled with a sustained worsening in the wealth distribution. We observe that as money accumulates in the hands of agents with the lowest propensity to spend, money velocity keeps declining. This also puts a downward pressure on nominal aggregate demand and hence a deflationary bias on the general price level.

Originality / value of the article: This paper shows that heterogeneity of economic agents should not be ignored and that ABM is a very powerful tool to analyse heterogeneity.

Implications of the research: The implication for policy makers is that the demand deficiency associated with the fall in money velocity will persist until the worsening of wealth dispersion comes to a halt.

Key words: Demand Deficiency, Money Velocity, Heterogeneity, Wealth Distribution, Agent Based Modelling

JEL: D31, D9

doi: http://dx.doi.org/10.29015/cerem.865

Vol. 4, No. 2, 155-166, June 2020

Cash management organisation decision-making: economics, strategy and operations

University of Groningen, The Netherlands

Aim: This article starts from the observations of two experts, who witness varying company views on the almost-vanished issue of structuring the internal decision-making on the organisation of cash management. The aim of this article is to put the current challenging developments in a digitalizing world into a conceptual perspective.

Research design: The article singles out motives for either centralization or decentralization of cash management, models to organize cash management functions, as well as developments in the field over the last some thirty years. Various theoretical views are studied briefly in order to find a way out of the signalled paradox into a refined future.

Findings: It can be concluded that multiple practices may coexist both within and between firms, whereby a refined understanding in terms of financial economics, strategic direction and operational flexibility is called for.

Originality: The present study is unique in that it is among the first in academia to signal the return of the centralisation versus decentralisation issue in cash management in a rapidly evolving digital era and a multi-legislation world.

Implications: The developments offer a unique opportunity for firms, further reducing their costs, to overthink their cash management system, including its relation to the external world. The study calls for follow-up research in terms of case studies at organisations with varying contingencies and survey questionnaires among representative samples.

Keywords: cash management organisation, (de-) centralisation, decision-making
JEL: B27, G30, L23

doi: http://dx.doi.org/10.29015/cerem.874