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Spring 2025 Issue No. 5

View the Spring 2025 Issue (PDF)

Table of Contents

• Editors' Introduction

In The Journals

• An Examination of Management Responsibility in Shock Events on Shareholders’ Wealth and Reputational-Repair Actions to Rebound Losses
• Principles-Based Accounting Standards and Audit Outcomes: Empirical Evidence
• Corporate Environmental Performance, Legal Origin, and Investor Protection
• The Effect of Auditor Industry Specialization and Board Independence on the Cash Flow Reporting Classification Choices Under IFRS: Evidence from Taiwan
• ESG Government Risk and International IPO Underpricing
• Global Equity Investing: An Efficient Frontier Approach
• Cross-Border M&As and Credit Risk: Evidence from the CDS Market
• All’s Fair in Love and War but Nothing’s Fair Use on YouTube: How YouTube Policies Favor Copyright Owners and Hinder Legal Fair Use
• Thoughts Regarding the Application of the Step Transaction Doctrine to the Section 351 Control Requirement and Complex Media, Inc. v. Commissioner
• The Death of MODA—Or So We Hope
• The Type of Pharmaceutical Payments to Physicians Affects Prescription Behavior Over Time
• Business and/or Ethics? A Framework for Resolving Multicriteria Decision Dilemmas
• Crisis Remote Learning During the COVID-19 Pandemic: A Global Case Study in Tourism
• When Opportunity Meets Ability: The Moderating Effects of Prolific Inventors on Novel Drug Innovation Following Product Development Failure in Biotechnology
• Fortune or Prestige? The Effects of Content Price on Sales and Customer Satisfaction
• Suspicious Online Product Reviews: An Empirical Analysis of Brand and Product Characteristics Using Amazon Data
• If at First You Do Succeed, Do You Try, Try Again? Developing the Persistence–Licensing Response Measure to Understand, Predict, and Modify Behavior Following Subgoal Success
• Synergistic Effects of Market Orientation Implementation and Internalization on Firm Performance: Direct Marketing Service Provider Industry

On the Bookshelf

• Contemporary Talent Management: A Research Companion
• Global Leadership and Wisdoms of the World: Unpacking Insights from 17 Language Cultures

Editors' Introduction (PDF)
Drs. Eric Kessler and Ping Wang

It is with great joy that we celebrate the fifth anniversary of Lubin Business Review (LBR), founded on the mission of translating cutting-edge research for practical use by today’s business professionals. In doing this, we share with you an impressive array of focused single-page abstracts of recently published academic journal articles and scholarly books written by our Lubin faculty, directed toward providing valuable insights and useful tools to the Pace community and beyond. Whereas the titles and topics vary across the years, our format remains disciplined and steadfast – distilling fundamental gists under the headings of: a) Issue and Importance (engagement challenges), b) Main Findings (innovative solutions), and c) Practical Implications (impactful actions). As with previous issues of LBR, this fifth issue addresses a wide range of business interests spanning a host of regions, disciplines, and industries. In all, 22 unique contributions are included.

In the Journals

An Examination of Management Responsibility in Shock Events on Shareholders’ Wealth and Reputational-Repair Actions to Rebound Losses (PDF)
Dr. Samir M. El-Gazzar

Shock events are sudden and unexpected events that significantly disrupt the routine operation, and possibly, the continued existence of a firm. These shock events include (but are not limited to) product recalls, environmental violations, corporate illegalities, fraudulent financial reporting, and other forms of misconduct. They are improbable, unpredictable, usually short in duration, and have event dates that can be pinpointed. Assuming market efficiency, when a shock event occurs, a company's market capitalization is expected to decline by the present value of the expected costs of the event. Prior research has documented that shock events have caused significant shareholders’ loss by tens of trillions of dollars. This paper extends prior research by examining the incremental impact of management responsibilities in the event on shareholders’ wealth, and the reputation repair actions taken by management to rebound the losses. Industrial psychology and capital market theories state that shock events resulting from management misconduct reduce- stakeholders’ trust in the firm’s operations. The magnitude and duration of the loss depends on management’s reputational repair actions. 

Principles-Based Accounting Standards and Audit Outcomes: Empirical Evidence(PDF) 
Dr. Myojung Cho

The Sarbanes-Oxley Act of 2002 was enacted after high-profile accounting scandals emerged involving firms that exploited rules-based accounting standards. In response, the Financial Accounting Standards Board (FASB) proposed the principles-based approach to accounting standard setting, which allows managers to exercise professional judgment in reporting financial transactions in a manner that is consistent with the underlying economic substance. However, the US Securities and Exchange Commision (SEC) raised concerns that professional judgment and related management discretion under the principles-based standards might lower financial reporting quality and increase audit efforts. Therefore, we investigate whether the design of accounting standards (principles-based vs. rules-based) is related to audit outcomes, including audit fees, going concern audit opinions on a firm’s ability to continue operation, and audit report delays. 

Corporate Environmental Performance, Legal Origin, and Investor Protection (PDF)
Dr. Kam C. Chan 

Adopting strong environmental, social, and governance (ESG) practices and reporting standards is increasingly vital to investors, consumers, activists, and regulators. In response, numerous countries are introducing new disclosure requirements for businesses regarding their ESG activities and impacts. For instance, the US Securities and Exchange Commission has recently proposed rules that would mandate firms to report climate-related risks to their businesses. Additionally, investment advisors and funds with an ESG focus would be required to disclose the specific ESG criteria used in making their investment decisions. These developments signal a growing recognition of the importance of ESG factors in shaping corporate strategies. This study aims to examine the effect of countries’ legal strength on the environmental performance of firms. 

The Effect of Auditor Industry Specialization and Board Independence on the Cash Flow Reporting Classification Choices Under IFRS: Evidence from Taiwan (PDF)
Dr. Picheng Lee 

A firm’s cash flows provide critical information to potential investors/creditors as to the sustainability of the firm’s business operations. International Financial Reporting Standards (IFRS) allow firms to report interest paid, interest received, and dividends received within the operating cash flow section of the statement of cash flows or to classify them as investing or financing cash flows. IFRS, then, provides management with greater discretion as to where cash flows can be reported. Understanding the determinants of interest/dividend reporting choices is one important aspect of understanding corporate accounting policy choice more generally.

ESG Government Risk and International IPO Underpricing (PDF)
Drs. Marcus Braga-Alves and Matthew R. Morey

It is well-known that IPOs tend to be underpriced. Hence, this is the reason that they often change dramatically in value after the IPO is issued. The underpricing often reflects uncertainty in the company and country in which the IPO is issued. In this paper, we study the association between this underpricing and country-level environmental, social, and governance (ESG) ratings. By using country-level ESG ratings, we have a unique measure that identifies the particular traits of the country where the IPO is being issued. Normally, countries with good ESG ratings have been found to have better governance, accountability, and labor practices than other countries. We ask the question of whether these traits lead to better IPO pricing.

Global Equity Investing: An Efficient Frontier Approach (PDF)
Dr. Niso Abuaf

The goal of this paper is to test empirically whether emerging-market portfolios appear on the mean-variance efficient frontier, investigate whether particular markets provide better diversification benefits, and to ascertain if these relationships are time-invariant.

Cross-Border M&As and Credit Risk: Evidence from the CDS Market (PDF)
Drs. Iuliana Ismailescu and Burcin Col

There is an unresolved debate in the extant literature regarding the impact of domestic acquisition announcements on US bidders’ credit risk; the effect of cross-border deals is relatively unknown. In this paper, we focus on the latter and compare the implications of the emerging market (EM) and developed market (DM) transaction announcements on US acquirers’ credit default swap (CDS) spreads (our measure of credit risk). Our findings should be of particular interest to creditors of risky bidders that plan acquisitions in EMs, especially when transactions result in majority, but not full control of the target, as these have the highest negative effect on bidders’ CDS spreads.

All’s Fair in Love and War but Nothing’s Fair Use on YouTube: How YouTube Policies Favor Copyright Owners and Hinder Legal Fair Use (PDF)
Dr. Jessica A. Magaldi

YouTube fostered the creation of many different types of user-generated video content, including Let’s Play videos. Let’s Play videos are created by video gamers recording themselves playing their favorite games while providing commentary, tips, and entertainment to viewers. Through a dispute about Let’s Play created by players of Nintendo’s Legend of Zelda franchise, this article considers what happens when a cutting-edge online trend redefining how video game players experience gaming runs head-on into the copyright interests of one of the world’s largest video game producers.

Thoughts Regarding the Application of the Step Transaction Doctrine to the Section 351 Control Requirement and Complex Media, Inc. v. Commissioner (PDF)
Dr. Philip G. Cohen

Over thirty years ago, Professor Ronald H. Jensen authored an article in the Virginia Tax Review, titled ”Of Form and Substance: Tax Free Incorporations and Other Transactions Under Section 351.” Professor Jensen asserted that it was inappropriate to utilize the step transaction doctrine to determine whether the control requirement was met in a purported Section 351 transaction, involving a disposition of some, or all, of the transferor’s shares even if effected by a binding contract made prior to the contribution. The author of this article explains why he thinks this is incorrect. This is a very important aspect of corporate taxation because Section 351 governs under what circumstances transfers to a new or existing regular corporation can avoid being taxed.

The Death of MODA—Or So We Hope (PDF)
Dr. Mark Fichtenbaum

Investors, large and small, dodged a bullet when Congress failed to enact the Modernization of Derivatives Act (MODA) at the end of 2022. While most attention to this bill focused on the year end mark-to-market provisions on all derivatives, the real problem had to do with the handling of hedged positions.

The Type of Pharmaceutical Payments to Physicians Affects Prescription Behavior Over Time (PDF)
Dr. Janice Winch

The Physician Payments Sunshine Act (PPSA) from the Patient Protection and Affordable Care Act of 2010 (“Obamacare”) required pharmaceutical companies to disclose payments made to physicians. These industry payments, typically in the form of meals, compensation for travel to a conference, and speaking fees, raised ethical concerns regarding whether the recipients were prescribing medication in the best interests of their patients. This study analyzed publicly available data from Centers for Medicare and Medicaid Service (CMS) to determine (1) the impact of PPSA on the industry payments and (2) the impact of these payments on the prescribing behavior of the physicians.

Business and/or Ethics? A Framework for Resolving Multicriteria Decision Dilemmas (PDF)
Dr. E. Susanna Cahn

Corporate leadership is in the unenviable position of balancing ethical choices and profit. Multiple stakeholders’ legitimate, conflicting demands, together with demands of conscience, create inevitable dilemmas. Strategic business measures are financial: profit, revenue, sales, market share, cost, quality, and innovative product development. Ethical decisions are among right and wrong outcomes or processes, beneficial and harmful consequences, moral principles, and fairness, all of which are not easily quantified. The inherent nature of business-ethics decisions involves multiple decision criteria. Conflicting criteria create dilemmas: Sometimes ethical business decisions are profitable; sometimes ethical business decisions are more costly, and therefore less profitable. Organization structures can obfuscate responsibility. Complex technology embeds responsibility in algorithms opaque to users. In the uncertain time between idea and market, engineers designing a new product, and managers strategizing its introduction to the market, face questions of ethics along with business goals of efficiency and profitability.

Crisis Remote Learning During the COVID-19 Pandemic: A Global Case Study in Tourism (PDF)
Dr. Claudia G. Green

The COVID-19 pandemic of 2020 was the world’s largest experiment in remote learning. Teaching strategies and delivery methods went into survival mode at many educational institutions, particularly those that were forced to cut budgets and increase teaching loads. �����Ƶ’s core curriculum requires that students take an Area of Knowledge Civic Competency (AOK1) course wherein students learn about issues impacting society and develop skills to address these issues. With COVID-19 in Spring 2020, the challenge was to change a New York City community project into a relevant global project. Instead of having students identify and research sustainable tourism destinations in the New York City metropolitan area, students capitalized on being in locations around the world and created a map of sustainable tourism destinations in their respective locations during the pandemic.

When Opportunity Meets Ability: The Moderating Effects of Prolific Inventors on Novel Drug Innovation Following Product Development Failure in Biotechnology (PDF)
Dr. Donghwi (Josh) Seo

In the biotechnology industry, product development failures are frequent due to high technological and market uncertainty, often leading to financial losses. However, these failures also present opportunities for learning and innovation. This research examines how prolific inventors, those with exceptional innovative performance, influence a firm’s ability to pursue novel drug innovation (NDI) after experiencing product development failures. Understanding this dynamic is crucial for managers in technology-driven industries aiming to optimize innovation efforts following setbacks. This study offers insights for strategic human capital management and innovation planning, particularly relevant for biotechnology firms and R&D professionals.

Fortune or Prestige? The Effects of Content Price on Sales and Customer Satisfaction (PDF)
Dr. Chongyu Lu

The rise of the sharing economy over the last decade has had a significant impact on the content sharing industry. In particular, the sharing of paid content has become very popular, as the sharing economy entails transactional and economically motivated sharing. Content sharers increasingly seek individual economic opportunities by charging a certain price for shared content, but the role of price in shared content evaluations remains unknown. Given the growing popularity of paid shared content, it is imperative for content sharers to understand the price effect on shared content evaluation because they can adjust their prices to optimize their financial returns. This study examines the effect of content price on sales and customer satisfaction.

Suspicious Online Product Reviews: An Empirical Analysis of Brand and Product Characteristics Using Amazon Data (PDF)
Dr. Eunhee (Emily) Ko

Concerns over the authenticity of reviews hinder their usefulness. Consumers discount the information they get from reviews and this particularly harms brands with high ratings. We argue that perceived brand strength, brand advertising effort, price, and sales each act as signals that help positive reviews of a brand seem more reliable. We investigate this by studying Amazon.com reviews of branded products from 16 product categories that have the resources and potential desire to advertise. We also examine consumer perceptions of review authenticity as perceived by machine learning algorithms trained on human subjects, as well as by direct perceptions of human subjects during validation.

If at First You Do Succeed, Do You Try, Try Again? Developing the Persistence–Licensing Response Measure to Understand, Predict, and Modify Behavior Following Subgoal Success (PDF)
Dr. Canan Corus

This article examines how subgoal success affects subsequent goal persistence. For example, how does succeeding at a fitness milestone affect one’s persistence at exercise subsequent to this initial success? It is proposed that cognitive and emotional responses to initial success guide subsequent behavior. Further, an individual difference scale dubbed the Persistence-Licensing Response Measure (PLRM) is developed and validated. This scale predicts post-success behavior beyond existing related measures. As more practitioners and researchers highlight the importance of persistence in achieving goals, this work is important, as it builds a scale to predict such behavior.

Synergistic Effects of Market Orientation Implementation and Internalization on Firm Performance: Direct Marketing Service Provider Industry (PDF)
Dr. Pradeep Gopalakrishna

Market orientation has been studied for over three decades now. In the literature, market orientation has been studied primarily as a behavioral (implementation) or cultural (internalization) construct, and researchers have addressed them separately. The behavioral perspective views market orientation as the generation of, dissemination of, and responsiveness to market intelligence. This approach is also known as the bottom-up approach to market orientation. The cultural perspective views market orientation as an aspect of organization-wide culture, characterized by organization-wide adherence to values and norms central to the delivery of superior value to customers. This perspective is known as the top-down approach to market orientation. In this study, the authors examine the synergistic effect of both perspectives on firm performance using the direct mail service industry. The importance of this research lies in the fact that several firms/industries are in the midst of transformation from physical to digital domains, including the direct mail service industry.

On the Bookshelf

Contemporary Talent Management: A Research Companion (PDF)
Dr. Ibraiz Tarique

Research on talent management has grown exponentially over the past several years as an important area in management. This book, Contemporary Talent Management: A Research Companion, and its partner book, Companion to Talent Management, assembled over 100 academics and talent management professionals from over 20 countries to provide an in-depth examination of important topics to further develop the field.

Contemporary Talent Management: A Research Companion - Commentary (PDF)
Dr. Patrick McGuigan

Success in the knowledge economy relies more urgently on talent management in a marketplace disrupted by technology in unexpected and unpredictable ways. This book brings together strategic thinkers who confront the disruption and offers a way for advanced postgraduate and graduate students, management consultants, and academic researchers to improve their knowledge and understanding of the implication of talent management. Globalization has been amplified by rapid advances in virtual capabilities shrinking and eliminating borders for practical reasons, but for legal, cultural, ethical, political, and economic reasons those borders are very real obstacles to optimal talent management. This essential resource helps readers see the scope and breadth of issues related to talent management and helps them gain insight into best practices research in the field.

Global Leadership and Wisdoms of the World: Unpacking Insights from 17 Language Cultures (PDF)
Dr. Eric H. Kessler

This book is based on the premise that languages, and especially critical hard-to-translate terms, reveal deep-seated assumptions, values, and praxis that are often misread outside of their context. In this sense, they can be seen as entryways into exploring core, yet mysterious local wisdoms along with the accompanying best practices that guide life and success. When combined with contributions from distinguished scholars from around the globe, these wisdoms of the world can offer global leaders a litany of insights for enlightening understanding, enhancing practice, deepening learning, bridging contexts, and making a sustainable positive impact.

Global Leadership and Wisdoms of the World: Unpacking Insights from 17 Language Cultures - Commentary (PDF)
Dr. Uzoamaka Anakwe

Leadership and language are inextricably linked. The choice of language as the source of wisdoms of the world is fascinating and offers a creative path towards uncovering ‘hidden’ knowledge that enriches global leadership. As we read from scholars who are indigenes or conversant with the 17 culture languages, the authenticity is both reassuring and enlightening. It fits readily into pairing it with courses in global business and international management. This book does a terrific job highlighting the diversity of wisdoms from these cultural languages, as well as provides a framework that integrates them. As such, it makes an invaluable contribution to managing relationships and/or situations within different contexts, especially, in the worldwide business arena.