This paper investigates the impact of an ambiguity increase on the optimal insurance deductible for a risk- and ambiguity-averse individual under the uncertainty of a loss distribution. A deductible is an important insurance contract design in both theory and practice. Previous studies have reported preference-based results in the context of coinsurance, albeit with limited applications. In this paper, we prove a straight deductible is optimal under an alpha-maxmin model. In the context of the straight deductible, we assume that the cumulative loss probability at an initial optimal deductible is preserved after an ambiguity increase. We show that, for a loss below the initial optimal deductible, the optimal deductible remains unchanged when possible distributions are unaffected by the ambiguity increase. Allowing for a distinct center in the belief set while keeping the others unchanged, we prove that, when the worst distribution is unaffected, but the best distribution deteriorates in terms of first-order stochastic dominance, the optimal deductible becomes lower after the ambiguity increase. If the cumulative loss probability is not preserved, the optimal deductible decreases when, at the initial optimal deductible, the odds of obtaining partial indemnity relative to no indemnity become larger under the loss distribution distorted by ambiguity aversion.
This study examines the impact of firms' engagement in political activism on their corporate innovation capability, focusing on listed firms in Taiwan and analyzing legislative elections from 2008 to 2019. This study finds that firms' political activism, as indicated by support for legislative candidates through political donations, is negatively associated with corporate innovation activities. Furthermore, the negative impact on innovation capability is more pronounced in electronics firms that make political donations. These findings suggest that crowding-out and the political resource curse reduce the benefits of corporate political activism, thereby hindering innovation.
Enterprises generate profits by providing products and services, aiming to maximize profits through effective marketing strategies. However, how long can a product survive, and how much profit can it generate throughout its entire life cycle? Related studies remain rare. As this area has not been thoroughly explored by scholars, this study aims to develop a method for measuring Product Life Cycle Value (PLCV). By integrating with Activity Value Management (AVM), this research utilizes profit information produced through AVM as the foundation for estimating PLCV. This study also incorporates Artificial Intelligence techniques to construct and validate predictive models for PLCV, thereby enhancing forecasting accuracy and practical applicability. We adopt the field-based empirical approach, with a well-known domestic channel agent serving as the research subject. From the perspective of the channel agent, the study investigates the life cycle duration and value of distributed products. Furthermore, for products with greater PLCV, the study combines demographic variables from the corresponding channel regions to identify the key population characteristics that influence profitability, thereby improving the effectiveness of resource allocation decisions
This study investigates whether an audit partner's litigation experience affects subsequent audit quality. Using a sample of financially distressed public firms in Taiwan from 1999 to 2023 and employing the accuracy of the going-concern opinion (GCO) as a proxy for audit quality, this study documents that defendant audit partners remain more likely to issue GCOs to non-bankrupt firms after being sued, suggesting that GCO Type I errors contaminate subsequent audits. However, this contagion phenomenon will be mitigated after the district courts rule in favor of the defendant audit partners. On the other hand, this paper also finds that audit partners significantly increase the likelihood of issuing GCOs to soon-to-go-bankrupt firms after being sued, indicating that defendant partners improve audit quality and commit fewer GCO Type II errors, especially those partners whose litigated event clients go bankrupt. Overall, litigation experience does not significantly affect audit partners' GCO Type I errors, but it does significantly reduce GCO Type II errors.
In this study, we use attribution theory and social identity theory to develop a parallel mediated moderation model. Our goal is to explore whether the interaction between external and internal corporate social responsibility (ESCR and ICSR) influences the substantive and symbolic motivational attributions of employees, and to determine how these attributions, in turn, affect organizational identification. Although prior studies have examined the inconsistencies between ECSR and ICSR perceptions and their potential influence on employees' motivational attributions, limited attention has been paid to how these interactions shape organizational identification. According to attribution-based models, individuals may develop multiple attributional cognitions for specific events at the same time. Thus, employees may perceive organizational CSR efforts as simultaneously driven by both substantive and symbolic motives. However, whether and how the interplay between perceived ECSR and ICSR contributes to such dual attributions and ultimately leads to divergent effects on organizational identification remain an underexplored area. In this study, to minimize common method variance (CMV), we collect data at two time points from 209 respondents employed across diverse organizations in Taiwan. We then analyze these data using Mplus 8.3 software. The results indicate that the interaction between ICSR and ECSR is positively associated with substantive attributions, but negatively associated with symbolic attributions. Specifically, when perceived ICSR increases, the positive relationship between perceived ECSR and substantive attribution becomes stronger, whereas the negative relationship between perceived ECSR and symbolic attribution becomes weaker. Furthermore, substantive attribution is positively associated with employee organizational identification, whereas symbolic attribution is negatively associated with employee organizational identification. Nonetheless, both types of attribution simultaneously mediate the indirect effect of the interaction between perceived external CSR and perceived internal CSR on organizational identification. Overall, these findings contribute to the literature on CSR and provide a theoretical basis for CSR practice
Consumers' pre-existing attitudes toward Artificial Intelligence of Things (AIoT) smart healthcare technologies significantly shape the effectiveness of electronic word-of-mouth (eWOM) and contribute to attitude polarization. This study aims to examine how attitude consistency influences recipients' attitude polarization through credibility. Additionally, it explores the moderating effect of medical brands' attitude consistency and investigates potential age differences. Based on the biased assimilation theory, this research conducts a quasi-experiment involving a 2 (valence of eWOM on AIoT smart medical technology: positive vs. negative) x 2 (valence of eWOM on medical brands: positive vs. negative) x 2 (2 versions of messages). The results of 1,010 valid data demonstrates that greater consistency leads to higher credibility; attitude consistency exerts a negative impact on attitude polarization by enhancing credibility. In contrast, attitude consistency does not play a significant moderating role. Additionally, the influence of biased assimilation regarding AIoT smart medical technology varies between older and younger groups.
The paper examines the changes in the financial statements comparability (Comparability) of listed foreign firms in Taiwan (i.e. KY companies; KY) and non-KY companies (NKY) surrounded by the case of Pharmally scandal in 2020. We find that, as a whole, the comparability of KY is worse than NKY, and the comparability of NKY with board interlocks to KY is also worse than NKY without board interlocks. More elaborately, after the case of Pharmally scandal, the comparability of NKY has improved, regardless of whether they are with board interlocks or not; however, the comparability of KY has not improved and has even deteriorated compared to that of NKY. The possible reason is that due to COVID-19, the auditors cannot conduct on-site audits of KY whose operating locations are overseas, which has resulted in the inability to improve their comparability in the short term and may even worsen it by not being able to conduct on-site audits. This finding shows that under COVID-19, the company's operating location helps explain the comparability of the financial statements
his study investigates the role of economic policy uncertainty (EPU) in the relation between the special item (SPI) recognition and the voluntary non-GAAP earning disclosure, and EPU's effect on the exclusion quality. By examining a sample of US listed firms ranging from 2003 to 2017, we find that (1) the incremental relation between the SPI recognition and the likelihood of voluntary disclosure of non-GAAP earnings is positive under higher EPU; (2) the relation between EPU and the exclusion quality is positive for firms with voluntary disclosures of non-GAAP earnings; (3) firms exclude more SPIs under higher EPU. In addition, the monitoring role of analysts makes the positive effect of EPU on exclusion quality stronger. Finally, the incremental relationship between the voluntary non-GAAP earning disclosure and information asymmetry is negative under higher EPU. These findings sustain the informative motive for non-GAAP earnings disclosure
Business process management (BPM) helps align organizational strategies and business processes. To improve operational efficiency, BPM researchers propose the Plan-Do-Check-Act (PDCA) life cycle as a framework for businesses to continuously improve their process management. However, most of past studies regarding the applications of BPM are limited to the primary process while studies on the utilization of BPM in support processes remain rate. The express industry is labor-intensive. However, the lengthy hiring processes of exprest companies prevent potential candidates from accepting job offers and thus these con panies lose their competitiveness. Moreover, the hiring process is previously considered a backend support process, relevant discussions are also limited. This research explores whether and how the PDCA life cycle can be applied to the support process of the express industry. We conduct a case study on the Taiwan subsidiary of a multinational express company. By utilizing the cycle to its hiring process, the case company redefines the responsibilities of process owners and redesigns the process. The results indicate that the application of PDCA life cycle significantly improves the company's operations. Specifically, the recruitment process time is improved by 85.3%, and the rates of damaged reports arld rejected offers due to lengthy processes are both improved by 100%. The contribution of this research is threefold. It contributes to the body of knowledge for BPM by applying the PDCA life cycle in Taiwan, an application which answers the call for validation for generalization purposes. It also fills the gap in the BPM literature by focusing on the support process instead. Finally, it provides guidance to practitioners that intend to gonduct BPM projects for performance improvement.
This study investigates the effects of the Economic Substance Act, which was enacted since 2019, on corporate offshore investment structures and tax avoidance behaviors, particularly as they pertain to tax havens. Regression analysis of data on Taiwan Stock Exchange and Taipei Exchange companies in Taiwan (2016-2021) is conducted. The results indicate that the Economic Substance Act has discouraged companies from establishing subsidiaries in tax havens, with existing subsidiaries in such jurisdictions being more likely to be liquidated or relocated to non-tax haven areas. Furthermore, the act has led to reductions in the maximum number of ownership layers in offshore investment structures and in revenues reported by tax haven-based subsidiaries. These findings reflect the streamlining of corporate offshore investment structures and a decline in transactions conducted in tax havens. Finally, after the implementation of the act, tax avoidance activities through tax havens decreased, as evidenced by a considerable increase in corporate effective cash tax rates. The findings suggest that in an environment where tax incentives in tax havens are diminishing, companies should relocate core income-generating activities to locations where firms' economic value is created.
Rapid transmission, sharing, and discussion of hostile messages on social media may cause a crisis for enterprises. Therefore, responding appropriately to such messages is crucial. The message life cycle framework explains the dissemination of social media messages across four stages: emergence, amplification, saturation, and recession. The study employs this framework to a case study involving antaccusation of plagiarism en the social media platform Dcard. To analyze the mechanisms driving the rise and fall of message influence throughout the message life cycle, we examine 3,907 posts related to the incident. We also conduct a textual analysis to evaluate the patterns of interaction, emotional reactions, and social media responses of users by applying MaxQDA, utilize Excel Power BI to visualize data, conduct in-depth interviews to obtain qualitative data, and employ thematic analysis to identify salient themes. Moreover, we examine the roles and behaviors of stakeholders to identify effective crisis management and response strategies at each stage of the message life cycle. This study also assesses how organizational culture and internal control systems contribute to such crisis management strategies.
Using a sample of US and UK real estate firms, this study investigates whether changes in accounting standards impact analyst forecast properties. It reveals that a shift from the partial fair value reporting model (UK domestic standards) to the full fair value reporting model (IFRS) temporarily increases forecast dispersion; however, this increase disappears several years after adoption. The study also finds that, when both income statements and balance sheets are reported under the full fair value model, financial statements become more straightforward, reducing analysts forecast revision response time. This reduction only becomes pronounced several years following IFRS adoption, meaning that the effect is not immediate. Finally, the study revisits Liang and Riedl (2014) and shows that the increase in forecast error is temporary in the post-IFRS period. Overall, this work documents that the change in accounting standards has a time-varying effect on analyst behavior.
This paper examines the impact that tax risk and tax avoidance, both individually and jointly, have on firm value. Using the data of listed companies in Taiwan from 2000-2019, the results of measuring tax avoidance and tax risk with the cash effective tax rate suggest that investors negatively value tax risk while positively value tax avoidance; moreover, tax risk moderates the positive valuation of tax avoidance. In addition, we find that across different tax systems or tax rate periods, tax avoidance and tax risk have roughly the same impact on firm value; however, the magnitude of the impact varies in some periods. Overall, compared with prior literature on firm value that has mostly focused on tax avoidance, the empirical results of this study show that future researchers should also consider the interaction between tax risk and tax avoidance.
Digital transformation has been recognized as the driving force in enhancing business operations and increasing revenue. Relevant studies have mostly focused on the implementation of specific technology and on the effects of that technology on individuals, organizations, and ecosystems. Prior studies fall short of examining the process of how a shift in a business model or a brand-new model can originate with the introduction of a simple device. The current study tries to elaborate on this process from the perspective of actor interactions and information density. Using secondary data from online sources regarding electronic shelf label (ESL)-enabled retail digital transformation, this study highlights actors interacting with other actors to provide some technological advancement. This case study focuses on actor-network interactions in ESL-enabled retail digital transformation. These interactions also trigger changes in information density and impact business operations. We propose three stages of digital transformation: digitization, unbundling and rebundling information, and information outsourcing for a business model shift. A well-designed system can turn a simple labeling device into a connected label solution through collaboration with other actors in the retail ecosystem. Our study provides contributions to understanding digital transformation from information density perspectives and how ecosystem actors co-create technology to leverage its functionalities
Past literature has often explained withdrawal decisions from the host country regarding financial performance, suggesting that poor performance of foreign subsidiaries or divisions forces the parent company to withdraw to avoid further losses. However, decision-makers sometimes exhibit an escalation of commitment, where they increase investment despite poor performance in the host country, refusing to acknowledge investment failure. Additionally, companies might abandon profitable business units to avoid uncertainty, resulting in a lack of convergence between host country performance and withdrawal decisions. This study re-examines the impact of investment performance in mainland China on withdrawal decisions based on firm behavior and prospect theory theories. Using data from the Taiwan Economic Journal (TEJ) database, the study focuses on 506 publicly listed Taiwanese electronic information companies that invested in the Chinese market from 2016 to 2020, yielding 2,530 observations for empirical analysis. The analysis was conducted using two-stage research method (Heckman, 1979). The findings reveal an inverted U-shaped relationship between investment performance in China and withdrawal decisions when the investments are profitable. Conversely, firms are less likely to withdraw from China when investments are unprofitable. Additionally, we found a positive relationship between withdrawal from China and market performance. Finally, correction factors and decision errors are statistically significant, effectively controlling for selection bias
This study examines how a hub firm fosters the emergence of a new ecosystem through the perspectives of ecosystem and institutional theory. Using a longitudinal theorizing method, this study analyzes Coursera's development from 2012 to 2022. The findings reveal that Coursera, as a hub firm, functions as an ecosystem architect and advocates for "educational equity," gaining legitimacy and support from elite universities. This strategy overcomes the "liability of newness," enabling the discovery of a new blue ocean market in affordable, accessible higher education. Specifically, through the strategies of humanistic framing and technological empowerment, Coursera connects and orchestrates ecosystem members; designs the content, structure and governance models of new activities; and fosters a dual-flywheel ecosystem business model centered on humanistic innovation, which promotes the generating of a new ecosystem. Finally, this study proposes a process model illustrates how a hub firm uses framing strategies and business model innovation to stretch resources and create shared value, forming a positive dual-flywheel ecosystem effect that accelerates the development of a humanistic innovation ecosystem. This case provides a notable example which is distinct from traditional technology innovation ecosystems.
Digital transformation is unstoppable, and how to successfully transform an organization is the key to the competition of modern enterprises. Relevant literature points out that digital transformation leads to changes in the institutional logic behind various practices in the organization. This study intends to explore the shift of the dominant logic during the organization's digital transformation and how to increase the compatibility of the multiple institutional logics in the organization. Recent literature on institutional logic indicates that logical hybridization allows organizations to face multi-institutional logical conflicts. However, the shift and hybridization of institutional logic within organizations have not been discussed in depth in the context of digital transformation. This research employs the qualitative case study method to examine the selected case - CommonWealth Education Media and Publishing from a practice lens. I conduct 14 personnel interviews and two onsite participation observations, and adopt the model induction method of institutional logic to analyze the data collected. I find that before and after the digital transformation, in terms of the daily practices of content production and sales, customer interaction and partner connection, the dominant logic of each practice has shifted. After examining the shifts happened in these three practices, I derive three types of hybridization from the hybridity of the old and new institutional logic within each practice. This study coins the hybrid approach "correspondence" and discusses theoretical and practical contributions from this new point of view.
Digital transformation is not just about introducing information systems; it involves executives analyzing the external environment and internal capabilities to adjust or innovate the business model and implement digital transformation. Organizations with dynamic capabilities can quickly test, redefine, adapt, and implement business models to facilitate digital transformation and create value. The purpose of this study is to integrate dynamic capability thinking to explore the dynamic process of value creation through digital transformation. This study adopts a case study approach to analyze the ability to perceive opportunities and threats, seize opportunities, reallocate resources and the effectiveness of digital transformation in creating value in three organizations: CyberLink, Show Chwan Memorial Hospital, and I Jang Group. The study finds that as the organizations are aware of the impact of digital technology on changing business operations and practices, business leaders will adjust their organizational structure, learning mechanisms, mode of operation, and leadership style to carry out digital transformation and create new value. Moreover, in different digital transformation modes, organizations will adopt various organizational structure adjustments and employee knowledge management methods during the digital transformation process.
In a competitive business environment, the issue that how market actors with conflicting goals could collaborate and create value should be considered crucial. To address this issue, the present study constructs a value co-creation development model from an actor engagement perspective by examining the market activities between Taiwan's sales agents, original manufacturers, and customers. We adopt a single case method; the aesthetic medical equipment manufacturer BRIDGECON Co., Ltd. is the focal case. Eight respondents participate in an in-depth interview. The findings indicate that information sharing, mutual benefit, and risk sharing drive value co-creation among actors. This study also provides a theoretically grounded classification of value co-creating practices and identifies the service system's underlying process, resources, and capabilities.
This study investigates whether the change in the U.S. SEC's regulation of non-GAAP reporting in 2010 affects firms' earnings management through the recognition of opportunistic special items. The SEC released Compliance and Disclosure Interpretations (hereafter C&DIs) in 2010 to relax the exclusion restrictions imposed by an earlier regulation (i.e., Regulation G) and to give companies more flexibility in excluding other items in the calculation of non-GAAP earnings. Using a difference-in-differences design, we find that, relative to firms that do not report non-GAAP earnings, firms disclosing non-GAAP earnings reduce the recognition of opportunistic special items after the implementation of C&DIs. We also find that the incidence of using opportunistic special items to meet or beat analysts' earnings forecasts by non-GAAP firms significantly decreases in the post-C&DIs period. Our results are robust to a variety of alternative research design. An additional analysis suggests that the reduction in the recognition of opportunistic special items is more pronounced in firms that report a loss under GAAP. Our findings complement prior research suggesting that a less stringent regulation on nonGAAP earnings disclosures will reduce firms' incentives to pursue aggressive earnings management.
