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Building stock market resilience through digital transformation: Using Google trends to analyze the impact of COVID-19 pandemic
Ding Ding, Chong Guan, Calvin M. L. Chan, Wenting Liu
Front. Bus. Res. China. 2020, 14 (3): 257-277.
https://doi.org/https://doi.org/10.1186/s11782-020-00089-z
As the 2019 novel coronavirus disease (COVID-19) pandemic rages globally, its impact has been felt in the stock markets around the world. Amidst the gloomy economic outlook, certain sectors seem to have survived better than others. This paper aims to investigate the sectors that have performed better even as market sentiment is affected by the pandemic. The daily closing stock prices of a total usable sample of 1,567 firms from 37 sectors are first analyzed using a combination of hierarchical clustering and shape-based distance (SBD) measures. Market sentiment is modeled from Google Trends on the COVID-19 pandemic. This is then analyzed against the time series of daily closing stock prices using augmented vector autoregression (VAR). The empirical results indicate that market sentiment towards the pandemic has significant effects on the stock prices of the sectors. Particularly, the stock price performance across sectors is differentiated by the level of the digital transformation of sectors, with those that are most digitally transformed, showing resilience towards negative market sentiment on the pandemic. This study contributes to the existing literature by incorporating search trends to analyze market sentiment, and by showing that digital transformation moderated the stock market resilience of firms against concern over the COVID-19 outbreak.
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Major government customer and management earnings forecasts
Agnes C. S. Cheng, Wenli Huang, Shaojun Zhang
Front. Bus. Res. China. 2020, 14 (3): 350-369.
https://doi.org/https://doi.org/10.1186/s11782-020-00088-0
This paper examines whether customer base composition in the US, that is, whether a firm’s major customers are government entities or publicly traded companies, affects the properties of its management earnings forecasts (MEFs). Using a sample of 1168 MEFs from 1998 to 2014, we find that firms whose major customers are government entities (i.e., government suppliers) issue more precise and more accurate MEFs than firms whose major customers are public companies (i.e., corporate suppliers). Moreover, when managers disclose negative information to the market, earnings forecasts issued by government suppliers have greater price impact than those issued by corporate suppliers. Collectively, our empirical results suggest that having major government customers has a positive impact on the quality of MEFs.
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Do you respond sincerely? How sellers’responses to online reviews affect customer relationship and repurchase intention
Xiaofei Li, Baolong Ma, Rubing Bai
Front. Bus. Res. China. 2020, 14 (3): 370-382.
https://doi.org/https://doi.org/10.1186/s11782-020-00086-2
For many online businesses, online reviews are crucially important to managing reputation, word-of-mouth sales, and, ultimately, their survival. Hence, more and more online business owners are posting public responses to both positive and negative reviews. But do these responses change anything? And, if so, which types of responses are the most effective for strengthening customer relationship and increasing the chances of repeat business? With two surveys and a series of partial least squares-structural equation modeling (PLS-SEM) analyses, we tested three relevant hypotheses to answer these questions. The results show that when business replies to online reviews with promotional information, consumers perceive the seller to be self-interested, and both relationship quality and repurchase intention decrease. However, sincere responses that do not contain promotional information, such as gratitude and apology, are highly correlated to positive relationship quality and the likelihood of future repeat business. These findings enrich the academic literature on online reviews, and the recommendations stemming from our results should be of interest to any business that relies on their online reputation for survival.
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