Asset Pricing With Endogenously Uninsurable Tail Risk

This paper studies asset pricing and labor market dynamics when idiosyncratic risk to human capital is not fully insurable. Firms use long‐term contracts to provide insurance to workers, but neither side can fully commit; furthermore, owing to costly and unobservable retention effort, worker‐firm relationships have endogenous durations. Uninsured tail risk in labor earnings arises as a part of an optimal risk‐sharing scheme. In equilibrium, exposure to the tail risk generates higher aggregate risk premia and higher return volatility. Consistent with data, firm‐level labor share predicts both future returns and pass‐throughs of firm‐level shocks to labor compensation.

Social media, customer engagement and advocacy

PurposeThe purpose of this study is to examine how social media facilitates the process of customer engagement in quick service restaurants (QSRs). Customers characterized as transactional customers, loyal customers, delighted customers or fans, based on the degree of relational exchange and emotional bonds, are expected to vary in their propensity to engage in advocacy and co-create value.Design/methodology/approachHypotheses linking the antecedents of customer engagement to advocacy are empirically investigated with data from the Twitter social media network for the top 50 US QSRs. Multiple regression analysis is carried out with proxies for advocacy as the dependent variable and connection effort, interaction effort, satisfaction, retention effort, calculative commitment and affective commitment as independent variables.FindingsThe results indicate that retention effort and calculative commitment of customers are the most important factors influencing advocacy. Efforts to retain customers using social media communication increase advocacy. Greater calculative commitment also increases advocacy. Affective commitment mediates the relationship between calculative commitment and advocacy.Practical implicationsFostering retention and calculative commitment by using social media communication engenders loyalty and customers become advocates. Calculative commitment fosters affective commitment, turning customers into fans who are delighted as well as loyal, enhancing advocacy.Originality/valueThis study uniquely investigates the relationship between the antecedents of customer engagement and advocacy. It develops the theory and conducts an empirical analysis with actual social media network data for a specific industry where usage of the network is widely prevalent. It confirms that calculative commitment influences advocacy. Calculative commitment not only has a direct effect but also has an indirect effect through affective commitment on advocacy in the QSR context. Further, social media efforts by QSRs to retain customers encourage advocacy. Other customer engagement antecedents do not directly influence advocacy.

Retention and Institutional Effort: A Self-Study Framework

This article describes a retention assessment framework as a way of helping practitioners use existing literature and research to assess how good their institutional retention effort is. It addresses the rationale for the framework, why some institutions graduate students at higher rates than predicted given the entry characteristics of its students, and how to use the framework.