May 1 – 10:30am - Noon, "Friction in Related Party Trade
when a Rival is also a Customer" presented by Professor Anil Arya,
John J. Gerlach Chair in Accounting.
Dept of Accounting and MIS, OSU. Related parties in vertical relationships routinely have competing objectives. While conventional wisdom suggests that such frictions can be alleviated by centralized control, this paper demonstrates that decentralization and the tensions that arise in transfer pricing can help coordinate the decisions of affiliated firms. In particular, a vertically integrated central planner may find it difficult to convince a wholesale customer that it will not subsequently encroach on its retail territory, thereby necessitating wholesale price concessions to the wary customer. However, under decentralized control, related parties in the supply chain exhibit strife manifested in limited related-party pricing discounts. In this case, the upstream affiliate's customer realizes retail competition will not be as cutthroat, thereby inducing
a greater willingness to pay in the wholesale arena. Such wholesale
profit gains can outweigh the costs of transfer pricing distortions
that arise in the retail realm. Further, in our setting, wherein
input sales both to downstream affiliates and rivals are an issue,
arm's length (parity) pricing restrictions can have the upside of
solidifying commitments to less favorable related party pricing.
Apr. 11 – 10:30 am – 1:00 pm
Dr. Prasad Naik, Univ. of
California, Davis, presents his co-authored paper, "Managing Corporate
and Product Brands." This paper explores how firms should optimally
allocate their multi-million dollar budgets between corporate versus
product branding efforts. The authors formulate a dynamic model of
corporate advertising by multi-product firms, derive the optimal
closed-loop equilibrium strategies for every brand, and design an
appropriate Kalman filter to estimate the model using market data.
Empirical results based on Ford Motor Company furnish evidence that
corporate advertising generates goodwill, which increases both brand
sales and brand advertising effectiveness. The authors further
elucidate that corporate advertising and brand advertising are
complementary activities to be integrated in the firm's communications
mix.
Feb. 29 – Dr. Tim Renken of Coulter/Renken LP presented
"Tales from the Practitioner Side" at 10:30 AM – Lunch to follow.
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