Graduate School of Business & Management

E-Commerce involves organization-to-organization, unit-to-unit, organization-to-consumer, and person-to-person information and transactional exchanges. The type of business-related events currently encompassed by E-Commerce run the gamut from requests for information, through ordering, shipment, and payment, to the delivery of “digital products” such as insurance policies, electronic cash, (digitally) published documents, software, and media. The objective of this project is to investigate the opportunities of using E-Commerce in the Lebanese banking sector. A survey will be conducted to identify the level of awareness, the technological readiness and the infrastructure availability of E-Commerce in this sector. Technologies associated with E-Commerce including EDI (Electronic Data Interchange), EFT (Electronic Funds Transfers), and Web-TCP/IP-based systems will explored and analyzed. E. Awad*, H. Ghaziri.

The paper sheds light on brand extensions as a growth strategy and isolates some of the pertinent factors that influence consumer evaluations of brand extensions. The concepts of branding and brand equity are discussed in light of their relevance to brand extensions. The benefits and risks associated with pursuing a brand extension growth strategy are discussed, along with a summary of the previous research findings on the factors that affect extension evaluations. A series of research hypotheses depicting the effect of selected factors on consumer extension evaluations are proposed. An empirical investigation of the hypotheses follows. Managerial implications of the findings are discussed. I. B. Baalbaki and H. Bakhash*.

The paper is a marketing-related case study on the LINC charge card experience. The case starts with a historical overview of the Lebanese credit card industry, the major players in the market, and the recent market developments and industry statistics. A detailed discussion of the LINC card follow.s, including an overview of the basics of the microchip technology upon which the card is built, the LINC basic idea development into a business entity, and the steps involved in the LINC transaction process. The card benefits to the cardholder, the merchant, and the issuing bank are discussed along with the applicable transaction fees of the various LINC card types available. The marketing strategy of LINC is presented together with that of BankerNet, its major local competitor. In light of the presented material, the opportunities and challenges facing LINC are to be isolated and a marketing and communication program for LINC is to be developed. I. B. Baalbaki and N. K. Malhotra*.

An empirical comparison of the dimensions of service quality between developed and developing economies

This paper attempts to empirically investigate a series of research hypotheses that provide managerial guidance as to how the various dimensions of service quality should be emphasized differentially in developed and developing economies. The paper draws upon the conceptual framework of the determinants of service quality that was proposed by Parasuraman et al. (1985). Further theoretical foundations for this paper are based on the recent work of Malhotra et al. (1994). Malhotra et al. proposed several hypotheses related to each of the ten dimensions of service quality and how each should be emphasized and addressed differentially in developed and developing economies. This research undertaking attempts to empirically assess the majority of those hypotheses. A three-country comparison is proposed with data to be collected in Lebanon, the USA, and Canada. Finally, managerial implications of the findings and potential areas of future research are discussed. (Research partially funded by a grant from the Mellon Foundation through the Center for Behavioral Research at AUB.) I. B. Baalbaki, N. K. Malhotra*, and J. Agarwal*.

The paper attempts to investigate the state of advertising on the internet in Lebanon. A brief historical overview of the internet development is presented, followed by a listing of recent statistics highlighting the internet proliferation and use. The business applications and benefits of the internet are addressed along with legal and security related issues. The benefits and challenges of web advertising are then discussed. A set of hypotheses are proposed related to the objectives behind the development of web sites, the effectiveness of sites in meeting those objectives, and the degree of satisfaction with the sites. To empirically verify the hypotheses, an e-mail-based questionnaire is developed. The paper ends with a discussion of the findings and their managerial implications. I. B. Baalbakiand A. Sweidan*.

Practitioners note that cross listing makes it easier for Arab investors to trade on the BSE, implying that trading activities would be enhanced following the cross listing event. This event would also improve tliquidity, resiliency and depth of the Beirut Stock Exchange market. Thus, this paper will investigate four issues: (1) whether there is any integration effect among the Lebanese, Egyptian and Kuwaiti markets, (2) whether trading activities have been improving at the BSE since its opening in 1996, (3) whether this improvement has affected the liquidity and resiliency of the BSE, and (4) whether the change in market efficiency is the direct result of cross listing or is mainly due to other national and international conditions that affected trading at the BSE in the past two years. Data collection and statistical work are in progress. S. Elfakhani. (Partially funded by a grant from the URB.)

Short positions, the size effect, and the liquidity hypothesis: implications to stock performance

This study focuses on the relationship between short interest and subsequent stock returns. It also deals with the question of whether this relationship itself is attributable to firm size. In this context, this study investigates: (1) whether short sellers are correct in their predictions and whether these predictions can benefit other investors, and (2) whether the liquidity hypothesis or the differential information hypothesis can explain the relationship between firm size and short selling. The results support the notion that short sellers made correct predictions of price movements during the sampling period, 1986-1990. The results also show that following the monthly report of short interests, investors can still earn higher returns on shorted stocks, especially the small ones. Finally, the results maintain that short interest positions on less-liquid overpriced small stocks are more profitable than more-liquid overpriced large stocks, thus supporting the liquidity hypothesis. These findings do not display seasonal differences, especially in January. The paper has already been accepted for publication in the journal Applied Financial Economics (October 2^nd, 1998). S. Elfakhani. (Partially funded by a grant from the Board of Governors and the Dean of the College of Commerce, University of Saskatchewan, Canada.)

Integration vs. segmentation in the Gulf States securities market: lessons from Europe

Financial integration is more and more necessary if the Arabian Gulf States (herewith referred to by GCC) is to have a new impulse. But financial integration is too broad a concept and may involve a dramatic loss of sovereignty. Limited and realistic objective have to be set up and one way of creating a strong link between national money and capital markets is to start with specific markets. Currently, most, if not all, of the stock exchanges in the GCC are small closed world, inefficient to a certain degree and probably dull. Carefully putting six of them together may increase their efficiency significantly. The purpose of this study is to investigate if there is any potential gains for the GCC securities market from international diversification through their integration. This would be linked to the former experience that other nations went through, particularly the European experience. Data collection and statistical work are in progress. S. Elfakhani and A. Alsakran*.

Corporate dividends have been the subject of a great deal of research. One subject in specific that has garnered many published studies is dividend signaling, which is the attempt by management to reduce the information asymmetry that exists in the markets. In recent years, dividend signaling theory has been extended to also account for the information that is released in a wide variety of previous events. This study attempts to shed more light on the multiple signaling notion as well as start to fill the Canadian void in the existing base of research. The database in this study spans the period of March 1, 1985 through October 31, 1995. This study has two main goals. The first goal is to investigate the role that dividend announcements play in Canadian markets given the prior release of analysts’ earnings estimates. The second goal is to examine the earnings performance that follows the dividend signal; signal validity. Data collection and much of the statistical work have been already done. The paper is in its last stages before sending it to a refereed journal. S. Elfakhani and D. Foltz*.

This paper examines the market behavior surrounding stock split announcements in the Canadian market for the 1977-1993 period. Using the event study methodology, the findings indicate that abnormal returns exist on both the announcement days (0,1) and on the eleven-day period surrounding stock split announcements. The results also show that following the split event, bid-ask spreads decrease, while both trading volume and the number of transactions increase. This evidence supports the notion that split events enhance liquidity (thus favoring the liquidity hypothesis explanation). Furthermore, it appears that earnings rises and capitalization grows in the year following split events, thus supporting the signaling hypothesis (i.e., split events signal future performance of the firm), as to explain the motivation for split decisions. The paper is already completed and was presented to the Financial Management Association 28th Annual Conference, Chicago, Illinois, October 1998, and to the Sixth Annual Global Finance Conference, Istanbul, Turkey, April 199. (This paper is currently under revision, after which, it will be sent to a refereed journal.) S. Elfakhani, and T. Lung*.

The survivorship bias, share price effect, and small-firm effect in Canadian markets

This paper examines the relationship between average returns, firm-size and price levels for Canadian stocks during the 1975-1994 period, after controlling for survivorship bias. The sample is divided into two sub-samples; one includes stocks that survived until the end of the testing period (December 1994), and one that includes firms that were deleted before the cutoff date. Both samples were cross-classified by size (price level) then by share price level (firm size). For the overall sample and the senior group, findings indicate that there is a significant inverse share price level effect in Canadian markets. The delisted group shows a strong performance for large size-high price stocks, implying that these stocks were likely strong performing winners that were missed in prior studies. Evidence in support of an independent size effect is, however, less clear for Canadian stocks. Evidence suggests a confounded size-price effect. Overall, the survivorship bias seems significant and should be accounted for in future research. The paper was presented to the Sixth Conference on Pacific Basin Business, Economics, and Finance, Hong Kong, May 1998. It is currently under second revision before it is accepted in a refereed journal. S. Elfakhani, and J. Wei*. (Partially funded by a grant from the University of Saskatchewan USTEP96 program, Canada.)

Thin trading and mispricing profit opportunities in the Canadian commodity futures

This study examines whether thin trading problems in the Canadian futures market can create mispricing profit opportunities for canola and feed wheat futures traded over the period 1981 through 1993. A forecasting model is developed using historical and publicly available information to predict future closing prices for these contracts, and then two trading rules (a confidence interval and a percentage price change filter) are used to determine their profit potentials. The size of profits generated from trading canola futures under either rule during the period 1987-1993 is consistent with Carter's (1989) earlier results that no market inefficiency was detected during the 1980-1987 period. Similarly, profits from the Canadian feed wheat thinly traded contracts and from a control group using the highly liquid American soybean oil and wheat contracts do not violate the efficiency theory. The average gross profit per trade analysis further suggests that net positive profits may not be viable for marginal investors. The has already been accepted for publication in the Quarterly Review of Economics and Finance (March 18^th, 1998). S. Elfakhani, R. Wionzek*, and M. Chaudhury*. (Partially funded by a grant from The Winnipeg Commodity Exchange, Canada.)

Variance amplification is a phenomenon obtained in the increase in variance magnitudes of accumulated orders when going up the supply chain. This phenomenon is recognized as one of several causes to what is called “The Bullwhip Effect.” This phenomenon happens to result in instability in the inventory and production systems of wholesalers and producers. The aim of this work is to model a multi-echelon ordering process and the effect of commonly used inventory policies at lower echelons on the aggregation of those orders as moving upstream the supply chain, using stochastic approaches. This model will be used to analyze this effect and to provide practical solutions that could minimize its negative impacts on management. A. El-Tannir. (Supported by URB.)

We introduce a new family of Markov processes called “Markov Interactive Processes'' (MIP). Such processes consist of several variables or components. Jumps occur in one component at a time where the transition rates of each component depend on the current states of the remaining ones. We show that the t-step transition probabilities of this type of processes have a product form when the transition rates of the jumps in one component are proportional to a positive function of the states of the remaining components. This yields a product form stationary distribution as well. We also use our results to provide several models including the standard closed Jackson network as a special case of MIP. This paper is submitted for publication in the Journal of Stochastic Models. A. El-Tannir.

The GTSP is an extension of the classical Travelling Salesman Problem (TSP) in which the set of customers to visit is partitioned into a certain number of clusters. The objective is not to find the shortest path passing through all customers but to find the shortest path passing through exactly one customer from each cluster. The paper is organized in the following way: we start by discussing the Hopfield Tank approach to solve this problem; we then extend the self-organized feature map to the GTSP. Finally, we discuss the computational results and we compare the performance of the two approaches in terms of quality, size and computational time to find a near optimal solution. H. Ghaziri.

The vehicle fleet mix problem is an extension of the classical vehicle routing problem in which the fleet composition is heterogeneous. The objective is to find the optimal fleet and the optimal route for each vehicle such that the total cost is minimized and the different constraints satisfied. We have designed a neural network based on the Kohonen model to deal with this problem. We have tested this approach on a set of test problems and compared its performance in terms of computational time and solution quality with other heuristics. We have obtained the best known results for some problems for the others the deviation from best solution is ranging between 0.02 % and 2.1%. H. Ghaziri.

The Multisource Weber Problem consists of finding the location of m facilities in the Euclidean space such that the total transportation cost needed to satisfy the demand of n fixed customers is minimized. This problem is an NP-Hard problem. As a consequence, exact methods are restricted to small size problems and many heuristics have been proposed to find quickly approximate optimal solutions for real size problems. In this paper, we propose a new heuristic based on artificial neural networks. Several variations of this approach are presented. Their performance is compared to the best results obtained for a set of two problems, one with 654 customers and the other one with 1060 customers, with a various number of facilities. Accepted for publication in the International Journal of Information Systems and Operations Research. H. Ghaziri.

A survey of the evolving climate of opinion in management thinking with special reference to the changing executive mindset. The emerging strategic executive paradigm is highlighted and its increasing impact on the corporate landscape is traced. Examples and illustrations are provided in support of the argument that a new set of core executive competencies is taking shape. The new set is based on an emerging cluster of concepts accentuating rapid change, flexibility, strategic stretch and harnessing the near infinite possibilities of the return on investment in human capital. G. Najjar.

An overview and analysis of the Lebanese business environment with a view to reconstruction requirements to meet the challenges of accelerating competition in a complex global economy. The Lebanese management profession in transition is then addressed and a four-phased metamorphosis is highlighted. In chronological order, the four phases are: a. Pre-war advances; b. The difficult war years; c. Current dilemmas; d. Future prospects. G. Najjar

This research paper tries to explain the behavior of business firms whenever they face anticipated type of inflation. The purpose is to test the hypothesis that business firm try to hedge against inflation by substituting real assets for monetary assets in the composition of their balance sheets. A random sample of US firms is selected and their balance sheet composition is analyzed. Y. Shibl.

The predictive power of the Keynesian and Monetarism models in less developed countries

So far development economies have negated the role of the Keynesian and Monetarism models in explaining the behavior of output, income and prices. The purpose of this research paper is to determine to what extent Keynesian and Monetarism models can predict gross domestic product in a sample of less developed countries. Three countries are selected: Egypt, Kuwait and Jordan. If these models show that they have significant predictive power then this will have far reaching implications on the stabilization policies of less developed countries. Y. Shibl.

The capital Asset Pricing Model is one of the most important analytical tools in Finance. However, its predictive power in explaining the fluctuations in the prices of stocks is still a major source of controversy in the field of Finance. This paper is an empirical test of the predictive power of the capital Asset Pricing Model. Y. Shibl.

Alexopoulos, C.*, El-Tannir, A. and Serfozo, R.*, Partition-Reversible Markov Processes. Operations Research, 47 (1), 125-130, 1999.

Elfakhani, S. and Zaher T.*, The differential information hypothesis, institutional neglect and the small firm size effect: a possible explanation. Journal of Financial and Strategic Decisions, 11 (2), 29-40, 1998.

Elfakhani, S., Lockwood L. J.^*, and Zaher T.^*, size and value effects in the Canadian stock market. Journal of Financial Research, 21 (3), 277-291, 1998.

Malhotra, N.K.*, Agarwal, J.*, and Baalbaki, I.B., Heterogeneity of regional trading blocs and global marketing strategies: a multicultural perspective. International Marketing Review, 15 (6), 476-506, 1998.

———, Economic and financial determinants of stock prices, The Medical Periodical, July 1998.

Toufeili, I., Olabi, A.*, Shadarevian, S.*, Abi Antoun, M.*, Zurayk, R.*, and Baalbaki, I.B., Relationships of selected wheat parameters to burghul-making quality. Journal of Food Quality, 20, 211-224, 1997.

ABSTRACTS, PRESENTATIONS AND PROCEEDINGS

Awad, E.*, Allen, B.*, Ghaziri, H., Reorganization through technology. The caseof the National Bank of Cambodia. Presented by H. Ghaziri, The 2^nd International Al-Shaam Conference on Information Technology, Damascus Syria, April 26-29, 1999.

Awad, E.*, Ghaziri, H., Tax Reform through technology. The case of the state tax administration of Ukraine, Presented by H. Ghaziri, The 2^nd International Al-Shaam Conference on Information Technology, Damascus Syria, April 26-29, 1999.

Baalbaki, I.B. and Moukkaddem, A.M., The effect of brand name on taste perceptions. Paper presented at the Academy of Business Administration 1999, Reno, Nevada, April 13-18 1999.

Baalbaki, I.B. and Semaan, R.M.*, The effect of unique claims on advertising effectiveness across product categories. Paper presented at the Academy of Business Administration 1998, Toronto, Canada, April 14-19 1998.

El-Tannir, A., International trends of industrial research and development under economic globalization. Presentation, The Second Conference on Industrial Research and Development, Beirut, Lebanon, November 1998.

———, The global impact of information technology on manufacturing systems. Proceedings of The 2^nd International Al-Shaam Conference on Information Technology, Damascus, Syria, April 1999.

———, Variance amplification of aggregated (Q,r) orders in supply chains. Presentation, INFORMS Spring 1999, Cincinnati, Ohio, USA, May 1999.

Elfakhani, S., and Lung T.*, The effect of split announcements on Canadian stocks. The Sixth Annual Global Finance Conference Yearbook, 97-98, 1999.

———, The effect of split announcements on Canadian stocks. Financial Management Association 28th Annual Conference, Chicago, Illinois, October 1998.

———, The effect of split announcements on Canadian stocks. The Sixth Annual Global Finance Conference, Istanbul, Turkey, April 1999.

Ghaziri, H., Neural approaches to the generalized travelling salesman problem. Proceeding of the XVIth European conference on Operational Research, Brussels, Belgium, July12-15, 1998.

———, E-Commerce and the role of the public sector. Presentation, The 2^nd International Al-Shaam Conference on Information Technology, Damascus Syria, April 26-29, 1999.

Malhotra, N.K.*, Agarwal, J.*, and Baalbaki, I.B., International market segmentation: penetrating regional trading blocks. Paper presented at the Academy of Marketing Science Eighth Biennial World Marketing Congress, Kuala Lumpur, Malaysia, 1997.

MASTER’S PROJECTS

Abdul-Baki, M., The market penetration strategy of "Coast" calcium milk (1999). N. Eid.

Abou-Haouili, J., Intellectual property rights: a real challenge for Lebanon (1999). H. Ghaziri.

Ahadi, R., The global economic meltdown wave in Japan & its implications on the US economy (1999). Y. Shibl.

Alam, J., Implementing total quality management in Lebanon: The American University of Beirut as a Case Study (1999). G. Najjar.

Al-Darwish, R., A Critical analysis of public debt in Lebanon: Problems and possible solutions (1999). S. Elfakhani.

Assi, J., Neural networks & neuro-fuzzy approaches to pricing options (1999). H. Ghaziri.

Baassiri, S., Management of interest rate risk in Lebanese banks (1998). Y. Shibl.

Berbari, D., Marketing of greeting cards in the Lebanese market (1998). I. Baalbaki.

Dahdaleh, S., Consumers' reaction to comparative advertising (1998). I. Baalbaki.

Dajani, R., Restructuring the Lebanese banking sector through mergers & acquisitions (1998). Y. Shibl.

El Achkar, J., Privatization of the telecommunication sector in Lebanon (1999). H. Ghaziri.

El Haddad, C., Consolidation in the oil industry: The Exxon Mobil merger (1999). Y. Shibl.

El-Rohayem, T., Managerial flexibility: The use of real option theory (1998). Y. Shibl.

Fakhouri, D., Strategic planning at Banque du Liban et d'Outre-Mer (1999). Y. Shibl.

Fawaz, A., Comparative analysis of Banque du Liban & the U.S. federal reserve system (1998). Y. Shibl.

Ghantous, R., 1998-the year of Megamergers: Highlight on the US banking industry (1999). S. Elfakhani.

Halabi, R., The development of life insurance-based deposits products (1998). I. Baalbaki.

Halawi, A., Financing small & medium enterprises: The case of a development bank (1998). Y. Shibl.

Hariz, E., Understanding the effects of feat appeals in advertising (1998). I. Baalbaki.

Ibrahim, N., A proposal for the privatization of the social security system in Lebanon (1999). S. Elfakhani.

Itani, G., An empirical assessment of the use of fear appeals in advertising (1998). I. Baalbaki.

Iskandarani, M., The promotion of Pharmaceutical products in Lebanon (1998). I. Baalbaki.

Jalloul, R., Strategic planning: A case study: Saudi Lebanese bank s.a.l. (1998). Y. Shibl.

Kaissi, R., Stock valuation: An application of the Lebanese stock market (1998). Y. Shibl.

Katergi, S., BOT Financing of infrastructure projects-Case: Lebanon toll highway network (1999). Y. Shibl.

Khalife, A., The Euro & its effect on the international financial markets (1998). Y. Shibl.

Khalil, S., Capital market intermediation versus banking sector intermediation (1999). Y. Shibl.

Kronfol, M., Asset-backed securities: The securitization of automobile loans in Lebanon (1999). H. Abdallah.

Masri, O., The economic dependency of the potential Palestinian state on Israel (1999). Y. Shibl.

Masri, S., Human resource safety measurements and implications the case of Lebanese factories (1998). Y. Shibl.

Melki, H., Analysis of the information system at the university of Balamand: Emphasis on the fees section (1998). H. Ghaziri.

Mhaish, S., Feasibility study of the rehabilitation & expansion of Tripoli seaport (1998). Y. Shibl.

Musallam, S., Analysis of Coca-Cola's marketing strategies in Lebanon (1999). N. Eid.

Naffah, N., Total quality management elements in ISO 9000 implementation: Blood testing process at the AUBMC laboratory department (1999). G. Najjar.

Nasereddine, M., Importance of display in the fast moving consumer goods industry FMCG (1998). I. Baalbaki.

Obeid, M., Equity financing for Lebanese commercial banks: Analysis & evaluation (1998). Y. Shibl.

Rahme, R., Determination of the quality of clients of banking institutes using multicriteria decision (1998). H. Ghaziri.

Sabbagh, O., Traveler's salient selection criteria on an airline (1997). I. Baalbaki.

Salem, I., Capital markets & financing techniques in emerging economies. A focus on Lebanon (1998) H. Abdallah.

Sanyoura, R., "Interest-free" finance: are you interested? (1999). S. Elfakhani.

Sayegh, S., TQM implementation. A case study: Ericsson Lebanon (1998). E. Dedoussis.

Sfeir, C., Towards optimal electric tariff structure in Lebanon (1999). Y. Shibl.

Shahrour, H., Analysis & design of a computerized information system for Al-Chahrour restaurants (1997). H. Ghaziri.

Shirinian, D., Credit policy, A comparative study, Lebanese versus foreign banks. (1999). Y. Shibl.

Tabbara, A., Application of (EDI) electronic data interchange in the banking sector in Lebanon (1999). Y. Shibl.

Tayyara, D., Structured Financial Products and their applicability to the Lebanese market (1999). Y. Shibl.

Uwaydah, R., The applicability of the Keynesian versus monetarist models (1999). Y. Shibl.