Return windows and the value relevance of earnings

Research on the value relevance of annual earnings commonly accumulate stock returns over a 12-month period starting from the fourth month of the fiscal year, resulting in a mismatch between the return window and the earnings period (i.e. the fiscal year). By comparing this return window with alternative windows, we show that the mismatch produces a downward bias in the estimated R² from the regression of stock returns on earnings, especially for firms that announce earnings early. Our results also show that both profits and losses are more value relevant when announced earlier, supporting regulatory calls for timely disclosure.     

Imperfect information, multiple shocks, and policy's signaling role

In multiple shock models, when agents have imperfect information they attempt to infer a shock's type, in addition to its size. In this environment, monetary policy plays an important signaling role. This paper highlights this signaling role by showing that conclusions from imperfect information monetary models are sensitive to the number of shocks included. With multiple shocks, contractionary monetary policy can initially increase inflation and delay the eventual disinflation. Moreover, multiple shocks can result in destabilizing price flexibility, while optimal policy's response to one shock will depend on the existence of other shocks, contrary to a typical linear-quadratic framework.     

Trading reserved capacity independently among supply chains

We propose a novel mechanism for pooling the reserved capacity (super capacity) of different supply chains, so that they can more effectively match their single-period inventory supplies with their demands. Through this mechanism, retailers can buy or sell unutilized super capacity independently as a commodity in a sub-industry before and during the selling season, which helps improve supply flexibility and increase the utilization of suppliers' reserved capacity. Our findings provide a new channel coordination strategy for a group of supply chains to hedge against capacity and inventory risks by trading super capacity with their competitors, which yields individual and aggregate benefits.     

Population ageing and pension reform in a small open economy with non-traded goods

In this paper we study the implications of population ageing in an economy with a sizeable non-traded goods sector. To this effect a highly stylized micro-founded macro model is constructed in which the age structure of the population plays a non-trivial role. The model distinguishes separate birth and death probabilities (thus allowing for net population change), allows for age-dependent labour productivity (thus mimicing life-cycle saving), and includes a rudimentary pension system (thus allowing for intergenerational redistribution). The model is used to analytically study demographic and pension shocks.     

Integrating innovation skills in an introductory engineering design-build course

Modern engineering curricula have started to emphasize design, mostly in the form of design-build experiences. Apart from instilling important problem-solving skills, such pedagogical frameworks address the critical social skill aspects of engineering education due to their team-based, project-based nature. However, it is required of the twenty-first century engineer to be not only technically competent and socially and culturally aware, but also innovative and entrepreneurial. This paper discusses a reformulated first-year engineering course at the University of Pretoria, which was adopted 6 years ago to better address the required innovation skills of engineering students. This design-build-innovate course employs a unique creative problem-solving strategy in designing and building solutions to set technological problems. The students further investigate the provisional patenting of their design concepts. Mini business plans are developed and the students participate in a university- and in a national innovation competition. This introductory engineering course has been successful as measured by overwhelmingly positive student feedback, several provisional patents, and a number of small start-up companies that emanated from the students’ work.     

Contracting with private knowledge of signal quality

We characterize the optimal procurement contract in a setting where a supplier has privileged knowledge of the quality of a public signal about his production costs. The optimal contract exhibits important differences with standard contracts in adverse selection settings. For instance, the contract induces output both above and below first‐best levels. Furthermore, the induced output may not vary with the realized public signal unless the signal quality is sufficiently pronounced. In addition, output may increase as expected costs increase.     

Use of quality tools and techniques in services

The purpose of this article is essentially twofold: to evaluate the use of quality control (QC) tools and statistical process control (SPC) in certain services and to underline the key management prerequisites that help ensure their effective use. It involves a study of a sample of case service organisations, namely banks, hospitals, courier services and utilities, to assess the (in)effective use of QC tools and SPC and what this could signify for the future. A theoretical model is proposed and conclusions are drawn on the basis of it. For the use of QC tools and SPC to be more readily accepted and valuable in service organisations, certain critical success factors are identified here. The question is also raised as to which tools and techniques might be more appropriate in services and why.