UNIT ROOT TESTING: A CRITIQUE FROM CHAOS THEORY

A counter-example from chaos theory is used to challenge the augmented Dickey-Fuller (ADF) test and common prewhitening techniques. The ADF test is applied to data constructed from a fully deterministic nonlinear (chaotic) process. The null hypothesis, that a unit root is present, cannot be rejected; “stationarity” is achieved by prewhitening. The largest Lyapunov exponent and the correlation dimension are estimated for the original and conditioned series in efforts to detect the nonlinearity and ascertain information regarding its specification. This is repeated in the presence of additive white noise. In no case is the procedure successful, nor is misspecification avoided. Along the way, the tests for nonlinearity provide evidence in support of the results of Nelson and Plosser (1982), that the removal of deterministic trends from time series that appear to be unit root processes can lead to spurious results.     

The Corporate Governance Premium,Returns, and Mutual Funds

Mutual funds with a preference for strong corporate governance (CG) have performance similar to mutual funds with a preference for weak CG. We find a direct relation between overall mutual fund CG preference and the corporate governance premium (CGP). Furthermore, the investment preferences of mutual funds forecast the change in the CGP. We provide evidence that the investment activities of institutional investors can affect stock performance, and that shifts by institutional investors in CG preference impact the appearance of the CGP.     

An efficiency wage approach to reconciling the wage curve and the Phillips curve

This study develops an efficiency wage model that generates a wage curve at the regional level and a Phillips curve at the national level, under the assumption that workers' efficiency depends on both regional and aggregate labor market conditions. An equation relating wages to unemployment and lagged wages is derived from the profit-maximizing behavior of firms, and it is demonstrated that the coefficient on lagged wages is less than 1 with regional data but equals 1 with aggregate data. In addition, there is an equilibrium relationship between unemployment and wages at the regional level, but not at the aggregate level.     

Earnings Management Surrounding New Debt Issues

We examine whether firms manage earnings before issuing bonds to achieve a lower cost of borrowing. We find significant income‐increasing earnings management prior to bond offerings. We also find that firms that manage earnings upward issue debt at a lower cost, after controlling for various bond issuer and issue characteristics. Our results are consistent with studies that report earnings management around equity issuance. The results indicate that, like equity holders, bondholders fail to see through the inflated earnings numbers in pricing new debt.     

Factors Affecting Motivation to Transfer Training

This study examines the relationship of motivation to transfer skills and knowledge learned in a computer-based training programme with five groups of variables: individual or general attitudes, situational specific attitudes, reactions, learning, and work environment factors. Hierarchical regression analysis produced a model which explained 60.5% of the variance in motivation to transfer. Individual attitudes and environmental variables explained most of the variance in motivation. A number of mediated relationships were suggested.     

ONE HAT TOO MANY: KEY EXECUTIVE PLURALITY AND SHAREHOLDER WEALTH

Tracing backward the career paths of the key executives of Business Week’s 1990 listing of the 1000 most valuable publicly held companies, we empirically examined the impact of announced changes in key executive plurality on stockholder returns. We found the more complete the position consolidation, the more negative were the shareholder responses. To attempt to gain further understanding, the additional variables of executive’s origin, the size of the board of directors of the firm, the proportion of outsiders on the board, and prior firm performance were examined. © 1997 by John Wiley & Sons, Ltd.     

Resolving the impasse on hospital scale economics: a new approach

The existence of scale economies in hospitals in important for both public and managerial policy, yet production and cost function studies have found conflicting evidence. More recently, more sophisticated studies have typically found scale diseconomies, which is inconsistent with the views of industry participants and observers. In the early 1980s. California deregulated both private and public health insurance (Medical), which provides a natural laboratory for examining hospital efficiency. Using Stigler's original and multivariate survivor analysis, we resolve the conflict in favour of scale economies, and reconcile the controversy. The survivorship methodology in simple to apply, and a useful tool in conjunction with statistical cost and production studies.     

Have the Mobile Coupon Preferences of Millennials Changed?

ABSTRACT

In 2007, the authors delivered a web-based survey to a sampling frame of 18 to 30 year olds. Choice-based conjoint analysis was used to determine their local coupon preferences. The findings indicated that Millennials, in general, were resistant to receiving coupons for local businesses through their cell phones. In this article, the same survey was delivered to a sampling frame of Millennials in 2014. Choice-based conjoint analysis was again used to examine the couponing preferences of Millennials and statistical analysis was conducted to determine if these preferences have significantly changed over the last seven years.