Consistency of UK Pension Fund Investment Performance

Transition matrix techniques are used to relate the past and present performance of pension fund portfolios. In particular, funds are ranked to study the tendency of portfolios to remain in the same quartile of the ranking as they were in the previous period. For raw returns, funds in both of the top quartiles are found to be more likely to remain in the same quartile than would be expected by chance. This result can be taken as limited evidence for the consistency of performance. Similar systemic effects are observed on a risk-adjusted basis. There appears to be clear evidence that some fund managers can offer a degree of consistent good performance.     

Public policies as specification errors

Treating public policies as computable dynamic general equilibrium model specification errors offers computational and conceptional advantages for comparing models with data. The set of policies calculated to rationalize observed behaviors raises the substantive economic question whether, in any particular market, actual public policies sufficiently coincide with the model's behavior-rationalizing policies, or whether the model offers correct hypotheses about the determinants of demand and supply. As illustrations, public policies are calculated to rationalize, with respect to the stochastic neoclassical growth model, capital market behavior since WWII and labor market behavior in 1929–1950. One conclusion is that capital taxation drives a wedge between consumption growth and the expected pre-tax capital return, in the direction and amount predicted by the theory, and that capital taxation is the major intertemporal distortion in the postwar capital market. Second, a good theory of the Great Depression labor market must explain why measured MRS and MPL diverged so dramatically in 1929–1933 and why the wedge persisted.     

Subjective Uncertainty over Behavior Strategies: A Correction

In order to model the subjective uncertainty of a player over the behavior strategies of an opponent, one must consider the player's beliefs about the opponent's play at information sets that the player thinks have probability zero. This corregendum uses “trembles” to provide a definition of the convex hull of a set of behavior strategies. This corrects a definition we gave in [E. Dekel, D. Fudenberg, and D. K. Levine, 1999, J. Econ. Theory89, 165-185], which led to two of the solution concepts we defined there not having the properties we intended. Journal of Economic Literature Classification Numbers: C72, D82, C610.     

Housing Preferences of Temporary Migrants in Urban China in the wake of Gradual Hukou Reform: A Case Study of Shenzhen

In the wake of the recent announcement by the State Council concerning the provision of public rental housing across China, and the gradual reform of China's household registration system (hukou), this article explores how potential adjustments in government housing policies (namely access to public rental housing) influence the housing preferences of temporary migrants who are currently residing inside the chengzhongcun (urban villages) of Shenzhen. The results indicate that dissatisfaction with rental cost and living conditions in these urban villages are the key reasons for migrants wishing to move into public rental housing if it is offered to them — and not the fact that they are treated differently within the hukou system. Public rental housing is welcomed in particular by newly arriving migrants who live outside the Shenzhen Special Economic Zone (SEZ), and migrants who have decided to remain in Shenzhen for the foreseeable future. By contrast, dissatisfaction with urban villages is the sole contributor to housing preferences for those residing inside the SEZ.     

Coaching the alpha male

Highly intelligent, confident, and successful, alpha males represent about 70% of all senior executives. Natural leaders, they willingly take on levels of responsibility most rational people would find overwhelming. But many of their quintessential strengths can also make alphas difficult to work with. Their self-confidence can appear domineering. Their high expectations can make them excessively critical. Their unemotional style can keep them from inspiring their teams. That's why alphas need coaching to broaden their interpersonal tool kits while preserving their strengths. Drawing from their experience coaching more than 1,000 senior executives, the authors outline an approach tailored specifically for the alpha. Coaches get the alpha's attention by inundating him with data from 360-degree feedback presented in ways he will find compelling--both hard-boiled metrics and vivid verbatim comments from colleagues about his strengths and weaknesses. A 360-degree assessment is a wake-up call for most alphas, providing undeniable proof that their behavior doesn't work nearly as well as they think it does. That paves the way for a genuine commitment to change. In order to change, the alpha must venture into unfamiliar--and often uncomfortable--psychological territory. He must admit vulnerability, accept accountability not just for his own work for others', connect with his underlying emotions, learn to motivate through a balance of criticism and validation, and become aware of unproductive behavior patterns. The goal of executive coaching is not simply to treat the alpha as an individual problem but to improve the entire team dynamic. Initial success creates an incentive to persevere, and the virtuous cycle reverberates throughout the entire organization.     

Hardening soft accounting information: Games for planning organizational change

This study provides theory and field evidence on the social process of hardening soft accounting information to make it persuasive for planning organizational change. Accounting information intended to support organizational change is often soft, that is, there is lack of interpersonal agreement about its quality. For example, employees can lack agreement about the quality of accounting information (e.g., activity-based costing) because the information is constructed from subjective information obtained from interviews and surveys. This information can contain unintentional errors as well as intentional distortions that are intended to avoid revealing embarrassing inefficiencies and/or to resist painful organizational change. We use concepts from applied game theory and social psychology to identify from the accounting literature four multi-person games that may be played to harden soft accounting information. These hardening games are characterized in terms of payoffs, players, the comparability of soft accounting information, and the rules of the games that are expected to emerge. We interpret the field evidence as indicating that the hardening games that emerge depend on who the players are and the comparability of their soft accounting information. In addition, we provide evidence on how the rules of the games that harden the information emerge from the players’ social interactions. Finally, we provide evidence on how an organization learns by trial-and-error how to harden soft accounting information by changing the players and the comparability of the soft accounting information.     

Corporate governance and incidences of listing suspension by the JSE Securities Exchange of South Africa: An empirical analysis

We examine the association between corporate governance structures and incidences of listing suspension from the JSE Securities Exchange of South Africa. Using a matched-pairs research design, we compare 81 firms suspended between 1999 and 2005 to an equal number of control firms matched in terms of time, size and industry. Employing a conditional logistic model, we find that the likelihood of suspension is higher in firms with a smaller proportion of non-executive directors, without an audit committee, and with greater block-share ownership and higher gearing (i.e. leverage). Further analysis splitting block-share ownership into institutional and non-institutional investors provides mixed results. While we find a positive association between suspension and non-institutional investors, we observe no association with institutional investors. No association is detected for board size, role duality, directors' share ownership, auditor quality and return on assets. Given the paucity of studies examining listing suspension from stock exchanges and corporate governance mechanisms, these findings contribute to the literature. Additionally, the dearth of research on corporate governance in developing countries suggests that our findings have important implications for policy makers in these countries as they endeavor to improve corporate governance.     

An assessment of market-based approaches to providing ecosystem services on agricultural lands

Market-based approaches are increasingly being advocated as tools for achieving the conservation of ecosystem services. We examine the reasons why markets so far appear to have failed to provide an efficient allocation of many ecosystem services, and identify the conditions under which markets deliver efficient resource allocation. We discuss different forms of market-based approaches to ecosystem services and identify the characteristics of services that make them better suited to one or another of these approaches. We find that lack of low-cost measurability and valuation currently precludes efficient allocation of many ecosystem services through market-based approaches. Still, some forms of market-based approaches hold promise for cost-effectively managing some ecosystem services provided by and to agricultural lands. In many cases some form of well-designed government involvement will be required to seek outcomes that protect the public interest.