AN EMPIRICAL ASSESSMENT OF THE “FIT”BETWEEN STRATEGY AND MANAGEMENT INFORMATION SYSTEM DESIGN

This paper was motivated by the limited understanding of the role of accounting vis a vis other information in supporting the needs of management. The paper reports the findings of a study which examined differences in the design parameters of management information systems in firms adopting different strategic priorities. Based on a sample of 49 business unit general managers, the findings indicate that the effectiveness of business units is dependent on a match between the design of the information system and the firm's strategic posture. Information systems which have the characteristics of a broad scope system were found to be more effective in firms employing a strategy of continuous product/market development and innovation (Prospectors) than in firms which were protecting a comparatively narrow and stable product-market (Defenders). The results have important implications for management accountants involved in the design and implementation of management information systems, especially in firms adopting a more innovative strategic posture. In particular, the study sheds light on the role of accounting as part of the “mosaic” of information provided to managers for decision making.     

THE UNDERPRICING OF “SECOND” INITIAL PUBLIC OFFERINGS

The underpricing of initial public offerings (IPOs) of equity represents a well-documented empirical phenomenon. One prominent explanation for this underpricing relies on the uncertainty investors feel about the value of the issuer. In this paper, this asymmetric information hypothesis is tested by examining the underpricing of IPOs of seventy-four firms for which the uncertainty about the value of the firm is likely to be substantially reduced. These firms were once publicly owned, then taken private, and subsequently returned to public ownership. Findings show that the IPOs of these “reverse leveraged buyouts” are significantly less underpriced than typical IPOs. These results support the asymmetric information hypothesis.     

TRADE SIZE AND INFORMED TRADING: WHICH TRADES ARE “BIG”?

We find adverse‐selection spread components increase sharply in the ratio of trade size to quoted depth, and spike when trade size equals quoted depth. We find that two previously documented and prominent indicators of informed trading, raw trade size and high‐trading volume half‐hours, offer almost no explanatory power for informed trading measures beyond trade size to quoted depth, and a third indicator, time of day, offers no explanatory power among trades with high trade size to quoted depth. Our results suggest trade size to quoted depth is perhaps the single most important indicator that a trade is informed.     

A SHORT NOTE ON “IS THE EMPHASIS OF CAPITAL BUDGETING THEORY MISPLACED?”

This note relates to Paul King's article (in the Spring 1975 JBFA), which may add little to an earlier contribution by W.W. Haynes and M.B. Solomon, Jnr. Specifically, it is based on a "misplaced" caricature of "the scientific model". There seem to be serious questions as to the empirical status of the model, and more recent contributions to the theory of organisational decision-making also need to be considered.
Dans ce comnentaire, on s'eteńd sur l'article de Paul King paru dans le numéro de Printemps 1975 de ce journal. Son article ne semble fournir guère plus d'informations que la précédente étude présentée par W.W. Haynes et M.B. Solomon, Jnr. I1 insiste avant tout sur un aspect détourné du 'modèle scientifique', ce qui semble poser de sérieux problèes quant aux statuts empiriques attribues au modèle, et demande que l'on s'interroge devant de plus récentes études concernant la théorie de gestion des structures.
Diese Stellungnahme bezieht sich auf die Abhandlung von Paul King (in der Frühjahrsausgabe der JBFA), die wenig zum früheren Artikel von W.W. Haynes und M.B. Solomon, Jnr., beitragen mag. Insbesondere basiert diese Abhandlung aug einer unberechtigen Karikatur des "wissenschaftlichen Modells". Ausserdem ist der empirische Status des Modells höchst fraglich. Darüberhinaus müssen die neuen Beiträge zur Theorie des Organisationsentscheidungsprozesses berücksichtigt werden.     

SEASONED EQUITY OFFERINGS FOR NEW INVESTMENT AND THE INFORMATION CONTENT OF INSIDER TRADES

Significant negative valuation effects are widely acknowledged for firms announcing seasoned equity offerings. This result is consistent with theoretical models linking new equity issues to increased adverse-selection costs, lower management ownership in the firm, misuse of free cash flow, or expectations for earnings declines. Also increasingly evident, insiders trade around corporate announcements. We test the hypothesis that insider trading and announcements of new equity issues serve as joint signals in the market's evaluation of prospective capital investment projects. Our findings are consistent with the hypothesis that insider trading is related to market reaction to announcements of new equity issues.