The optimal policy rule under rational expectations and multiplier uncertainty

This paper shows the role of macro policy under multiplier uncertainty when expectations are rational and the supply structure is affected by price level variance. Policy less is a function of price level variance and possibly of the expected price level. If the letter argument is omitted from the less function, optimal policy simply minimizes the horizontal variance of the aggregate demand curve. If it is not omitted, the level of policy depends on the responsiveness of the supply structure to price level variance, and there may be multiple local policy optima.     

Comparative dynamics in a life cycle theory of the firm

Important insights and contributions to the corporate financial manager's decision problem have been provided by the balanced-growth financial modeling literature, e.g., see [4, 5, 8, 10, 11, 13, 15]. In the spirit of this research, the objective of this paper is twofold. First, a normative model of the dynamic financial planning process in a deterministic environment is constructed wherein the traditional, steady-state assumptions are relaxed. In contrast to prior models, the firm is allowed to pay a liquidating dividend and faces a time-dependent investment rate of return, interest rate, and equity discount rate. Necessary and sufficient conditions for the levered firm's optimal investment-financing-dividend policy decisions which maximize the wealth of its investors are developed, and a solution synthesis technique is employed to catalogue the different decisions at each time instant in terms of three earnings-growth stages over the firm's life cycle. Over this life cycle, the firm experiences high, low, and negative growth stages, with the latter stage distinguished by a liquidating dividend payout and retirement of debt outstanding. Secondly, the life cycle depiction further permits an analysis of the effects, in terms of both direction and magnitude, on the optimal duration of the firm's different growth stages and optimal growth rates due to changes in the firm's return on investment, debt-equity ratio, borrowing rate, equity discount rate, depreciation rate, and flotation costs via a comparative dynamics and simulation framework. Changes in the return on investment are found to have the most influence on the duration of the firm's growth periods and their respective earnings growth rates, while changes in the mix of financing and depreciation rate tend to have the least effect. Furthermore, the magnitudinal impact of marginal changes in any of the above firm variables is greatest at low levels of debt-to-equity and growth-in-earnings and quickly dissipates as the degree of leverage increases.     

Household income data reports in mail surveys

An empirical study was conducted to assess the quality of reported household income data in the context of a mail survey, where quality was measured in terms of the difference between actual household income and reported household income. In the study, nonresponse error was found to be greater than response error (distortions in reporting household income), although both were statistically significant. Under- and overreporting of household income were found to be associated with absolute income levels, and several possible reasons for under- and overreporting were hypothesized.     

Improving the effectiveness of persuasive communications: Matching message with functional profile

The functional approach to improving communication strategy has received little attention. This research attempts to partially correct this oversight by experimentally verifying the major functional hypothesis: matching message with functional profile brings about attitude change. Working adults were integrated into an experiment which was a before-after with control. The major functional hypothesis was confirmed at the 0.10 level. An associated hypothesis regarding the relative ease of changing value- expressive attitudes compared to utilitarian attitudes was confirmed at the 0.10 level. The results show the importance of matching message with functional profile and highlight the potential inherent in the functional approach.     

Boundary-spanning activity,role dynamics,and job satisfaction: A longitudinal study

Boundary-spanning activity and its effects on role conflict and ambiguity and job satisfaction were studied in a large manufacturing organization. Longitudinal data were collected 11 months apart from 132 managerial, engineering, and supervisory employees. A corrected cross-lagged correlational analysis suggests no casual relationships between boundary-spanning activity and role conflict and ambiguity. Causal, positive relationships are suggested, however, between boundary-spanning activity and satisfaction with work, promotions, supervision, co-workers, and overall job satisfaction.     

Measures of brand attitude: Are cognitive structure approaches really needed?

Recent research on attitude toward the advertisement provides a theoretical base that questions the usefulness of multiattribute attitude measures. Arguments for global measures of brand attitude in affect-referral choice situations are presented. The two types of measures are tested as predictors of purchase intentions for ten supermarket brands. Global brand attitudes demonstrated greater predictive value for nine of the ten test brands.     

Structural constraints on organizational change: A longitudinal analysis

The results of a longitudinal study assessing the impact of internal constraints upon both organizational responsiveness to the environment and efforts to change structures for symbolic signaling of policy are presented. The causal model used is developed from a theoretical elaboration of Williamson, Thompson, and Meyer. The implications of the analysis for the signaling metaphor of organizational change are emphasized. The data indicate (i) that the varying resistance to change observed within core dimensions of organizational structure may be largely due to durable capital investments, (ii) that within capitalized dimensions of organizational structure, the resulting resistance to change leads to a longitudinal persistence of centralized decision making, and (iii) that failure to incorporate such constraints in analyses of organizational change leads to misleading results.     

Social power bases of marketing executives: The relationship with organizational climate

This research paper reports the results of a mailed questionnaire study of 343 marketing executives. The purpose of the research was to investigate whether or not a relationship exists between organizational climate (i.e., specific conditions in the organizational environment of the firm) and the particular social power base of the marketing executive. Results indicate that the three desirable power bases—expert, referrent, and legitimate—are correlated with all four of the organizational climate dimensions studied—reward orientation, personnel policies, MBO orientation, and status orientation. The undesirable power base—coercive power—was correlated with none of these dimensions.     

Conjoint measurement experiment of consumer complaining behavior

What factors influence whether a consumer voices a complaint, given a dissatisfactory product purchase and/or consumption experience? This limited, experimental research suggests that the greatest propensity to complain occurs when purchase price is high, the product is available from only one retailer, and the social risk of product consumption is high.     

Ethical beliefs and personal values of top level executives

Do business executives sell their souls to the corporation? Is the organization a “paramour” in an executive's life? Is backstabbing the only way to climb the corporate ladder? The basic purpose of this study was to provide answers to these questions by surveying Fortune 500 corporate executives in the marketing, finance, and production areas. The findings are interesting as various executives exhibited different behavior regarding three types of ethical concern.     

A causal analysis of psychological climate and leader behavior relationships

Individual perceptions of the work environment, or psychological climates, have been shown to be important determinants of work attitudes such as satisfaction and job involvement. However, little is known concerning the relationships between psychological climate and other variables that may lead to or cause these perceptions. This research examined causal relationships among dimensions of psychological climate and leader behavior. Specifically, the investigation attempted to determine whether leader behavior caused psychological climate, or whether psychological climate caused leader behavior. Eithty-five foremen from a truck manufacturing facility participated in the study over a 17-month period. Results of cross-lagged panel correlations and causal path analysis indicated that psychological climate caused leader behavior. Since one individual's perceptions of his/her work environment can only indirectly be linked to another person's (in this case, the leaders) behavior, an intervening variable is required to explain these findings. This variable may be a consensual or organizational climate.     

Labor market differentials and the expected gain from search

Several recent empirical studies have used the residuals from estimated earnings equations as explanatory variables in models of on-the-job search and quit behavior. It has often been argued that the coefficients on these “market differential” variables are biased downward because estimated residuals overstate the “true” quasi-rent or disincentive to search for alternative employment. This argument—that observed wages include implicit payments for workplace and person-specific characteristics not fully specified in earnings models— ignores an opposing bias associated with the value of being able to reject unattractive wage offers. As a consequence, there is no unambiguous a priori relationship between estimated wage residuals and the theoretical expected gain from search. Some evidence bearing on the relative magnitudes of the two biases is discussed.     

Beta adjustment methods

This study is an analysis of the forecasting ability of adjusted and unadjusted betas. Based on the Canadian data for 252 stocks, random errors in betas are the most important reason for the poor predictive ability of individual security betas. Most of this random error is eliminated if securities are grouped into portfolios. However, further improvements in forecasting ability are gained by adjusting the security betas for bias and inefficiency. Five methods of adjusting the naive beta estimates have been tried, including two methods not tested before. These two, Vasicek's two-stage method and order-bias adjustment method, gave results generally superior to others.     

Measuring the performance of industrial salespersons

Sales force performance is a critical concern of most industrial firms, yet in this area of research there are difficulties in measuring salespersons performance. Issues relevant to measuring the performance of industrial salespersons are reviewed. A self-report performance scale developed and evaluated based on the responses of 200 salespersons and 42 managers from five major industrial firms is presented.     

Prices of deep discount bonds and the Revenue Act of 1978: An evaluation of market response

This article explores the market response of deep discount corporate bonds to the reduction in the capital gains tax rate incorporated into the Revenue Act of 1978. Such tax change should have increased the desirability of assets acquired for capital gains potential, such as deep discount bonds. Examining a time series of prices and returns for a sample of deep discount corporate bonds and a control group of comparable duration and credit risk corporate bonds selling at or near par did indeed provide evidence of a market price reaction. Moreover, the price changes for the deep discount bonds occurred well in advance of the implementation of the tax change.