A comparison of job analytic and conventional economic variables as explanations of occupational earnings differentials

Occupational carnings are analyzed in order to determine the relative importance of micro-oriented job analytic variables vis-a-vis more conventional market variables as explanatory factors of earnings differentials. Earnings functions are constructed in order to determine the extent to which these variables can explain occupational earnings differentials. These functions are analyzed by means of both ordinary least squares and ridge regression techniques. Job analytic variables were obtained from the Position Analysis Questionnaire (PAQ), which measures job characteristics that are similar to many job evaluation systems. When these approaches are combined, a comprehensive model can be estimated that reflects the responsibilities, experience, training, skills, job environment, and work regularity characteristics of different occupations as well as conventional economic factors. Although the job analytic variables measure potentially important differences between jobs, the conventional economic variables have greater explanatory power.     

Formulating a strategic portfolio of profitable retail market segments for commercial banks

A profit contribution study of commercial bank retail customers reveals systematic relationships with family life cycle, social stratification, and relative income class. The analysis leads to the conclusion that a bank's continued retail growth and profitability depend in a crucial way on its ability to attain a balanced portfolio of three key high profit market segments. To attain this mix, banks must intensify product development efforts oriented to the asset management needs of upscale customers during the later stages of the family life cycle. It is interesting to note that these three market segments are expected to attain the highest population growth rates in the decades ahead as the age distribution of the population changes.     

Mismeasurement of market returns

Virtually all empirical tests of the Capital Asset Pricing Model have assumed (usually implicitly) that returns of some New York Stock Exchange index measure the returns of the “market factor” without error. However, recent theoretical developments suggest that this assumption may be inappropriate. In this effort, an obverse tack is adopted — the asset pricing model is assumed correct and attention is focused on the impacts of incorrect specification of market returns. A simple errors-in-variables econometric technique is used to reevaluate the oft-cited study of Black, Jensen, and Scholes. The conclusion is reached that incorrect measurement of the market is itself an onerous and unreconciled problem which adds marked bias to tests of asset pricing mechanisms.     

Entry inclinations under uncertainty

This paper considers the market entry decision of a potential entrant that behaves as if it knew the future market demand and its own cost schedules, and formulates a set of probability judgements as to the unknown output rates that its future rivals will maintain. The special case where entry is free and each in-market seller, as well as the potential entrant, assumes that the others will not alter their production provokes the classic Cournot-Stackelberg situation. Although one might suspect that uncertainty would tend to inhibit entry as compared with an equivalent, in the expected-value sense, certainty situation, this is not at all the case. The suspucion is not necessarily true even when management is risk averse.     

Monetary policy and the daily behavior of interest rates

It is possible that previous research has failed to detect significant variation in the ex-ante real interest rate because the Federal Reserve follows a policy designed to stabilize the real rate. If the Fed is successful, there will be little month-to-month variation in the real rate. Nonetheless, research to date has relied on monthly or quarterly data. This paper presents the results of new tests that use daily data in an attempt to detect short-term variation in the ex-ante real rate. Though the tests reveal that the real rate is not constant, most of the detected variation is related to reserve settlement on Wednesday.     

Comparison of alternative models for estimating the cost of equity capital for electric utilities

In this article five models used to estimate the cost of equity capital for electric utilities are systematically compared. We show the impact of model specification, data definitions, and estimation techniques on the estimates. Our search for the “best” model is based on reasonableness of estimates and the Pesaran-Deaton test for non-nested hypotheses. Conclusions emerging from the study are the following: 1) all models explain approximately the same proportion of the variation; 2) recognition of natural nonlinearities in the models does not lead to improvement; 3) no model can consistently reject the other models.     

Multibank holding company activity and local market structure: Some implications for intra- and interstate banking

This paper presents new evidence on the effects of multibank holding companies on the structure of local commercial bank markets for deposits. A distinguishing feature of this study is the use of pooled cross-section and time-series data. It is concluded that multibank holding company activity has had a procompetitive effect on the local banking markets in the sample. This finding, which is quite robust under alternative model specifications, has important implications for state and federal policy toward this organizational form and toward intra- and interstate banking.     

Adjustment costs and theory of investment under uncertainty

It is shown that the stochastic investment rule for the price-setting monopolist facing random demand differs from the deterministic rule, due to the presence of the covariance of the marginal utility of profits and the MRTS between capital and labor. For the risk-neutral quantity-setting monopolist, the optimal current investment under random demand is shown to be greater than that under deterministic conditions, given that production technology is of the Cobb-Douglas type with constant returns to scale. When random wages and prices follow first-order autoregressive schemes, the risk-neutral competitive firm's current investment level is shown to be at least equal to that under certainty.     

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.     

The error learning hypothesis: The evidence reexamined

This paper reexamines the error learning hypothesis, taking explicit account of both the measurement error in forward rates and the nonstationary of liquidity premiums. The evidence is consistent with the model, but with lower explanatory power than the previous results of Meiselman (1962) and Van Horne (1965).     

The determination of corporate optimal capital structure under value maximization and informational asymmetry

In this article we examine the optimal capital structure of the firm under conditions of informational asymmetry, i.e., when the manager of the firm is viewed by the market as possessing inside information about the firm's future profitability. Unlike previous research on this topic, in this study we preserve the objective of value maximization when examining the signaling property of corporate capital structure. We also recognize explicitly the other consequences of debt financing on the value of the firm. An integrated analysis of the capital structure problem within the context of rational expectation is presented, and a signaling equilibrium is derived and discussed. The nature of the welfare costs that emerge from the existence of informational asymmetry is also analyzed.     

Similarities between conflict and cooperation in the marketing channel

This article examines the relationship between two causes of conflict: domain dissensus and perceptual incongruity, and the levels of conflict and cooperation within a marketing channel dyad. Utilizing a national sample of food broker-food wholesaler dyads, four hypotheses were tested—two relating domain dissensus and two relating perceptual incongruity to conflict/cooperation. Results indicated no significant relationship between either perceptual incongruities or domain dissensus and the level of conflict found in the dyad, while a significant negative relationship was found between both perceptual incongruities and domain dissensus and the level of cooperation in the dyad.     

A market index futures contract and portfolio selection

This paper shows that if security returns are generated according to the market model and there is a futures market in the market index, then optimal portfolios can be selected in three steps: 1) select the optimal combination of firm unique characteristics; 2) select the optimal investment in the market; and 3) select the optimal investment in the risk-free asset. The futures market contract separates the choice of firm and market exposure and thus both simplifies the mathematics involved and increases the mean/variance efficiency of the optimal portfolio.     

Statistical classification models applied to common stock analysis

The application of statistical classification techniques to various aspects of equity financing and returns performance has been an attractive and fairly prolific area of research in the last 10–15 yrs. The various aspects of equity analysis relevant to classification techniques are more diverse than fixed income analysis and, until recently, presented more interesting empirical as well as theoretical challenges.The purpose of this paper is to review and comment upon numerous classification studies related to several aspects of common stock analysis, and, in so doing, to provide a clear picture of the variety of application areas amenable to statistical classification techniques. These areas include (1) common stock investment categories; (2) price-earnings and return-risk equity classification; (3) information content and return performance; and (4) capital structure questions.     

Market similarity and market selection: Implications for international marketing strategy

International market selection patterns for a sample of 954 new products suggest that firms exhibit a significant preference for markets similar to the home market. Preferences for similar markets decline as firms gain experience in a variety of markets, however. This pattern suggests the importance of uncertainty and information in global market selection and marketing mix management. Alternative means of gathering information about foreign markets permit and support very different approaches to global marketing activity. More fundamentally, a global perspective on the relationship between market conditions, marketing policies and programs, and consumer response can be developed systematically to improve global marketing performance.     

The role of incubator organizations in the founding of growth-oriented firms

The role of incubator organizations, those organizations where entrepreneur work before starting their own firms, is examined. Using a sample of 161 new, growth-oriented firms, the relationships of the new companies to their incubator organizations are considered, as well as the characteristics of the incubator organizations. 5The findings have implications for prospective entrepreneurs. Entrepreneurs in most industry categories do not change geographic location and, in most technical industries, usually start businesses related to what they did before. An individual's decision to join a particular organization results in a particular geographic location and in knowledge about a particular industry. The would-be founder located in an unpromising geographic area and getting experience in an industry offering few opportunities for company start-ups is unlikely to be able to start a growth-oriented technical firm, regardless of personal motivation. However, the prospective founder of a nontechnical firm appears to be less tied to the experience gained in an incubator organization.There are also implications for regional economic development. Because technically oriented start-ups are tied closely to the business of their incubator organizations and because most entrepreneurs don't move when starting, the possibilities for high-technology start-ups may be very limited in many geographic regions. There have been no studies, to date, on why some founders move when starting. Programs to attract entrepreneurs at the time of start-up may have promise, but, at least to date, there is not much evidence of entrepreneurs being mobile at this stage of their careers.Local and regional programs to attract branch facilities of larger corportions have a long history. The emphasis is usually upon attracting facilities that will offer the maximum number of blue-collar jobs. In contrast to this traditional approach, it might be beneficial to shift the emphasis to those facilities most likely to function as incubators. The greatest benefits might come from laboratories or divisions that would “seed” a region with people learning about promising technologies or industries.The role of universities in this process appears to be less direct than is often assumed. Based upon our sample, it appears that software and biotechnology/medical firms often have spun-off from universities or hospitals. However, in other industry categories, it is business firms that have primarily served as incubators. There are currently many experiments underway to create university-affiliated innovation centers or incubator centers intended to help aspiring entrepreneurs. Whether these will enable universities to function more effectively as incubators, spinning off students and faculty who start growth-oriented firms, remains to be seen.     

Profitability market segmentation: Identifying the heavy users of overdraft checking

Users of overdraft checking, a bank service that allows customers to draft checks in excess of their existing balances up to a predetermined limit, were studied to see if they could be segmented on the basis of utilization rates. A total of 271 overdraft checking customers from among 489 enrollees in the service returned completed questionnaires. All enrollees were customers of a bank in a midwestern city of slightly more than 100,000 inhabitants. Data covering the extent of overdraft usage, utilization of other of the bank's services, and sociodemographic backgrounds were collected. Customer groups varying in overdraft usage intensity and date of enrollment in the service were derived through cluster analysis. Multiple discriminant analysis was used to relate use of other services and background data to group membership. Heavy users, the most profitable bank customers, were younger, had lower incomes, and were better educated than light users. Furthermore, early heavy users tended to be similar in socioeconomic profile to later heavy users. So a re view of the characteristics of the first few intense users would have been helpful in the development of a marketing program to attract additional profitable customers.     

Heterogeneity in performance within the bank holding company sector: Evidence and implications

The performance of banks affiliated with the holding company sector has been heavily investigated. Empirical studies have sought to determine if the alleged efficiency of holding companies does in fact exist; and if such efficiency outweighs the anticompetitive effects introduced into the banking structure. Research methodologies, nevertheless, have tended to view the holding company sector as homogeneous in its performance characteristics as compared to independent banking. In this study, however, it is found that there is considerable heterogeneity in performance within the holding company sector. The findings have implications for the direction of future research as well as the formation of public policy in banking.     

Note,advance refunding and municipal bond market efficiency

This study uses the public announcement of an advance refunding to examine the informational efficiency of the secondary market for municipal bonds. The data show that bond yields respond quickly and in the direction predicted. The text discusses methodological considerations and the data sources used in the tests. The results of the study indicate that even for infrequently traded bonds, yields can be expected to reflect fully changes in default risk.