The World's Best Performing Companies

For companies to create successful strategies, they need to identify success. Performance measurement and benchmarking are an important step towards good performance itself. But conventional profit measures do not provide a good benchmark. Using a profitability indicator which measures value created for shareholders, Business Strategy Review ranks the best performing companies in Europe, America and Japan. The message: if you want to be a successful company, move into the Pharmaceuticals sector.     

Corporate governance, takeovers and the role of the non-executive director

The takeover mechanism may have some effect on disciplining managers - but it also allows them to spend shareholders money on self promotion. The authors of this paper argue that if we had a better system of corporate governance with a revitalised role for independent directors fewer takeovers would occur, and calls for reform of the acquisition market would diminish.     

Regime changes and the sustainability of fiscal imbalance in East Asian countries

The main purpose of this paper is to assess empirically the fiscal policy regimes in five Asian countries using a formal framework based on the government's intertemporal budget constraints (GIBC). To this end, we relied on an array of time-series methods and quarterly data of nearly three decades. Our conclusions are; first, the evidence indicates that the fiscal stance in Thailand and South Korea are on their sustainable path while the Philippines and Malaysia demonstrate only ‘weak sustainability’. Second, revenues are growing at a rate faster than government spending for Singapore, a country that has recorded large surpluses for most of the sample period. Third, the results show a one-way causation from expenditure to revenue for Korea, Singapore and Thailand. This finding indicates that reducing the size of government spending may improve fiscal budget deficits without having to undergo changes in the overall strategy. Fourth, we observed a long-run feedback causality in the revenue–expenditure nexus for the case of Malaysia and the Philippines, which may require fiscal synchronization instrument policies to moderate the post-crisis fiscal imbalances. Together, the results demonstrate diverse fiscal patterns but they should be useful to understand the complexities of economic integration in the region.     

Economics at the FCC, 2011–2012: Spectrum Incentive Auctions, Universal Service and Intercarrier Compensation Reform, and Mergers

The past year in economics at the Federal Communications Commission covered a broad range of topics in telecommunications policy. This paper highlights the economic issues that are addressed in the following key areas: spectrum management, universal service and intercarrier compensation reform, and merger review. In spectrum management, the FCC received congressional authority to implement an ??incentive auction?? to repurpose television broadcasting spectrum into flexible-use licenses that will be suitable for mobile wireless service providers. We discuss some important issues in designing the auction. We next address some aspects of the FCC??s comprehensive reforms of intercarrier compensation, which mainly involves call termination rates, and of universal service. Finally, we discuss the economic analysis of two major mergers: AT&T-T-Mobile, which the FCC staff recommended should be referred to an administrative hearing, and Level 3/Global Crossing, which was cleared with no conditions.     

Inherited agglomeration effects in hedge fund spawns

This paper studies inherited agglomeration effects, which we define as human capital that managers acquire while working in an industry hub that may be transferred to a spinoff. We test for inherited agglomeration effects in the hedge fund industry and find that hedge fund managers who previously worked in New York and London outperform their peers by about one percent per year. The results are driven by managers who worked in investment management positions previously, and are at least as large as traditional agglomeration effects that arise from being located in an industry hub contemporaneously. The evidence suggests that inherited agglomeration effects are an important, but as yet overlooked, factor influencing the performance of new firms. Copyright © 2013 John Wiley & Sons, Ltd.     

PLANNING THROUGH RESIDENTIAL CLUBS: HOMEOWNERS' ASSOCIATIONS

Private homeowners' associations now govern over 18% of the American population, enforcing contractual land-use restrictions and providing what would otherwise be municipal services. The rapid spread of these associations in new housing construction is explained by rising land costs, constraints on the ability of local governments to raise property taxes, and consumer preferences. Because these associations resemble club economies in significant respects, they provide an opportunity to test whether these private associations can provide services more efficiently than municipalities. Departures from the assumptions of the club economy model are noted, including the lack of options for consumer choice that undermine the consent-based rationale.     

Do Heterogeneous Beliefs Matter for Asset Pricing?

We study how heterogeneous beliefs affect returns and examinewhether they are a priced factor in traditional asset pricingmodels. To accomplish this task, we suggest new empirical measuresbased on the disagreement among analysts about expected earnings(short-term and long-term) and show they are good proxies. Wefirst establish that the heterogeneity of beliefs matters forasset pricing and then turn our attention to estimating a structuralmodel in which we use the forecasts of financial analysts toproxy for agents’ beliefs. Finally, we investigate whetherthe amount of heterogeneity in analysts’ forecasts canhelp explain asset pricing puzzles.     

Short-term cross-cultural study tours: impact on cultural intelligence

This paper examines whether short-term cross-cultural study tours enhance the four factors of cultural intelligence (CQ): metacognition, cognition, motivation and behavior. CQ has exhibited high correlations between higher levels of CQ and positive attitudinal and behavioral outcomes. As a capability, CQ appears malleable and, thus, open to change and improvement. Data were collected from working professionals in an MBA program both before and after participating in an experientially oriented 11- or 12-day short-term cross-cultural study tour. Results supported three of the four hypotheses, suggesting that short-term cross-cultural study tours exhibited a significant relationship with enhanced metacognitive CQ, cognitive CQ and motivational CQ. The results did not reveal a significant relationship between the study tours and behavioral CQ.     

Developing a Valid and Reliable Measure of Product Innovativeness for Entrepreneurship Research

Product innovativeness is central to entrepreneurship, but extant measures are problematic for entrepreneurship research because they tend to be firm‐level and/or subjective and lack validity and reliability for new and small firms. We develop a new measure of product innovativeness that is direct, objective, contemporary, and cardinal that provides entrepreneurship researchers with a reliable measure of innovativeness at the product level that will facilitate consistent measurement of this construct in cross‐sectional and longitudinal studies of product innovation. The new measure is developed as a formative measurement model using composite indicators that are objectively identified by observation of the new product and can be used to compare rival products or a particular firm's product innovations over time.