Do Board Characteristics Influence the Shareholders' Assessment of Risk for Small and Large Firms?

This paper investigates the association between board characteristics and shareholders' assessment of their exposure to economic and agency risks as reflected in the volatility of stock returns. Our hypotheses incorporate prior evidence that small and large firms have ‘dramatically’ different board structures, reflecting the firms' different monitoring and advising needs. We hypothesize and find evidence that only the shareholders of well‐established large firms are able to generate positive net benefits, in the form of lower equity risk, from independent boards and well‐connected independent directors with multiple directorships. We also find professional and formal industry degree qualifications on the board are associated with shareholders' risk assessment for some small firms consistent with the focus of small firms on building growth and scale. While we find evidence that formal industry professional affiliations (weak evidence) and MBAs provide benefits for the shareholders of large firms, there is limited evidence that financial expertise on the board systematically influences shareholders' risk assessments for small or large companies. The key conclusion from the evidence in this paper is that a ‘one size fits all’ approach to governance in relation to the board of directors may not meet the diverse needs of companies at different stages of economic development.     

Industrial Relations in Privatized UK Mining: A Contingency Strategy?

This paper explores variations in the pattern of colliery level industrial relations following the privatization of British Coal in four pits operated by the largest coal mining company in the UK. Differences are explained in terms of the competing institutions representing mineworkers and, most significantly, in relation to whether the mode of acquisition of the colliery required the management to maintain existing terms and conditions as a result of the Transfer of Undertakings (Protection of Employment) Regulations 1981.     

Economic Analysis at the Federal Communications Commission

This article reviews some of the major economic issues faced by the FCC in thelast year. It focuses on the application of new analytic techniques at the FCC, andidentifies several areas in which further academic research would be valuable to theFCC.Currently serving as FCC Chief Economist     

PERSPECTIVE: Ranking Business Schools on the Management of Technology

Current centers of active research on the management of technology and innovation (MOT) are identified through the use of a publication‐based study. This article develops a methodology for ranking centers of MOT research and in doing so identifies 120 centers of MOT research in different parts of the world. Centers of research are identified in Africa, Asia, Australia, Europe, and North America. Detailed assessment is offered for the 21 U.S.‐based schools with three or more active MOT researchers present. The nature and quality of research activity is assessed with a series of 21 metrics. These metrics consider the number of active faculty, the number of publications researchers have in the base journals during the study period, total publication history, MOT publication history, number of equivalent articles, number of pages published, frequency of citations, and a series of metrics that are a combination of two or more of these factors. The assessment identifies four groups of schools that have MOT research capabilities. Schools with substantial research capability are divided into three tiers based on their rankings in different metrics. Each of the schools ranked in the first tier placed first on at least two of the 21 metrics considered in this study. A reasonable argument can be made that any one of the schools ranking in the first tier is the strongest school in terms of MOT research capabilities. These U.S.‐based schools in alphabetical order are Georgia Tech, MIT, Rensselaer, Rutgers, and Stanford. An important point to note is that there are clear differences in research focus between the different first‐tier schools; therefore, it is quite likely that different types of students, faculties, and practitioners will find each of the first‐tier schools most attractive based on personal fit with these differences in specialization. The schools in the second and third tier have substantial MOT research capability. The fourth tier identifies 18 additional U.S.‐based schools that have some capability due to a core of two researchers. This core could be the springboard to a national ranking or a transitory state due to departure of a faculty member. Future research should consider the stability of the results over time and should explore the links among research capabilities, program structure, student output, and placement.     

A new measure of firm-group accounting closeness

Review of Quantitative Finance and Accounting - In this study we develop a new measure of firm-group accounting similarity which captures co-movement in accounting fundamentals over time. We...     

Data for outcome payments or information for care? A sociotechnical analysis of the management information system in the implementation of a social impact bond

ABSTRACT

Social Impact Bonds (SIBs) are a policy intervention designed to explicitly link the activity of social interventions to outcome payments. Despite a burgeoning literature on SIBs there is a lack of evidence in relation to the information system characteristics and accounting mechanisms of SIBs. Applying a multi-dimensional sociotechnical lens to a case study of a SIB allows us to reveal the current problematic convergence of public management and information systems. The authors found that an information system within a SIB is introduced and adapted to increasingly prioritize the production of data for payment over documenting care accounts to support improved provision. The ?ndings of this paper also suggest that claims of SIBs as an innovation are limited as they are subject to the familiar problems of New Public Management practice, in the way they shape the design and use of the data in governance, management and service delivery practices.     

Do Inward Investors Achieve their Job Targets?*

The paper utilizes data for north‐east England over the period 1985–98 to examine if foreign‐owned start‐up plants achieve their job targets. Different models are estimated, each shedding light on the relationship between the jobs promised by plants in their initial investment and their actual employment attained. On average, it is found that the plants achieve their job targets, but larger plants fall someway short. It is argued that these plants may deliberately overstate the number of jobs, and that the employment‐creation claims of inward investors and economic development agencies should be treated with skepticism.     

Bank Loan Availability and Trade Credit Demand

This paper investigates the effects of bank loan availability on the trade credit and credit card demand of small firms, using firm‐level data from the 1995 Credit, Banks, and Small Business Survey, conducted by the National Federation of Independent Business. We find that firms increase their demand for trade credit and credit card debt when facing credit constraints imposed by banks. These results provide evidence of a pecking order of debt financing, where firms increase their reliance on potentially expensive sources of funds when bank loans are not available.     

Examination of Conditional Asset Pricing in UK Stock Returns

I examine the empirical performance of various specifications of the capital asset pricing model (CAPM) in UK stock returns, using the stochastic discount framework. When the proxy for the market portfolio includes a proxy for labor income growth in addition to the stock market index, the performance of the CAPM improves. The improvement in performance shows in the magnitude and significance of the pricing errors and in the reduced impact of asset characteristics and other factors in the pricing of assets. There is further improvement when I use conditional versions of the models.     

Order flow and exchange rate dynamics in electronic brokerage system data

We analyze the association between order flow and exchange rates using a new dataset representing a majority of global interdealer transactions in the two most-traded currency pairs at the one minute frequency over a six-year time period. This long span of high-frequency data allows us to gain new insights about the joint behavior of these series. We first confirm the presence of a substantial association between interdealer order flow and exchange rate returns at horizons ranging from 1 min to two weeks, but find that the association is substantially weaker at longer horizons. We study the time-variation of the association between exchange rate returns and order flow both intradaily and over the long term, and show that the relationship appears to be stronger when market liquidity is lower. Overall, our study supports the view that liquidity effects play an important role in the relationship between order flow and exchange rate changes. This by no means rules out a role for order flow as a channel by which fundamental information is transmitted to the market, as we show that our findings are quite consistent with a recent model by Bacchetta and Van Wincoop (2006: Can information heterogeneity explain the exchange rate determination puzzle? American Economic Review, 96, pp. 552–576.) that combines both liquidity and information effects.