Comparing the Value Relevance of Two Operating Income Measures

Prior research has shown that pro-forma (recurring operating) earnings reported by managers and analysts are more value relevant than GAAP net income. Since GAAP net income contains many non-operating items that reduce its value relevance compared to operating earnings, comparing the value relevance of GAAP net income with operating earnings unduly favors operating earnings. We show that operating earnings reported by managers and analysts are more value relevant than a measure of operating earnings derived from firms' financial statements, as reported by Standard and Poor's. Our evidence is important because it indicates that operating earnings reported by managers and analysts contain value relevant information beyond that provided by operating earnings obtained by sophisticated users from firms' financial statements.     

Time pacing: competing in markets that won't stand still

Most companies change in reaction to events such as moves by the competition, shifts in technology, or new customer demands. In fairly stable markets, "event pacing" is an effective way to deal with change. But successful companies in rapidly changing, intensely competitive industries take a different approach. They change proactively, through regular deadlines. The authors call this strategy time pacing. Like a metronome, time pacing creates a rhythm to which managers can synchronize the speed and intensity of their efforts. For example, 3M dictates that 25% of its revenues every year will come from new products, Netscape introduces a new product about every six months, and Intel adds a new fabrication facility to its operations approximately every nine months. Time pacing creates a relentless sense of urgency around meeting deadlines and concentrates people on a common set of goals. Its predictability also provides people with a sense of control in otherwise chaotic markets. The authors show how companies such as Banc One, Cisco Systems, Dell Computer, Emerson Electric, Gillette, Intel, Netscape, Shiseido, and Sony implement the two essentials of time pacing. The first is managing transitions--the shift, for example, from one new-product-development project to the next. The second is setting the right rhythm for change. Companies that march to the rhythm of time pacing build momentum, and companies that effectively manage transitions sustain that momentum without missing important beats.     

Ranking Accounting Ph.D. Programs and Faculties Using Social Science Research Network Downloads

We rank accounting Ph.D. programs and accounting faculties based on downloads individuals' working papers posted to the Social Science Research Network (SSRN) receive. We retain 185 individuals included in Accounting Faculty Directory 2002–2003 (Hasselback, 2002) whose work has been most heavily downloaded as of August 21, 2002. We rank Ph.D. programs (faculties) both adjusting and not adjusting for program (faculty) size. We provide rankings both without regards to when individuals graduated and for individuals graduating during three consecutive sub-periods: pre-1982, 1982–1991 and 1992–2001. We first provide rankings without regards to teaching or research area. After dichotomizing individuals into those whose teaching/research area is financial versus non-financial we provide additional rankings focusing on non-financial research areas.     

Diffusion of a durable good innovation: The case of high bypass turbojet engines

Jackson and Kaserman (1991) model diffusion of an innovation an investment decision where the time of adoption is motivated by cost-minimization. This paper tests this model, using the adoption by American major airlines of jet aircraft embodying high bypass turbojet engine technology.The results support the Jackson-Kaserman model. The effect of aircraft age has the appropriate and significant sign. Likewise, average stage length measuring relative variable cost performance of the old and new technology is appropriately signed.     

How Institutional Identity Shapes College Student Recruitment: The Relationship Between Religious Distinctiveness and Market Demand

Institutional diversity has long been recognized as a signature strength of the American system of higher education, yet the sector contributing most to this remarkable feature—small and midsized private colleges—currently finds itself under significant financial pressure as a result of recent social and economic disruptions. To overcome such challenges, campus leaders must understand the market positioning of the institutions they serve. This article investigates the relationship between market demand and organizational distinctiveness within one segment of the diverse private sector—religiously affiliated colleges. It draws upon longitudinal data from the membership of one national professional association, the Council for Christian Colleges & Universities, to develop an empirical typology of institutional religious distinctiveness and examine patterns of market demand over time. Results suggest that religious distinctiveness has a medium effect on student demand at both the application and matriculation phases of the admissions process. The article concludes by considering appropriate recruitment strategies for faith‐based colleges and universities depending on their degree of religious distinctiveness.     

Customer positivity and participation in services: an empirical test in a health care context

Many service interactions require customers to actively participate, yet customers often do not participate at levels that optimize their outcomes, particularly in health care. To gain insight into how customers shape a service experience with highly uncertain outcomes, we construct a model on the broaden-and-build theory of positive emotions. The model is used to empirically assess how situation-specific emotions and customer participation during a health care service experience affect perceptions of the service provider. The model is tested using data from 190 medical clinic customers. Consistent with theory, results reveal that as customers’ relative affect levels become more positive, levels of participation increase as well. In turn, higher levels of positivity and participation improve customer perceptions of the quality of the service provider and satisfaction with the co-produced service experience. Implications of this research focus managers on designing services to help clients manage their emotions in ways that facilitate positivity and participation and thus improve service perceptions.     

Asset allocation and portfolio performance: Evidence from university endowment funds

We use university endowment funds to study the relationship between asset allocation decisions and performance in multiple asset class portfolios. Although endowments differ substantially in asset class composition, policy portfolio returns and volatilities are remarkably similar across the sample. The risk-adjusted performance of the average endowment is negligible, but actively managed funds generate significantly larger alphas than passive ones. This is consistent with endowment managers exploiting their security selection abilities by over-weighting asset classes in which they have superior skills. Contrary to both theory and prevailing beliefs, asset allocation is not related to portfolio returns in the cross-section but does indirectly influence performance.     

A study of the impact of package changes on orange juice demand

In January 2009, Tropicana introduced a new package design as part of its advertising and branding campaign, with the theme “Squeeze it’s a Natural”. Sales of the Tropicana Pure Premium line plummeted 20% between the end of December and February from the same period a year ago. By the end of February, Tropicana had changed its mind and went back to the earlier packaging. The purpose of this study is to examine the impact of Tropicana’s package redesign on the sales of Tropicana orange and on the sales of all orange juice in grocery stores. Study results show that the package redesign cost Tropicana an estimated $27 million.