Multiperiod hedging in the presence of stochastic volatility

In this paper, we characterize the multiperiod minimum-risk hedge strategy within the stochastic volatility (SV) framework and compare it to other hedge strategies on the basis of hedging performance. Using crude oil markets as an example, we demonstrate that the SV model is appropriate in depicting price behaviour. However, ex ante and ex post comparisons indicate that the SV strategy is inferior to conventional hedging strategies. There is also evidence that the Generalized Autoregressive Conditional Heteroskedasticity (GARCH) strategy may be better than the SV strategy, at least in terms of variance reduction.     

Innovation and Merger Decisions in the Pharmaceutical Industry

There is increasing public policy concern about the potentialeffects of mergers on innovation. This paper provides acomparative analysis of approaches to innovational competitiontaken by the E.U. and U.S. merger authorities in a sample of threerecent, major, pharmaceutical mergers. The European Commission'sapproach appears lighter handed and places more explicit emphasison effects in downstream markets. The uncertainties in the analysisof dynamic effects of mergers on innovation, even in pharmaceuticals,suggest the need for a cautious approach and for careful framingof any merger remedies where R & D projects and components, ratherthan approved drugs, are involved.     

An analysis of the profitability of businesses of diversified companies

This paper presents empirical evidence on the relationship between diversification and profitability. The data set used in the analysis includes data on 55 U.S. corporations who participated in phase II of the project on Profit Impact of Market Strategy (PIMS).Following upon the pioneering work of Carl Kaysen, complex indices of diversification are developed. Cross sectional regression analyses indicate a statistically significant positive association between measures of corporate diversification and measures of business profitability (return on investment or profit margin on sales). These relationships are insensitive to variations in the treatment of outliers, and do not appear to be accounting artifacts.     

Decomposing hospital productivity changes, 1985–1988: A nonparametric Malmquist approach

Annual data on U.S. hospitals from 1985–1988 are evaluated by ownership type—profit, nonprofit, state and local government, and U.S. Department of Veterans Affairs (VA)—for changes in hospital productivity over time. Distance functions are used to measure Malmquist indices of productivity change, which are then decomposed into indices of efficiency change and technology change. In contrast to previous studies using this approach, we allow for variable returns to scale and use both input and output orientations. We find that changes in technology dominate changes in inefficiency in determining changes in productivity.     

Success factors for collaborative product development: a study of suppliers of information and communication technology

It is apparent that more and more organizations are embarking on collaborative ventures to develop products. This is particularly evident in Information and Communication Technology (ICT) sectors, so much so that part of the 'received wisdom' of ICT companies is that collaboration is the preferred route for product development. The benefits of collaboration have been well documented and are linked to the complexity and costliness of product development and the need for inputs from wide and varied areas of expertise as well as shorter lead times for product development. But the risks and costs of collsborative product development have been less well defined. In this paper, it is argued that the alleged rewards of collaboration may not be experienced in practice and that collaboration can lengthen the product development process, add to the cost of product development and prove difficult to control. However, management practice can facilitate the effective outcome of collaborative product development and the critical factors affecting the likelihood of successful management practice are presented here.     

The kinesthetic speaker. Putting action into words

Speeches and presentations offer an interesting catch-22: executives don't want to spend long hours creating them, and people don't want to sit for long hours listening to them. Ultimately, though, executives can't live without them. That's because a good speech or presentation has the power to inspire people to act on the speaker's behalf and create change. Author Nick Morgan, a longtime speech-writer and speaking coach, says what's most often lacking in today's speeches and presentations is what he calls the "kinesthetic connection." Many good speakers connect aurally with their audiences, telling dramatic stories and effectively pacing their speeches to hold people's attention. Others connect visually, with a vivid film clip or a killer slide. Some people do both, but not many also connect kinesthetically. Morgan says the kinesthetic speaker feeds an audience's primal hunger to experience a presentation on a physical, as well as an intellectual, level. Through awareness of their own physical presence--gestures, posture, movements--and through the effective use of the space in which they present, kinesthetic speakers can create potent nonverbal messages that reinforce their verbal ones. In this article, Morgan describes techniques for harnessing kinesthetic power and creating a sense of intimacy with an audience--a closeness that is more widely expected from speakers since the advent of television. For instance, kinesthetic speakers should make use of audience proxies--individuals in the crowd who serve as representatives for the others. Ultimately, the author says, a speech or presentation offers something of great value to business executives: it's the best vehicle for winning trust from large groups of people--be they employees, colleagues, or share-holders.     

Embodying Embodiment in a Structural,Macroeconomic Input-Output Model

In this paper, I develop a regression-based system of labour productivity equations that account for capital-embodied technological change and I incorporate this system into IDLIFT, a structural, macroeconomic input-output model of the US economy. Builders of regression-based forecasting models have long had difficulty finding labour productivity equations that exhibit the "Solowian' property that movements in investment should cause accompanying movements in labour productivity. The production theory developed by Solow and others dictates that this causation is driven by the effect of traditional capital deepening as well as technological change embodied in capital. Lack of measurement of the latter has hampered the ability of researchers to estimate properly the productivity-investment relationship. Recent research by Wilson (2001) has alleviated this difficulty by estimating industry-level embodied technological change. In this paper, I utilize those estimates to construct capital stocks adjusted for technological change and then use these adjusted stocks to estimate Solow-type labour productivity equations. It is shown that replacing IDLIFT's former productivity equations, based on changes in output and time trends, with the new equations, results in a convergence between the dynamic behaviour of the model and that predicted by traditional (Solowian) production theory.