Are All Professional Investors Sophisticated?

Abstract. Existing empirical evidence is inconclusive as to whether professional investors show more sophisticated behavior than individual investors. Therefore, we study two important groups of professional investors and compare them with laymen by means of a survey covering about 500 investors. We find that some professionals, i.e. institutional investors, behave in a more sophisticated manner than laymen, whereas the less researched investment advisors seem to do even worse. Our survey approach complements available evidence due to its design: it compares professionals with (qualified) interested laymen, it covers six measures of sophisticated behavior, uses several control variables and strictly compares investment decisions in the private domain.     

Stochastic frontier models with multiple time-varying individual effects

This paper proposes a flexible time-varying stochastic frontier model. Similarly to Lee and Schmidt [1993, In: Fried H, Lovell CAK, Schmidt S (eds) The measurement of productive efficiency: techniques and applications. Oxford University Press, Oxford], we assume that individual firms’ technical inefficiencies vary over time. However, the model, which we call the “multiple time-varying individual effects” model, is more general in that it allows multiple factors determining firm-specific time-varying technical inefficiencies. This allows the temporal pattern of inefficiency to vary over firms. The number of such factors can be consistently estimated. The model is applied to data on Indonesian rice farms, and the changes in the efficiency rankings of farms over time demonstrate the model’s flexibility.

Ansätze und Ergebnisse anglo-amerikanischer M&A-Forschung

Based on a review of established U.S. management journals (1995–2003), six schools of thought are identified within the Anglo-American M&;A research: “Capital Market”, “Principal/Agent”, “Industrial Organization”, “Organizational Behavior”, “Human Resources” and “Strategic Management”. The literature review shows that the definition of M&;A success, the methods applied, and insights from empirical research differ according to the respective school of thought. Empirical studies focus on the resource combinations of merger partners, the specific circumstances of merger negotiations, and on integration management as antecedents of merger performance. Unfortunately, empirical findings have not yet provided reliable explanations for M&;A success. Based on the current state of Anglo-American M&;A research, the authors discuss implications for business practice, identify research gaps, and propose areas for future research.     

GLOBALIZATION: CONTENTS AND DISCONTENTS

William Shakespeare's Tragedy of King Richard III, written approximately in 1592, is the story of evil acts by the detested and misshapen hunchback, Richard, who plots to sow discontent among his brother, the King, and others, and has his brother murdered along with other wicked deeds in order to gain the throne. It opens with the line, “Now is the winter of our discontent” (p. 111, ed. Wright 1936). “The Winter of Our Discontent” is also the title of John Steinbeck's (1961) novel of a man who trades his moral convictions to reclaim lost family wealth. “Globalization and Its Discontents” is the title of Joseph Stiglitz's (2002) book that critiques rigid adherence by major economic institutions—such as the International Monetary Fund—to economic orthodoxy in the promotion of globalization. (JEL F6, D72, D3, O23, O24, L17, K33)     

Fully quantitative predictive maintenance/inspection planning optimization for chemical process plant components

Predictive maintenance/inspection planning and fitness-for-service analyses are being applied more frequently to address the effect of component aging affecting plant reliabibility. Component aging is one of the critical issues in an increasingly competitive environment, especially in plant components built and installed during the 50s and 60s. Maintenance optimization is also a critical issue for components, such as those that operate in the creep regime, and therefore age quickly. Maximizing the value received for each predictive maintenance/inspection dollar is the key. This article introduces the use of decision analysis to unite engineering analysis and economic evaluation for decision making. To illustrate this idea, examples of this approach applied to chemical facility components will be presented. In addition, the concept of priority-ranking multiple component maintenance/inspectio projects having maintenance budget and safety constraints in a way that maximizes Net Present Value, will be presented.     

More Than Rocket Science: A Case for Differentiated Leadership Development

Drawing on the research of Edwin Friedman (2007) in his book, A Failure of Nerve: Leadership in the Age of the Quick Fix, we explain the importance of developing differentiated leadership in groups and organizations of all sizes and types. According to Friedman, the leadership process is plagued by the fallacies of self, expertise, and empathy. These fallacies lead to an over reliance on data, low tolerance of ambiguity, anxiety, and a superficial comfort in togetherness, all of which upset the emotional balance in the leadership process. Using examples from rocket science, biology, and social psychology, we suggest that in order to combat these common dysfunctions, leadership development programs should be aimed at developing leaders who represent a nonanxious, self‐regulating presence. The goal of the current paper is to expand leadership development concepts and ideas to include practices that make groups and organizations more psychologically safe and enriching for all stakeholders.