Disappearing investment-cash flow sensitivities: Earnings have not become a worse proxy for cash flow

According to a recent conjecture in the literature, earnings have become a poorer proxy for cash flow from operations over time. We find that since 1988, when cash flow statements started to be consistently reported in Compustat, the cash effectiveness of earnings has actually increased for a large sample of US manufacturing firms. This occurs despite the introduction of fair value accounting and increasing accounting accruals during the last three decades. Also contrary to the conjecture, using more comprehensive measures of cash flow does not restore the investment-cash flow sensitivity, which continues to be around 0.05 in more recent periods.     

Cultural metaphors and KMS appropriation: Drawing on Astérix to understand non-use in a large French company

Management research is increasingly using fiction as an insightful way to analyze complex organizational dynamics. Focusing on user appropriation of Knowledge Management Systems, we describe how we used the popular Astérix, a well-known French cartoon to better understand KMS appropriation. We came to use this approach in an action research project in a large French construction firm initially designed to help Chief Knowledge Officers address KMS non-use. After our first findings showed paradoxical cultural issues, and based on the idea that culture is central to sensemaking and appropriation, we used the notion of the cultural metaphor to help better understand the cultural aspects associated with KMS appropriation. These results contribute knowledge in three different areas. First, we underline the role of cultural metaphors in information systems appropriation. Second, we enrich the literature on the role of fiction in management by illustrating the role of cultural metaphors. Third, we report on how this can be used in an action research project to help better understand KMS appropriation issues, which has the potential of leading to practical managerial action.     

Do analysts add value when they most can? Evidence from corporate spin‐offs

This article investigates how securities analysts help investors understand the value of diversification. By studying the research that analysts produce about companies that have announced corporate spin‐offs, we gain unique insights into how analysts portray diversified firms to the investment community. We find that while analysts' research about these companies is associated with improved forecast accuracy, the value of their research about the spun‐off subsidiaries is more limited. For both diversified firms and their spun‐off subsidiaries, analysts' research is more valuable when information asymmetry between the management of these entities and investors is higher. These findings contribute to the corporate strategy literature by shedding light on the roots of the diversification discount and by showing how analysts' research enables investors to overcome asymmetric information. Copyright © 2013 John Wiley & Sons, Ltd.     

Assessing Systemic Importance With a Fuzzy Logic Inference System

Three metrics are designed to assess Colombian financial institutions' size, connectedness and non-substitutability as the main drivers of systemic importance: (i) centrality as net borrower in the money market network; (ii) centrality as payments originator in the large-value payment system network; and (iii) asset value of core financial services. An aggregated systemic importance index is calculated based on expert knowledge by using a fuzzy logic inference system. We use principal component analysis to calculate a benchmark index for comparison purposes. Overall similarities between both indexes put forward that expert knowledge aggregation is consistent with that based on a purely quantitative standard approach. Specific non-negligible differences concur with the nonlinear features of an approach whose intention is to replicate human reasoning. Both indexes are complementary and provide a comprehensive relative assessment of each financial institution's systemic importance in the Colombian case, in which the choice of metrics pursues the macroprudential perspective of financial stability. Copyright © 2015 John Wiley & Sons, Ltd.     

Information on sellers and buyers characteristics: added value to explain price formation at primary fish markets in managed French scallop fisheries

The aim of this article is to explore, through a hedonic approach, the factors that might explain the price variability for the French-managed fishery of scallop at primary fish markets. In addition to factors classically identified in the current literature like intrinsic product characteristics or markets situation, the characteristics of operators are tested. The relationships of loyalty between sellers and buyers, and market assiduity are notably considered.     

On the test score gap between Roma and non‐Roma students in Hungary and its potential causes

Using unique data from Hungary, the gap in reading and mathematics test scores between Roma and non‐Roma 8th grade students is assessed and a substantial gap between them revealed. Standardized test scores as well as the fraction of students with competences considered inadequate are examined. Regardless of measurement and subject area, the bulk of the gap is explained by social differences in income, wealth and parental education. Using reduced‐form regressions, two major mediating mechanisms are identified: first, on average the home environment of Roma children is less favourable for cognitive development; second, the educational environment of the average Roma student is different from the average non‐Roma student. Comparing students with similar home environments from the same school and class, the ethnic gap in test scores is found to be insignificant. Ethnic differences in the home environment are explained by social disparity, and ethnicity seems to play no additional role in that regard. The unequal distribution of Roma students in schools and classes is found to be explained predominantly by social difference, too, with a significant residual portion, indicating the effect of ethnic segregation.     

Two-stage DEA: <Emphasis Type="Italic">caveat emptor</Emphasis>

This paper examines the wide-spread practice where data envelopment analysis (DEA) efficiency estimates are regressed on some environmental variables in a second-stage analysis. In the literature, only two statistical models have been proposed in which second-stage regressions are well-defined and meaningful. In the model considered by Simar and Wilson (J Prod Anal 13:49–78, 2007), truncated regression provides consistent estimation in the second stage, where as in the model proposed by Banker and Natarajan (Oper Res 56: 48–58, 2008a), ordinary least squares (OLS) provides consistent estimation. This paper examines, compares, and contrasts the very different assumptions underlying these two models, and makes clear that second-stage OLS estimation is consistent only under very peculiar and unusual assumptions on the data-generating process that limit its applicability. In addition, we show that in either case, bootstrap methods provide the only feasible means for inference in the second stage. We also comment on ad hoc specifications of second-stage regression equations that ignore the part of the data-generating process that yields data used to obtain the initial DEA estimates.     

The British Airways Heritage Collection: an ethnographic ‘history’

This article develops an ethnographic account of the development and history of the British Airways Heritage Centre (BAHC). Responding to several observations throughout the literature, we report on our experiences of engagement with British Airways’ archives over a 25-year period. In doing so our focus is on the much-neglected history of archives as powerful influences on how corporate histories are written. The ethnographic account is rooted in ANTi-History, an approach to historiography, that focuses on the production of history as knowledge of the past by following a number of human (e.g. archive volunteers) and non-human (e.g. airline artefacts) actors to reassemble the elements that constitute an archive at a point in time. To that end, we trace the inter-relationships between histories of British Airways and the development of the BAHC. We conclude that a focus on the various human and non-human relationships that constitute an archive can help the researcher to identify the hidden influences on the production of history that can otherwise serve to enrol him or her.     

Do professional forecasters behave as if they believed in the New Keynesian Phillips Curve for the euro area?

This paper finds that participants in the European Central Bank’s Survey of Professional Forecasters have submitted forecasts that are consistent with a (mostly forward-looking) empirical version of the New Keynesian Phillips Curve for the euro area. The estimation technique takes advantage of the panel nature of the Survey of Professional Forecasters’ dataset to exploit both its time series and cross-section dimensions, and to control for unobservable individual heterogeneity across forecasters. The estimation results suggest that euro-area inflation forecasts have reacted less to unemployment forecasts after the start of the financial crisis but another cost measure (energy inflation) remains significant. This finding is consistent with a flatter Phillips Curve in the euro area after 2007. However, the reasons suggested by the International Monetary Fund for this finding, namely a better anchoring of inflation expectations and increases in structural unemployment do not seem to find support in the survey data. Instead, the expectations for compensation per employee submitted by professional forecasters are consistent with the existence of downward real-wage rigidities in euro-area labour markets.