Trends,random walks,and tests of the permanent income hypothesis

Recent studies find that consumption is excessively sensitive to income. These studies assume that income is stationary around a deterministic trend. The data, however, do not reject the hypothesis that disposable personal income is a random walk with drift. If income is indeed a random walk, then the standard testing procedure is greatly biased toward finding excess sensitivity. Moreover, if income follows either a more general non-stationary process or a borderline stationary process, this procedure is also seriously biased.     

Detecting Information from Directors' Trades: Signal Definition and Variable Size Effects

There have been three empirical studies examining the share price reaction following trades by directors of UK companies (King and Poell, 1988; Pope, Morris and Peel, 1990; and Gregory, Matatko, Tonks and Pukiss, 1994). All three of these UK studies used different definitions of 'buy' and 'sell' signals resulting from the transactions of directors and employ different controls to detect the presence of any 'size effects'. We investigate whether the signal definition explains the different conclusions drawn by these earlier studies, and examine whether or not any observed abnormal returns are explicable by the small companies effect. We also investigate trading strategies based on holding a long portfolio of shares purchased or a short portfolio of shares sold by directors held until the end of the study period or until a 'reserving event' (e.g. a sale following a purchase by director[s] is observed).     

Allocating Control over Firms: Stock Markets versus Membership Markets

The theory of the firm must explain howdecision-making powers are allocated between suppliersof capital and labor. Most large enterprises awardformal control to investors rather than workers. Isuggest here that this asymmetry can be traced in partto differences between stock markets and membershipmarkets as institutional mechanisms for allocatingcontrol over firms. The attractive theoreticalproperties of membership markets are examined, alongwith some factors that may account for their rarity inpractice. These practical difficulties help explainthe rarity of labor-managed firms themselves, alongwith various facts about their design, behavior, anddistribution across industries.     

“Trust but verify”? The performance implications of verification strategies in trusting relationships

Considerable extant research demonstrates the benefits of trust in buyer-seller relationships. More recent research points out downsides of the vulnerability inherent with trust. Recognizing this dilemma of trust, partners may offset the vulnerability of trust with verification strategies—efforts to produce information relevant to the exchange relationship. This research examines the use of three types of verification strategies—monitoring, assurances, and corroboration—which may be employed to safeguard against the vulnerability of trust. When control mechanisms like trust and information are combined, they may complement one another and enhance performance or function as substitutes, be redundant or compete, and consequently detract from performance. Emerging theory on combined modes of governance provides insights. We draw on this theory and develop hypotheses proposing that combinations of trust and verification may enhance or detract exchange performance—depending on the specific verification strategy. The hypotheses are tested on a sample of 230 buyer-supplier relationships. Results of the research provide some support for the proposed relationships and yield implications for the management of cooperative exchange relationships.     

A meta-analysis model of manufacturing capabilities

Recent research in operations strategy has focused on showing the extent to which manufacturing's competence in developing and executing one or more competitive capabilities affects the organization's overall business performance. Several of those efforts have produced models, such as the ‘sand cone’, that suggest an ideal sequence in which manufacturing capabilities should be developed. However, efforts to empirically validate such sequential models, except for one recent study, have been inconclusive. This paper takes a different approach to examining the relationships among competitive capabilities. The existing cross-sectional studies of manufacturing capabilities are integrated to synthesize a proposed model of: (1) the relationships among manufacturing capabilities, and (2) the relationships between those capabilities and business performance. The proposed model is synthesized using data from previous studies, other models and theoretical arguments. Meta-analysis is used to identify aspects of the model that appear better supported by empirical research and those that require further study. The implications of this proposed model with regard to research, practice and future research in operations strategy are discussed.