Selecting Australian equity superannuation funds: A retail investor's perspective

In this performance persistence study, two questions are addressed. First, what is the relationship between past fund returns and future performance? Secondly, does a ’hot hand‘ fund selection system deliver economically significant returns to investors? Using a sample of Australian equity superannuation funds over the 1990s, the answers from this study are as follows: on a raw and risk-adjusted return basis the authors find evidence of mean reversion, with prior annual performance having little influence on future fund return. Selecting funds based on a persistence strategy resulted in underperformance of industry and passive returns for the retail superannuation investor over the sample period. The findings of the study have serious implications for financial planning advisers who market superannuation funds based on past performance. The results suggest that previous annual performance has little influence on future returns.     

The discipline of teams

Groups don't become teams because that is what someone calls them. Nor do teamwork values by themselves ensure team performance. So what is a team? How can managers know when the team option makes sense and what they can do to ensure team success? In this article, drawn from their recent book The Wisdom of Teams, McKinsey partners Jon Katzenbach and Douglas Smith answer these questions and outline the discipline that makes a real team. The essence of a team is shared commitment. Without it, groups perform as individuals; with it, they become a powerful unit of collective performance. The best teams invest a tremendous amount of time shaping a purpose that they can own. The best teams also translate their purpose into specific performance goals. And members of successful teams pitch in and become accountable with and to their teammates. The fundamental distinction between teams and other forms of working groups turns on performance. A working group relies on the individual contributions of its members for group performance. But a team strives for something greater than its members could achieve individually. In short, an effective team is always worth more than the sum of its parts. Katzenbach and Smith identify three basic types of teams: teams that recommend things--task forces or project groups; teams that make or do things--manufacturing, operations, or marketing groups; and teams that run things--groups that oversee some significant functional activity. For managers, the key is knowing where in the organization real teams should be encouraged. Team potential exists anywhere hierarchy or organizational boundaries inhibit good performance.(ABSTRACT TRUNCATED AT 250 WORDS)     

Identifying VARS based on high frequency futures data

Using the prices of federal funds futures contracts, we measure the impact of the surprise component of Federal Reserve policy decisions on the expected future trajectory of interest rates. We show how this information can be used to identify the effects of a monetary policy shock in a standard VAR. This alternative approach to identification is quite different, and, we argue, more plausible, than the conventional identifying restrictions. We find that a usual recursive identification of the model is rejected, as is any identification that insists on a monetary policy shock having an exactly zero effect on prices contemporaneously. We nevertheless agree with the conclusion of much of the VAR literature that only a small fraction of the variance of output can be attributed to monetary policy shocks.     

Egoistic and ethical orientations of university students toward work-related decisions

An onslaught of ethically questionable actions by top government, business, and religious leaders during the 1980s has brought the issue of ethics in decision making to the forefront of public consciousness. This study examines the ethical orientation of university students in four decision-making situations. The dependent variable — ethical orientation toward work-related decisions — is measured through student responses to questions following four work-related vignettes. Possible responses to each vignette are structured to permit categorization of respondents into two broad orientations: egoistic and ethical. Independent variables are academic major, ethics in business orientation, gender, and religiosity. Generally, students tended to choose an ethical orientation over an egoistic orientation in each vignette. Business majors were generally no less likely to choose an ethical orientation toward work-related decisions than nonbusiness majors. Respondents characterized by moral unity (belief in the consistency between general ethical principles and work-related ethical standards) were more likely to have an ethical orientation toward work-related decisions than those subscribing to the amoral theory of business. Females showed a consistent tendency to be more ethically oriented toward work-related decisions than males. Finally, respondents high on religiosity tended to be more ethically oriented. Jon M. Shepard is Head of the Department of Management at Virginia Polytechnic Institute and State University. His most recent publications include Gender Differences in Proclivity for Unethical Behavior (Journal of Business Ethics). His current research interests include ethics in business, corporate ethical climates, and the accountability of institutions in modern society.Linda Hartenian is a P/HRM doctoral candidate in the Department of Management at the University of Kentucky. Her research interests include the performance appraisal process, the impact of decentralized computing systems on organizational communication, and research methodology.This research was supported by a grant from the Graduate School, University of Kentucky. We wish to thank Richard Wokutch for his thoughtful suggestions for this paper.     

A spatial theory of party formation

Members of an assembly that chooses policies on a series of multidimensional ideological issues have incentives to coalesce and coordinate their votes, forming political parties. If an agent has an advantage to organize a party at a lower cost, a unique party forms and the policy outcome moves away from the Condorcet winning policy, to the benefit of party members. If all agents have the same opportunities to coalesce into parties, at least two parties form. The results are robust to the consideration of an endogenous agenda and to generalizations of the distribution of preferences.     

On IT governance structures and their effectiveness in collaborative organizational structures

Organizations today engage in various forms of alliances to manage their existing business processes or to diversify into new processes to sustain their competitive positions. Many of today's alliances use the IT resources as their backbone. The results of these alliances are collaborative organizational structures with little or no ownership stakes between the parties. The emergence of Web 2.0 tools is having a profound effect on the nature and form of these alliance structures. These alliances heavily depend on and make radical use of the IT resources in a collaborative environment. This situation requires a deeper understanding of the governance of these IT resources to ensure the sustainability of the collaborative organizational structures. This study first suggests the types of IT governance structures required for collaborative organizational structures. Semi-structured interviews with senior executives who operate in such alliances reveal that co-created IT governance structures are necessary. Such structures include co-created IT steering committees, co-created operational committees, and inter-organizational performance management and communication systems. The findings paved the way for the development of a model for understanding approaches to governing IT and evaluating the effectiveness for such governance mechanisms in today's IT‐dependent alliances. This study presents a sustainable IT-related capabilities approach to assessing the effectiveness of suggested IT governance structures for collaborative alliances. The findings indicate a favorable association between organizations' IT governance efforts and their ability to sustain their capabilities to leverage their IT resources. These IT-related capabilities also relate to measures business value at the process and firm level. This makes it possible to infer that collaborative organizations' IT governance efforts contribute to business value.     

Bargaining and Efficiency in Sharecropping

In this paper the Nash bargaining solution is used to derive solutions for the rental share and labour input in sharecropping. The bargaining is modeled as a two‐stage process. First there is a bargain about the rental share, and then a bargain about labour input. The power of the landlord to ensure an outcome favourable to himself may differ in the two stages. By imposing particular assumptions about this bargaining power, some popular models of sharecropping, that have been treated as completely separate in the literature, can be derived as special cases in our model. However, we also generate a new class of models. It is also demonstrated that it is not the tenant's influence in the labour input decision per se which causes inefficiency in sharecropping, but differences in the tenant's influence over different issues in the contract. This is in contrast to the popular view which states that if the tenant controls the level of labour input, sharecropping will result in an inefficient resource allocation.     

Extending the economics of disorganization

Many of the states of the former Soviet Union have experienced a dramatic collapse of output during transition, which has not yet been reversed in a sustainable way. The economics of disorganization, proposed by Blanchard (1997) and tested empirically by Blanchard and Kremer (1997), reasons that this phenomenon can be explained by specificity of inputs and the breakdown of traditional domestic supply linkages. We replicate the Blanchard-Kremer study for Ukraine and Kazakhstan, and also find that longer and more complex domestic supply chains are associated with greater reductions in output. When we extend their analysis to incorporate measures of the complexity of the Commonwealth of Independent States (CIS) trade and non-CIS trade however, we find that complexity of non-CIS trade is the significant factor in explaining the output collapse. We therefore argue that the disintegration of the Council for Mutual Economic Assistance and the requirement of hard currency trade, are equally, if not more, significant in explaining the output declines experienced by Ukraine and Kazakhstan.     

Public policy and R&D when research joint ventures are costly

In this paper we examine the role of policy when forming a R&D joint venture is costly. Contrary to previous studies, we document an active role for public policy, since the interests of firms are not necessarily aligned with societal interests. The nature of policy, however, depends on the joint venture cost. If it is relatively low, then policy may call for subsidizing the joint venture to encourage collaboration. If forming a joint venture is very costly, however, then there are cases where social welfare is improved if policy encourages R&D competition with no joint venture. JEL Classification: D43, L13
Politique publique et R&D quand les alliances stratégiques en recherche sont coûteuses . Ce mémoire examine le rôle de la politique publique quand la mise en place d'une alliance stratégique en recherche est coûteuse. Contrairement à ce qu'ont suggéré des études antérieures, les auteurs montrent qu'il y a un rôle positif pour la politique publique, à proportion que les intérêts des entreprises ne sont pas nécessairement alignés sur les intérêts de la société. La nature de la politique dépend cependant du coût de l'alliance stratégique. Si le coût est faible, alors une politique de subvention pour encourager la collaboration peut s'imposer. Si le coût est élevé, alors il existe des cas où une politique de concurrence dans le R&D sans alliance stratégique peut mieux servir le mieux être collectif.