The impact of designated market makers on security prices

This paper is divided into two distinct parts. Part I, Empirical Evidence, tests a previously formulated variance, thinness relationship for security returns. First quarter 1972 daily returns variance is regressed on market value of shares, share price, trading activity, sales variance, and institutional holdings for 178 firms selected by stratified random sampling from AMEX and NYSE (specialist exchanges), and from Tokyo and Rio de Janeiro (non-specialist exchanges). The principal finding is that returns variance and market value are inversely related on non-specialist exchanges, but not on specialist exchanges; this difference is attributed to specialists' impact. Part II, Policy Proposals, discusses the manner in which designated market makers may be effectively incorporated into a continuous auction exchange. Issues discussed include: desirability of price stabilization, transfers implicit in the existing U.S. specialist system, consolidation and public availability of the limit order book, number of designated market makers for a security, competitive bidding, and compensation for performing the price stabilization function. Stabilization is modeled as an external economy, and specific policy proposals for internalizing it are advanced.     

The making of a corporate athlete

Management theorists have long sought to identify precisely what makes some people flourish under pressure and others fold. But they have come up with only partial answers: rich material rewards, the right culture, management by objectives. The problem with most approaches is that they deal with people only from the neck up, connecting high performance primarily with cognitive capacity. Authors Loehr and Schwartz argue that a successful approach to sustained high performance must consider the person as a whole. Executives are, in effect, "corporate athletes." If they are to perform at high levels over the long haul, they must train in the systematic, multilevel way that athletes do. Rooted in two decades of work with world-class atheletes, the integrated theory of performance management addresses the body, the emotions, the mind, and the spirit through a model the authors call the performance pyramid. At its foundation is physical well-being. Above that rest emotional health, then mental acuity, and, finally, a spiritual purpose. Each level profoundly influences the others, and all must be addressed together to avoid compromising performance. Rigorous exercise, for instance, can produce a sense of emotional well-being, clearing the way for peak mental performance. Rituals that promote oscillation--the rhythmic expenditure and recovery of energy-link the levels of the pyramid and lead to the ideal performance state. The authors offer case studies of executives who have used the model to increase professional performance and improve the quality of their lives. In a corporate environment that is changing at warp speed, performing consistently at high levels is more necessary than ever. Companies can't afford to address employees' cognitive capacities while ignoring their physical, emotional, and spiritual well-being.     

The Effect of Organizational Culture and Ethical Orientation on Accountants' Ethical Judgments

This paper examines the relationship between organizational ethical culture in two large international CPA firms, auditors' personal values and the ethical orientation that those values dictate, and judgments in ethical dilemmas typical of those that accountants face. Using an experimental task consisting of multiple judgments designed to vary in "moral intensity" (Jones, 1991), and unique as well as tried-and-true approaches to variable measurements, this study examined the judgments of more than three hundred participants in our study. ANCOVA and path analysis results indicate that: (1) Ethical judgments in situations of high moral intensity are affected by personal values and by environmental variables, such as the professional code of conduct (direct and indirect effects) and previous ethics instruction (direct effect only). (2) Corporate ethical culture, and a relatively strong firm rules-orientation, affect auditors' idealism but not relativism, and therefore indirectly affect ethical judgments. Jones' (1991) moral intensity argument is supported: differences in the characteristics of specific judgment tasks apparently result in different decision processes.     

Reputation Without Repeated Interaction: A Role for Public Disclosures

This paper conductsan experiment to investigate the economic effect of public disclosureswithin a multi-move adaptation of the Prisoner's Dilemma game.The game, which has multiple equilibria, is characterized by:(1) a stochastic endpoint, (2) random, repeated pairings withanonymous partners, and (3) public disclosures concerning thecurrent partner's previous strategies. In the experiment, cooperationis improved by the disclosures. In addition, subjects cooperatemore frequently when encountering a player who has tended tocooperate in the past, and less frequently when encounteringa player who has tended to defect in the past. Delayed disclosureleads to levels of cooperation only slightly less than thoseobtained with timely disclosure.     

Cointegration and common trends on the West German labour market

In this paper we analyze the West German labour market by means of a cointegrated structural VAR model. We find sensible stable long-run relationships that are interpreted as a labour demand, a wage setting and a goods market equilibrium. In order to study the dynamic behaviour of the model we identify two common trends that push unemployment. We find that goods market shocks have only transitory impacts on unemployment. In the long run, it is almost equally determined by technology and labour supply factors. However, transitory shocks have major importance in the shorter run since adjustment processes are rather sluggish. First version received: Sept. 1998/Final version accepted: Feb. 2000     

Columbia Law School Roundtable on The Future Of Capitalism

In this discussion that took place at Columbia Law School's Millstein Center last October (and thus well before the appearance of the coronavirus), two distinguished English academics, a Pulitzer Prize‐winning journalist, and the executive chairman of a large American investment house discussed the role of corporations in addressing the crises that periodically beset the capitalist system. Sir Paul Collier opened with the comment that, although capitalism had shown itself to be the only effective system for mass human improvement in the past 10,000 years, it was now experiencing its “third serious derailment.” In each of the first two—the first in Northern England in the 1840s and the second during the Great Depression of the 1930s—capitalism was preserved in significant part by the “moral load‐bearing” performed by private companies and citizens. For capitalism to survive this third derailment, the public and private sectors must join forces to address what Collier to sees as the most formidable economic challenge: finding ways to transport urban jobs and capabilities to rural areas still reeling from two major blows—the first, a century ago to agriculture, and the second, for the past two or three decades, to large‐scale manufacturing. Collier's Oxford colleague Colin Mayer follows by calling on public companies to formulate and state a corporate social purpose that goes beyond maximizing their own long‐run shareholder values. And to encourage and support such a practice, Mayer urges the large universal owners that own large stakes in all the world's large listed companies not only to support and applaud such statements, but to find ways to ensure that companies are living up to them. Alan Schwartz, Executive Chairman of Guggenheim Partners, responds by noting that capitalism has been forced to make major adjustments throughout its history. And consistent with Collier's observations, Schwartz argues that the global economic order should have been preparing for the past 30 or 40 years for its biggest challenge: creating a global economy dynamic enough to provide jobs for some two or three billion new unskilled workers spawned by the globalization of the world economy. The American private sector, after having lost much of its efficiency and value in the 1970s, has since used continuous restructuring to produce enormous productivity gains and value. And although generally supportive of the thinking behind the Business Roundtable's recent statement, Schwartz deplores the confusion that continues to surround the message. Those corporate leaders now endorsing the pursuit of social goals are by no means asking their shareholders to accept below‐market returns on investment. In well‐run companies focused on long‐run efficiency and value, there is no inherent conflict between the interests of shareholders and the long‐run interests of other major stakeholders. In such companies, customers, employees, suppliers, and local communities all end up better served.