SENSITIVITY OF INVESTOR REACTION TO MARKET DIRECTION AND VOLATILITY: DIVIDEND CHANGE ANNOUNCEMENTS

We examine whether investor reactions are sensitive to the recent direction or volatility of underlying market movements. We find that dividend change announcements elicit a greater change in stock price when the nature of the news (good or bad) goes against the grain of the recent market direction during volatile times. For example, announcements to lower dividends elicit a significantly greater decrease in stock price when market returns have been up and more volatile. Similarly, announcements to raise dividends tends to elicit a greater increase in stock price when market returns have been normal or down and more volatile, although this latter tendency lacks statistical significance. We suggest an explanation for these results that combines the implications of a dynamic rational expectations equilibrium model with behavioral considerations that link the responsiveness of investors to market direction and volatility.     

The attitudes of business majors toward the teaching of business ethics

Business majors were tested for their attitudes toward the teaching of business ethics in university business education. Respondents indicated that they considered ethics an important part of a business curriculum and that they preferred integrating ethics into a number of different courses rather than taking a separate compulsory or elective ethics course. Ethical business practices were seen by respondents as increasing profit and return on investment and creating a positive work environment and public perception of the organization.Karen Stewart is an Assistant Professor at Richard Stockton College of New Jersey. She has taught undergraduate business courses for over ten years and has published in the areas of educational marketing, business school accreditation, marketing by nonprofit agencies, and business ethics.Linda Felicetti is a Professor of Marketing at Clarion University of Pennsylvania. She has published in the areas of retailing, educational marketing, marketing of nonprofit organizations, and business ethics.Scott A. Kuehn is an Assistant Professor in the Department of Communication at Clarion University of Pennsylvania. He earned his Ph.D. in Communication in 1987. His research interests include the study of computer communication and the educational application of computers in higher education.     

The Profit-Structure Relationship in Legally Protected Banking Markets Using Efficiency Measures

Our various tests suggest that our sample banks that are shielded from competition by severe intrastate branching restrictions have market power. This analysis has allowed us to test rigorously the adverse effects of legal and possibly market barriers to entry. We reject the notion that profits are a result of superior $x$-efficiency. We conclude if these results are corroborated by further research (e.g., using other measures of profit, efficiency, capital, etc), and if these and/or other barriers remain, the Federal Reserve should be concerned with the competitive impacts of rural, in-market bank mergers.     

Team Racial Composition, Member Attitudes, and Performance: A Field Study

Attitudinal, performance, and demographic data from 1200 workers on self-directed teams are examined to determine if racial composition affects team performance, if African-Americans and whites have different attitudes toward their teams and team performance, and whether any differences explain performance differences associated with different racial composition. Results indicate that racial composition affects team performance and racial differences in team and performance-related attitudes. Differences in attitudes reduce, but do not eliminate, racial composition effects on team performance.     

Equilibrium Selection and Stability for the Groves Ledyard Mechanism

In their seminal paper Groves and Ledyard (1976) construct a balanced incentive compatible mechanism that solves the free rider problem. In subsequent research, Bergstrom, Simon, and Titus (1983) prove that there exist numerous asymmetric equilibria in addition to the symmetric equilibrium. In the present paper, we explicitly solve for the additional equilibria and use computational experiments to examine the structure and stability of the set of equilibria of the Groves Ledyard Mechanism. We find that all of the equilibria found by Berstrom, Simon, and Titus are unstable and that for a high level of the punishment parameter these equilibria do not exist. Further, we find that there exists an additional boundary equilibrium for each of the equilibria found by Bergstrom, Simon, and Titus. The boundary equilibria are all stable.     

Intellectual Capital Profiles: An Examination of Investments and Returns*

ABSTRACT Using data collected from executives in 208 organizations, this study takes a configurational approach to examine how human, social, and organizational capital coexist to form distinct intellectual capital profiles across organizations. We then examine how investments in human resource management (HRM), information technology (IT), and research and development (R&D) differ across these intellectual capital profiles and investigate differences in financial returns and Tobin's q between the profiles. Results indicate that a relatively small group of superior performing organizations exhibit high levels of human, social, and organizational capital. Most firms, however, tend to focus primarily on only one form of intellectual capital, and a small group of underperforming organizations have very low levels of all three types of intellectual capital. At a general level, HRM and IT investments appear to influence intellectual capital development more than R&D investments. More specifically, HRM investments tend to be higher in firms with profiles high in human and social capital, while IT investments are stronger in firms with profiles high in social capital. Further, HRM, IT, and R&D investments are all very high in the group of superior performing organizations that have high levels of human, social, and organizational capital.     

Using Contingent Valuation to Measure User and Nonuser Benefits: An Application to Public Transit

The contingent valuation method (CVM) was used to measure the value of a community service, rural transit, that has both user and nonuser values. Traditional focus groups and a CVM questionnaire provide estimates of willingness to pay and willingness to accept. Tobit analysis was used to test relationships among the variables. Income was not related to the amount of perceived benefit, but the alternative desire to provide transit for others was statistically significant. Ranges for possible total benefits, user and nonuser, are provided for the test transit systems. Proper aggregation of benefits to the population was found to be critical.     

Surveying Farmers: A Case Study

A large percentage of farmers do not respond to mail surveys. To gain insight into why farmers do not respond and how to improve response rates, a three-step research design was developed. First, an initial survey, based on in-person interviews with 15 farmers, was sent to 100 farmers. Second, farmers who did not respond to this mail survey were contacted by phone to investigate the reasons for not responding. Third, based on the information from these nonrespondents, the survey instrument was revised and sent to 3,990 U.S. farmers. Our studies show that the period in which the survey is sent is a crucial factor in the willingness to participate, along with the form and amount of compensation, the sender of the questionnaire, and the perceived length of the questionnaire.     

United Grain Growers: Enterprise Risk Management and Weather Risk

In August of 1999, Mike McAndless, the risk manager of United Grain Growers (UGG), was preparing for a meeting with the firm's chief financial officer, Peter Cox. Mike and Peter had spent considerable time over the past three years with representatives of the Willis Group Ltd., a large international insurance broker, identifying and measuring UGG's major sources of risk. The risk assessment process indicated that, although UGG hedged most of its currency and commodity price risk and purchased insurance against property and liability losses, the firm's earnings still exhibited substantial volatility. This volatility was, in large part, due to the weather. Mike and Peter had to decide whether to retain the risk or shift it to another party using one of two innovative contractual arrangements: weather derivatives or a new type of insurance contract.