A Spatial Cross–Sectional Analysis of Elasticity of Demand for Soccer

Several studies estimate the demand for watching English professional football (soccer) as highly inelastic, a puzzling result given that clubs appear to possess a degree of monopoly power. We discuss weaknesses in earlier studies and offer an alternative method of assessing elasticity based on travel costs of spectators living different distances from the grounds. We find that elasticity varies across the 20 senior clubs for which data were available but in almost every case demand is more elastic than reported in the existing literature and pricing policy appears therefore to be more orientated towards profit maximisation than previously thought.     

Focusing the fuzzy front–end in new product development

Effectively managing the 'upfront or fuzzy front–end' (FFE) of the product development process is one of the most important, difficult challenges facing innovation managers. In this paper, we define the FFE as the period between when an opportunity is first considered and when an idea is judged ready for development. We classify the outcomes of the FFE into product definition, time, and people dimensions. We suggest several strategies to manage the FFE by assigning a FFE manager or team; by providing organizational support for FFE activities; by understanding the sources of FFE ambiguity; by building an information system; and by developing relationships with supporters, partners, and alliances.     

Initial Margin Requirements, Volatility, and the Individual Investor: Insights from Japan

Initial margin requirements represent: (1) a cost impediment to the wealth constrained investor and (2) a potential way of mitigating excessive volatility. However, prior empirical research finds that margins are not an effective tool in reducing volatility. We consider the possibility that margins primarily affect certain stocks and investors. Specifically, we test whether margins affect individuals who, as a group, we believe to be the investors most affected when margin requirements change. Our initial empirical tests, however, do not support this contention.     

UNIVERSAL BANKS ARE NOT THE ANSWER TO AMERICA'S CORPORATE GOVERNANCE "PROBLEM": A LOOK AT GERMANY, JAPAN, AND THE U.S.

This article objects to a recent tendency of legal and economic scholars to "romanticize" the corporate governance role of German universal banks and Japanese main banks. There are potential conflicts between banks' interests as lenders and as shareholders that are likely to make banks less-than-ideal monitors for outside shareholders. Citing evidence that Japanese corporate borrowers pay above-market interest rates for their bank financing, Macey and Miller interpret the high interest rates as "rents" earned by Japanese banks on their loan portfolios in exchange for (1) insulating incumbent management of borrower firms from hostile takeover and (2) accepting suboptimal returns on their equity holdings.
The main problems with the German and Japanese systems stem from their failure to produce well-developed capital markets. Concentrated and stable shareholdings reduce the order flow in the market, thereby depriving the market of liquidity. And the lack of capital market liquidity– combined with the intense loyalty of the banks towards incumbent management–removes the ability of outside shareholders to make a credible threat of takeover if managerial performance is substandard.
The problem with American corporate governance–if indeed there is one–is not that hostile takeovers are bad, but that there are not enough of them due to regulatory restrictions and misguided legal policies. While U.S. law should be amended to give banks and other debtholders more power over borrowers in the case of financial distress, encouraging U.S. banks to become large stockholders is not likely to improve corporate efficiency. Strengthening the "voice" of American equity holders by eliminating restrictions on the market for corporate control would be the most effective step in improving firm performance.     

Product Development Strategy and Organizational Learning: A Tale of Two PC Makers

The personal computer (PC) marketplace in the US presents a dizzying array of component suppliers and products. No single firm dominates the industry with a complete package of hardware and software components. Although one company's operating systems and general-purpose applications are installed on most PCs in the US, the other system components—processors, memory, storage devices, display adapters, monitors, specialized applications, and so on—come from any number of sources. David T. Methe, Ryoko Toyama, and Junichiro Miyabe point out that the PC industry in Japan also exhibits this decentralized nature. However, they also note that despite the decentralized network structure of the Japanese PC industry, one company—NEC—was able to achieve a dominant market share. To provide insight into the key issues involved in the management of complex technology, they contrast NEC's strategic approach to product development and organizational learning with the approaches taken by Fujitsu—the firm that placed a distant second in this market. Despite matching NEC in terms of technological capabilities, financial resources, and managerial talent, Fujitsu never managed to threaten NEC's dominance of the PC market in Japan. Fujitsu continually emphasized technological leadership, even at the expense of protecting its installed base. Poor coordination of resources and product development efforts resulted in incompatibilities among Fujitsu's various products, and the company failed to foster close relationships with suppliers of such key technologies as software and peripherals. NEC's PCs did not enjoy the advantages of first-to-market status or technological leadership. Instead, NEC achieved market dominance by finding the combination of product technologies that met the needs of the greatest number of consumers. Throughout almost 20 years of competition in the PC industry, NEC successfully maintained consistency and backward compatibility across its product lines. NEC also recognized the importance of third-party software developers, and carefully cultivated relations with these firms as a source of competitive advantage. In other words, NEC struck the right balance between three key factors: technological innovation, motivation of third-party developers of software and peripherals, and service to its installed base of customers.     

Information Disclosure to Employees and Rational Expectations: a Game-Theoretical Perspective: a Comment

In this comment we identify the key features of the Frantz and Walker (1997) game theoretic model that drive the non-disclosure equilibrium result in their paper. We argue that, although technically correct, their model fails to capture certain aspects of real-world wage bargaining that will be important in determining optimal disclosure strategies in practice. However, Frantz and Walker's paper illustrates the potential of analytical techniques to contribute to the employee disclosure debate.     

From T-Bills to Stocks: Seasonal Anomalies Revisited

This paper employed eleven data series which consist of stocks, bonds, bills, equity premiums, term premiums, and various default premiums to investigate whether January seasonality reported in existing literature is robust across different states of the economy as this has important trading implications. For the periods 1926–1990, small stocks, small stock premiums, low grade bonds, and default premiums (spread between high grade, low grade and government bonds) reveal January seasonality and that the seasonality is robust across different states of the economy except for low grade bond returns and default premiums. January seasonality for low grade bond returns and low grade bond default premiums are primarily driven by results found during periods of economic expansion. Overall, January seasonality is more evident during the economic expansion periods although the magnitude of default premiums is larger during periods of economic contraction. Furthermore, prior findings of strong summer equity returns are primarily driven by the results found during the periods of economic contraction. It is also found that equity returns are generally higher during periods of economic expansion.