MARKETS VS. MANAGEMENT: WHAT ‘DRIVES’ PROFITABILITY?

This study addresses the issue of the relative degree of variance in ROA accounted for by industry, corporate, and SBU effects while controlling for the business cycle and the interaction between the business cycle and industry. Two key articles, Schmalensee (1985) and Rumelt (1991), are discussed in detail. Research results on a recent data base (COMPUSTAT), using variance components analysis (VARCOMP) are presented that not only confirm most of the Rumelt (1991) findings, but also suggest the existence of a corporate effect, heretofore undetected.     

Symposium on Public Policy Issues in Finance

The thesis of this symposium, organized by James Bicksler, was that while finance theory will surely inform practitioners, it seems appropriate to pay some attention to the opposite flow: practitioners can inform theory. Contributors include a distinguished group of practitioners with extensive backgrounds in economics, and economists with extensive public policy experience: Martin Feldstein, Robert Glauber, David Mullins, and Steven Wallman. Their topics range from privatizing social security, to managing market crashes, to the regulatory agency cost problem, to regulatory constraints in a technologically advanced world.     

MARKET STRUCTURE, PROGRAM DIVERSITY, AND RADIO AUDIENCE SIZE

This paper examines the relationships among radio station listenership, the number of program formats, and the number of stations. These relationships are statistically significant and consistent with theory, but the interrelationships are numerically small. The results imply that proposals by the federal Communications Commission and Congress to relax ownership restrictions must induce substantial changes in station numbers in order to noticeably increase programming diversity. Merely modest changes in these numbers will have only small diversity effects. The paper's results also imply that merely mandating the number of formats in a market may not be in the interests of listeners.     

The Impact of Comparative Food Price Information on Consumers and Grocery Retailers: Some Preliminary Findings of a Field Experiment

There is reason to believe that consumers face a difficult task in securing adequate and accurate information upon which to judge relative price levels of competing foodstores. The objective of the research reported here was to investigate the potential of retail food price reporting for correcting this information problem. Both consumer and grocery retailer responses to this comparative food price information were analyzed. A pretest-post-test design with four pairs of experimental-control cities (with replications at two levels of concentration) was employed to collect price data. A modified Solomon-four group design was used for surveys of food consumers in experimental and control cities. The results of analysis of variance models lend support to the hypothesis that price reporting can lower the relative level of food prices, both for items individually identified in a price report and items not identified in the report. The magnitude of this effect varied among the cities. It appears that consumers' role in this experiment was a passive one: consumer behavior and patronage patterns did not change in a manner that would consistently reinforce the competitive effects of the price reports.     

Orientations Toward Consumerism: A Test of a Two-Dimensional Theory

Some past studies concerning attitudes toward consumer public policy issues have attempted to distinguish characteristics of consumerism supporters from those of nonsupporters. Results to date have been largely inconsistent. This study incorporates a solution preference dimension into the supporter/nonsupporter analysis in order to help resolve past identification anomalies and to suggest a theoretical explanation for diverse orientations. More specifically, a two-dimensional theory of consumerism orientations is developed and tested as a special case of Rokeach's broader Two-Value Theory of Political Orientations. The survey data presented tend to general support the hypothesized theoretical structure.     

EFFECTS OF PRICE AND AVAILABILITY ON ABORTION DEMAND

Over 1.5 million legal abortions were performed in the United States in 1988. State-level regulation affecting the price or availability of abortion services may expand given recent Supreme Court decisions. This paper uses state-level data pooled over time to estimate abortion demand. Using single cross-sections of state data, past studies find abortion demand per 1,000 pregnancies to be price inelastic and find income elasticity to be positive and significant. The analysis here shows that price elasticity estimates in a single cross-section are sensitive to the choice of state characteristics used to control for "abortion attitudes" within a state. Ajixed-efects model design with pooled data gives more robust abortion demand price elasticity estimates. The results suggest that any new state regulations that increase the costs of obtaining abortions will reduce abortion use and increase unintended fertility .