On-Line Portfolio Selection Using Multiplicative Updates

We present an on-line investment algorithm that achieves almost the same wealth as the best constant-rebalanced portfolio determined in hindsight from the actual market outcomes. The algorithm employs a multiplicative update rule derived using a framework introduced by Kivinen and Warmuth. Our algorithm is very simple to implement and requires only constant storage and computing time per stock in each trading period. We tested the performance of our algorithm on real stock data from the New York Stock Exchange accumulated during a 22-year period. On these data, our algorithm clearly outperforms the best single stock as well as Cover's universal portfolio selection algorithm. We also present results for the situation in which the investor has access to additional "side information."     

On Opposition to Rent Seeking: Implications for Developing Countries

A model is developed to study the implications of the presence of rent-opposing activities for the measurement of deadweight losses and for cost–benefit analysis. The analysis provides an upper bound on the social cost of rent-seeking in the presence of potential rent-opposers. Remarks are offered on the interactions between merits and skills in the determination of success in rent-seeking, and on the pervasiness of corruption in developing economies.     

The Integrity Factor-Critical to Accounting Education

Integrity must be the organizing principle for accounting education and accounting practice. Without integrity, ethical frameworks can be misused as manipulative devices to support particular interests. The accounting profession has frequently addressed integrity. The professional interpretation, however, has been a narrow rules-oriented approach focusing on identifying fraudulent financial reporting and on traditional views on the nature and scope of the audit report. This paper links integrity to corporate responsibility and to the individual moral responsibility to take the moral point of view.     

The Impact of Financial Participation and Employee Involvement on Financial Performance

In recent years, considerable attention has been given to the impact of various forms of financial participation on financial performance. However, financial participation is only one of a number of different schemes attempting to elicit better performance and is itself heterogeneous. Moreover, financial participation schemes are typically introduced in conjunction with employee involvement schemes and their combined effect can be very different from their individual contributions. Indeed, concentrating on only one type of participation can seriously distort its relationship with financial performance. In this paper, a range of different employee participation schemes is examined, including two types of financial participation. The results indicate that financial participation has important interaction effects with particular types of employee involvement scheme and that the two main types of financial participation scheme have negative interactions. Furthermore, some employee involvement schemes are found to have a lower or even negative relationship with financial performance when introduced in isolation.     

Bartlett adjustments for systems of linear equations with linear restrictions

Simple matrix formulae are derived for calculating a Bartlett adjustment to the likelihood ratio test statistic for testing linear parameter restrictions in a system of linear equations. For the special case of column and/or row restrictions on the matrix of coefficients the adjustment is a simple function of matrix dimensions being invariant to sample observations and the error covariance matrix. An example of testing for homogeneity and symmetry in a demand system is given.     

Exchange Rates and Oil Prices

The paper documents a robust and interesting relationship between the real domestic price of oil and real effective exchange rates for Germany, Japan and the United States. It also offers an explanation of why the real oil price captures exogenous terms-of-trade shocks, and why such shocks could be the most important factor determining real exchange rates in the long run.