Rater source factors represent important subcomponents of the criterion construct space, not rater bias

We contrast normative accuracy and ecological perspectives on applications of the multitrait–multimethod methodology to multisource performance ratings and review existing research that provides critical tests of these perspectives. Existing research supports the ecological perspective which proposes that the rater source effects that are typically found in analysis of multisource performance ratings do not represent mere halo biases but alternative, perhaps equally valid perspectives on ratee performance. We suggest that future research view multifaceted research designs in the broader context of a prototype multidimensional data relational system such as that proposed by Lance, Baranik, Lau, and Scharlau (Lance, C. E., Baranik, L. E., Lau, A. R., & Scharlau, E. A. (in press). If it's not trait it must be method: (Mis)application of the multitrait–multimethod design in organizational research. In C. E. Lance & R. J. Vandenberg (Eds.), Statistical and methodological myths and urban legends: Received doctrine, verity, and fable in the organizational and social sciences. Mahwah, NJ: Erlbaum).     

Valuing and hedging fixed rate mortgage commitments

A fixed rate loan commitment that is binding on the lender but not on the loan applicant is equivalent to a put option. This article uses the Black-Scholes option pricing model to establish a value for fixed rate loan commitments and to derive the hedge ratio for the lending institution to hedge the interest rate risk associated with the commitments in the FHLMC forward market for mortgages. The effectiveness of the resulting hedge is tested in a simulation, where it is found that the result is a 71% reduction in the variance of the value of the lender's gain or loss associated with the commitment period.     

A Preliminary Investigation into the Effects of the Federal Override of State Usury Ceilings on the Supply of Mortgage Funds by FSLIC-Insured S&Ls in New York and New Jersey

Examined is the economic theory that restrictive usury ceilings reduce the supply of residential mortgage funds and tighten terms of the mortgage instrument. Studied are the mortgage policies adopted by New York and New Jersey FSLIC-insured S&Ls during periods when there were restrictive usury ceilings and when these usury ceilings were removed. The results clearly confirm the theory that effective elimination of usury ceilings increases the supply of mortgage funds and also liberalizes the terms of the mortgage instrument.     

Designing Optimal Crop Revenue Insurance

When the indemnity schedule is contingent on the farmer's price and individual yield, an optimal crop revenue insurance contract depends only on the farmer's gross revenue. However, this design is not efficient if, as is the case with available contracts, the coverage function is based on imperfect estimators of individual yield and/or price. The producer's degree of prudence and the extent of basis risks have important influences on the optimal indemnity schedule. In this broader context, optimal protection is not provided by available U.S. crop insurance contracts and may include combinations of revenue insurance, yield insurance, futures, and options contracts.     

Modelling the Risks Associated with the Increased Importation of Fresh Produce from Emerging Supply Sources Outside the EU to the UK

The risk of non‐indigenous plant pests entering the UK via international trade in fresh produce is increasing. The objective of this article is to identify existing and emerging supply sources for UK fresh produce importers and examine the extent to which they could provide invasion pathways. We tested the hypothesis that increased imports of fresh produce from new sources outside the European Union could increase the risks of non‐indigenous insect pests. We use a bio‐economic model approach in which the number of species arrivals is a function of the volume of imports, whereas the volume of imports itself is a function of gross domestic product, relative import prices and seasonality. The study has identified clear trends, which show import volumes of fresh produce and species detections increasing from new supply sources. If this trend continues in the future, then the UK inspection agency should expect to confront species from new suppliers in much greater numbers, given that import volumes of fresh produce are income elastic.     

Country of origin labeling for complex supply chains: the case for labeling the location of different supply chain links

We investigate the value of a country of origin label (COOL) that separately identifies the geographic location of different stages in a food product's supply chain. We estimate the willingness‐to‐pay (WTP) of U.S. consumers for a packaged cereal product where the key grain ingredient may be grown in one country and processed in a second country (multicountry supply chain) and compare it to equivalent products that have both stages located in a single country. We find consumer WTP for products with single‐country and multicountry supply chains are statistically different, meaning that simplifying a multicountry label by listing only the country where the ingredients are grown or only the country where the ingredients are processed can result in different consumer values. We also find that for countries with a poor quality reputation, consumers respond more negatively when that country has the “last touch” than when that country's involvement is limited to upstream supply chain links.     

External corporate governance and financial fraud: cognitive evaluation theory insights on agency theory prescriptions

R esearch summary : Agency theory suggests that external governance mechanisms (e.g., activist owners, the market for corporate control, securities analysts) can deter managers from acting opportunistically. Using cognitive evaluation theory, we argue that powerful expectations imposed by external governance can impinge on top managers' feelings of autonomy and crowd out their intrinsic motivation, potentially leading to financial fraud. Our findings indicate that external pressure from activist owners, the market for corporate control, and securities analysts increases managers' likelihood of financial fraud. Our study considers external governance from a top manager's perspective and questions one of agency theory's foundational tenets: that external pressure imposed on managers reduces the potential for moral hazard. M anagerial summary : Many of us are familiar with stories about top managers “cooking the books” in one way or another. As a result, companies and regulatory bodies often implement strict controls to try to prevent financial fraud. However, cognitive evaluation theory describes how those external controls could actually have the opposite of their intended effect because they rob managers of their intrinsic motivation for behaving appropriately. We find this to be the case. When top managers face more stringent external control mechanisms, in the form of activist shareholders, the threat of a takeover, or zealous securities analysts, they are actually more likely to engage in financial misbehavior. Copyright © 2016 John Wiley & Sons, Ltd.     

An analysis of decision processes

AbstractThis paper outlines three ways of looking at decision processes, and relates them to problems of research management. A classification of decisions is suggested, based on three dimensions of complexity. On each dimension, innovative decisions are normally more complex than operating decisions, but since the latter are more common, there is a danger that the former will be inadequately treated, as shown in an example. These dangers may be mitigated, first, by regarding complex decision-making as an explicitly cyclical process, and, second, by recognizing the significance of reference standards. Four types of reference standard—historical, external, planning, and imaginative—are noted, and brief consideration is given to their origins and to their influence on the perception not only of problems but also of solutions. It is argued that the range and quality of the reference standards used are likely to be significant factors in the success of research management.