The Horizontal Merger Guidelines of 1992

The 1992 Horizontal Merger Guidelines of the Department of Justice and the Federal Trade Commission outline an enforcement policy which makes a long overdue break with its predecessors in awarding no decisive or predominant role to market concentration as a criterion of anticompetitive effect. However, the new policy does not provide an adequate substitute criterion: the tests that it prescribes for screening merger proposals are so specified that a potentially large proportion of anticompetitive mergers can escape challenge without showing any promise of improving efficiency. The time is ripe for a comprehensive inquiry aimed at formulating a more satisfactory policy.     

Another Look at the Cross-section of Expected Stock Returns

Our examination of the cross-section of expected returns reveals economically and statistically significant compensation (about 6 to 9 percent per annum) for beta risk when betas are estimated from time-series regressions of annual portfolio returns on the annual return on the equally weighted market index. The relation between book-to-market equity and returns is weaker and less consistent than that in Fama and French (1992). We conjecture that past book-to-market results using COMPUS-TAT data are affected by a selection bias and provide indirect evidence.     

On the Role of Futures Trading in Spot Market Fluctuations: Perpetrator of Volatility or Victim of Regret?

We examine the role of index futures trading in spot market volatility. We use the exponential generalized autoregressive conditional heteroskedasticity (EGARCH) approach to measure volatility, analyze causality and feedback relations between volatilities in the spot and futures markets, and test various hypotheses in the context of a multivariate model that incorporates other macrostate variables. Our empirical results suggest index futures trading may not be blamed for the observed volatility in the spot market. Rather, we find stronger and more consistent support for the alternative posture that volatility in the futures market is an outgrowth of a turbulent cash market. We use the regret (cognitive dissonance) theory to explain our results.     

Antecedents of private label attitude and national brand promotion attitude: similarities and differences

A model that addresses the similarities and differences in conceptual antecedents of attitudes toward private label grocery products and national brand promotions is proposed and tested. The proposed model is tested using a sample of 300 consumers who were recruited from grocery stores, provided behavioral data from sales receipts of their shopping trip, and responded to a survey that contained multi-item construct measures. We predict and find in the study that both price and nonprice related constructs impact both private label attitude and national brand promotion attitude, but the directionality and strength of several of these relationships differ. Implications of these findings for retailers and national manufacturers are discussed.     

The Information Content of Nonfinancial Performance Measures in the Airline Industry

This research extends the literature on nonfinancial performance measures (NFPMs) by assessing (1) the information content of a broader set of NFPMs and (2) whether NFPMs provide information not provided by financial performance measures (FPMs) from all previously identified FPM categories, rather than just earnings and book value. Specifically, exploratory and confirmatory factor analysis results presented in this paper demonstrate that nineteen NFPMs of major airlines capture seven underlying constructs not captured by eighteen common FPMs. Additionally, this research develops reliable composite measures of the identified performance measure constructs, which prior research argues are superior to individual performance measures.     

How Naïve Is the Market’s Use of Firm‐Specific Earnings Information?

Recent studies suggest the apparent delay in the stock-price response to earnings announcements (i.e., post-earnings announcement drift) is caused by investors who underestimate the autocorrelation of seasonally-differenced earnings (persistence). I present results that suggest: (1) a firm's future persistence is predictable on the basis of its past persistence; (2) the immediate stock-price response to earnings is positively related to historical persistence; (3) post-earnings-announcement drift is independent of historical persistence; and (4) consistent with (2) and (3), the difference between a firm's current observed persistence and that implied in stock prices is independent of its historical persistence. These results extend prior research by demonstrating that investors are aware not only that seasonally-differenced earnings are autocorrelated, but that investors recognize firm-specific differences in the magnitude of the autocorrelation.     

My vision of a better India

India is a rich country in which poor people live, a big country which does not realise its own potential. India must build on its strengths and achieve its potential to become an economic superpower with a good and just society. A number of attitudinal and structural factors, such as lack of national pride, politics based on caste and other identities, a hierarchic and corruption-ridden feudal society and the tendency to reward failure and weakness rather than success and achievement are the major hurdles that are stopping us from achieving our true potential. On the other hand, our strengths in democratically managing a multi-ethnic, multi-cultural country and our capacity to master technology are also notable. Steps and hopeful developments that show the way forward to solve our national problems and realise the vision of a better India are suggested.