Looking for contagion in currency futures markets

This article tests whether there are pure contagion effects in both conditional means and volatilities among British pound, Canadian dollar, Deutsche mark, and Swiss franc futures markets during the 1992 ERM crisis. A conditional version of international capital asset pricing model (ICAPM) in the absence of purchasing power parity (PPP) is used to control for economic fundamentals. The empirical results indicate that overall there are no mean spillovers among those futures markets, but they are detected during the crisis period. That is, past return shocks originating in any one of the four markets have no impact on the other three markets during the entire sample period, suggesting that these markets are weak‐form efficient. However, this weak‐form market efficiency fails to hold during the market turmoil, especially for British pound and Swiss franc, and the sources of contagion‐in‐mean effects are mainly due to the return shocks originating in three European currency futures markets. As for the contagion‐in‐volatility, it is detected for British pound only because its conditional volatility is influenced by the negative volatility shocks from Canadian dollar, Deutsche mark, and Swiss franc, with Deutsche mark playing the dominant role in generating these shocks. JEL Classifications: C32; F31; G12. © 2003 Wiley Periodicals, Inc. Jrl Fut Mark 23:957–988, 2003     

MANAGING VENDOR INVENTORY IN A DUAL LEVEL DISTRIBUTION SYSTEM

Collaborative arrangements among members of the supply chain have received a great deal of interest in recent years as a means of reducing costs. One such arrangement is vendor managed inventory (VMI). VMI allows the vendor to make decisions concerning the quantity and timing of deliveries to the retailer. Such an arrangement offers the potential of a more efficient supply chain by removing the negative effects of retail ordering policies. A thorough review of the literature was conducted to identify factors likely to impact the performance of a VMI partnership. Computer simulation was used to study the effects of these factors from both the vendor's and retailer's perspectives. The results lend insight into the performance of VMI and guidance for managers as to the environments in which VMI is most effective.     

AN EVALUATION OF PROCESS‐ORIENTED SUPPLY CHAIN MANAGEMENT FRAMEWORKS

Supply chain management (SCM) is implemented by integrating corporate functions using business processes within and across companies. Several process‐oriented frameworks for SCM have been proposed but only two of these provide sufficient detail to enable implementation. We evaluate the Supply‐Chain Operations Reference (SCOR) framework and The Global Supply Chain Forum (GSCF) framework using four criteria and identify their relative strengths and weaknesses.     

The Contingent Value of Responsive and Proactive Market Orientations for New Product Program Performance*

While the benefits of being market oriented are largely accepted, a group of scholars and managers remain skeptical. Marketing scholars have sought to counter the criticisms leveled against market orientation (MO) by arguing that it has both responsive and proactive dimensions. However, few studies have empirically examined the complexity of the effects of these dimensions on firm performance. Drawing on theories of resource‐based advantage and organizational search behavior, this article advances understanding by arguing that responsive and proactive market orientations have curvilinear effects on product development performance, that their interaction may be positively related to product development performance, and that their effects on new product program performance are moderated differentially by the organizational implementation conditions and marketing function power. Survey results of 175 U.S. firms indicate support for most of the hypotheses. Specifically, whereas responsive MO has a U‐shaped relationship with new product program performance, proactive MO has an inverted U‐shaped relationship with new product program performance. Contrary to the arguments presented here, the interaction of both orientations is negatively related to new product program performance. This study finds that both orientations are needed; however, new product program performance is enhanced when one is at higher level and the other is at lower level. Finally, responsive MO is only positively related to new product program performance under specific conditions such as when strategic consensus among managers is high. On the other hand, the positive effect of proactive MO on new product program performance is further strengthened when learning orientation and marketing power are high. Overall, this study suggests that the effects of responsive and proactive MO on new product program performance are more complex than previously theoretically argued and empirically examined.     

When Do Analysts Adjust for Biases in Management Guidance? Effects of Guidance Track Record and Analysts’ Incentives

Prior research indicates that analysts do not fully adjust for the general downward bias in earnings guidance issued by management. We report the results of two experiments designed to investigate how guidance track record and analysts’ incentives jointly explain the extent to which analysts adjust for guidance bias. Our results suggest that analysts with accuracy incentives adjust for management’s track record of downwardly biased guidance when the bias is relatively small (one cent), but those with relationship incentives do not. Furthermore, the difference in adjustment is larger when the bias track record is inconsistent than when it is consistent. Also, when guidance bias is larger (two cents) relative to smaller (one cent), analysts with relationship incentives partially adjust, as they appear to strike a balance between accuracy and their desire to please management. These findings hold implications for investors, regulators, and the interpretation of prior research.     

Technical Analysis as a Rational Tool of Decision Making for Professional Traders

The psychological background of technical analysis usage is investigated to further explain the popularity and common usage of technical analysis as an investment decision tool. Attitudes toward technical analysis of professional futures market traders and neophyte investors, represented by finance students, were examined. Technical analysis is one of the most popular methods supporting investment decisions and it is much more popular among future market traders than among neophyte investors. The concept of processing information was used to explain this phenomenon. Neophyte investors are more experiential and intuition-driven while using technical analysis models, while futures market traders are more rationally driven. Technical analysis methods help professional traders on futures markets, which are less transparent than regulated stock markets, to process information; those methods are perceived by them as rational, cognitive tools supporting their decision making.     

Corporate Lobbying and Firm Performance

Corporate lobbying activities are designed to influence legislators, regulators and courts, presumably to encourage favorable policies and/or outcomes. In dollar terms, corporate lobbying expenditures are typically one or even two orders of magnitude larger than spending by Political Action Committees (PAC), and, unlike PAC donations, lobbying amounts are direct corporate expenditures. We use data made available by the Lobbying Disclosure Act of 1995 to examine this more pervasive form of corporate political activity. We find that, on average, lobbying is positively related to accounting and market measures of financial performance. These results are robust across a number of empirical specifications. We also report market performance evidence using a portfolio approach. We find that portfolios of firms with the highest lobbying intensities significantly outperform their benchmarks in the three years following portfolio formation.