The colors of investors’ money: The role of institutional investors around the world

We study the role of institutional investors around the world using a comprehensive data set of equity holdings from 27 countries. We find that all institutional investors have a strong preference for the stock of large firms and firms with good governance, while foreign institutions tend to overweight firms that are cross-listed in the U.S. and members of the Morgan Stanley Capital International World Index. Firms with higher ownership by foreign and independent institutions have higher firm valuations, better operating performance, and lower capital expenditures. Our results indicate that foreign and independent institutions, with potentially fewer business ties to firms, are involved in monitoring corporations worldwide.     

American Labor and Europa's Recovery

On the morrow of President Truman's election the newspapers announced that the first person the President had received was the President of the powerful American syndical organisation known throughout the world under the name of C.I.Q. (Congress of Industrial Organizations). We know that this organisation as well as the other central organisation, the American Federation of Labour, had unequivocally taken up its stand in favour of Truman's candidacy. As the legislative elections had at the same time given the majority to the Democratic Party it was immediately declared on all hands that trade-unionism was going to exert considerable influence on American policy. These facts conferred a great importance on the memorandum addressed by Mr. Philipp Murray, in November 1947, to President Truman; a memorandum which was officially communicated by the C.I.O. to the International Trades Unions Conference for the recovery and reconstruction of Europe held in London on the 9th and 10th of March, 1948. We are especially pleased to put this document, which constitutes a declaration of principles of tie utmost interest, before the readers of the Annals.     

The economic performance of the Russian economy in 2006 and a forecast for 2008–2010

This article examines the economic outcome of 2006 and builds a forecast for 2007–2010. The medium-term development risks of the Russian economy are analyzed.     

The appraisal of ordinary shares by Saudi investors

This paper reports on a questionnaire survey about share valuation practices among investors and their intermediaries in Saudi Arabia. The findings suggest that fundamental analysis is used most by investor respondents where a P/E multiple is applied to an earnings forecast to generate a prediction of future price. However, technical analysis is also used to a much greater extent than in developed markets. Finally, the results indicate that quarterly and annual reports as well as newspapers are widely consulted by investors when forming their expectations about share valuations.     

Do Tests of Capital Structure Theory Mean What They Say?

In the presence of frictions, firms adjust their capital structure infrequently. As a consequence, in a dynamic economy the leverage of most firms is likely to differ from the “optimum” leverage at the time of readjustment. This paper explores the empirical implications of this observation. I use a calibrated dynamic trade‐off model to simulate firms' capital structure paths. The results of standard cross‐sectional tests on these data are consistent with those reported in the empirical literature. In particular, the standard interpretation of some test results leads to the rejection of the underlying model. Taken together, the results suggest a rethinking of the way capital structure tests are conducted.     

An analysis of option pricing under systematic consumption risk using GARCH

An issue in the pricing of contingent claims is whether to account for consumption risk. This is relevant for contingent claims on stock indices, such as the FTSE 100 share price index, as investor’s desire for smooth consumption is often used to explain risk premiums on stock market portfolios, but is not used to explain risk premiums on contingent claims themselves. This paper addresses this fundamental question by allowing for consumption in an economy to be correlated with returns. Daily data on the FTSE 100 share price index are used to compare three option pricing models: the Black–Scholes option pricing model, a GARCH (1, 1) model priced under a risk-neutral framework, and a GARCH (1, 1) model priced under systematic consumption risk. The findings are that accounting for systematic consumption risk only provides improved accuracy for in-the-money call options. When the correlation between consumption and returns increases, the model that accounts for consumption risk will produce lower call option prices than observed prices for in-the-money call options. These results combined imply that the potential consumption-related premium in the market for contingent claims is constant in the case of FTSE 100 index options.     

RESISTANCE TO CHANGE: A PSYCHOANALYTIC CRITIQUE OF ARGYRIS AND SCHON'S CONTRIBUTIONS TO ORGANIZATION THEORY AND INTERVENTION

The purpose of this essay is to examine psychoanalytically Argyris and Schon's contributions to organization theory and intervention. The author focuses his attention on the problem of individual and organizational resistance to change in the light of Argyris and Schon's cognitive psychological assumptions about learning, reasoning, and effectiveness.