UNDERSTANDING AND CONDUCTING EVENT STUDIES

Event studies have become one of the most important methodological approaches to empirical research in frnance and accounting. This paper discusses the nature of event studies, differentiating the four basic types: information content, market efficiency, model evaluation and metric explanation. A structure is identified for the conduct of event studies and the steps discussed. Specific studies in the literature are cited as illustrations of various points. Finally, a number of issues of interpretation, evaluation and design are discussed which are crucial to the effective conduct and understanding of an event study.     

Return on advertising: Another approach

With companies becoming more cost conscious the need for a more effective method of measuring the Return on Advertising is becoming more crucial. Previous attempts at measuring the return on advertising have focused on measuring either the sales effect or the communicative effect of an advertising campaign. However, both methods of measurement leave something to be desired and yet both techniques have strong points. This article proposes that one should synthesize the best elements of both measurement techniques into an objective design that will enable the practitioner to determine his ROA.     

EVALUATING THE FINANCE JOURNALS: THE DEPARTMENT CHAIRPERSON'S PERSPECTIVE

Finance department chairpersons report that the role of published research is more important than ever in influencing appointment and promotion decisions of finance professors. This study and one conducted 15 years ago focus on the pivotal role of finance chairpersons in the evaluation of their faculties' journal publications. These studies show that the major factor influencing the finance chairpersons' evaluations of publications is the journal in which an article is published. Journals of high merit are perceived to have low acceptance rates and vice versa. These estimates of perceived acceptance rates are not correlated with actual acceptance rates. Because perceived acceptance rates play a key role in evaluating faculty publications, there is a need for finance chairpersons to know the relative difficulties of publishing in leading finance and related journals.     

Irrigation reform in conditions of populist anarchy: An Indian case

It is true that the performance of India's canal-irrigated agriculture could be substantially and cheaply improved by change in canal operating and maintenance procedures. But current procedures allow some farmers and state officials to capture disproportionate benefits for themselves through a well-institutionalised system of corruption. These beneficiaries of the status quo make up powerful interes groups against reform. The paper illustrates just how intensely ‘political’ irrigation reform can be, by tracing what happened when an attempt was made to carry out an apparently simple improvement in water allocation rules under a South Indian canal. The events suggest a wider process of cumulative causation making for low rates of growth of food production and weaker political authority. The process is not inevitable, however, and the paper ends with some suggestions about how, in the irrigation context, public policy might help to offset the decline.     

An empirical investigation of owner–manager labor-supply behavior

This paper uses data from the University of Michigan's Panel Study of Income Dynamics to examine an owner–manager's labor-supply decision. Graphical analysis is used to motivate the central hypothesis tested, which is that the hourly wage paid to comparable hired managers is the marginal price of leisure to the owner–manager and will help determine his hours worked. The results suggest that this is an appropriate interpretation, with the average elasticity of hours-worked with respect to cost of comparable hired managerial services equal to + 0.23.     

Culture and the management of time: A comparison of Japanese and American top management practice

Data was collected from CEO's and upper-level managers in Japan and the United States by survey and by structured observation in order to investigate patterns of time utilization as functions of culture. The results showed similar patterns between the Japanese and the Americans with regard to the percentage of time spent working alone as opposed to working with others. Different patterns were found for the two cultures with regard to the length of activities.     

Wage Differences Between Men and Women: Performance Appraisal Ratings vs. Salary Allocation as the Locus of Bias

This article explores the nature and origins of wage differences between men and women in the context of a single large financial services organization. Data collected on 800 women and 1831 men showed that modest wage differences do exist and that they tend to be concentrated primarily in managerial levels. Two possible sources of bias in evaluation were assessed – performance appraisal ratings and the translation of performance appraisal ratings into salay. Our analyses showed that performance appraisal ratings, on average, do not differ between men and women at the same level; however, the relationship between performance appraisal ratings and salary was stronger for men then women, particularly at higher levels. This suggests that the salary allocation process, and not the performance appraisal process, may be the source of bias in large organizations.     

Transaction costs and the small firm effect

Recent empirical work by Banz (1981) and Reinganum (1981) documents abnormally large risk-adjusted returns for small firms listed on the NYSE and the AMEX. The strength and persistence with which the returns appear lead both authors to conclude the single-period, two-parameter capital asset pricing model is misspecified. This study (1) confirms that total market value of common stock equity varies inversely with risk-adjusted returns, (2) demonstrates that price per share does also, and (3) finds that transaction costs at least partially account for the abnormality.