The Credit Crisis and De Nova Mimicking in Security Analysis

The failure of the investment community in 2007 to foresee the systematic collapse of the credit default swap market significantly increased the complexity of security analysis and damaged the reputation of the security analyst community in general. submit that in response to the credit crisis, security analysts may have engaged in a de nova form of mimicking by increasing emphasis on general market factors and reducing emphasis on idiosyncratic factors in their valuations, driven by behavioral motives to achieve increased cost efficiency and avoid higher penalties for unfavorable outlier valuations. The result would be increased correlation among security valuations and therefore returns, and diminished benefits of diversification. We test this hypothesis by examining the patterns of security and portfolio returns surrounding the onset of the credit crisis in early 2007 and observe a significant postcrisis increase in the proportion of security and portfolio returns explained by market factors. The findings support the hypothesized shift in emphasis in security analyst valuation techniques, and provide results consistent with the hypothesized behavioral explanations.     

Canadian dairy policy and the returns to federal dairy cattle research

The economic surplus approach is used to estimate the returns to federal investments in dairy cattle research in Canada. A national supply function is estimated using time series data. Lagged research expenditures are included as explanatory variables in the model, facilitating the calculation of ***marginal as well as average benefits from research. Simulation analysis is used to study the effects of product market distortions associated with Canadian dairy policy as well as of the marginal excess burden on the rates of return to research and on the distribution of research benefits. Returns were found to be high at the margin. Distortions in the product market had a small effect on the overall returns to dairy cattle research but had a large impact on the distribution of research benefits. Rate of return estimates were found to be indicative of underinvestment even when the marginal excess burden was taken into account.     

Comment: A conceptual framework for studying the interaction of demand, supply and the market environment in product line optimization

This paper examines the work of Michalek et al. (2011) and Tsafarakis, Marinakis and Matsatsinis (2011), published in this issue of the International Journal of Research in Marketing, within a strategic framework. This framework allows a consideration of how the powerful tools that the two papers propose can be harnessed within the overall direction and activity of the firm.On reviewing these two papers, one could concentrate on the algorithms and heuristics that make the complex problem of product line optimization tractable. Such an analysis would be valuable. Instead I concentrate on the strategic environment in which the optimization decision takes place to allow a consideration of applications and extensions within a managerial context. I do that by suggesting a framework for product line decisions after a brief overview of both articles. That enables me to examine managerial issues that arise in implementing such an approach in practice, many of which are addressed in the two papers. For those issues not addressed in the papers, I propose a set of research questions which would be valuable to managers.     

Technology Vision: a scale development

Researchers have cited significant gaps in our knowledge regarding the early stages of vision formation in the radical innovation context and have emphasised the importance of further investigation in this area. As such, this paper aims first to build on the extant literature on organizational, project and Market Vision in order to construct a measure for Technology Vision through theory construction, scale development and modeling. The second goal is to help firms to better understand what the underlying components of Technology Vision are in order to offer themselves the best possible chance of success with the development of radically new, high‐tech products. Based on samples of firms involved with radical innovation research and development in high‐tech sectors in North America and the United Kingdom, conceptual and measurement studies conducted herewith suggest there are five factors related to Technology Vision: Technology Vision benefits, Technology Vision efficiency, Technology Vision magnetism, Technology Vision specificity, and infrastructure clarity. The paper concludes with an examination of the implications of these components of Technology Vision and discusses the need to understand its relationship with Market Vision and the performance of the firm.     

Cost‐effective strategies to mitigate multiple pollutants in an agricultural catchment in North Central Victoria,Australia

Strategies to reduce phosphorus and sediment yields are identified for two Australian catchments using a nonlinear optimisation model. This provides novel insight into the cost‐effective management of dual pollutants of water courses in Australia. A strong degree of complementarity between the two pollutants is highlighted, given the adsorption of phosphorus to sediment that augments the value of gully and streambank management for mitigation. However, the relationship between the two pollutants is asymmetric. A 30 per cent reduction in phosphorus yield achieves a 75 per cent reduction in sediment yield in one catchment, while a 30 per cent reduction in sediment yield achieves only a 12 per cent reduction in phosphorus yield. Sediment abatement costs are low given the efficiency of gully and streambank management. A 30 per cent phosphorus reduction lowers profit by 3–7 per cent, while a 30 per cent sediment reduction lowers profit by around 1 per cent. Land‐use optimisation requires spatial heterogeneity in land‐use and gully/streambank management responses. Overall, this research demonstrates the need to determine whether one pollutant is more important than another, while recognising the potential that mitigation practices possess for the reduction of multiple emissions during their evaluation.     

Youth leisure careers during post‐communist transitions in the South Caucasus

This paper reports findings from interview surveys with 1215 respondents, split between the capital cities (Yerevan, Baku and Tbilisi) and one non‐capital region (Kotayk, Aran‐Mugan and Shida Kartli) in each of the three South Caucasus countries – Armenia, Azerbaijan and Georgia. The respondents, who were drawn from households in larger representative household social surveys, were all born between 1970 and 1976 and were aged 31–37 at the time of the fieldwork in 2007. Their life stage transitions from childhood to adulthood had roughly coincided with their countries’ transitions from communism to post‐communism. Data was collected on the samples’ participation in selected leisure activities from age 16 to 30. Similar data was collected on the samples’ careers in education, the labour market, housing and family relationships. This information enables us to identify typical leisure careers and how their development was affected by events in other life domains, all in the context of the macro‐changes that were in process in each of the research locations. The evidence enables both personal leisure careers and aggregate leisure trends in different socio‐demographic groups to be identified This shows that changes in leisure behaviour between age 16 and 30 were neither widening nor narrowing the differences between the leisure of males and females, or those who married and became parents on the one hand, then, on the other, those who were still single and childless at age 30. In contrast, differences by place, and by social class, grew progressively wider, thus raising the social costs of geographical and social mobility. Changes in leisure behaviour between age 16 and 30 were separating young adults into those who participated in little, if any, structured out‐of‐home leisure, whose main leisure spending, if any, was on alcohol and tobacco (typically consumed in homes and neighbourhoods), and those whose leisure was characterised by relatively high and sustained participation in sport, consumption of high culture, and going out to bars, cafes, cinema, discos, etc.     

Targeting,bias, and expected impact of complex innovations on developing‐country agriculture: evidence from Malawi

Agronomic analyses of new technologies are often conducted under carefully controlled research station programs or trials managed by self‐selected farmers. Oftentimes, the technologies are then scaled up with minimal evaluation under real‐world conditions. Yet, the interim step between agronomic trials and large‐scale promotion is crucial to generate evidence on the social and economic impact of technologies that is both internally valid and generalizable. The article focuses on a participatory action research program in Malawi designed to test and identify scalable technology options to intensify the smallholder sector and contribute to poverty reduction and food and nutrition security. We examine the socioeconomic characteristics of farmers testing technologies and find evidence of systematic targeting of better‐endowed farmers. After controlling for observable differences using matching and a doubly robust estimator, we find evidence of early positive effects on maize yield and harvest value, although placebo tests suggest possible selection on unobservables. We note that attention should be given to program design and household characterization to better define and improve targeting criteria, technology selection, and external validity.     

Privatization,Foreign Acquisition and the Motives for FDI in Eastern Europe

The paper examines the motives for FDI in Eastern Europe by analysing foreign entry by acquisition facilitated by privatization programmes. Firm-level characteristics encouraging entry through their effect on expected profits, as well as industry level determinants are considered. The data are drawn from the list of the 500 largest companies in Polish manufacturing and span privatizations between 1993 and 1998. The results point to market-seeking rather than resource-seeking motives behind the location decisions of foreign investors. JEL no.  F23, L33, P31