Relative accuracy of analysts’ earnings forecasts over time: a Markov chain analysis

The main purpose of this paper is to analyze the time patterns of individual analysts’ relative accuracy ranking in earnings forecasts using a Markov chain model. Two levels of stochastic persistence are found in analysts’ relative accuracy over time. Factors underlying analysts’ performance persistence are identified and they include analyst’s length of experience, workload, and the size and growth rate of firms followed by the analyst. The strength and the composition of these factors are found to vary markedly in different industries. The findings support the general notion that analysts are heterogeneous in their accuracy in earnings forecasts and that their superior/inferior performance tends to persist over time. An analysis based on a refined measure of analysts’ forecast accuracy ranking that strips off firm-specific factors further enhances the empirical validity of the findings. These findings provide a concrete basis for researchers to further explore why and how analysts perform differently in the competitive market of investment information services.     

Der Begriff Lügenpresse in deutschen Tageszeitungen

In Germany, we currently see on-going changes in politics and society. More and more people seem to lose faith not only in politics, but also in the mainstream media. Since autumn 2014, the distrust in and suspicion of the news media has reached a new level: the group “Pegida” (Patriotic Europeans against the Islamization of the West) coined the term Lügenpresse (lying press) to illustrate their growing distrust in news media. The term lying press emerged for the first time in 1914 and was regularly used for war propaganda to defame foreign media. In general, the term is not only used by followers of a certain political direction, but in the context of different, especially antidemocratic, political movements (e.?g., during the National Socialist era or during the GDR era in Germany). Since the beginning of the 2000s, however, the concept has been increasingly referred to by right-wing groups (see Heine 2015; Klarmann 2013). Nevertheless, this is not only an issue in Germany, since Pegida has support in other European countries, such as Great Britain and the Netherlands.News media become part of their own coverage as soon as they refer to these developments. Self-discussion or self-coverage can be described as journalistic communication about journalism and means that the media themselves become the object of reporting. Hence, when media use the term lying press, they inevitably refer to themselves. The present study deals with how the media refer to the term lying press and how they reflect upon it. The main question we deal with in our study is how detailed the concept is reflected on and how the media deal with the associated reproach of deliberate misinformation.Drawing on the concept of framing, a content analysis is employed in order to analyze how newspapers report on the term, how they relate it to themselves and how they deal with its implications. The framing approach deals with the emergence, dissemination and alteration of interpretive frames, which are placed on an issue and determine the point of view on this topic. According to Matthes (2014), frames can be understood as a tool to highlight certain information or aspects of a topic while neglecting others. The framing approach deals with the genesis, alteration and effects of frames, which are located at various points in the communication process. In this study, we focus on media frames in the daily newspaper coverage. We rely upon the definition according to Entman (1993) which has been most frequently operationalized so far.We postulate several research questions that deal with the concept of self-coverage and framing. We are, for example, interested in verifying the sections of newspapers in which the term is referred to and if there are differences in how strongly the term is reflected upon. Furthermore, our research interest focuses on how the term is framed, which frames are dominant in the news media and if the frames change over time. We investigated the coverage of the five most widely circulated daily newspapers (Frankfurter Allgemeine Zeitung, Süddeutsche Zeitung, Bild, die Welt, and die tageszeitung) in Germany from October 2014 to October 2015. We discovered 304 articles with 338 statements referring to the term lying press. With a cluster analysis, we extracted four frames.Overall, the term lying press is more strongly reflected on in media sections than in political reporting. In political sections the term is often only mentioned without further contextualization. The four extracted clusters, which can be interpreted as media frames, are termed as follows: demanding author frame, reserved expert frame, external accusation frame, and unreflected author frame.In political sections of newspapers, the two rather undifferentiated frames (external accusation frame with 35% and unreflected author frame with 36%) are dominant. The reserved expert frame (35%) and the unreflected author frame (43%) are the two dominant frames in media sections. Nevertheless, the two most common frames (external accusation frame and unreflected author frame) do not use the term lying press in a critical and reflective way (combined percentage of 60%). The selection of the term as “non-word” of the year did not significantly change the frequency with which the four frames are used within the media.Our results show that the term lying press is used in different ways – but in most cases, there is only little or no elaboration. Frequently, the term is only mentioned without a deeper discussion and classification of the term and its meaning. It sometimes even seems that newspapers use the term ironically as a synonym for themselves instead of the terms media or press. However, the associated trivialization of a term carrying such negative connotations is problematic and could help to establish lying press as an unreflected designation for the media. The media might miss the opportunity to both react decisively to the accusations and to illustrate how important they are in a democratic society. The term must be placed in its historical context and should not be permitted as a flat-rate defamation. Whether the underlying criticism is justified or not, the media should discuss the term and, if possible, invalidate it. In this context, the media must perform their function of practicing criticism – also against themselves. Limitations and future research are discussed at the end of the paper.     

Delegation and polarization of platforms in political competition

Summary. We consider a model of political competition among two ideological parties who are uncertain about the distribution of voters. The distinguishing feature of the model is that parties can delegate electoral decisions to candidates by nomination. It is shown that if the credible platform commitments of the candidates is feasible, then at least one of the parties nominates in equilibrium to a candidate who has an ideology that is more radical than the delegating party's ideology. In a variety of circumstances, this, in turn, yields a polarization of equilibrium policy choices of the candidates. It is thus argued formally here that strategic nomination of the candidates may well be one of the major reasons behind the well documented observation that the platforms associated with the political parties in two-party democracies are often surprisingly polarized. Received: January 10, 2002; revised version: May 8, 2002 RID="*" ID="*" We thank Alberto Alesina, Levent Ko?kesen, Antonio Merlo, Ronny Razin, Vijay Krishna, Alessandro Lizzeri, and seminar participants at Alicante, Columbia, Copenhagen, and NYU for helpful comments. We also thank an anonymous referee for its useful suggestions. A good fraction of this research was conducted while Ok was a visitor in the Department of Economics at University of Alicante; he thanks for the kind hospitality of this institution. We gratefully acknowledge the financial support from the Spanish Ministry of Education through grant CICYT BEC2001-0535 (Faulí-Oller) and BEC2001-0980 (Ortu?o-Ortín). Correspondence to:I. Ortu?o-Ortin     

Einkommensentstehung als Verteilungsfaktor

From the end of the Second World War onwards, a middle class emerged in Germany that was, by international standards, broadly based. The economic basis for this middle class was good pay and relatively low income differentiation, which was the result of collective agreement on a high coverage rate. Since the mid-1990s, however, the economic basis of middle-class prosperity and security has been crumbling. In the primary distribution, the share of households in the middle-income groups fell by almost ten percentage points, from 56.4 per cent to 48 per cent, between 1992 and 2013. The welfare state was no longer able to compensate fully for this unequal primary distribution. An increase in coverage by collective agreements, the re-regulation of atypical employment forms and the elimination of all incentives to take marginal, part-time jobs are the keys to strengthening the middle-income groups in Germany.     

What pupils can learn from working with robotic direct manipulation environments

This study investigates what pupils aged 10–12 can learn from working with robots, assuming that understanding robotics is a sign of technological literacy. We conducted cognitive and conceptual analysis to develop a frame of reference for determining pupils’ understanding of robotics. Four perspectives were distinguished with increasing sophistication; “psychological”, “technological”, “function”, and “controlled system”. Using Lego® Mindstorms® NXT robots, as an example of a Direct Manipulation Environment, we developed and conducted a lesson plan to investigate pupils’ reasoning patterns. There is ample evidence that pupils have little difficulty in understanding that robots are man-made technological and functional artifacts. Pupils’ understanding of the controlled system concept, more specifically the complex sense-reason-act loop that is characteristic of robotics, can be fostered by means of problem solving tasks. The results are discussed with respect to pupils’ developing technological literacy and the possibilities for teaching and learning in primary education.     

Fostering entrepreneurship in distressed urban neighbourhoods

During the last decade entrepreneurship research has focused increasingly on spatial aspects of entrepreneurship. Many systematic studies have been conducted on the national or regional scale, although other geographical scales—cities and their single districts and neighbourhoods—have drawn less attention. In this context, the paper aims, firstly, at identifying spatial success factors of entrepreneurial activities and their promotion at the local scale. Secondly, the paper aims at contributing to the development of a conceptual frame at the interface of entrepreneurship research, urban and economic geography, and regional economics. Empirically, the paper draws on results from explorative case studies in two distressed urban areas.     

Multi-product capacitated facility location problem with general production and building costs

This research introduces the multi-product capacitated facility location problem with general production and building costs (MP-CFLPGC). The MP-CFLPGC extends previous problems found in the literature by including multiple products and general production and building cost functions that allow the modeling of different behaviors like economies of scale and congestion. The MP-CFLPGC is formulated as a mixed integer linear program (MILP). To evaluate the performance of the proposed formulation we analyze the results of a commercial optimizer on a set of 288 randomly generated test instances that resemble the Colombian cement industry supply chain. After one hour the optimizer achieved an optimality gap of 1.0 % or less in 55 % out of the 288 test instances. On average the optimality gap was 3.57 %. Additionally, we propose a randomized mathematical-programming-based heuristic for the test instances where the MILP formulation presents significantly high optimality gaps.     

BidPacket: trading bandwidth in public spaces

Smart devices such as smartphones and tablets are used extensively in public spaces for the transmission and reception of content in the form of text, photos and streaming videos. Since the bandwidth provided for wireless access is limited in public areas, it becomes an issue for users to gain access to the bandwidth they need at the right times. While an omniscient controller could assign bandwidth to each device on the basis of their needs and overall availability, imperfect information about the instantaneous state of the wifi access patterns and needs of users make for a very inefficient allocation of such bandwidth. This paper provides a solution for bandwidth allocation by creating a market among users of smart devices so that they can bid for extra bandwidth when they need it and sell it when they don’t. They do so by using a virtual currency that is conserved so that each device owner maximizes his own utility. This utility function is composed of both the benefit accrued from accessing bandwidth and the loss of the currency incurred in bidding for such bandwidth. Extensive simulations show that this market-based method outperforms an omniscient model when demand is uncertain, while minimizing bandwidth consumption.     

The Coordinated Effect of a Merger with Balanced Sharing of Collusive Profits

It is hard to assess the coordinated effect of mergers in solid and convincing fashion, in part because economic theory deals mainly with the sustainability of tacit collusion and generally does not explore the conditions that foster collusion in the first place. Also the most popular schemes of collusion (Joint profit maximization and Nash Bargaining) proposed by the economic literature seem at odds with the evidence recorded on cartels and with the practical attitude of entrepreneurs. In this scenario the recent version of the Horizontal Merger Guidelines contained the interesting suggestion to pay attention to the process - parallel behaviour – which leads to collusive equilibria. Working on the same intuition we propose an approach based on the idea that firms can always find a feasible collusive agreement, for every possible value of the factor which discounts future profits. Assuming that in order to collude, firms demand the fair sharing of collusive gains, we exploit the egalitarian property of grim trigger strategies when all incentive compatibility constraints are binding. This approach suggests using three indicators to determine whether and how a merger affects the probability of collusion. An application of this approach to a real-world case (the AT&T/T-Mobile merger) is provided.     

It is not whom you know,it is how well you know them: Foreign entrepreneurs building close guanxi relationships

Within the growing body of Chinese entrepreneurship literature, guanxi is increasingly recognized as an important indigenous Chinese business practice with important implications for firm performance and success. Guanxi is defined as relationship or connection. China’s continued economic growth and forecasts of it becoming one of the world’s largest consumer markets present multinational corporations and foreign entrepreneurs alike with unprecedented economic opportunities. Thus, greater insight is required into how foreign entrepreneurs, as outsiders, establish and develop close guanxi relationships. Conceptualizing guanxi as a dynamic process, this paper explores the underlying interactions and processes foreign entrepreneurs engage in to establish and build a strong emotional connection and trust with their closest guanxi partner. Using an exploratory single case study approach, data from 15 foreign entrepreneurs operating legally registered small- and medium-size enterprises (SMEs) in Shanghai was collected and analyzed. In addition, self-administered structured questionnaires that utilize the McAllister trust scale were used to measure 20 foreign entrepreneurs’ levels of cognitive and affective trust toward their closest guanxi partner. Overall, the findings of the study provide an in-depth understanding of the complex interplay and functioning of third-party and anticipatory bases. In so doing, the study’s outsider perspective addresses a critical gap in the literature that yields initial yet important insights that contribute to a better understanding and appreciation of the inherent nuances and differences in relationship-building processes in cross-cultural settings. Furthermore, these findings bring to the fore the need to consider the ways in which this indigenous Chinese business practice may be evolving in the face of increasing internationalization.