UK brokers' characteristics: does size matter?

This study provides one of the first insights into how UK brokers' institutional characteristics may impact on the forecasting performance of their financial analysts. The study focuses on brokerage house size and finds it to be a significant factor explaining cross sectional variation in forecasting performance. This is consistent with evidence from several recent US studies (Jacob et al. 1997; Clement, 1999). It is likely that this broker-size effect reflects the resources (human, IT) available to brokers' analysts to support them in their activities. It may also reflect larger brokers' superior access to company managers and information. However, this broker-size effect appears to be significant only for forecasts made at horizons of one year or less. The sign of the earnings change being predicted also has a significant impact: for observations where earnings changes are negative, the broker-size effect is larger than for positive changes, though the effect is significant for both cases. In addition, the form of the model employed here suggests diminishing marginal returns to broker size. More generally, this study reiterates the importance of controlling for the most commonly cited explanatory variables for forecast accuracy, and there is evidence that the heavy industry sectors may be more difficult to forecast, echoing the conclusions of UK studies from the 1980s.     

Share Tipsters and Fair Advertising

The paper considers the concept of ‘fairness' as it applies to the advertisements of investment advisers. In the light of the empirical evidence relating to the performance of investment tipsters and fund managers, it is argued that current advertising practices tend to raise investors’ expectations to unrealistic levels. Possible changes to advertising practice regulations are considered.     

Assessing the Time-Varying Interest Rate Sensitivity of Real Estate Securities

Abstract

This paper examines the sensitivity of real estate securities to changes in both market and central bank interest rates. It is commonly viewed that the traded real estate market is one of the industry sectors most susceptible to interest rate movements. This is due to traditional high levels of borrowing, the impact of rate changes on property yields and indirectly upon occupational demand and thus rental income. The results which are the first to examine the UK sector, highlight the impact of interest rates on UK property companies, in relation to both returns and volatility. The paper also illustrates that this sensitivity is not confined to periods of high and volatile interest rates as the sample period under examination is characterized by historically low and stable rates.     

The role of individual personality type in subjective risk elicitation outcomes

Managing uncertainty is an unavoidable challenge in a variety of decision contexts. On many occasions, objective data are not available, necessitating the use of experts. However, research into procedures to elicit and aggregate information from experts is difficult to validate or test empirically. A controlled economic experiment was used to assess subjective probability elicitation accuracy resulting from three alternative elicitation procedures and two aggregation alternatives. The empirical results provide evidence of the impacts of elicitation techniques, distribution type, and personal characteristics such as risk preferences and personality type on subjective risk assessment accuracy. Our conclusion is that experimental approaches hold promise as a technique to assess the forecast accuracy of aggregated subjective probabilities in a variety of contexts.     

Short-term residual reversal

Conventional short-term reversal strategies exhibit dynamic exposures to the Fama and French (1993) factors. We develop a novel reversal strategy based on residual stock returns that does not exhibit these exposures and consequently earns risk-adjusted returns that are twice as large as those of a conventional reversal strategy. Residual reversal strategies generate statistically and economically significant profits net of trading costs, even when we restrict our sample to large-cap stocks over the post-1990 period. Our results are inconsistent with the notion that reversal effects are the result of trading frictions or non-synchronous trading of stocks and pose a serious challenge to rational asset pricing models.     

Anti-corruption reform in indonesia: an obituary?

Indonesia's Anti-Corruption Court had until recently convicted all the defendants brought before it by the Corruption Eradication Commission. Many of these were well-known and politically powerful figures. Yet both the Court and the Commission are under threat. Between February and October 2011, the Anti-Corruption Courts issued more than 20 acquittals, and on 11 October 2011, for the first time, a defendant prosecuted by the KPK itself was acquitted. This article traces the history of the Court and the Commission and explains why their fall may be imminent. Both institutions have been the targets of efforts to discredit and hobble them, apparently orchestrated by people the Commission has investigated. If the current trend continues, the Anti-Corruption Court and the Corruption Eradication Commission may soon join the growing list of Indonesia's failed anti-corruption initiatives.     

Parasoziale Meinungsführerschaft

In a democratic society, the media operate as a public space in which political and social topics are discussed. As media communicators influence and restrict both the topics of discussion and the amount of information available from in the media, they exert a substantial influence on the recipients’ formation of political opinion. The present study examines this impact by integrating the theoretical concepts of opinion leadership and parasocial relationship, resulting in a phenomenon referred to as parasocial opinion leadership. Based on the results of a qualitative survey of recipients, the concept was then substantiated. Parasocial opinion leadership is based on viewer’s perceptions and comes into existence, if (1) a recipient ascribes certain attributes to a media communicator based on a parasocial relationship; which (2) allows for a gradual influence of the media personality on the recipient’s opinions and attitudes by fulfilling at least one of the three functions information and reduction of complexity, orientation or arousal of interest.