A comparison of buy‐side and sell‐side analysts

There is very little research on the topic of buy-side analyst performance, and that which does exist yields mixed results. We use a large sample from both the buy-side and the sell-side and report several new results. First, while the contemporaneous returns to portfolios based on sell-side recommendations are positive, the returns for buy-side analysts, proxied by changes in institutional holdings, are negative. Second, the buy-side analysts' underperformance is accentuated when they trade against sell-side analysts' recommendations. Third, abnormal returns positively relate to both the portfolio size and the portfolio turnover of buy-side analysts' institutions, suggesting that large institutions employ superior analysts and that superior analysts frequently change their recommendations. Abnormal returns are also positively related to buy-side portfolios with stocks that have higher analyst coverage, greater institutional holding, and lower earnings forecast dispersion. Fourth, there is substantial persistence in buy-side performance, but even the top decile performs poorly. These findings suggest that sell-side analysts still outperform buy-side analysts despite the severe conflicts of interest documented in the literature.     

Segmented asset markets and optimal exchange rate regimes

This paper revisits the issue of the optimal exchange rate regime in a flexible price environment. The key innovation is that we analyze this question in the context of environments where only a fraction of agents participate in asset market transactions (i.e., asset markets are segmented). Under this friction alternative exchange rate regimes have different implications for real allocations in the economy. In the context of this environment we show that flexible exchange rates are optimal under monetary shocks and fixed exchange rates are optimal under real shocks.     

‘A Comparison of the Contents of the Codes of Ethics of Canada’s Largest Corporations in 1992 and 2003’

This paper compares the findings of content analyses of the corporate codes of ethics of Canada’s largest corporations in 1992 and 2003. For both years, a modified version of a technique used in several other studies was used to determine and categorize the contents of the codes. It was found, inter alia, that, in 2003, as in 1992, more of the codes were concerned with conduct against the firm than with conduct on behalf of the firm. Among the changes from 1992 to 2003 were a significant increase in the frequency of mention of environmental affairs, legal responsibility as the basis of codes and enforcement/compliance procedures.     

Gender disparities: a medical detoxification program

Significant gaps exist in health care regarding gender in the United States. Health status, social roles, culturally patterned behavior and access to health care can be influenced by gender. Women have been the primary users of health care and minority women usually have received poorer quality care than Non-Hispanic White (NHW) females. The objectives of this study were to identify gender, racial and ethnic disparities in access to substance abuse treatment in a Texas hospital. Secondary data collected on 1,309 subjects who underwent detoxification were studied. Gender, race/ethnicity, drug of abuse, relapse and financial classification were included in the analysis. Results indicate Hispanic females and Non-Hispanic Black (NHB) females were about 5 and 3.5 more likely than NHW females to use Medicaid services respectively (p < .05). NHW and NHB males were more likely to use Medicare than females (p < .05). NHB and Hispanic females were 5.8 and 2.1 times more likely to receive care for abuse of cocaine when compared to NHW females respectively (p < .05). Hispanic females were 2.3 times more likely to relapse than Non-Hispanic females, and uninsured NHB females were 7.1 times at a higher risk to abuse multiple drugs compare to NHW females (p < .05). Socio-economic factors, lower labor force participation rates, and less financial independence can explain females utilizing more often Medicaid regardless of their race/ethnicity. These results can be also explained by aggressive case management utilization, socio cultural barriers and/or discriminatory practices, both intentional and unintentional.     

Managerial perceptions of service-infused IORs in China & India: A discursive view of value co-creation

This paper explores the managerial challenges facing firms seeking to build relationships with other network actors while doing business in foreign markets. By taking a critical perspective on an area of increasing importance in both manufacturing and service sectors, that of value co-creation, the paper explores how managers in different cultural contexts make sense of the notion of ‘value’ in inter-organizational B2B relationships between New Zealand service and service-infused supplier firms and buyers in China and India. From an analysis of the interview-based accounts on both sides of the buyer–seller dyad marked differences emerge regarding value-creation within managers' discourse around partnerships, collaboration and cooperation. Our findings suggest that the Indian manager's discursive use of ‘partnership’ draws on service-dominant logic in viewing this type of interaction as a means for co-creating value; they and their New Zealand suppliers are jointly involved in co-creating value within a service system, creating value-in-use. In contrast, the predominant perspective seen in the discourse of Chinese managers is the use of cooperation as a means of making transactions more cost-effective, or to fill gaps in their supply chains, resulting in the creation of transaction-based, co-production of value, which suggests a value-in-exchange orientation. In both cases, there is repeated reference to more peripheral actors whose efforts result in what we interpret as network value creation, based on their interactions with actors within the buyer–seller dyad.     

Using the social system of a supply chain to improve a focal organization’s operating performance

In this paper, we explore how a large organization, operating in a mature, asset-intensive industry, used the social system of a key supply chain to generate significant improvement in operating performance (e.g., inventory turnover ratio improved from 0.8 to 3.2 in 5?years). A case study approach was used to study a steel rail supply chain involving an Australian railway company as the focal company. This supply chain consisted of two other companies: a steel manufacturer and a bulk transporter. Multiple forms of data were collected and analyzed, including models and process maps of the supply chain, published and internal documents, Enterprise Resource Planning system reports, and in-depth interviews of 31 key personnel involved in the supply chain. We found that the organizations had invested heavily in formal systems, such as governance processes and information technology systems. However, it was the informal mechanisms across and within the social system which made the greatest contribution to the resulting improvements. This suggests that organizations may be able to achieve significant operating performance outcomes at far lower cost and in shorter time frames by working through the existing social systems instead of focusing excessively on formal governance and IT systems.     

Growth dynamics: the bidirectional relationship between interfirm collaboration and business sales in entrant and incumbent alliances

This paper demonstrates the existence of bidirectional relationships between interfirm collaboration and business sales. Controlling for factors that influence whether firms form collaborative relationships, the analysis shows that entry and post‐entry collaboration often contribute to superior performance, which in turn attracts more partners. However, the performance influences vary across types of collaborators and collaborations, with differences among entrant and incumbent partners, between marketing and R&D partnerships, by partner size, and across time. The empirical analysis examines businesses that operated in the U.S. hospital software systems industry between 1961 and 1991. Copyright © 2005 John Wiley & Sons, Ltd.     

Forecasting Real Inventories and the Anomaly of Money Illusion

While the transmission mechanism of inventory behavior in the business cycle has been studied, less effort has been devoted to applied forecasting of inventory change. Inventory fluctuations have accounted for a sizable portion of the changes in U.S. GDP during recessions over the past fifty years. In this paper, we report on out-of-sample forecasts of manufacturing and trade inventories generated by regression and neural network methodology. Our forecasting model is Metzlerian in approach, in that the divergence between actual and targeted sales is hypothesized as the primary cause of inventory imbalance. Our forecasts also rely on the slow adjustment of inventory investment to sales surprises. However, the likely presence of money illusion is a caveat to users, and we address several distortions it introduces to inventory management measures.     

Adjustment Dynamics of Paper and Paprboard Consurption in Canada

Using time-series data from 1961 to 1982, habitual nature of consumption of paper and paperboard products in Canada was analyzed and short-run and long-run income and price elasticities were estimated. Five groups of paper and paperboard products, based on data from Canadian sources, were specified: (i) newsprint, (ii) printing and writing paper, (iii) tissue and sanitary paper, (iv) wrapping paper, and (v) paperboard. Two formulations of stock adjustment models (with current income and current price in the first and permanent income and expected price in the second) were specified. An adaptive expectation model and a double logarithmic static model were also estimated for comparing the results with the more desirable dynamic stock adjustment models. The first two models were estimated by nonlinear estimation technique. The adaptive expectation model was estimated with the combination of GLS and a two-dimensional grid search over expectation coefficients. The static model was estimated by the OLS. The results indicated that it is worthwhile to estimate dynamic models because they show superiority over the static model in terms of explanatory power. Estimates from the stock adjustment model indicated that consumption of newsprint and printing and writing paper are subject to inventory adjustments and the other three products to habit formation. The income and price coefficients were all estimated to be positive and negative, respectively, and mostly were significantly different from zero. All long-run income and price elasticities exceeded those in the short run. Consumption of all paper and paperboard products in Canada was found to be income elastic in the long run. Similarly, price elasticities of consumption of all products were high and greater than one for printing and writing paper and for paperboard in the long run. Thus, the supposedly inelastic response of consumption of paper and paperboard to price changes, as concluded by many workers in the past, is not supported when habit, stock and expectational effects are taken into account. La nature habituelie de consommation de papier et de produits de carton au Canada est étudiée d'après les données chronologiques de 1961 à 1982. Les revenus sur une periode courte et longue ainsi que l‘élasticité des prix sont estimés. Cinq groupes de papier et de produits de carton, basés sur des données de source canadienne, sont spécifiés: (i) papier journal, (ii) papier d'imprimerie et d’écriture, (iii) papier pelure et papier sanitaire, (iv) papier d'emballage, et (v) carton. Deux formulations de modèles de règlement de stock (avec revenu courant et prix courant dans la première et revenu permanent et prix attendu dans la deuxième) sont spécifiées. Un modèle adaptable d'attente et un modèle “double logarithmic static” sont aussi estimés pour comparer les résultats avec les modèles d'adjustage dynamique de stock qui sont plus désirables. Les deux premiers modèles sont estimés par une technique d'estimation nonlinéaire. Le modèle adaptable d'attente est estimé avec la combinaison de GLS et une recherche de quadrillage à deux dimensions des coefficients d'attente. Le modèle statique est estimé par OLS. Les résultats indiquent qu'il est valable d'estimer les modèles dynamiques parce qu'ils montrent la supériorité sur le modéle statique en terme de pouvoir explicatif. Les estimations du modèle d'ajustage de stock indiquent que la consommation de papier journal et de papier d'imprimerie et d‘écriture est sujet à des ajustages d'inventaire et les trois autres produits à la formation d'habitude. Les coefficients de revenu et de prix sont tous estimés positifs et négatifs, respectivement, et surtout sont significativement different de zéro. Toutes les élasticités de période longue de revenu et de prix ont excédé celles de période courte. On trouve que la consommation de tous papiers et produits de carton au Canada est élastique quant au revenu à la longue. De la même manière, les élasticités de prix de consommation de tous les produits sont élevées et plus qu'un pour le papier d'imprimerie et d’écriture et pour le carton à la longue. Done, la réponse de consommation de papier et carton aux changements de prix supposément inélastique, ainsi que conclue par beaucoup de travailleurs dans le passé, n'est pas supportée lorsque l'habitude, le stock et les effets attendus sont pris en considération.     

DISCRIMINANT FUNCTION ANALYSIS OF SMALL FARMERS AND LANDLESS IN INDIA*

The small farmers and landless in India are faced with the vicious cycle of low incomes, low savings, low investment and uneconomic size of operational holdings and often are nonviable. Using data for the Haryana State of Northern India for 1977/78, the linear discriminant function was used to identify those factors which will make the majority of small farmers and landless in India a viable entity. Analysis of these data indicated that per hectare fertiliser use, area under high yielding crop varieties, operational size of holding and working capital are the factors which affect the viability of the small farmers and landless. As compared to the simple regression analysis discriminant function approach has been found an effective tool for discriminating the two social groups and for predicting the sponsored social change. However, the use of the discriminant function may be limited if the qualitative independent variable has more than two classes and its orderings are not in sequence.