Real Estate for the Long Term: The Effect of Return Predictability on Long-Horizon Allocations

We examine how the predictability of real estate returns affects the risk of, and optimal allocations to, real estate for investors of differing investment horizons. Returns to direct real estate are mean reverting, and risk decreases with horizon. This is driven by a tendency for property transaction prices to overshoot inflation. Mean reversion in real estate returns is weaker than that of equities, resulting in real estate having similar risk to equities for long-term investors. However, optimal portfolios have large allocations to direct real estate at all horizons, and the allocation increases with horizon. Finally, we find that real estate investment trusts are a redundant asset class for investors with access to direct real estate as an asset class, but they do have a role in optimal allocations when direct property investment is not feasible.     

The role of structure and agency in management accounting control change of a family owned firm: A Greek case study

This study seeks to understand the changes in management accounting controls in a large Greek company (pseudonym: FA), with a focus on understanding the role of structure and agency in this change. In order to do this, we have employed a critical realist philosophy, pioneered by Roy Bhaskar (Bhaskar, 1979; 1997). We believe that the empirics of the case, the time span under consideration, and our theoretical approach provide us with a unique opportunity to explore the role of structure and agency in changing management accounting controls within the case firm. Our analysis revealed that changes in management control practices in FA were a function of different interacting structural conditions as mediated through human agency. This paper contributes to the debate about how to conceptualise agency and structure in management accounting control change (Kilfoyle and Richardson, 2011). Our analysis also demonstrates that the ‘dualism’ approach to agency and structure will result in a better analysis of management accounting control changes within firms.     

Consumer trust and confidence in the compliance of Islamic banks

Islamic banks compete with traditional (non-Islamic) banks for customers. This article aims to provide insight into why some Muslims choose to bank with Islamic banks in Pakistan, while others do not. Specifically, it addresses the questions: to what extent are trust and confidence active influencers in the decision-making process, are they differentiated or are they one of the same? Also how does the Pakistani collective cultural context further complicate the application of these concepts? For the purposes of this article trust refers to people and their interpersonal or social relations whereas confidence concerns institutions such as banks. Drawing on interviews with Muslim consumers in Pakistan, this study provides further insight into consumer behaviour within financial services and specifically Islamic banking and contributes to our theoretical understanding of the concepts of trust and confidence.     

Management quality and the cost of debt: Does management matter to lenders?

This paper investigates the effect of organizational capital, typified by various management practices within a firm, on the cost of external debt financing. Using a sample of medium-sized manufacturing firms in the US, we find that better management practices enhance a firm’s external financing capacity by lowering the firm’s cost of bank loans. We do not find any evidence that the lower loan cost of a high-quality-management firm is associated with more restrictive non-price contract terms such as greater collateral requirements and stricter covenants. These results suggest that banks explicitly take into account the risk arising from poor management practices when pricing and designing debt contracts.     

Are there racial differences in faculty salaries?

Many studies have used micro-level data in estimating earnings differentials by gender for college professors. None has studied racial earnings differences for faculty except by employing a dummy variable for race in its regression models. The availability of the 1993 National Study of Postsecondary Faculty has made such a study possible. We use a variant of the Oaxaca decomposition technique suggested by Cotton (1988) and Neumark (1988). Although the salaries of black faculty trail those of their white counterparts at the Associate and Full Professor levels, the reverse is true at the Assistant Professor level. The increased emphasis in recent years on increasing diversification in the racial composition of college faculty are possible explanations. The authors are indebted to various colleagues for comments on earlier drafts. They also wish to thank an anonymous referee who suggested significant changes to this article. The authors remain responsible for any remaining errors or omissions.     

Finding Missing Markets (and a Disturbing Epilogue): Evidence from an Export Crop Adoption and Marketing Intervention in Kenya

Farmers may grow crops for local consumption despite more profitable export options. DrumNet, a Kenyan NGO that helps small farmers adopt and market export crops, conducted a randomized trial to evaluate its impact. DrumNet services increased production of export crops and lowered marketing costs, leading to a 32% income gain for new adopters. The services collapsed one year later when the exporter stopped buying from DrumNet because farmers could not meet new EU production requirements. Farmers sold to other middlemen and defaulted on their loans from DrumNet. Such experiences may explain why farmers are less likely to adopt export crops.     

Do Patent Protection and Technology Transfer Facilitate R&D in Developed and Emerging Countries? A Semiparametric Study

This paper examines if patent protection and technology transfer facilitate R&D in a sample that includes both developed and emerging countries. A semiparametric model is used to estimate the relevant parameters using country level data from 21 countries, of which six are emerging, for the period 1981–1997. The results suggest thresholds in patent protection and technology transfer: patent protection has a positive effect which weakens at high levels of protection, and FDI has a positive effect only if the country depends heavily on FDI.

The Effects of Greenfield FDI and Cross‐border M&As on Total Factor Productivity

We examine the effects of greenfield FDI and cross‐border mergers and acquisitions (M&As) on total factor productivity (TFP) in developed and developing host countries of FDI. Using panel data for up to 123 countries over the period from 2003 to 2011, we find that greenfield FDI has no statistically significant effect on TFP, while M&As have a positive effect on TFP in the total sample. Greenfield FDI and M&As both appear to be ineffective in increasing TFP in the subsample of developing countries. In contrast, M&As have a strong and positive effect on TFP in the subsample of developed countries.     

Scraping EDGAR with Python

This article presents Python codes that can be used to extract data from Securities and Exchange Commission (SEC) filings. The Python program web crawls to obtain URL paths for company filings of required reports, such as Form 10-K. The program then performs a textual analysis and counts the number of occurrences of words in the filing that reflect, for example, uncertainty (or any other quality specified by the researcher). The program can be easily modified to conduct other searches by changing the word list, company names, or SEC filings. The Python program could be used in an introductory graduate data analytics course in finance that has a web crawling or textual analysis component.