Finding diamonds in the rough: Analysts’ selective following of loss‐reporting firms

Investors face greater difficulty valuing loss‐reporting than profit‐reporting firms: losses may be due to very different reasons (e.g., poor operating performance or investments in intangibles, and financial accounting information is of more limited use for valuing loss‐making firms than profit‐making firms. Because of increased uncertainty about loss firms’ future financial and business viability, we hypothesize that financial analysts will be more selective when choosing to follow loss firms than profit firms, with the result that “abnormal” analyst following will be more informative to investors regarding the future performance of loss firms than profit firms. Consistent with this prediction, we find that abnormal analyst coverage is useful for predicting firms’ future prospects, and is more strongly associated with future performance (stock returns and ROA) for loss firms than for profit firms. The market, however, does not seem to use this useful information when pricing loss firms: for loss firms a portfolio investment strategy based upon abnormal analyst following can generate positive excess returns over 1‐ to 3‐year holding periods. These results are stronger for persistent‐loss firms than for occasional‐loss firms. We conclude that abnormal analyst following contains useful information about firms’ future prospects, and even more so for loss firms than for profit firms.     

Heuristics and CAD modelling: an examination of student behaviour during problem solving episodes within CAD modelling activities

Design activities typically involve and culminate in the creation of models representative of new ideas and conceptions. The format is often dictated by the specific discipline, with ideas in design and technology education regularly being externalised through the use of computer aided design (CAD). This paper focusses on the realisation stage of a design process, specifically when conceptual ideas are being externalised through CAD. Acknowledging students as novices or quasi-experts with regards to their levels of technical expertise and recognising the limitations in the cognitive capacities of humans suggests merit in investigating problem solving strategies through the lens of heuristics. A comparative study was employed between two distinct CAD systems to examine students modelling behaviour. Considering the situational context of the problems encountered and the bounded rationality which the students are operating within, a number of insights are generated from the findings which are of importance from a pedagogical perspective within design and technology education.     

Irish credit unions: Investigating performance determinants and the opportunity cost of regulatory compliance

The study investigates how producer-specific environmental factors influence the performance of Irish credit unions. The empirical analysis uses a two-stage approach. The first stage measures efficiency by a data envelopment analysis (DEA) estimator, which explicitly incorporates the production of undesirable outputs such as bad loans in the modelling, and the second stage uses truncated regression to infer how various factors influence the (bias-corrected) estimated efficiency. A key finding of the analysis is that 68% of Irish credit unions do not incur an extra opportunity cost in meeting regulatory guidance on bad debt.     

Extrapolation of causal effects – hopes,assumptions, and the extrapolator’s circle

ABSTRACT

I consider recent strategies proposed by econometricians for extrapolating causal effects from experimental to target populations. I argue that these strategies fall prey to the extrapolator’s circle: they require so much knowledge about the target population that the causal effects to be extrapolated can be identified from information about the target alone. I then consider comparative process tracing (CPT) as a potential remedy. Although specifically designed to evade the extrapolator’s circle, I argue that CPT is unlikely to facilitate extrapolation in typical econometrics and evidence-based policy applications. To argue this, I offer a distinction between two kinds of extrapolation, attributive and predictive, the latter being prevalent in econometrics and evidence-based policy. I argue that CPT is not helpful for predictive extrapolation when using the kinds of evidence that econometricians and evidence-based policy researchers prefer. I suggest that econometricians may need to consider qualitative evidence to overcome this problem.     

A more ideal system?

“Although American higher education can justifiably take pride in its capacity to develop the student's ability to manipulate the material world through its programs in science, medicine, technology, and commerce, it has paid relatively little attention to the student's “inner” development—the sphere of values and beliefs, emotional maturity, moral development, spirituality, and self‐understanding.” —from the Foreword to Encouraging Authenticity and Spirituality in Higher Education by Alexander W. Astin and Helen S. Astin     

PROFILING: A STRATEGY FOR SUCCESSFUL VOLUNTEER RECRUITMENT IN CREDIT UNIONS

Credit unions are non‐profit financial organisations that provide financial services to their members. They are located in 97 countries across the world. All credit unions are governed by a volunteer board and many are reliant on volunteers for all their labour requirements. However, recruiting volunteers is a problem. The literature on recruitment issues in volunteering in general, suggests that the not‐for‐profit sector looks to the private sector for guidance on recruitment policies and approaches. One such approach which is considered in this paper is ‘market segmentation’ wherein the potential volunteer body is profiled to determine if an individual is likely to volunteer and if they are, to identify the type of role they are most likely to be attracted to. Prior literature on volunteering in non‐profit organisations suggests that certain types of individual (dominant individuals) are more likely to volunteer. This paper investigates whether this dominant status profile is evident amongst volunteers in credit unions in Northern Ireland (NI). The study finds that people with dominant characteristics are more likely to be attracted to volunteering to the board of directors and individuals who have less dominant traits overall should be offered more social/participative type roles. This information can be used by credit union governing boards for volunteer recruitment, retention and management purposes.     

In Advertising,a Double Negative Does Not Equal a Positive

This research investigates the effectiveness of double negative ads relative to positive, self-promoting ads as it relates to impression formation. The study was conducted using a 3 (ad valence/intensity: extreme double negative, moderate double negative, positive) x 2 (impression type: incidental, intentional) repeated measures design study using print ads designed for fictitious brands. Overall, brands in double negative ads received less positive impression ratings and the double negative ad format was less memorable. These effects were even more pronounced as the valence of the double negative ads became more extreme.     

Classifying Credit Union Development in Terms of Mature,Transition and Nascent Industry Types

Classifying credit union industry types as Mature, Transition or Nascent provides a useful heuristic device by which to better understand grorwth ancl development issues facing the world- wide credit union movement. By defining the key attributes of each industry type an evolutionary linkage can be established between Transition and Mature industries, where Muture industries provide a demanstrations of the likely developrnenr path for Transition industries. The importance of Nascent industries to the future grorwth of the credit union movement makes this industry type of particular importance. Use of an industry type classification provides a platforn to better explore the economic and social significance of credit unions world- wide.     

The Distributional Characteristics of a Selection of Contracts Traded on the London International Financial Futures Exchange

This study examines the distributional properties of futures prices for contracts traded on LIFFE. A filtering process is employed to remove day of the week and holiday effects, a maturity effect, moving average effects and the influence of an asset's conditional variance from the raw returns series. Alternative distributional models from the stable paretian and ARCH families are examined for their applicability to futures data using a stability under additions. The results conclusively reject the hypothesis that futures returns are normally distributed with findings in favour of two related hypotheses – the mixtures of stable distribution and the ordinary stable distribution.