Probabilities of Small Claims Judgment Satisfaction and Factors Influencing Success

A claim adjudicated in small claims court is substantively not resolved until the judgement rendered has been received by the winning plaintiff. Using data from the Boone County, Missouri, Small Claims Court, this study found that one-half of the winning claims were collected in full. Differences in collection success were more closely related to the judgment amount and characteristics of the defendant than to characteristics of the plaintiff.     

On the Industry Concentration of Actively Managed Equity Mutual Funds

Mutual fund managers may decide to deviate from a well‐diversified portfolio and concentrate their holdings in industries where they have informational advantages. In this paper, we study the relation between the industry concentration and the performance of actively managed U.S. mutual funds from 1984 to 1999. Our results indicate that, on average, more concentrated funds perform better after controlling for risk and style differences using various performance measures. This finding suggests that investment ability is more evident among managers who hold portfolios concentrated in a few industries.     

Preferential Regulatory Treatment and Banks' Demand for Government Bonds

The purpose of this paper is to analyze the impact of preferential regulatory treatment on banks' demand for government bonds. Using unique transaction‐level data, our analysis suggests that preferential treatment in microprudential liquidity and capital regulation significantly increases banks' demand for government bonds. Liquidity and capital regulation also seem to incentivize banks to substitute other bonds with government bonds. We also find evidence that this “regulatory effect” leads banks to reduce lending to the real economy.     

It Pays to Set the Menu: Mutual Fund Investment Options in 401(k) Plans

This paper investigates whether mutual fund families acting as service providers in 401(k) plans display favoritism toward their own affiliated funds. Using a hand‐collected data set on the menu of investment options offered to plan participants, we show that fund deletions and additions are less sensitive to prior performance for affiliated than unaffiliated funds. We find no evidence that plan participants undo this affiliation bias through their investment choices. Finally, we find that the subsequent performance of poorly performing affiliated funds indicates that this favoritism is not information driven.     

Defined Contribution Pension Plans: Sticky or Discerning Money?

Participants in defined contribution (DC) retirement plans rarely adjust their portfolio allocations, suggesting that their investment choices and consequent money flows are sticky and not discerning. However, participants’ inertia could be offset by DC plan sponsors, who adjust the plan's investment options. We examine these countervailing influences on flows into U.S. mutual funds. We find that flows into funds from DC assets are more volatile and exhibit more performance sensitivity than non‐DC flows, primarily due to adjustments to the investment options by the plan sponsors. Thus, DC retirement money is less sticky and more discerning than non‐DC money.     

Investor Reaction to Celebrity Analysts: The Case of Earnings Forecast Revisions

We examine the effects of analysts' celebrity on investor reaction to earnings forecast revisions. We measure celebrity as the quantity of media coverage analysts receive in sources included in the Dow Jones Interactive database, and find that media coverage is positively related to investor reaction to forecast revisions. The effect of celebrity on the reaction to forecast revisions remains significant after controlling for forecast performance variables examined in prior studies (ex post forecast accuracy, ex ante accuracy, award status, and other variables shown to be related to forecast accuracy). While these results are consistent with the familiarity of the analyst's name affecting the market reaction, we cannot rule out that our measure of celebrity is correlated with error in the performance measures we examine and/or correlated with other unexamined dimensions of forecast performance. A content analysis of a random subsample of the media coverage of our sample analysts suggests that our findings likely are not due to the increased availability of forecast revisions. Finally, an investigation of the excess returns around the quarterly earnings announcement date suggests that market participants react too strongly to forecast revisions issued by analysts with high levels of media coverage. Taken together, these findings suggest that an analyst's level of media coverage can affect the initial market reaction to his forecast revisions.     

Mutual Fund Tax Clienteles

Mutual funds are held by investors in taxable and tax‐qualified retirement accounts. We investigate whether the characteristics, investment strategies, and performance of mutual funds held by these diverse tax clienteles differ. Examining both mutual fund distributions and mutual fund holdings, we find that funds held primarily by taxable investors choose investment strategies that result in lower tax burdens than funds held primarily in tax‐qualified accounts. Despite these differences, we find no evidence that any investment constraints that may arise from these tax‐efficient investment strategies result in performance differences between funds held by different tax clienteles.     

Is experience necessary in cue measurement? The case of auditing tasks*

Abstract. This study investigates whether, in some audit tasks, less experience is required for superior cue measurement than for other components of those tasks and, thus, the overall tasks. Hypotheses are developed based on a consideration of the knowledge needed to perform cue measurement and of how and when that knowledge is acquired. An experiment examined the effects of experience and cue measurement on assessments of control risk and analytical risk. Results indicate that, as predicted, there are experience-related differences in global analytical risk assessments, but those differences are not attributable to differential knowledge about cue measurement. Résumé. La question sur laquelle se penche l'auteure est de savoir si, dans certaines tâches de vérification, l'expérience nécessaire à une mesure supérieure de certains indicateurs est moins grande que celle que nécessitent d'autres aspects de ces tâches et, par conséquent, l'ensemble des tâches de vérification. Ses hypothèses se fondent sur la détermination des connaissances nécessaires pour procéder à la mesure des indicateurs ainsi que du mode et du moment d'acquisition de ces connaissances. Dans le cadre d'une expérimentation, elle analyse les effets de l'expérience et de la mesure des indicateurs sur l'évaluation du risque de non-contrôle et du risque analytique. Les résultats obtenus révèlent que, conformément aux prévisions, il existe des différences liées à l'expérience dans l'analyse globale du risque analytique, mais que ces différences ne sont pas attribuables aux connaissances marginales relatives à la mesure des indicateurs.