Earning the “Write to Speak”: Sell‐Side Analysts and Their Struggle to Be Heard

This paper explores the ways in which sell‐side (SS) financial analysts seek to position themselves advantageously within the wider field of investment advice in spite of widespread skepticism over the value that their forecasts and recommendations add to investment decisions. The field of investment advice has been characterized in recent years by a number of regulatory and technological changes that have forced SS analysts to reconstitute the ways in which they influence the investment decisions of buy‐side (BS) actors. Faced with existential threats, SS analysts have responded to the disruptive impact of technology and regulation by struggling hard to ensure that their services are still valued by fund managers. Key to this ongoing process is the recalibration of professional expertise, which previous research has alluded to but not explored in detail. Central to the persistence of SS analysts in processes of investment decision making are activities revolving around the production and use of analyst reports which, our findings indicate, are less valuable for their informational content than their role as “relational devices,” ascribing legitimacy to SS analysts and earning them an entry ticket to more substantive, value‐adding interactions with companies and BS actors. We also show that economic considerations in the area of investment advice are influenced by social ties, the motivations of various actors in the field, and their relative position vis‐à‐vis other actors. More generally, we contribute to the literature on professional projects by showing how professional groups are constantly engaged in attempts to reposition themselves in the social space, but that field‐level changes can restrict the outcomes of these strategies to mitigation rather than advancement for the professionals concerned.     

Measuring the Impact of Various Income Sources on the Link between Inequality and Development: Implications for the Kuznets Curve

To understand the link between inequality and development, a decomposition of the Gini index by income sources is used that emphasizes the role of three components measuring the impact of the shares of the sources, the degree to which they are unequally distributed, and their correlation with total income. Such a breakdown explains why the rising section of the Kuznets curve is mainly the consequence of the increasing share of wages while its declining section reflects the decreasing share of entrepreneurial income and the negative correlation between transfers and total income. The data sources were provided by the International Labour Office.     

MEASURING MULTIDIMENSIONAL POVERTY: AN EMPIRICAL COMPARISON OF VARIOUS APPROACHES

This paper makes a systematic comparison of four approaches to multidimensional poverty analysis based respectively on the theory of fuzzy sets, information theory, efficiency analysis and axiomatic derivations of poverty indices. The database was the 1995 Israeli Census that provided information on the ownership of various durable goods. There appears to be a fair degree of agreement between the various multidimensional poverty indices concerning the identification of the poor households. The four approaches have also shown that poverty decreases with the schooling level of the head of the household, first decreases and then increases with his/her age and with the size of the household. Poverty is higher when the head of the household is single and lower when he/she is married, lowest when the head of the household is Jewish and highest when he/she is Muslim. Poverty is also higher among households whose head immigrated in recent years, does not work or lives in Jerusalem. These observations were made on the basis of logit regressions. This impact on poverty of many of the variables is not very different from the one that is observed when poverty measurement is based only on the income or the total expenditures of the households.     

A note on the output effect of price discrimination on a sales maximizer

This note analyses the behaviour of a profit-constrained sales-maximizing firm under price discrimination. It is shown that tightening the price discriminatory constraint will cause a decrease in output regardless of the shape of the relevant demand curves.     

Mind the Gap: Crowdfunding and the Role of Seed Money

We analyze voluntary private contributions to public goods and the role seed money plays in signaling the public good's quality to potential subsequent contributors. We present a theoretical model and analyze two sets of naturally occurring data from crowdfunding platforms. After developing the theoretical background, we find statistically significant switch points that distinguish between seed contributions and subsequent contributions. A positive change in contribution behavior after the switch suggests an increase in the perceived value of the public good. We find that the signal comprises the number of contributors and the average contribution (as a proportion of the targeted goal). Copyright © 2015 John Wiley & Sons, Ltd.     

Public policy for reducing tax evasion: implications of the Yule–Simpson paradox

The current study exhibits a new implication of the Yule–Simpson paradox with public policy repercussions. We construct Laffer curves of local property tax collection based on aggregated data and group division to residential land uses in Jerusalem. Results indicate that based on aggregated (dis-aggregated) data, the location of owner-occupiers and renters who pay a relatively high rate tariff will be on the upward-sloping (downward-sloping) part of the Laffer curve. Consequently, statistical test outcomes support Laffer’s controversial claim that for the few upper-brackets taxpayers, an efficient collection is associated with tax reduction rather than tax increase.     

The usefulness of inaccurate models: Towards an understanding of the emergence of financial risk management

Is the growth of modern financial risk management a result of the accuracy and reliability of risk models? This paper argues that the remarkable success of today’s financial risk management methods should be attributed primarily to their communicative and organizational usefulness and less to the accuracy of the results they produced. This paper traces the intertwined historical paths of financial risk management and financial derivatives markets. Spanning from the late 1960s to the early 1990s, the paper analyses the social, political and organizational factors that underpinned the exponential success of one of today’s leading risk management methodologies, the applications based on the Black–Scholes–Merton options pricing model. Using primary documents and interviews, the paper shows how financial risk management became part of central market practices and gained reputation among the different organisational market participants (trading firms, the options clearinghouse and the securities regulator). Ultimately, the events in the aftermath of the market crash of October 1987 showed that the practical usefulness of financial risk management methods overshadowed the fact that when financial risk management was critically needed the risk model was inaccurate.     

Do family farms really converge to a uniform size? The role of unobserved farm efficiency*

We analyse the growth of family farms in Israeli cooperative villages during a period of economic turmoil. We use instrumental variables to account for the endogeneity of initial farm size, and correct for selectivity as a result of farm survival. We also include a technical efficiency index, derived from the estimation of a stochastic frontier production model, as an explanatory variable. Our aim is to check whether ignoring efficiency could have been the reason for convergence results obtained elsewhere in the literature. We found that technical efficiency is an important determinant of farm growth, and that not controlling for technical efficiency could seriously bias the results. In particular, larger farms are found to grow faster over time, while without controlling for technical efficiency the farm growth process seemed to be independent of initial farm size. The increasing polarisation of farm sizes in Israel has ramifications for the inefficiencies induced by the historical quota system, for the political power of the farm sector and for the social stability of farm communities.     

MBTI Personality Types of Project Managers and Their Success: A Field Survey

This paper describes a survey of 280 project managers that reveals both their personality types (via Myers‐Briggs personality inventory) and their success in project management. The results show that a project manager's personality is better suited for functioning with partial data and under ambiguity than the rest of the population. These traits were found for both women and men. The conclusion is that project managers (females and males) have a unique personality‐type distribution that distinguishes them from the general population. The findings can contribute to better understanding the traits that characterize the project management population, and their relationship to project success.